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SPEECH

OK THE

HON. R HARCOURT.

TREASURER OF IHE PROVINCE OF ONTARIO,

DELIVERED ON THE NINETEENTH DAY OF FEBRUARY, ,.

IN^THE LEGISLATIVE ASSEMBLY OF THE PROVINCE OF

ONTARIO, ON MOVING THE HOUSE INTO

COMMITTEE OF SUPPLY,

TORONTO:
WARWICK BROS, & RUTTER, Printers, Etc., 08 and 70 Front St. West

1896.

INDEX.

Appendix
Assets . . . ,

Analysis of succession duties

Annuities, sale of

Arbitration proceedings

Appeal by Dominion dismissed

Brewers' licenses

Common school fimd

Estimated receipts, 189G

" expenditure, 189()

Expenditures, 1895

Indian claims'

Immigration expenditures

Liabilities presently payable

License receipts

Legislation, increased cost of

Ontario's appeal sustamed

Other claims by Dominion disallowed

Printing and binding, 1891-1895

Public institutions' expenditure

< Quebec's claim disallowed

Ileceipts, 1895

Reduction in yearly expenditures . . . .

Railway aid certificates

Satisfactory results re awards

SucceBsion duties ,

Successful sale of annuities

Second award

»iurplu8

PACK.

45
40
14
17
29

If)
3()
42
42
21
32
34
41
15
23
33
35
24
2t)
37
7
28
45
39
10
19
32
41

FINANCIAL STATEMEINT

HON. R. HARCOURT,

Legislative Assembly,

Toronto, 19th February, 1896.

Me, Speaker, — Honourable members will not be surprised when I
say at the very commencement of my address concerning the
finances of the Province in general, with special regard to our present
position, and to the operations of the year just closed, that I do not
expect for a moment to be able to present to the House anything
either new or of unusual interest.

Honourable members are so familiar with every detail of all our
unaiiuial questions, so full and complete is the published information
placed in their hands from year to year ; so ample are the facilities
which each Session affords for detailed criticism, investigation and
enquiry, that it becomes proportionately difficult to impart to the
subject, important though it be, either novelty or interest. I do
hope, Sir, however once move to be well able to satisfy the House
completely, and the Province at large as well, that our financial con-
dition now, as always heretofore, is exceptionally sound and satisfac-
tory, and that while our aflfairs have been uninterruptedly adminis-
tered with what I may well call courageous economy, we have, at
the same time, in no sense disregarded those reasonable well-founded
claims for increased expenditures or for new expenditures which
our growing needs from time to time demand.

It would be an easy task for me, Sir, to show that in this regard
this Province stands conspicuous and alone ; that it is admitted on
all sides by men holding high place and position in both political
parties in the sister provinces, and elsewhere, that the Province of
Ontario has long and continuously enjoyed to the fullest extent the
many and inestimable benefits which result from careful, prudent
and successful financial administration.

I well know that we are agreed in the House concerning the
leading principles which have always guided this Government in its
expenditures of public money.

For example, we all unite in vigorously deprecating the disposi-
tion, wherever it exists, to vote the public money for this or that
object indiscriminately regardless of the public needs, and without
any reference at all to the cirumstances of the ratepayers from whose
pockets it must ultimately come.

It has been well and tersely said that public expenditure )« after
all only private expenditure under another name ; that the State has
no funds except what it takes from the purses of its citizens, and
therefore that it behooves us always to act with the caution proper
to those who know that they are being liberal with other peoi)le'8
money. And we are also agreed that the truest economy is consist-
ent at all times with fullest justice ; that it has happened, and that
it may happen that cases will arise under which the State, in the
long run, will save more than it spends, and likewise that it may be
the fact that unless expenditure — and it may be large expenditure —
is incurred, some important public right will be infringed.

And we are further agreed, I venture to say, that it is a very for-
tunate thing for us in this Province that we have resolutely and
systematically indulged the habit of paying our way as we go ; of
resolutely suppressing all votes of money which are not clearly and
unmistakeably in the public interest, and in this way of preserving
carefully the equilibrium between revenue and expenditures.

