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Finances of
Canada.
BUDGET SPEECH
MKaMVBRMi' i-s I Mi.:
HOUSE OF COMMONS OF CAN A DA,
FRIDAY, 22nd FEBRUARY, 1878.
* V TlIK
H0N/RICH4RD J. CARTWRIGHT,
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OTT/^AVA
1878 I
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1 ^ ^
THE FINANCES OF CANADA.
BUDGET SPEECH
DELIVERED IN
THE HOUSE OF COMMONS OF CANADA
On Friday, February 22nd, 1878,
BY THE
ffoN. Richard I. Cartwright,
Minister of Finance.
Mr. CARTWRIGHT :— Mr. Speaker :
It is now almost five years since I took occasion, from my place as a
private member of this House, to point out to the then House of Com-
mons in the most emphatic language I could command, the inevitable
consequences which must necessarily ensue from the adoption of certain
proposals at that time submitted for the consideration of Parliament.
It is nearly four years, since, as Minister of Finance, it became my un-
pleasant duty to point out to the House the grave financial difficulties which
beset our position, and the necessity of submitting to considerably
increased taxation, if we desired to provide for the liabilities wd had
incurred. Uiihappily, grave as were the forebodings I then expresse* the
depression which actually took place has decidedly surpassed the extent
of that upon which I had calculated. It is not often in the commercial
history of any country that we are called upon to chronicle so great a
reduction, not merely in the total volume of our trade, but also in the
revftnue derired therefrom, as we have seen within the last two or three
years. Making allowance for the admission of Prince Edward Island
into the Union, the total volume of the trade and commGrce of
2
Canada liatl, iii tliat short interval, been reducetl by very nearly
5j5r)(),(M)(),()()(), while tlie revenue derived from Customs alone cxhibitH a
decrease in that period of something' like $8,00().()()(), — the actual figures,
in round nuniberH, hhowing that the volume of our trade and commerce
collectively has been reduced from $218,000,OlK) to $108,000,000, while
the duties derived from Customs alone have fallen off from $15,851,000
to $12,51(),0()0. Neither would this reduction, enormous as it doubtless
is, , fairly represent the whole measure eitlier of the inflation which
occurred at that time, or of tlie subsequent re-action. In a country
like ours, which is steadily growing in population, and in which a large
area of fertile soil is constantly being l)rouglit under cultivation, we may
fairly calculate in any ordinary year that a considerable increase would
always be made to the general volume of trade by the natural force of
circumstances provided there has been no unreasonable inflation, and
therefore, if the House wish to mcvsure the full extent of the inflation,
or the subsequent seventy of the re-action, they must add to the
$5(),0()(),00(), which have been definitely ascertained to have been lost,,
a very considerable per ceiq^tage, probably varying from $80,000,000 to
$40,000,000, for the natural growth which may be said to have been
absorbed or anticipated, though this last computation is mainly
valuable, as [affording an index of the extreme character of the
inflation, and of the extreme violence of the subsequent re-actioru
To jiut the matter before the House in another shape, — while during that
interval the total volume of our imports has been absolutely reduced by
fully one-third, it is probable that our population has increased at least
one-ninth, and consequently, whereas a few years ago, with a total popu-
lation of 8,000,000 souls, we imported something like $127,000,000 worth
of goods, we found ourselves, last year, with a population of 4,000,000
importing a little over $94, 000,000 worth. In other words, the total
imports have fallen from an average of $85.25 per head, to something like
$28.50 per head. Had the imports continued stationary, as it was
supposeciin 1878, they would, the revenue under our present tariff^
would, in all probability, have considerably exceeded $27,000,000, and,
had the reduction which actually took place not exceeded the
estimated amount, it would still have remained at
about $24,000,000, while, as the House knows, the actual fact
is, that the revenue has sunk to a hum very little exceeding
$22,000,000. Now, I think it will be admitted that two facts may be
looked upon as clearly established from these circumstances ; in the first
place, the extreme character of the inflation which existed in 1878 ; and
8
lu tlie next plftoo, the fact that if, as I hate no douht is uiifortmmti'ly the
caHO, the chtniand for liomo manufactures procluoiMl in this country, has
consii(U'ral)ly (koreascd, it in not at all probahio that it has ilocreasotl in
more than equal ratio to the diminished oousnmptiou of foroigu manu-
factures. It is not my purpose at present to dwell on the groat
longth of time that this depression has jn-evailed, nor to waste any
luinecossary words in descanting on the unavoidable misfortunen which
have exasperated the natural re-act'on that lias ensued. What I desire
(wpecially to point out, at the present moment, is that the Btrain on oiu*
resources has, of licoessity, been exceedingly great, and that, indeed, it
could not have been otherwise, because these misfortunes — these com-
mercial disasters — have not only visited us, but have also visited very
heavily those nations who have always been our best customers, and
with whom both then and now, the great bulk of our oommercial trans-
actions take place. It is, however, viry satisfactory to find that at
last the tide seems to have been turned in some degree, and to bo able to
inform the House that the receipts from revenue during the last
seven months show a very decided impronf^^ent, as compai-ed with
the same period of the preceding year. Up to the lOth day of February
instant, I find that our receipts from all quarters amounted to $13,434,235,
as against receipts to the corresponding period of last year of .$12,494,279 ;
that is to say, Mr. Speaker, that the augmentation, in these seven months,
reached to the sum of nearly $1,000,000. Noav, although it is true, that a
certain proportion of this increase mayperhapsbe attributed to the necessity
of replacing the mass of goods that were unhappily destroyed in the great
tire that desolated the City of St. John, I am glad to be able to tell the
House that the increase from that source is not by any means the largest
part of the increase I have mentioned ; but that every Province, without
exception, I believe, shows a large and cheering increase, and as the
question has been raised, how far tlie general increase is due to this
merely accidental cause, I think it is not unreasonable to point out to
the House, that the very remarkable character of the present winter has
most assuredly diminished to a considerable extent, the consumption
of many classes of goods from which we would, ordinarily, have received
a good deal of revenue, and that in all probability the $200,000 or there-
abouts, which may have been derived from the misfortune tliat Z have
alluded to, are balanced, and, I dare say, more than balanced, by the
diminution ot consumption arising from that cause.
Proceeding now, Mr. Speaker, to the consideration of the general
statement for the year which expired on the first of July, 1877, it will be
my duty, before making any general obHcrvations, to invito the attention
of the House to certain special items, particularly in the list known as
•' Ordinary Expenditure." The House will observe that for that year our
total expenditure for Civil Government reached tlie sum of !S)812,000 j
being, I may remark, about $71,000 less than the sum which was ex-
pended lor that purpose in the year 1873-4, and representing
simply the regular statutory increases, which, under the ordinary
operation of law, would have been made to the expenditure
of 1872-8. On the item for Superannuation tlie House will
see that the charge is $104,000 as against $101,000. Now, Sir, I
may state, as some questions seem to have arisen as to the mode in
which that act vras administered, that the total superannuations granted
during that year were $12,005, against which are to be set off reduction*
by death to the extent of $11,711. The increased receipts on account of
that fund, as the House will see by a comparison with the previous
year were $2,414, and the net addition to our annual expenditure
$294, without taking into account the fact • hat several of those super-
annuations were caujgLby the abolition of offices by which a consider-
able saving was effected to the couutiy, (Hear, hear.) Under the
head of Immigration, the House will observe that a considerable amount
has been paid out in the shape of loans to tlie Mennonites and Icelandic
settlers, which I have every reason to believe will be returned to us at a
comparatively early day. This expenditure amounted in all to $79,000,
and the sum expended in suppressing a violent outbreak of small-pox in
the Icelandic settlement, $21,000. Under the head of Railway Expend-
iture, the sum of $90,000 has been expended (more than was estimated
for) ; but on the other hand, I am happy to be able to state that the
receipts show an equal augmentation, being very nearly $90,000 more
tlian was expected. Of course the House will know that estimates can-
not always be exact m regard to such matters ; if the traffic increases,,
the expenditure must necessarily bo expected to increase also.
