Thomas Cantley (Cons., Pictou) agreed with the object of the Bill but did not see how it could be of much advantage to Nova Scotia so long as a drawback was allowed on the import of American soft coal for the production of coke. Coke, he contended, should bear a duty. "Coal, which is a natural product," he said, "bears a duty; and if coal is entitled to a duty, coke, which is a manufactured product, is still more entitled to protection."

Robert Gardiner (U.F.A., Acadia) opposed the Bill on the ground that it would be used by promoters for the purpose of floating bonds for coking plants. "Once they get the plant built, "' he said, "and have an assurance that it will be a success, then so far as Nova Scotia coal is concerned they may or may not use it, just as they see fit. If it suits their purpose to use that coal, well and good; if not they will use American coal."

Mr. Stewart denied that the legislation amounted to a guarantee of bonds, and claimed that there was no possibility of the Bill being of any assistance in the floating of securities.

On Apr. 12, Thomas Cantley (Cons., Pictou) on a motion to go into Committee of Supply made a statement of his attitude towards the Government policy on the Duncan Report. He refused to agree that the Government had carried out the terms of the Duncan Report and listed a number of instances in which he claimed they had failed to do so. Among these were the exclusion of international and import traffic from the rate reduction, the failure to fix a minimum addition to the Maritime Province subsidies, the lack of action on horizontal rate increases or on the improvement of the Prince Edward Island car ferry or with regard to branch line railways in New Brunswick, inadequate treatment of the coking industry, and failure to provide adequate protection for the steel industry. As to coking plants, he asked that the Bill before the House should be amended so as to apply to any by-product coke oven now in existence in Canada. He asserted that the policy

of the Government reflected in the present Customs tariff as to coke and coal was a repudiation of the policy of the Liberal party as expounded by Mr. Mackenzie King in the coal counties of Nova Scotia, namely at Cumberland on Aug. 5, 1921. Mr. Cantley explained that in the statement he made he was speaking for himself only. He was followed by Mr. Black of Halifax, Dr. MacLaren of St. John-Albert, and R. K. Smith of Cumberland, all Conservative members, who dissociated themselves from the protest made by Mr. Cantley.

The 1927
Budget;
Other

Dominion
Finances

The Budget Speech was delivered by the Finance Minister, Hon. James A. Robb, on Thursday, Feb. 17, 1927. It contained no announcement of tariff changes, but included several reductions in taxation. The Income tax was reduced ten per cent.; there was a general cut of twenty per cent. in the Sales tax; the Excise tax on matches was cut twenty-five per cent.

With regard to the tax on cheques, bills of exchange, promissory notes, and similar documents, the exemption was raised to ten dollars and above that the tax was made a flat rate of two cents instead of the graduated scale in force previously. The stamp tax on over drafts and advances was abolished. The reductions in the Income tax applied to assessments falling due in 1927; the reductions in the sales tax came into effect on Feb. 18; the reductions in the tax on matches and in the stamp tax were fixed to come into force on July 1st, 1927. Mr. Robb announced that it had been found imimpracticable to grant the requests made for total or partial exemption from taxation of money gifts to hospitals and higher educational institutions. His statement with regard to the absence of any reductions in the Tariff was as follows:

"In April last an advisory board on tariff and taxation was created. Since then the Board has been instructed to investigate and report on fifty-two applications for tariff changes. Of these applications, one was sent by my immediate predecessor in office, the balance by myself. The Board has proven to be a popular tribunal, but has only been operating a few months. The holding of numerous public hearings and the making of intensive investigations have taken much time, and, as certain of the applications are inter-locking, inquiries are not yet completed. Everything considered, it has appeared to my colleagues and myself the part of wisdom to propose no changes in the Customs tariff at the present Session of Parliament."

Dealing with finances, Mr. Robb estimated a further reduction of thirty-one million dollars in the net Debt of the Dominion as of Mar. 31, 1927. For the four fiscal years commencing with Apr. 1st, 1923, he placed the total reduction in the net Debt at ninetyfive million dollars. Mr. Robb spoke in advance of the end of the fiscal year and his figures were somewhat increased, according to the monthly statement of the Public Debt issued by the Department of Finance to the night of Mar. 31, 1927. According to this statement, the net Debt on the last-mentioned date was $2,328,301,599, showing a decrease in the net Debt during the four years of approximately $125,000,000.

