the rough and ready system of book- | think this will satisfy all reasonable keeping which had heretofore pre- men that not only was the price obvailed, and under which the nominal tained value and not the sum actually paid was usually entered, has been discontinued. A small excess over our gross estimates has been caused by reason of the negotiation of the loan of 1876, some considerable time before the period at which I had originally designed to negotiate it. I am happy to be in a position to state to the House that the wisdom of the course adopted by the Government on that occasion has been very amply justified by the results. I have obtained a statement of all the loans negotiated in the calendar year 1877 on the London market, which, with your permission, I will briefly read to the House. In the month of April, the Corporation of Birmingham attempted to negotiate a loan of £1,500,000, bearing 34 per cent. interest, which loan, I am advised, proved a total failure. In the same month, the Metropolitan Board of Works put a loan of £1,250,000 at 3 per cent. on the market, and of this only one-half was subscribed. The Government of Natal, in the month of June, endeavoured to negotiate a loan of a similar amount, which, I understand, was very tardily subscribed for. An HON. MEMBER: What date was that? MR. CARTWRIGHT: In June. The HON. MEMBER: What was the rate? in MR. CARTWRIGHT: 4 per cent. The Government of Portugal issued a loan of £6,500,000 at 3 per cent., which was offered on the market at £50that is to say, a rate of terest of 6 per cent., and this was also tardily subscribed. I find also that, in the month of April, which would have been the period-other things being equal-when I should have desired to place our own loan on the market, the price of our securities, deducting accrued interest, was £90 6s. 8d. This price ruled, or rather it was a few shillings less, from May, with slight fluctuations, down to December, at which time it was £91 3s. 6d.-for retail transactions, be it understood. Now, Sir, I for the securities the highest which could reasonably have been expected, but that parties who purchased them could by no possibility have gained any undue or unfair profit out of the transaction, if, indeed, which in many cases I much doubt, they succeeded in securing themselves from loss at all. But, what is of most moment, and the point that I chiefly desire to press upon the attention of this House is that it is also perfectly clear that the Government of the Dominion would have incurred extreme danger if they had neglected to avail themselves of the opportunity which presented itself in November, 1876, to negotiate that loan. It is very rarely, indeed, that such difficulty has been experienced in placing loans of any kind on the London market, as occurred during the year 1877, and those who are acquainted with the very high position which is held by several of the corporations whose securities I have quoted, and more particularly with the position held by consols of the Metropolitan Board of Works, will know that it is morally impossible that the Government of Canada could, under such circumstances, have successfully floated a loan had it been delayed till that period. Turning to the general statement, if the House will deduct the interest on permanent investments, which did not exist in the year 1873-4, they will perceive that the total gross expenditure for the year which is just closed, exceeded the gross expenditure for the year 1873-4 by barely a few thousand dollars; while, if they turn to that portion of the statement which is headed "Ordinary Expenditure" they will find that, whereas in 1875-6 our expenditure for ordinary purposes amounted to $8,569,774, our expenditure in the last year amounted to $6,835,078; in other words, that the ordinary expenditure was reduced in that year by the sum of $1,734,696. If they prosecute this comparison to 1873-4, they will find that in that year the ordinary expenditure amounted to $8,324,076, our expenditure, of course, being as before, and that our ordinary expenditure, as compared with 1873-4, was less by $1,488,998. Should they prefer to take the year 1872-3, they will find that the ordinary expenditure in that year amounted to $7,062,095; showing that our expenditure for 1876-7 was less than the ordinary expenditure for 1872-3, by $227,017; and that, it is well to remember, in spite of the fact that we have had to provide very large amounts for treaties with the Indian tribes, for the maintenance of the North-West Police, and of law and order in that extensive territory, for the expenditure necessarily involved in the admission of Prince Edward Island, in the in the creation of the Supreme Court, and also, to some extent, by the increased population of the Dominion. Sir, I think the House will agree with me that that side of the statement, at least, may fairly be looked upon as reasonably satisfactory; and, although it is unhappily true that, in spite of these reductions, the very serious shrinkage which took place in our Customs and Excise revenue, amounting, altogether, to very nearly $1,000,000-although, I say, it is unhappily true, that that has caused a considerable deficit, amounting to no less than $1,460,000, still Several