The House will further observe that, under the head of Sinking
Fund, a certain cross entry has been struck out on both sides of the
account. It has been held to be desirable, in the public interest, to
devote the whole Sinking Fund to the purchase of the securities known as
the 4 per cents, and the rough and ready system of bookkeeping which has
heretofore prevailed, and under which the nominal value, and not the
sum actually paid, was usually entered, has been discontinued. A
small excess on 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 tlie Government on that occa-
sion has been 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 i'l, 500,000 bearing 8^ per cent,
interest, which loan, I am advised proved a total failure. In the same
month the Metropohtan Board of Works put a loan of £1,250,000 at 8^
per cent, on the market, and of this only one half was subscribed. The
Government of Natal, in the month of June, endeavored to negotiate a
loan of a similar amount, which, I understand, was very tardily
subscribed for.
An hon. meJnber — What date was that ?
Mr. CARTWlilGHT— In June.
The hon. member — What was the rate ?
A
Mr. CARTWRIGHT— 4i per cent. The Government of Portugal
issued a loan of £6,500,000 at 3 per cent., which was offered on the
market at £50 — that is to say a rate of interest of 6 per cent., and
this also was tardily subscribed. I find also that in the month of April,
which would havebeenthe period — other things being equal — Ishouldhave
desired to place our own loan on the market, the price of our securities, de-
ducting accrued interest, as shown by the Stock Exchange hst, was £90.
16s, 8d. This priee ruled, (or rather it was a few shillings less), from
May, with slight fluctuations down to December, at which time it was
£91 3s. 4d.— for retail transactions it is to be understood. Now, Sir, I think
this will satisfy all reasonable men that, not only was the price obtained for
those securities the highest which reasonably couldhavebeonexpected, but
that the 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 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
r»irc'ly, indecil, that hucIi dilVioulty Liuh been oxporioncod iu pliicin;,'
loans of any kind on tlia T^ondon uiurkct as occurred duriu<^
the yoar 1H77, nud tlioao who are aequaiutod with the very lii<»li poHitiou
which is liold by several of tlio corporations who.Hvi socurities I have
quoted, and more particularly with the position hold by consols of tho
Metropolitan Jioard of Works, will know that it is morally irapossiblo
that the Governniout of Canadu could, under such circumstances, ha\e
aucccssfully lloatod a loan, had it been d'.'layed till that period.
Tiiniinj,' to Ih-j (iencnil Stateuiont, if the House ^\ill deduct tho
int'.'r .st on pornmnent invcstnionts, which did not exist in the yoar
1H7.'^7•1, the^ will porccive that tho total «,n'oss expenditure for the year
wliipli has just closed, exceeded tho gross expiMiditurc for the yoar
187;M, by barely a few thousand dollars; while if they turn to that
portion of the statoniont which is headed " Ordinary Expftnditure," they
will tind that, whereas in 187.'3-0 our expenditure for ordinary purposes
amounted to $8,509,774, our expenditure in tho last year amounted to
$0.885,078, — in otl^aKords, that the ordinary expenditure was reduced in
that yoar by the sumw$1,734,6*.)0. L" they prosecute this comparison to
1873-4, they will find that in that year the ordinary expenditure amounted
to $8,324,070, and'that our ordinary expenditure, as compared withl873-4^
was loss by $1,488,098. Should they prefer to take the year 1872-8,
they will find that the ordinary expenditure in that year amounted to
$7,002,095 ; showing that our expenditure for 1870-7 was less than tlie
ordinary expenditure for 1872-8 by $227,017 ; — and that, it is well to
remember, in spite of the fact that we have had to provide very large
iimounts 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 expenditures necessarily involved iu the admission of
Prince Edward Island, — in tlio creation of the Supreme Court, and
also, to some extent, by tlie increased population of the Dominion.
tSir, I think that the House will agree with mo that that side of the
statement, at least, may fairly be looked upon as reasonably satis-
factory ; and although it is unhappily true, that in spite of these reduc-
tions 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 ^1,400,000, still —
Several hon. members — Hear, hear.
f
Mr. CART WRIGHT— Do lion, jjentlemen consider it a subject of
raerrimont, a aubject of rojoicing, that a detioit of $1,500,000 has been
incurred ?
Mr. MITCHELL— Of regret.
Mr. CARTWRIGHT— My ear may l»o in fault, but T detected no
tones of regret in the expressions emtnating from the opposite side.
An hon. member — '* Too thin I"
Mr. CARTWRIGHT— I am willing to bsliovo that my hon. friend
from Northumberland (Mr. Mitchell) expressed correctly the feeling of
the House on that side, and that the cheers they have just uttered
are an indication that they do deeply and sincerely regret that
this deficit has not been extinguished ; a thing 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 continual shrinkage
in the introduction of imported goods still, ^|^^^in cause is ne-
cessarily due to the very bad harvest of 1876, Tm^Hho have studied
the position of this country arc well aware that, li^ever important
other interests may be, now and for a long time to conife, the agricultu-
ral 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 prosjjerity ; and therefore that
it is no cause of wonder that an exceptionally bad harvest should pro-
duce such a reduction, or even a larger reduction in the revenue than
that which has actually occurred.
»
Proceedmg now. Sir, as perhaps the most convenient place, to lay
before the House the Estimates which I have prepared of the probable
receipts for 1878-79, I may take this opportunity of saying, that these
l^^stimates, as all estimates prepared so many months in advance of the
time of expenditure necessarily must be, are, as a matter of course,
based on the supposition that we shall enjoy, I do not say an unusual,
imt at any rate a moderately good harvest. Should we be favoured
vith such an one, I think, mider the present tariff, we may reasonably
ixpect, judging from our returns, to receive from Customs a revenue of
ibout $13,750,000; from Excise, $5,250,000; from Stamps, about
^:f;250,000 ; while from the Post Office, which, I am glad to say, shows
8
<lecided signs of improvement, I believe I may safely reckon on $1,200,000,
and on $1,000,000 in all from Public Works, together with receipts —
from various miscellaneous sources, and from interest on our investments,
.(which, as lion, 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 necessarily
inflicted upon us the necessity of incurring a considerable expenditure for
the purpose of repairing the public buildings in that city. At least
$200,000 will be required for that purpose, which necessarily in-
creases the Estimates that I would otherwise have had to submit to
tiie 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, and in order that the House may be fully possessed
of the necessary facts, to review somewhat briefly the position in
which we stand ^fc|t^ as contrasted with the position in which wo
stood some fivoHPFs ago ; and mainly with respect to these
points : — first, J^o our past and present liabilities; next, as to the
causes of the g«flat 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, tha,t those liabilities at that period consisted
of two totally distinct classes ; one being undetermined, and the
other being 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, which we had
become, or were shortly about to be possessed of. 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 Territory, $400,000 per annum has been found to be
necessary ; while the expenditure on our Indian Treaties, as the House
is aware, will requh-e about $400,000 more.
Mr. MITCHELL — Is that over and above the receipts ?
Mr. CARTWRIGHT— From Indian Treaties the receipts are nil,
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, how-
ever, speaking of the additions to the gross expenditure. But to re-
sunw, apart from these sources of expenditure, we had other liabilities
definitely fixed which, on 1st July, 1873, amounted very nearly to $131,.