It had been stated during the Election campaign that money had been saved owing to the fact that Supply had been obtained by Governor-General's warrants. In response to this statement Mr. Robb said that the total amount of Governor-General's warrants issued under the Administration of Mr. Meighen was $48,708,473, while the expenditure for the corresponding period of the previous year was forty-nine million dollars. For the period from the reentry of Mr. Mackenzie King into office on Sept. 25, 1926, up to the end of November there had been issued Governor-General's warrants for $31,963,509, while the expenditure for the corresponding months of the previous year were $30,497,921. Thus, he said, the total amount of Governor-General's warrants issued amounted to $80,671,982, while the total expenditure for similar services

for the corresponding period of the year before was $79,500,000. For the fiscal year 1927-28 Mr. Robb estimated that the remission of taxes would amount to twenty-seven million dollars. He expected, however, that increasing business activities would result in the total revenue being equal to that of the fiscal year 1926-27 or a little greater.

In a brief reference to the trade situation, he anticipated a balance of exports over imports and had this to say about the policy of the Government in the negotiation of treaties with other countries:

The policy of the Government has been to promote friendly trade relations with other countries, and particularly to strengthen our trade ties within the Empire. Canada introduced the policy of preferential tariffs within the British Empire and the extent of our Empire trade fully justifies the expectations of those who originated the British preference. Bearing in mind the industrial difficulties of the Mother Country during the past year, our trade with the Empire during the period under review was satisfactory.

The main feature of the speech of the financial critic of the Opposition, Hon. R. B. Bennett, was a proposal for the reduction of debt through the issue of a new consolidated four per cent. security of the Dominion of Canada to be taken up by the chartered banks and the insurance companies. He proposed:

That the Minister of Finance should, after creating his four per cent. consolidated Canadian securities, provide by legislation that a percentage, to be hereafter determined, of the revenue of the insurance companies, amounting to a net total of over $110,000,000 this year, and from the deposits of the Canadian people in our savings banks, amounting approximately to at least another billion and three-quarters, should be utilized for the purpose of paying off maturing debt. "This four per cent. security I would maintain at all times at par"-a very simple process. Under our Finance Act, our Department of Finance operates practically as a Federal reserve board and all that the insurance companies would have to do if they required additional money would be to deposit, either through their banks or with the Minister of Finance, the four per cent. consolidated securities and receive the money from the Federal reserve board. All that the banks would have to do would be what they have already been doing, as you will observe from the returns brought down by the Minister of Finance, deposit these securities with the Minister of Finance and obtain for them the money which enables them to carry on their business.

He stated further that his proposal would "make it compulsory" that part of the investments of insurance companies and banks should be made in four per cent. consolidated bonds of Canada. He denied that his proposal would compel these institutions to lend money at four per cent. but said that it would merely provide "compulsory trustee investment, which is but an amplification of the present provision of the Life Insurance Act." Mr. Bennett estimated that his proposal would save the country next year and the years following not less than $1,700,000 annually. He explained that in putting forward the proposal he was speaking for himself and not for the Conservative party.

No amendment to the Budget was moved by the Conservatives, but on Feb. 21 one was brought forward by G. G. Coote, U.F.A. representative from Macleod. Mr. Coote took exception to the reduction in the Income tax and said that the proposal

for a ten per cent. reduction appeared to him to be the first move in the elimination of this tax. Personally, he said, he would like to see the Income tax maintained until all the War Debt was paid. Mr. Coote was unable to see how it could be argued, in the face of the great increase in American investments in Canada, that the Income tax was retarding investment in this country. Regarding the Tariff, he said that the Finance Minister could not shelter himself behind the Advisory Tariff Board and declared that "the present Government owes its existence to its formal claim of being the low tariff party in Canada. . . . This Budget," he added, "however, is one which very well might be brought down by a Conservative Government. He closed by moving the following amendment:

Whilst recognizing the advisability of certain minor changes proposed, this House regrets that the Budget as presented by the honourable Minister of Finance contains no effective provision for the reduction in the high cost of living, in so far as such is due to the protective tariff;

That the Budget shows a further departure from the principle of direct and visible taxation based on the ability to pay.