HON. MEMBERS: Hear, hear. MR. CARTWRIGHT: Do hon. gentlemen consider it a subject of merriment, a subject of rejoicing, that a deficit of $1,500,000 has been incurred? MR. MITCHELL: Of regret. MR. CARTWRIGHT: My ear may be in fault, but I detected no tones of regret in the expressions emanating from the opposite side. An HON. MEMBER: Too thin. Mr. CARTWRIGHT: I am willing to believe that my hon. friend from Northumberland (Mr. Mitchell) expressed, correctly, the feeling of the House on that side, and that the cheers with which they received the announcement of a deficit only indicate that they do, deeply and sincerely, regret that this deficit has not been extinguished; a thing in which in which I most heartily concur with him. Sir, I need not say that, although it is probable that one cause of the deficiency has been the continued shrinkage in the introduction of imported goods, still, the main cause is necessarily due to the very bad harvest of 1876. Those who have studied the position of this country are well aware that, however important other interests may be, now and for a long time to come the agricultural interest will necessarily continue to be the predominating interest in Canada; and, therefore, that anything which strikes at the prosperity of the agricultural population strikes necessarily at all those classes, those very numerous classes, which are dependent upon them; strikes, I may say, at the foundation of our national prosperity; and, therefore, that it is no cause of wonder that an exceptionally bad harvest should produce such a reduction, or even a larger reduction in the revenue than that to which I have alluded. Proceeding, now, Sir, as, perhaps, the most convenient place to lay before the House the Estimates which I have prepared of the probable receipts of 1878-9, I may take this opportunity of saying that these Estimates, as all Estimates prepared so many months in advance of the time of expenditure necessarily must be, are based on the supposition that we shall enjoy, I do not say an unusual, but, at any rate, a moderately good harvest. Should we be favoured with that, I think, under the present tariff, we may reasonably expect, judging from our returns, to receive from Customs a revenue of about $13,750,000; from Excise, $5,250,000; from Stamps, our ordinary revenue of about $250,000; while, from the Post Office, which, I am glad to say, shows decided signs of improvement, I believe I may safely reckon on $1,200,000, and on $1,900,000 in all from Public Works, together with a revenue from various miscellaneous sources, and from interest on our investments, which as hon. gentlemen know, is continually increasing under the operation of the sinking fund of about $1,500,000; making, in all, $23,850,000. I may remark, as respects the expenditure side, that the House will note that the calamity which overtook St. John has inflicted upon us the necessity of a considerable expenditure for the purpose of repair ing the public buildings in that city. At least $200,000 will be required for that purpose, which necessarily increases the Estimates that I would otherwise have had to submit to the House. Having completed this much of my task, it appears to me that it would be advisable, before I proceed to discuss the general policy of the Government, in order that the House may be fully possessed of the necessary facts, to review somewhat briefly the seized and of it to enable them to jue position in which we stand now, as contrasted with the position in which we stood in some five years ago; and mainly with respect to these points First, as to our past and present liabilities; next, as to the causes of the great increase which has occurred in the expenditure during that period; and, lastly, as to the exact amount and incidence of our present system of taxation, absolutely and comparatively. With respect to the first point, I have had some considerable difficulty in ascertaining the exact extent of our liabilities on the first of July, 1873, partly for this reason, that those liabilities at that period consisted of two totally distinct classes; one being undetermined, and the other reasonably fixed and definite. On the first of July, 1873, we had not by any means definitely ascertained what would be the expense of working the railroad system, of which we had become, or were shortly about to become, possessed. We could not tell exactly what would be the cost of maintaining order in our North-West Territories, nor the ultimate expense of our Indian treaties. Since that time, we have ascertained those amounts with something like moderate precision. For the purpose of working our railroads a sum of about $750,000 will be required. For the purpose of maintaining order in the North-West Territories, $400,000 has been found to be necessary per annum; while the expenditure on our Indian Treaties, as the House is aware, will make necessary a sum of about $400,000 more. MR. MITCHELL: Is that over and above the receipts? MR. MITCHELL: For railways? MR. CARTWRIGHT: The probable loss on the working of railways is, as nearly as can be ascertained, $600,000 a year. I am now, however, speaking of the additions to the gross expenditure. To resume, however, apart from these sources of expenditure, we had