000,000, computed as follows : for the construction of our canal system,
on the scale at that time contemplated, I find upon reterence to
the Public Works Department, that had those designs been
carried out in then- entirety, a sum of no less than $43,800,
,000 would have been required, includmg, of course, the whole
system of the Welland, Lachine and St. Lawrence Canals, the
deepening of the St. Lawrence, and the various canals projected in
Nova Scotia, on the Ottawa River, and in New Brunswick ; for
the completion of the Intercolonial Railwa^|fPljftlO,000,000 ; for
ine Pacific Railway, a sum of $30,000^0l|||^« estimated by
the then Minister of Finance ; for debts ma^Big the sum of
$35,000,000 ; for necessary expenditures on th^J|p)va 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 ; 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 raised by loan, although it was not all necessarily an addition to our
net debt. To recapitulate, viz : —
Canals $43,800,000 00
Intercolonial Railway 10,000,000 00
Pacific Railway 30,000,000 00
Debts maturing 85,000,000 00
N. S. & N. B. Railways 2,000,000 00
P. E. Island Railway 2,500,000 00
Minor Works 4,500,000 00
Improvements, St. Lawrence 2,500,000 00 *
Advances 1,000,000 00
$131,300,000 00
10
Now the House wUl liest uuderstand the maguitiule of the task then
mpoKCcl, from the fact that this sura is as nearly as possible equal to
the total net mdchtcdness of the entire Dominion, upon the 1st of July,
1877, and at least $23, 000,000 more than the total net indehted-
ueas on the 1st Noveiubcr, 1878 ; tliat it would require, (at the rate of
discount at whicli our ordiiiury loans of late have been made,) seven
successive loans of $20,000,000 each, and lastly, (on the estipaates
submitted by the then Finance Minister) an addition to the interest
paid by this country of $o,8G7,-400 per annum. As regards our present
liabilities upon the 1st July 1878 my estimate is, that, taking into
account only those works which it is really necessary to prosecute, — we
will liave to provide for the completion of the Welland and Lachinc
Canals $5,r)00,0(M) ; to redeem debts maturmg within tl.e next few years
$18,500,000; for the purpose of completing necessary portions of the
Pacific Railway a sum of about $6,000,000 ; for a variety of
miscellaneous purposes a sum of $5,000,000 I think would suffice,
making in all ^^^00,000, for which I consider it necessary to
make provision^^^B^sh loans before 1881. And although there
still remains a ^BJPconsiderable amount of debt which I should like
to reduce, it is ^Vbe noted that payment is oj)tional, at the convenience
of the borrowers^^^
Coming now to the second pomt to which I desire to call the attention
of the House, that is to say to the causes of tlie gi-eat excess of expenditure
which occurred during this period, 1 iind that the causes of the large excess
which marks the year 1878-4 are chiefly due to the following additions
to our annual expenditure. In the first place to t)ie assumption of the
Provincial debts, and the additional subsidy to New Brunswick, amount-
ing 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 of Mr. Tilley's loan, $225,000 ; 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 $800,000 ; to an increase
of 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, aggregating $850,000
to $000,000 and amounting in ah to about $4,000,000, which sufficiently
account for the increases between 1872-3 and 1878-4, and which sum-
marized are as follows.
11
ProvSiBal Debts and Sabffidj, N. B $820,000 00
Aclmissson of Prince Edward Island oOO,000 00
^alf Year's lutercKt (Tilley Loan) 225,000 00
"TosiQffice Expen4itare 800,000 00
iQfficiai IncreaHos.'. 300,000 00
»ublie Works... ' . .* .'JOO.OOO 00
""TTounted Police 200.000 00
Extra SesflipogM^ ; 200,000 00
Treaties. . ..•'Hjp. 100,000 00
Miscellaneous Items 850,000 00
$3,996,000 00
As howerer, at that time there was no doubt cansidcrable difficulty in
ascertaining exactly the result of the expenditure which has been incurred
uuder the legislation I have referred to, it will probably interest the House
to see how the expenditure for the current year w-oulj^ompare with the ex-
penditure of the year 1872-3. I find. Sir, th^|^^^A£ causes of excess
in the expenditure of these two years may flHi^PI^^ as follows : the
Provincial debt and subsidy as before ; Pi^Be ErfflRrd Island, with
the addition of the railroad and steaJHHfl^B$820,000 ; the'
total interest of loan contracted in 187o^PB^00 ; the Post
Office increases as before ; the increases of salary in estimates ; for the
additional working expenses of the Intercolonial $500,000, which was
not necessary or incurred in 1872-73. The total interest on capital
expended on Public Works up to the end of 1877-78, represents an
additional charge of $1,200,000; our Mounted Police, $830,000; and
our Indian treaties an additional charge of probably $830,000 more ;
making a sum total of $5,100,000 of increase as between these years due-
to the respective items to which I have alluded and which detailed are-
Provincial Debts and Subsidies $ 820,000 00'
Prince Edward Island 820,00;) 00
Interest (Tilley Loan) 445,000 00
Post Office Increases 300,000 00
Official! ncreases 800,000 00
Intercolonial Railway 500,000 00
Public Works Capital (Interest on) 1,200,000 00
Mounted Police 330,000 00
Indian Treaties 380,000 OO'
$5,045,000 oa
Without pausing' to discuss this point further at present, I proceed to
consider tlie amount of the absolute taxation now levied on the people of
this country, and also the incidence of that taxation. Taking ijkyjlfej^i'st
place the ordinary standard per capita, the House will observe thaflrom our
present population of 4,000,000 of people, we axpect to receive in the-jBUr-
rent year a gross- llevenue of $28,400,000, lesj about $260,000, ii^^st
accrued on investments made since 1872-78. They will also observe that of
that amount $19, 150,000 are expected to be derived from what may bo call-
ed actual taxation, as compared with about $17,616,000 in 1872-73. It will
be observed therefore, that on our gross Revenue for the year 1877-78, if it
docs not exceed the estimated amount, our receipts i)er capita, would
amount, as nearly as possible, to $5.79 per head, as against $5.86^ in 1872-
7b, allowing for Post Office increase ; while the sum actually paid in
taxes 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 1872-73. Now, I am per-
fectly well aware t hat the per capita standard is only a very partial test of
the actual inciden^^^^^^^on. It may doubtless .lappen — it often does
happen — thatta?jpimP|||||K so levied on a country as to take a very great
deal more out of Bia ,poi[}k^]m of the people, tlian ever finds its way into the
public treasury, S||^|||jMorc that test can only be looked upon as valu-
able, all other co^HBI^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, (Hear, hear),
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 own 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, (Hear, hear.)
But I desire while on this subject to remove from the minds of lion,
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, 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 i)ause to observe that undoubtedlv the taxes that had been
taken oil", or their equivalents, ought to have been re^jlaced as a matter
of sound ordmary 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 cm be said to exist at all.
13
Now, without stopping to talie into consideration tlio effect of certain
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 actual amount of taxation collected from the people of Canada
in 1870-1 or 1871-2, and compare that with tlve rates now levied,
though there is no doubit an addition of two and one-half per cent, on
the general list of articles imported into this country, and a considerable
addition tothedutieslevied 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 former 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, and from the period of Confederation upward, would
have alone yielded a revenue of quite $1,500,000. Now there seems to
be reasonable ground, for believing that thej^l^B of Canada profited
from $1,500,000 to $2,000,000 by the aboUJ^^Bho excise duty, and
the reduction of the duty on coal oil. fP^q^^Rit, however, I do
not insist ; though it is obvious that if you ^|||||^Ktwo sums together
they represent the total amount of the additioHH^BKation, (even if the
imports had continued at tlieir original figure) which would have been
obtained by the taxes I imposed. Neither do I wish to do more tJian
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 one half per cent, barely equals the amount
which would have been collected, had the fifteen per cent, been converted
into a specific duty in 1874. But taking the lowest amount — taking only
the .$800,000 which we know i)ositively to have been saved to the con-
sumers of coal oil by the abolition of the excise and reduction of customs
duty, and adding that to the $1,500,000 which under the old tariff would
have been collected on tea, it will be seen 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 into our Treasury,) whereas
admitting that we collected $3,300,000 from the duties imposed, it is
clear that the additional taxation we are now obtaining from the people
of this country, would be at the outside barely $1,000,000 more
than was levied in the whole period from Confederation to 1873-4,
with the exception of the last year of that period. And it is worthy of
the attention of the House, that whereas the new duties have undoubtedly
14
cliiofly aflVscted articles of luxury, yet as regards these t^Q prime
articles of necessity, the taxes have been very largely reduced indeed.