And further that no systematic effort is being made to reduce our National Debt, the interest on which absorbs so large a proportion of the revenues of the Dominion.

J. S. Woodsworth (Lab., Winnipeg N.-C.) approved of the reduction in the Sales tax but condemned the cut in the Income tax. The changes in both the Income and the cheques tax, he claimed, reduced the burden on the higher incomes. The one gain which Labour made, in addition to the reduction in the Sales tax, was the cut in the tax on matches.

A protest against the absence of tariff reductions in the Budget came from the group of Liberal-Progressives who were sitting on the Government benches and who supplied the Government majority. J. A. Glen of Marquette, speaking on behalf of the group, asserted that they "must have from the Government a categorical and incontestable statement of its position with regard to future tariff reductions. Refusal to give such a statement," he added, "must inevitably be construed as an admission by the Government of a desire to depart from the policy of tariff reduction." Hon. C. A. Dunning, Minister of Railways, made the Government reply to Mr. Glen. He stated:

While the Minister of Finance, naturally will not budget for future years, he does authorize me to say this, in reply to the insinuations from the far corner regarding the fiscal policy of this Party and those who support it, that the Liberal fiscal policy is unchanged. We shall move forward cautiously with the aid of knowledge of the facts secured by the Tariff Advisory Board toward the goal of making our tariff structure bear as lightly as possible on production, industry and the people generally, having always in view the greater prosperity of all the legitimate industries of Canada. The tariff must be made to serve the best interests of the Canadian people as a whole. It must be adjusted from time to time to meet the needs, not of one class or group or industry alone, whichever one that may be, but of our whole economic structure. This does not mean tariff-tinkering so called, but it does mean a continuous expert examination and adjustment whenever the facts so revealed warrant.

Mr. Glen then asked Mr. Dunning for further particulars in the nature of an assurance "that the policy of the Government is in the direction of lower tariffs and that it is not the intention to abolish the Income tax as a permanent fiscal instrument." "Some people," replied Mr. Dunning, "tried to hold a pistol at the head of the Minister of Finance last year, we all know with what success; and those who try the same thing again, whether friend or foe, will find the same result."

A further assurance with regard to the Tariff was given by the Finance Minister himself on Mar. 1st, the last day of the Budget debate. "Surely," he said, "this Ministry has been attacked often enough and loud enough for them to know where we stand on the Tariff. We are recognized throughout Canada, and we are proud of it, as the low tariff party. We ran the risk of taking our political lives in our hands in 1925 to go to the country and appeal on our policy-a real national policy that would appeal to all the Provinces of Canada, not merely to any one particular section."

On the same day the Conservative leader described the Budget as "a rich man's budget" because of the maintenance of the Sales tax which, he said, had been retained for years in spite of the protests of the Conservatives. The reduction of the Income tax he described as "long delayed" and criticized the Government for having given no intimation of economy in the management of the affairs of the country. He condemned the Government for lack of initiative in securing the carrying out of the statute of June 1925 with regard to railway rates and stated that "the whole of Northern Saskatchewan and Northern Alberta are suffering from an unjust discrimination in connection with grain rates." He proposed the division of the Railway Commission into two bodies with a view to lessening delays. Dealing with the statement of Mr. Dunning in reply to Mr. Glen, he drew the inference that "now we have reason to know, if we can place any dependence upon the formal pronouncements of this Government, that we have in power a Government favourable to the policy of protection. . . . There never has been a moment's doubt," he continued, "as to the position of the Conservative party upon the question of protection. We look upon it as one of the corner-stones in the foundation of our national structure." On the other hand, declared Mr. Guthrie, "high protection is not the policy of the Conservative party in Canada."

The assurances given by Mr. Dunning and Mr. Robb to the Liberal-Progressives were successful, and they voted with the Government on the Budget. There were two divisions. The first took place on the Coote amendment which was defeated by 182 to 21. On this occasion Liberals, Liberal-Progressives, and Conservatives voted together, the Coote amendment being supported only by the Independent Progressives to the left of the Speaker and by the Labourites. The second division took place on the motion for the adoption of the Budget resolutions, which was car