other liabilities definitely fixed on July 1st, 1873, amounting very nearly to $131,000,000. For the construction of our canal system on the scale at that time contemplated, I find, upon reference to the Public Works Department, that, had those designs been carried out in their entirety, a sum of no less than $43,800,000 would have been required, including, of course, the whole system of the Welland, Lachine and St. Lawrence (anals, the deepening of the St. Lawrence itself, and the various canals in Nova Scotia, on the Ottawa River and in New Brunswick, which were at that time contemplated; for the completion of the Intercolonial Railway, $10,000,000; for the Pacific Railway, a sum of $30,000,000 was estimated by the then Minister of Finance; for debts maturing, the sum of $35,000,000; for the necessary expenditure on the Nova Scotia and New Brunswick portion of the Intercolonial Railway, the sum of $2,000,000; for the Prince Edward Island Railway and land grants, the sum of $2,500,000; and for a great variety of minor works, about $4,500,000; for improvements on the St. Lawrence below Montreal, $2,500,000; and for certain advances then contemplated $1,000,000, making in all a sum total, of what I may call liabilities capable of being ascertained, amounting to $131,300,000, all of which had, of necessity, to be provided for by new loans, although it was not all necessarily an addition to our net debt. Now, the House will see the magnitude of the task then imposed, by observing that this sum is as nearly as possible equal to the total net indebtedness of the entire Dominion, upon the 1st of July, 1877, and at least $23,000,000 more than the total net indebtedness on the 1st November, 1873; that it would require, at the rate of discount MR. CARTWRIGHT: From Indian at which our loans of late have Treaties the receipts are nil. been made, seven successive loans of time con there was no doubt siderable difficulty in ascertaining exactly the result of the expenditure which had been incurred under the legislation I have referred to, it will probably interest the House to see how the expenditure for the current year would compare with the expenditure of the year 1872-3. I find that the chief causes of excess in the expenditure of these two years may be described as follows:-The Provincial debt and subsidy as before; Prince Edward Island, with the addi not $20,000,000 each; and lastly, on the esti- | $4,000,000, which sufficiently accounts. mate submitted by the then Finance for the increase as between 1873-4 Minister, an addition to the interest and 1872-3. As, however, at that paid by this country of $3,367,400 | per annum. As regards our present liabilities upon 1st July, 1878, my estimate is as follows, taking into account only those works which it is really necessary to prosecute:-For the completion of the Welland and Lachine Canals, $5,500,000; to redeem debts which mature within a reasonable time, $13,500,000; for the purpose of completing necessary portions of the Pacific Railway, a sum of about $6,000,000 may be needed; for a variety of miscellaneous purposes, a sum of about|tion of the railroad and steam ferry, $5,000,000, I think, would suffice, making in all a sum of about $30,000,000 | for which I consider it still necessary to make provisions for by fresh loans. After 1881, although there still remains a very considerable amount of debt, which I should desire to reduce, it is to be noted that payment is optional, at the convenience of the borrowers. Coming, now, to the second point to which I desire to call the attention of the House, that is to say, to the causes of the great excess which occurred during this period, I find that the causes of the large excess which marks the year 1873-4 are chiefly due to the following additions to our annual expenditure:-In the first place, to the assumption of the Provincial debts, and the additional subsidy to New Brunswick, amounting to $820,000; in the next place to the additional charges incurred by the admission of Prince Edward Island, $500,000; to the first half-year's interest on Mr. Tilley's loan, $225,000; to the alteration in the mode of keeping the Post-Office accounts, which involved a nominal addition of $300,000; to that variety of increases in the salaries paid to the officials of the Government, amounting to a little over 300,000; to an increase of the expenditure on public works. chargeable to income, $500,000; for the Mounted Police, $200,000; the expenses of the extra Session of that year, involving a sum of $200,000; for treaties, about $100,000, and for a considerable number of miscellaneous items, ranging collectively from $850,000 to $900,000; amounting in all to about amounting to $820,000; the total interest of loan contracted in 1873, $445,000; the Post-Office increases as before; the increases of salary in Estimates $350,000; for the additional working expenses of the Intercolonial, $500,000, which was necessary or incurred in 1872-3. The total interest of capital placed in the Public Works up to the end of 1877-8, represents an additional charge of $1,200,000; our Mounted Police, $330,000; and our Indian treaties are additional charge of probably $330,000 more; making a sum tɔtal of $5,100,000 of increase as between these years