If the House desires to compare our position with that of other countji^
I think it will find that, although I cannot pretead to say that'oiir
present taxation is light p,r se, yet at any rate it is light as c:)mpared •with
tkat home hy other comitries somen'hat similarly circumstanced. Take
first the case of the people of the United States, and in d.Qiog this I may
observe that it will be quite impossible to institute d^HP^J valuable
comparison, unless in doing so wo take into acooui||||^ot merely the
results of their tariff, but also the xtry great amount of municipal taxa-
tion levied in that country. It is well known to those who pay any at-
tention to American affairs, that the amount of municipal taxation in
the United States has become so great as to constitute a very serious-
drain on ths resources of that country. How great it is will be best
understood from the following simple facts : — A year or two ago the four
great States of New York, Ohio,Massaclmsetts, and Pennsylvania — hav-
ing a total population o||Mtt|i^,000, contributed for iiurposes of local
taxation the sum of $l|^M^^^a year ; while out of 131 cities whose
returns have been published^l^nd that, on a total population of 8,500,
000 the taxes levied an^|gl|HEno less than $112,000,000, and in the cas«
of the City of New Yorkj^BHTtotal population of 1,249,000, and a valua-
tion of $1,111,000,000, no less a sum than $51,000,000 per annum was
levied for municipal purposes, being, a sura quite equal, I believe, to the
total taxation for municipal and federal purposes levied fi'om the whole
people of Canada. I have called attention to this point because I know there
is serious danger lest we ourselves should suffer from this particular evil.
No one can have looked carefully at the vast increase which has taken
place, and is taking place, in the amount of our municipal taxation, par-
ticularly in towns and cities, without being aware that there is very con-
siderable risk that cho almost unlimited powers of direct taxation whicli
have been granted to those bodies, will be grievously abused. Sir, I
trust it will be no offence to the representatives of the various
cities of the Dominion, if I say that city populations are especially
unfitted to be entrusted with such very large powers. The coun-
try population, so far as I know, do generally manage their affairs with
great economy and discretion ; but I am sorry to say that neither the
experience of the people of the United States, nor our own experience
in this country, would warrant us in bestowing any such powers on our
civic municipalities at least. If I may be permitted, on a point which^
15
tliough'not under our immediate control, is very closely connected with the
question under discussion, to express my own individual opinion, I would
say there is urgent need that the power granted to those municipal hodies
-sk^d be rigidly restricted, and I believe it will bo found far
truer in principle, fidid far more conducive to their real interests, if they
were confined to taxing certain subjects strictly selected, instead of, as
at present, permitting them to tax all kinds of property leas certain ex-
■eeptions. Lurge tliat restriction not only in the interest of the property
holders, who nre generally well enough able to take care of themselves,
but more particularly in the interest of the poorer classes of the popu-
lation. Always and everywhere when municipal extravagance has oc-
curred, I think it will be found that the poorer classes are those on
whom, in the long run, the chief part of the burden invariably presses, and
that they have to pay for the follies of then- municipal governors in al-
most every conceivable way, but notably in bad air, bad light, bad
water, bad lodging and in increased dearness, not only of food, but of
<every necessary they require. No one can read the history as revealed
by the reports of the 8tate CommissiorffliPlpd the State Courts, of
the great mismanagement which exiwM for Ipany years in the city
•of New York under the Tammany Ring, and me report of the Board
of Sanitary Commissioners for the City of ^|||BBiork, without perceiving
that the consequences of that civic mismanagement have been di-
rectly visited on large portions of their population. I was not aware
myself, until I had the opportunity of perusing that report, that in the
<]ity of New York at this moment the number of people to the square
mile, is said to be very nearly double of that which exists in the most
•crowded localities of East London, — the population in New York being
stated to be as nearly as possible 290,000 to the square mile in certain
localities, as against 179,000 which was the greatest density attained in
the City of London. I need not point out to those gentlemen who have
visited personally these regions of large cities, what an amount of misery
is contained in that simple statement. I would only say that although
tthere are do doubt particular circumstances in the case of New York,
which have brought about that unfortunate result, yet I believe two chief
•causes will be found in the fiscal policy, or rather in the fiscal impolicy
■of the United States, and in the grievous mismanagement which has so
long disgraced the civic government of that city. Although it is true
that this matter is not directly within our province as a legislature,
yet no consideration of the question of the incidence of taxation in Canada,
.or the United States can be held to bo complete without ascertaining
Hi
the umount of municii al taxation laid ou the people ; and moreover, I be-
lieve that it has become time for us in our individual capacities, at all
evcuts, to exert ourselves to see that the requisite remedies be applied
liere, if we would avoid the mischiefs which have undoubtedly ^^^sly
affected the resources of the United States. ^W^
Sir, I will not attempt to make any precise estimate as to the effect of
the United States tariff. That is a point upon which, I can well under-
stand, many difterent opinions will be expressed, bu^jggainly, I may say
that althougli their tariff is, at least, three-fold oubWIr levenue did not
show any greater receipts per head from Customs duties under its opera-
tion, and that I believe that Mr. David Wells, no mean authority on the
subject, is within the mark in asserting, as he lias done, that the people
of the United States are annually paying $400,000,000 or $500,000,000
in taxes under the operation of that tariff, of which scarcely one third
finds its way into the public coffers. I have had difficulty in ascertain-
ing, with sufficient accuracy, at what amount our own local taxation
might fairly be put down ; but I have succeeded in ascertaining the
taxation paid in the JH[^^^ t)^ Ontario, which appears to amount to
.^5,600,000, and I thiHI^fn^even allowing for the taxes imposed by
local Assemblies in ofeheif Provinces, I shall not be far astray if I put
down the local taxatillHJHie rest of the Dominion at a sum not exceed-
ing that amount. In doing this, it will be observed that no account is
taken of the receipts from Crown Lands, or for the sums paid by the
Dominion Government in the way of subsidy. But if that computation
can be allowed, and I think, without wearying the House with details, it
will be found sufficiently accurate for practical purposes, you will have
this result, tliat the taxation for all purposes borne by the people of the
Dominion of Canada, is iirobably^^barely one-third of the taxation inflicted
on the people of the United States under the operation of their municipal
system, and of their tariff", and in any case is barely one half of the sum
which we know to be paid by them in hard cash ; while as compared
with the British Islands with their present estimated population of
V about thirty-three millions, paying in what are known as the Queen's
taxes, about £66,000,000 sterling, our taxation may be fairly computed
as barely one-half. And although it is doubtless true that the wealth of
the people of Great Britain is vastly greater than ours, and although
their powers of raising money by way of loan far exceed ours, still it
oughtto be borne in mind that the distribution of property in Canada is very
much better than it is in that country, and therefore that the power of our
j)opulation to bear a fair amount of taxation without serious inconvenience,.
17
is probably quite as gi-eat as that of the people of Great Britain. I
think, too, that even in these hard times I am correct in stating that
with the exception perhaps of some portions of our large cities, there is
no diskict of Canada at the ))resent time in which there is serious
risk otway considerable portion of the people being stinted in the absolute
necessaries of life, and, therefore, I j.^u justified in saying that although
our taxation is rather heavier per sc than might be desired, yet that
on comparing iys^ that imposed in other countries somewhat similarly
circumstanced, ^^Ry fairly be described as endurable, and even by
comparison, as light.
Now, under these circumstances, it may not unnaturally be asked
by some members of this House, whether it would not be advisable, in
view of the fact that we have now had for two years considerable deficits,
to adopt such preen utions as would render the existence of another
deficit practicably impossible. Well, sir, I would say at once, that if
we possessed in Canada any to : equivalent to the income tax now in
use in England, probably, I would not hesitafiS^te advise the House to
have recourse to that means of increasing tfifeRevei^e — that being a tax
which can be raised or lowered with a minmtna ©f disturbance to the
commercial interests of the country. But, as ^HPinatter stands, I feel
it is important to call the attention of the House and the country to the
fact that, although we have unfortunately had two successive deficits in
the last two years, still it is equally true that a very large proportion of
those deficits has been composed of the sums annually devoted to the
Sinking Fund, which, I think the House will agree, makes an important
difference in considering the situation. In these two years our total
deficits have amounted to |8, 861, 000 but of that sum no less than $1,650,-
000 has been invested in the reduction of our debt, and the consequence is
that the net increase of our indebtedness in those two years is, not
$8,361,000, but barely $1,700,000 all told. Apart from this, I thmk,
+hat the combination of adverse circumstances which sunk our Revenue to
the extremely low figure of $22,000,000, is omc which is not likely to recur,
and, further, that there are reasons for expecting a moderate and steady in-
crease. Under any circumstances in this country, while the population con-
tinues to grow asweknowthatitis growing, while we continue from year to
year to add a very considerable amount of virgin territory to the area of
arable land, I think there is ground for expecting, from that source alone,
a considerable augmentation of our revenue. Now, so far as it is possi-
ble to ascertain the facts in a matter of this kind, I am inclined to believe
8
18
tliftt, one year with anocher, from SOO.OOO to 1,000,000 acres of new
laud arc almost always annually brought into cultivation in this
country — undoubtedly an amount which, in a poriod of six or seven
years wiU Hecure a considerable permanent augmentation of t^^roducts
of the Dominion. Moreover, it is not to bo lost sight of, tb|H|fe great
advantages of our position, and, in some respects, of our climate arc
beginnmg to assert thcroselves ; while, au every body knows, the enor-
mous improvements which have, of late years, l)Qen made in the trans-
portation of freights, have reduced the cost of truapportrng our products
from one side of the Atlantic to the other to so low a figure that tliero
appears good ground for expecting a very large and steady advance in
our trade in that direction. I believe that I am strictly accurate in
saying that, at tliis present time, almost every one of the more valuable
products of the farm can bo transported from the furthest point of Ontario
east of Lake Superior, to the City of London, at a cost varying from
one farthing to one half-penny sterling per lb. And altlioiigh it may be
true, that at present a very considerable proportion of the profits is
mtercepted by the^M|||^ middlemen engaged in the transportation,
still, if that rate of Cmifntmn be maintained, — and I see no reason why it
sliould not, — it muTHR obvious to «very hon. gentleman tliat an almost
unlimited field is (^|Pko the enterprise of om* agricultural population,
of which there are many cheering signs that they are heartily disposed
to avail themselves.
It is true, on the other hand, that it is impossible for us, a small
people of about four millions of souls, placed in direct contiguity to the
United States along a most extended frontier, not to be seriously affected
.by the fiscal policy they have chosen to pursue. I have never maintained
that the Dominion of Canada was not mischievously affected by the
policy of the Americans, but at the same time I say not only that I do
not see in their folly any reason for imitating them, but that they them-
selves are beginning to admit that they have made a very grave and
serious error, and that there is a very strong disposition to retrieve the
mistakes they have committed ; and further, that they have become con-
vinced, as far as Canada is concerned, that their policy has resulted
only in driving us to seek other markets, and in depriving themselves
of the middlemen's profits they would otherwise have enjoyed. No
doubt we have sustained a very grave direct loss from the fact that the
United States were formerly one of our very best customers, and that
it is impossible for 44,000,000 of our best customers to be suffering
from prolonged depression without seriouly embarrassing a largo
19
mimbor of om* own people. It is woU kiio\vn that, wliolly apart from the
direct loss, wo have also siistaiuetl Horious indiroct Ioshos — as, for ex-
ample, the loss of the profits many of our banks wore in the habit of
ileriviug from American trade, and what is perhaps as serious an item,
the los4^Bhe largo purchases at one time made in Ciuiada by American
travelleri^|||
Thore is, in addition to those considerations, another
of considerable moment which 1 desire to present to the IIouRe.
There can be no doubt, that the very serious disproportion which
exists between the fixed charges on our revenue and the sum which
remains more or less under our conti'ol, hiis become a matter requiring
very grave consideration indeed. Out of a total nominal
expenditure, in round nuKibers, of $23,500,000 mo less
than $11,500,000 are devoted to payment of Interest, Sxuking Fund, and
Subsidies to the Provinces, and must be considered as absolutely a first
mortgage. Of th« remainder, about $5,500,000 of the Charges on
Revenue must either be regarded as cross-eiitnes. which cannot be
removed from one side without blottmg them o0KfMbe other, or as being
to all intents and purposes practically a mortgage a«B. It will be obvious
tliat the balance of about $7,000,000 which remai(i# at our disposal, is
not only a very small field in which to exercise auy great economy, but
barely sufficient for the purposes we expect to discharge therewith. At pro-
sent, now that the various services have been cut down to the lowest point
consistent with efficiency, I see no reasonable ground for expecting that
we shall be able to reduce the expenditure on Justice and Peniteutiarie*
below $1,000,000 per annum, or that of Militia and Maintenance of the
North-West Police below a like amount, or that much less than
$1,000,000 can be voted for Public Works, while at least an equal sum
is required for Fisheries, Lighthouse, and Ooast service and other similar
matters. For the service of our Indians a sum of nearly $500,000 is
wanted, nor can the Immigration service, if maintained at all, be con-
ducted for much less than $250,000 annually, including Quarantine.
For Miscellaneous Expenditures about $250,000 is required, making a
totalof about $5,000,000, out of about $6,750,000, which cannot be
reduced, and leaving for Legislation, Civil Government, Pensions, and
Superannuation, a sum of $1,750,000, in which last items possibly some
reduction might be affected. I do not say that further economy is absolutely
impossible, nor that further taxation might not be borne, but I do say
that to push economy further, unless indeed '^ve submit to very important
20
altcratioiiH in our present constitutional syHtora, woukl be both difficult
and of doubtful expediency ; while increased taxation, if carried to any
considerable extent, raiRht defeat its own object, not only by stopping
the growth of this country, but also by the well-known fact that, jfcj^ou
raise the ta^es above a certain point, you are always suro tfflPfefeat
yourselves either by diminishing consumption or by encouraging
Hmuggling, as we have more than once discovered to our cost.