due to the respective items to which I have alluded. Without pausing further to discuss this point at present, I proceed to consider the amount of the absolute taxation now levied on the people of this country, and also the incidence of that taxation. Taking, in the first place, the ordinary standard per capita, the House will observe that on our present population of 4,000,000 of people, we expect to receive in the current year a gross revenue of $23,400,000, less about $250,000 interest accrued on capital since, 1872-3. They will also observe that of that amount $19,150,000 are expected to be derived from what may be called actual taxation, as compared with about $17,616,000 in 1872-3. It will be observed, therefore, that on our gross revenue for the years 1877-8, if ît does not exceed the estimated amount our receipts per capita would amount, as nearly as possible, to $5.79 per head, as against $5.86 in 1872-3; allowing for the nominal addition on account | actual amount of taxation collected of the Post Office; while the from the people of sum actually paid in taxation will amount, if we receive all we expect to get, to $4.79 per head, as against $4.90 actually paid into the Treasury in 1872-3. Now, I am perfectly well aware that the per capita standard is only a very partial test of the actual incidence of taxation. It may doubtless happen-it often does happen —that the taxation may be so levied on a country as to take a very great deal more out of the pockets of the people, than ever finds its way into the public Treasury, and therefore the per capita test can only be looked upon as valuable, all other conditions being the same. We have only to look to the case of the United States to see how grievously a people may be burdened without any considerable portion of the amount of the taxes, levied from the people, coming into the National Treasury, and I will venture to say that, if we were induced to re-adjust our tariff in the direction of the policy pursued by the United States, we would soon experience in our persons how very large an amount of taxes the people of Canada might be called on to pay, without more than a fraction of the sum finding its way into our Treasury. I desire, while on this subject, to remove from the minds of hon. members a misapprehension which I believe exists as to the relative extent of taxation in the periods prior to and after 1873-4. It is quite true that as comparing the present time with the year 1872-3.there has been a considerable addition to the taxation of the people, although I will here pause to observe that undoubtedly the taxes that had been taken off, or their equivalents, ought to have been replaced as a matter of sound ordinary economy in 1872-3. But I beg to state that, if we compare the actual taxation which was levied on the people of Canada in any year from Confederation to 1872, it will be found that the so-called increase has been slight, if indeed it can be said to exist at all. Now, without pausing to take into consideration the effect of some temporary taxes such as the five per cent. addition which was made in 1870 or the so-called national policy of the succeeding year, if we take the Canada in 1870-71 or 1871-72, and compare rates now levied, that with the though there is no doubt an addition of two and one half per cent. on the general list of articles imported into this country, and a considerable addition to the duties levied on whiskeys, brandies, tobaccos, and other such articles; yet, in comparing those two years, so great has been the reduction in the duties on tea and coal oil-both articles of general consumption—that I am inclined to think that the money actually taken out of the pockets of the people of Canada in the one year was quite as great as that now taken out under our apparently increased taxation. In the first place, the actual duties on tea which were levied in the year I have referred to, or from the period of Confederation upward, would have alone yielded a revenue of quite $1,500,000. Now there seems to be reasonable grounds for believing that the people of Canada profited from $1,500,000 to $2,000,000 by the abolition of the Excise duty, and the reduction of the other duties, on coal oil. Upon that, however, I do not insist; insist; though it is obvious that, if you put the two sums together, they represent the total amount of the additional taxation (even if the imports continued at their original figure), which would have been obtained by the taxes I imposed. Neither do I wish to do more than merely glance at the fact that, in all probability, owing to the reduction in the value of articles imported into this country, even the sum we receive from the two and a half per cent. barely equals the amount which would have been collected had the fifteen per cent. been converted to a specific duty in 1874. But, taking the lowest amounttaking only $800,000, which know positively to have been saved to the consumers of coal oil by the abolition of the Excise and Customs duty; adding that $1,500,000 which, under the old tariff, would have been collected on tea, it will be that the actual sum the people of Canada were paying on these two articles was $2,300,000 (although the whole of the latter sum did not come we seen |