All things considered, therefore, I am dipposed to advisa that we
should delay the consideration of the question whether it is desirable to
impose any further taxes on the people or not, and I do this for these
several reasons — first, because, in spite of all that is asserted to the
contrary, it appears to me that there are evident signs of improvement
in the general Revenue, and the ganeral condition of this country ; in
the next place, because I believe that the receipts for the year 1876-7
were decidedly below the ordinary average ; because, the deficit being
largely composed of the Sinking Fund, is not nearly so formidable as may
appear at first sight ; be^^e a very congiderable portion of the outlay
which we are annuall^HRRing, although properly chargeable to the
Consolidated Fund, isTpade for objects which may fairly be regarded as
approaching the characllv of expenditure on capital account ; because the
amount of the liabilities, which it is absolutely necessary for us to meet,
has been vastly reduced ; and because (which is perhaps even more to the
pm'pose) the issue which is about to be presented to the country by the
two political parties of the day would involve, if decided against us, so
great and radical a change in our whole fiscal system and our mode of
collecting the revenue, that I desire that the voice of the people should
be heard on this question, before committing ourselves to any further
alteration in the existing tariff.
Now, without desiring to stir up unnecessary controversy, I think it
is as well that the House should understand clearly and distinctly what
that issue is, and how violently our policy and that of the hon. gentle-
men opposite is contrasted in this matter. I find, sir, that the hon.
leader of the Opposition a very few months ago, in descanting upon this
question, made use of the following words : —
** Gentlemen, you know that Canada from East to West lies within
•*' the same degrees of latitude, and does not produce a great variety of
^' crops. From the Atlantic to the Pacific the country is subject to the
*• same climatic influences, but the United States, extending from the
81
*' lakes to the Gulf of Mexico, possesses a variety of climates. In
" Caaada, however, if by an unfavorable season the crops are scanty,
** we are witliout such resources, and then the farmers of the United
■" Bt(|i|s pour in their produce upon us, and we are defenceless. You,
** {thej^rniers} who, in an umjenial season, miijht i/et $ome recompense for
** scanty crops in the enhanced prices they woxdd briny, find that hope yone
*' from you. Even the little liarveat the storms hace left you, you find value-
*' leas wJien the products of the Western Statss are poured into the nuirketa of
** the Dominian. Shtdl we suffer in this way / Shall we not say, Cancula
*' is for the Canadians, and. protect our markets for ourselves f Shall we
*' not say, if we have a short crop oxtr own jyeople shall consume it, and pay its
** a fair price for it; ami if we have a larye crop, let us not only luive our own
** markets, but the distant markets of Europe, and let us say to the United
*' States, — 'We allow you to send the products of your country into our
** nmrkets, let us have the same privileye, and send ours to your own.'" That is
the policy of the Opposition ; that is the policy which my hon. friends are
going to fight to the death.* Let us trust that it will not bo the death
of any unhappy wretches who may be '-^f^ected to make good the
dej&ciency of the crops. Now, it is desirable to^oint out that the doc-
trines avowed in this speech have been endorsed within a very short pe-
riod, by, at any rate, the Ontario representatives of that party, as I
find that at a very recent conference certain resolutions were published
as indicating the programme of the Opposition in Ontario on that ques-
tion, which read as follows : — " 1. We are satisfied that the welfare
*' of Canada requu-es the adoption of a national policy, which, by a
" judicious readjustment of the tariff, will benefit and foster the
" agricultural, the mining, and the manufacturing interests of the
** Dominion. 2. But no such readjustment will be satisfactory to the
" interests affected or to the country if adopted as a provisional mea-
'* sure only, to meet a temporary exigency or to supply a temporary
" deficit, nor unless it is made to be carried out as a national policy, and
" not until reciprocal trade is estabUshed with our neighbours. 3. Canada
" should move in the direction of a reciprocity of tariffs so far as her
" various interests may demand. That it is the duty of the people of
" Canada to force upon the attention of the Government and Parlia-
'* ment of the Dominion, the necessity of carrying out their views, and
" to withold or withdraw their confidence from any Government who
** may fail from want of will or want of ability to enforce them by
•' legislative enactment."
* Extract from speec'i of Sir J. A. Macdonald, at Burj-.
22
Now mj object at present is noitlier to oominoiit on this remarkable
speech, nor on those remarkable resolutions ; but to draw your attention
to the fact tliat they involve an absolute coutraclietion of the policy laid
down by this Government. The position taken up by the hon. ge^e-
men of the Opposition is, as I understand it, this — that it is in the power
of the Government to increase the collective wealth of the country by
increasing the taxation, and that they can enrich the community collec-
tively by taking money o*t of their pockets. It may be so. On the other
aide, our position, which is equally clear, equally well defined, and one
for which we are at least equally willing to fight to the death, is this, that
all taxation, however disguised, is a loss per ie, that it is the duty, and the
pacred duty of the Government, to take only froKi the people what is neces-
sary to the proper discharge of thepublic service ; and that taxation in any
other mode, is simply in one shape or other, legalized robbery. No
doubt, Sir, there is this misfortune in our present position, that we are de-
barred so long as our revenue continues m its present state from attempting
many things which I should be glad to see attempted. There are valuable
improrements which the Goy^^rnment are not able at present to coasi-
der. There are valuable .^.uggestions made, from time to time, which w«
would desire, if our circumstances permitted, to carry into effect. We
are obliged, no doubt, to abstain from doing tkese things, but when we
are told, after having to contend with the difficulties we have met with,
that we are wrong for not attempting to do more, I must venture to entw
a protest against such censure. Sir, to condemn us in the present state
of our finances, because we are unable to undertake new enterprises, is as
imreasonable as if the passengers were to rise in mutiny against the cap-
tain and crew because they were unable to make progress towards their
port while obliged to lie to in a storm.
Passing from this subject, I may observe that the
year which has just closed is remarkable for another reason ; it
completes the first decade which has elapsed since Confederation,
and it may not be altogether amiss to spend a few moments in:
reviewing generally, the financial history of that period. Looking
back to 1867 and looking at our condition at present, I think,
Sir, that all candid persons will admit that two things are pretty clear. One
is that the resources of the provinces originally confederated were ample
to enable them to carry out all that was then undertaken, and perhaps
even to engage in considerable additional enterprises. But another
thing appears to me equally clear, that when we undertook risks which-
23
no conntry in our situation ought to have undertaken, wo unfor-
tunately attempted too much and thereby seriously imperilled the
•existence of our young community, and that the consequence lias
he§n an increased expenditure so startling and rapid, that it may well
-caitlte the most inconsiderate amongst us to reflect. (Hear, hear.) Taking
our starting point in 1867, we find that whereas the total outlay amounted
in that year to barely $13,500,000, in the course often years it has
swollen to $23,500,000 being as nearly as possible an increase in that
period of $10,000,000. And what is even more important, after making
provision for the increased liabilities thrown upon us, we are unable to see
any reasonable prospect of reducing it below that limit. It will not by
any mnaus be idle for me to point out to the House the mam items which
have caused that increase from the date of Confederation. In the first
place, I find that the interest on the capital expended in constructing
tiie Intercolonial Railway, and the expenses of workhig it, appear to
represent no less a sum than ^2,400,000 of that increase. I find that our
total expenditure for the Northwest including Indian Treaties, Mounted
Police, and also the interest on the purchase of the territory — amount
to about $1,000,000 per annum. The interest on the sum expended for
the Pacific Eailway, and also the charges on account of British Columbia,
amount to $1,000,000 more. The Interest on the other Public Works
represents a further sum of $1,000,000, while the assumption of Pro-
^viucial debts, and the admission of Prince Edward Island represent
$1,640,000. These five items, it will be observed, represent the largest
portion of tha total increase. Now, allowing for all receipts,
•.this represents a dead loss, so to speak of about $5,000,000
per annum, which, if capitalized, would represent an addition to our gross
indebtedness of $110,000,000. Of the balance of the increase, no doubt,
a certain portion may be fairly set down as a cross entry, which should
uppear on both sides of our account; and a certain other portion is due
to the increase of population since that period above named, while the
remainder is made up of a number of miscellaneous items, to which I
shall not now call the attention of the House.
Taking the whole situation altogether, I think we may fairly say
that the expenditure has at last been brought within bounds, and that
after allowing for the increased population and the increased progress of
the country, there is reason to think that the per capita expenditure need
not be much increased ; still it is equally clear that our task at this
moment is one of a thankless character. Our position presents certain
24
very peculiar features, and although our absolute taxation per capita is
probably less than it was a few years ago ; although the incidence
of that taxation is much the same — or at any rate, has not ap-
preciably increased, — and although the general mass of our liabiUties
is vastly less than a few years ago, I must frankly admit ^'Ihat
a very excellent financial position has been flung away ; that the margin
in which to exercise economy is exceedingly narrow ; that the power
of imposing fresh taxation is limited within comparatively narrow
bounds ; that economy has been pushed to the very verge, unless, as I
said, we agree to some considerable alteration of our system. And I
must also admit that the danger to our future position from any con-
siderable imprudence would be very grave indeed. (Hear, hear.)
Now, Sir, as to the question of largely increased taxation, it ought
not to be forgotten by the House, that in our position there
are considerable dangers incident to any largely increased measure of
taxation. In the first place, I think it will be found th ;i unless taxa-
tion is imposed for strictly revenue purposes there will be considerable
danger of quarrelling among ourselves. There is no doubt that in this
Confederation the interests of some portions of the people
might appear to diverge, and if it were seen that the Parliament of
Canada was wantoily sacrificing the interests of any portion of the
population, I need scarcely point out that it would give rise to serious
dissatisfaction. (Hear, hear.) I may also add that I do not think it
wise on political grounds to assimilate our system to that of the United
States, even if there were no other objection. I believe that any large
measure of taxation would grievously impede true industrial
progress, and would have a tendency to divert the
people from more productive to less productive occupations.
Then there is no doubt that the effect of an increased
tariff would grievously demoralize the mercantile community, and pro-
bably would lead to extensive smuggling among large numbers of our
own people. On the whole, I may say that the general results of
the last few years have been fairly good. A large mass of Public Works
have been prosecuted to completion, or are within a short period of com-
pletion ; a veiy considerable portion of our debt has been refunded, and
the expenditure hitherto increasing by vast and rapid strides,
has at last been brought, let us hope, to a halt. Keiatively to the in-
creased population, I may add, our expenditure has been considerably
decreased. If the House were to deduct from the expenditure of last
yeai' the sum accrued on interest-bearing permanent investments
25
aud also receipts from railways not formerly in operation, it would ap-
pear that whereas in 1873-4, with a population of 3,750,000 we were
obliged to expend $23,316,000, our present expenditure cannot be con-
sidered as much over $22,500,000; in other words, if measured per
capitu, our present expenditure is only $f^:62 as contrasted with$G:22 in
1873-4 and therefore it follows that relatively to our population, and mak-
ing those deductions which I think it would be only reasonal ' ■ to make,
the affairs of Government are now being conducted something like
$2,000,000 per annum cheaper than they were in the year last named.
I repeat, therefore, that in such case it appears to me to be our wisest
policy to adhere strictly to a revenue tariff, and to advance steadily, but
cautiously, with those important Public Works which cannot be delayed
without serious ]pubhc injury; also, to fulfil so far as we can the en-
gagements we have entered into — on this proviso, however, that those
engagements must not be allowed to imperil our general position, or to
endanger the future of the whole population of this country. I do
not pretend to say, that all risks are past ; but I think that I am justified in
saying that the amount of those risks, at any rate, has been very con-
siderably lessened. I do not look for any sudden expansion ; I can hardly
say that I desire any very sudden expansion ; but I do believe that we
may fairly count on a steady and gradual progress, pi a as we know by
past experience has rarely failed to exist in Canada, even under circum-
stances quite as disadvantageous as those with which we are now con-
fronted. Such, Mr. Speaker, are, as far as I understand, the questions
now before the coimtry. It will be for the country to decide what
particular fiscal po'icy it may please to adopt, and it will be for this
House, or for their successors,
Several hon. members : (Hear, hear.)
Mr. CARTWRIGHT — Or for their successors to decide how that
particular policy shall be enforced. I would, however, remind the
House, and remind the country too, that a very great deal will depend,
undoubtedly, on their action now. Our power of refunding our debt
on reasonable terms, and our power of thereby diminishing our annual
expenditure, will be largely governed by the opinion that foreign capital-
ists may entertain as to the prudence and economy with which the
affairs of this country are being managed. There appear to me to be
two courses open, one, the course which I have indicated above, and
which the Government intends to pursue ; and there is the other eouise
which I would fain hope we shall not see adopted, — the course of in-
4
26
(luiging again in foolish enterprises, the course of again indulging in
engagements of which we have not counted the cost, and of imposing an
undueamount of taxation, in the vain hope that we shall thereby be able-
to give a false stimulus to the present depressed condition of the country.-
Now, I think that no hon. gentleman who has either attended to'
my remarks, or who has been at the pains to make himself fairly well'
acquainted with tlie general position of this country during the past few
years, will be disposed to dispute my statement when I say that our
position in 1874 was, as we can now see, of a very perilous
^aracter, and that, whatever dangers may await us, they
are, at any rate, very greatly less than those which we had to-
encounter then. Sir, at that time, it was well known that the inflation
had been considerable ; it was well known that a re-action was inevitable;
we could not measure its extent — we could not tell how far it would go —
but I do not believe that there was one merchant, one manufacturer, or
one individual of aay ordinary prudence engaged in ordinary comnercial
transactions in Canada, who did not feel that the expansion had beeu be-
yond all reasonable limits, and that there was very considerable danger
of a re-action ; and I venture to say lat if there liad been any [delay on
the part of the Government in imposing the requisite amount of taxa-
tion, or if there had been any failure in floating the successive loans
which we were obliged to place on the English market, our position
would Imve been very dangerous indeed. I may invite the attention
of the House to the fact that it is rarely that any Government has been
called upon to deal with such a convergence of risks, occurring simulta-
neouoly, as we had. We had at one and the same moment to face the
injury to our credit, necessarily arising from considerable deficits ; we
had to provide large sums for carrying on important Public Works in
many quarters of this Dominion ; and we had to provide for large
amounts of debt maturing, which it was absolutely necessary for us to
pay. We had to do all that at a time when, in addition to the special de-
pression which existed in Canada, a great and imiversal commercial de-
pression had overspread almost the whole world ; at a time of grave poli-
tical disturbances, a time when, for certain reasons, there was a great
and unusual distrust of foreign loans, and I may say an aversion to deal
with any form of security not previously introduced. Now, Sir, although
it is true tliat we have escaped — although we did succeed in maintaining
our credit — although we did succeed in negotiating our loans — still, I
am bound to tell the House that our escape was a narrow one ; and the
27
House will understand that I have good reason when I say that I dread
rashly entering into any new engagements.
Sir, we have had two warnings, which ought to suftice, I
think, for any people. How it may have been with my friends in the
Maritime Provinces I do not know ; but I do know that the people of
Ontario and Quebec, at any rate, ought to have remembered better than
they appear to have done, the very grave warning which they fhould
have received from the events of 1854 to 1857, and the subsequent de-
pression which ensued. Every one who had studied the commercial
history of this country, knew that the period of extreme expansion which
occurred then was followed by a eorreeponding period of very prolonged
depression, as, indeed, might naturally have been looked for. Almost
identicall/ the same results, arising from causes of a very similar char-
acter, prevailed between 1870 and 1873 ; and although I think we shall
on the whole escape better than we did at that time, I should not be
doing my duty here if I did not call attention to the fact that we entirely
neglected our former warning, and endeavour, as far as in my power lies,
to impress on the House and on the country the necessity of being more
cautious in the future. I hold that v committed the very common
orror of grasping at far too much ; a pardonable error, perhaps, but
none the less a grave error, particularly in a country circumstanced like
ours. I would have us recognize and redeem that error, not by idle
murmurs at the past, but by submitting as patiently as we may, to the
needful and necessary privations which must always follow the re-action
from such an extreme expansion. If we are only moderately prudent,
I believe that a very short time will see the end of it. I believe that we
possess, after all deductions made, in our great western country — a coun-
try, which when developed, will certainly add very largely to our national
resources. I am willing for one to incur considerable risk ; I am
willing to submit to considerable privation for the sake of developing
that magnificent heritage. At present, as far as I can see, — although
the worst of the storm is past — wo are still on the ground swell
which remains after it. At present so far as I am able to understand
the situation — although it is perfectly true a very considerable amount
of depression prevails in commercial circles — I do not think the main in-
tei-ests of the country, with the exception of the important interest of
lumber, are at all in as depressed a state as it would apparently please
some gentlemen in this House to suppose. In all these cases, I think
wo lay lay it down that the effect will almost of necessity outlast
28
the cause. Just as in former years, the spirit of extravagance which
had got possession of our people, and which led them to import vastly
more goods than they required, continued to exercise a powerful effect long
after the prosperity itself had departed, so I think now the counteracting
influence is having its effect, although the cause is beginning to pass
away. If, Sir, any excuses were to be made for the increased expenditure
to which I have alluded, I think they might be fairly found in this, that
the whole community appear to some extent to have gone mad together.
Nobody can look at the enormous expansions which took place in the
years I refer to ; no one can look at the speculations of every kind and
sort that were entered into — without seeing that we had necessarily
prepared for ourselves a period of very considerable depression. Unfor-
tunately, that madness had become so universal, that as we know to our
cost in many portions of the country, not only have those who deserve to be
weeded out, been weeded out, but just at present the loss falls almost more
heavily on prudent and cautious men, who had managed their own affaii's
well, and who are brought into difficulties, not by their own fault, but largely
in consequence of the insane competition to which they were exposed on
the ijart of persons who ought never to have been entrusted with credit
or with capital at all. I have no doubt that a great many men of sub-
stance are paying in purse and person for the undue facilities with which
credit and capital have been obtained by men of straw, and that
is, in my opinion, one great cause of the commercial difficulties under
which we now labour.
In conclusion, I desire to be clearly understood, I do not at aH
pretend that the present Government have been faultless in their conduct
during the last four years. (Hear, hear.) I do not at all pretend to say
that they have committed no errors or that their conduct of affairs has
been absolutely free from blunders. I do not mean to say tliatno expen-
diture has been incurred which could have been avoided. To make such
a boast would be to expose myself justly to the jeers of hon. gentlemen
opposite. I do not claim that we have been infallible, and far less
would I say that they have been infalliblev Bu^ what I do assert is,, that as
the Public Accounts show, reasonable dihgence, care and prudence have
been displayed by this Government. I assert that taking into account
the difficulties with which we have had to contend, those difficulties have
been on the whole well and fairly met. I say our perseverance in the
policy which we chalked out is gradually extricating us from those diffi-
culties — difficulties not of our own making, but difficulties with which
we have had to contend. I say, that that has been done with pro-
29
bably as little hardship to the people of Canada as could possibly be
inflicted on them. Their taxes have npt been unduly increased, [and all
reasonable efforts have been made to lighten the burden upon them, so far
as it could be done by a redistribution of taxes. I say, that this
lias been done without having recourse to any hazardous experiments of
any kind whatever. I say that our credit has been maintamed, and
more than maintained. I say that the rate of interest on our debts has
been considerably reduced, that the expenditure, which had increased at
the rate of ten millions in seven years, has been at last kept stationary,
and that relatively to our population, and still more, relatively to the
services we have been obliged to discharge, that it has been very con-
siderably reduced. 'I say that under all these circumstances, great works
have been carried on, and that those works have been car-
ried on, for the first time, I believe, in the history of our
country, in such a way that they have not exceeded the estimates origi-
nally prepared. Sir, in moving that yon do now leave the chair, and
that tlie House resolve itself into a Committee of Supply, I venture to
say that the record submit \ in the Public Accounts, is not a record of
■which this Government or Oi|Which their supporters in this House, or ia
the country need be ashamed. (Applause.)
80
.A-i^i^EisriDix:.
o-
"ExTRACT from tlio ^lossago tlclivcred by tho Governor of ilie State of
New York, to tho Lcgi.slaturc of that State, — Albany, January, IS^S.
" Tho depression in all branches of trade, business and manufac-
" ture, and tho wreck of our too numerous railroad, mining, iron a^id
" milling ventures, /um-e thrown out of miploji a vast number of lahonnnij
" vien, who, without fmiU of their own, are now nufferiiyj otvti'erns want.
" While, it is true, that legislation can do little for their relief, it is well
" to understand clearly the causes which have led to their distress."
After noting, as one of th3 causes of this state of things, the currency
inliation in the States, the Governor went on to say : —
" At the sarao time another groat evil was strongly developed.
' Individuals and coi-poratious engaged in the various branches of
' manufacture, taking advantage of the necessities of the Government,
' rushed to Congi'ess and, by every means in their power, procured, each-
' for its own benefit, tho levy of what were 'called protective duties,
' under the false pretence of raising revenue for the Government, but
' really to compel consumers to -pay exoihitnut prices for the favored article^
' ihua protected. Under the wing and stimulus of this so-called protection,
' new enterprises were undertaken ; new and extensive factories built ;
' new and needless railways projected and undertaken ; new mines
' and foundries opened, and armies of laborers allm'od by high wages to
* these enterprises from fields of agriculture and other sober and rational
' employments of life. The few notes of warning raised against the
' certain consequences of this wild overaction were unheeded. Bxti'a-
' vaganoe of expenditure, the absence of everything like frugality and
' economy obtained in all directions. The empty and delusive bubble
' thus raised could not endure, and although kept afloat by the whole
' power of the Government so long as it was possible, it met at last the
* inevitable day of doom. Imaginary fortunes vanished in a moment,
' ill-advised railway schemes, mineS; mills and factories were suspended,
* and tens of thousands of innocent and unfortunate laborers were left without
' employment or the means of subsistence. Instead of the high loagee by
* which they had been enticed from other ocoupatrons to these &ntffrpristi:<,
' they receired 7»o wmges at all.
81
•* It is easier to discover the cause of this distress than to point out
" the manner of its relief. There can be but one permanent and effectual
" remedy. That is to return as speedily as possible to the condition of
'• things that existed before the road to ruin was entered upon ; by
" means of a return to specie payments, a sound and stable currency aad
" the reduction of the tariff to a strictly revenue standard.
" Under the influence of these measures all branches of industry
•* will assume their old and accustomed regularity and success. All
" departments of labor will call for employes, to whom such wages will
" be paid as the business will warrant and the parties can agree upon.
'* If a surplus of unemployed laborers still remains there are open to all
" in tliis great country coimtless millions of fertile acres of land upon
*' which every industrious man can be sure of securing, for himself and
" family, at least a comfortable subsistence. One of the gi-eatest evils
'* resulting to the laboring man, from the false and delusive appearances
" which have been displayed before them, is that they have been in-
" duced to leave the safe, peaceful and independent walks of agriculture
" to congregate in the large 'uties, and there to watch and wait for
" something that they fancy might jdeld them larger retm'ns tlian they
•' could hope for from the cultivation of the soil. But, by following
* * faithfully and earnestly the road here indicated, it will not be very long
" before business and trade will be restored to their natural chamiels,
** and laborers receive full employment with fair wages."