Our persistent adherence at all times to these first principles of
sound finance, our determination, fortified as we have been by our
knowledge that in so doing we have always had the approval of the

House and the fullest sanction of the cout try, to resolutely refuse to
depart on any consideration from this cleai course of safety, have en-
abled us year by year to present to the peoole a satisfactory balance
sheet .

The opposite policy, the policy of the spendthrift, of drawing huge
cheques on the future, heedless of the serious burMien they impose,
of piling up a great loid of debt for posterity to pay, accompanied
by large present annual interest charges, in themselves a burden, of
wasting the resources of the country and impairing its credit, and all
this without any adequate compensating advantages, or indeed any
advantages other than mere transitory party gain or the enrichment
of a favored few, has wherever tried, and apt illustrations of such a
policy are, I regret to say, near at hand, invariably proved harmful
and disastrous.

What I have to say, Sir, this afternoon, and I hope to be very
brief, concerning the financial operations of this Province of the
year 1895, will amply and in every regard support and verify these
preliminary observations.

Last Year's Receipts.

I will, first of all, Sir, make some reference to the receipts of 1895.

RECEIPTS, 1895.
Subsidy 81,116,872 80

Specific Grant 80.000 00

!?l,lim,H7L> 80

Interest on Capitai. helm, am> Ukim's due uv tmk

Dominion to Ontaiuo 262,274 82

Interest on Investments 41,184 74

;{03,459 nf)

Crown Lands Department: —

Crown Lands 43,583 91

Railway Lands 718 42

Clergy Lands 6,259 60

Common School Lands 13,942 51

Grammar School Lands 1,512 43

Rent re Lands 26,106 12

Woods and Forests 853,179 86

Fishing Licenses 365 GO

Cullers' Fees 240 00

Casual Fees 442 42

Refunds 1,596 80

947,947 07

Aluoma Taxks 2,183 34

Law Stamps 74,70100

LiCKNSEs 272,809 12

Education Department 52,271 63

PcuLio iNHTiTcriONs Rkvenue :

Toronto Lunatic Asylum 38,639 71

Mimico " 1,422 89

London " 10,870 69

Hamilton " 11,667 54

Kingston " 6,574 35

Brockville " 1,147 !»8

Orillia " .S, 439 14

Reformatory for Females 3,166 93

Boys 585 00

Deaf and Dumb Institute 125 00

Central Prison Industries 26,395 21

104,034 44

Casual Rkvkni'k :—

Provincial Secretary "s Department. 14,213 72

Provincial Registrar's Branch 113 25

Registrar-General's Branch 148 00

Fines, etc 4,098 89

Division Court Fees 5,678 63

InsTirance Companies' Fees — Ontario Act and

1892 Act 15,988 01

Surrf)gate Courts' Surplus Fees 1,972 56

Public Officers' Surplus Fees (57 Vict., cap. 9) . . 4,999 66

Offices of Local Masters 1,940 35

Shooting and Fishing Licenses (Fishing Licenses,
additional §365. 0(», See Crown Lands De-
partment) 1 ,506 25

Official Gazette 12,9(51 88

Private Bills 7,481 65

Statutes 886 73

Ground Rent 2,000 00

Sale of B. N. A. Acts 164 75

Incidentals 30 37

Dundas and Waterloo Road Debentures ,.. 1,801 00

Insurance Companies" Assessments re Expendi-
ture for Insurance Branch 2,999 99

Removal of Patients to Asylums 5,813 31

84,799 00

Succession Duties 298,824 99

Mercer Reformatory— Capital Account. Refund re Expendi-
ture 65 25

Drainage Wobks Assessments 7,349 41

$3,345,317 61

B3 34
01 00
09 12
71 63

Dkaina(;k Debkntukks 40,389^99

Tile 8,435 00

Brewers' Lk'ENsks (R. S, O., cap. 194, mc. 51) 19,637 50

Salh ok Annuities 171,520 00

313,58.5,. SCO 10

,034 44

84,799 OO
;98,824 99

65 25
7,349 41

J45,317 61

We received from Crown lands last year t'^47,947. Our estimate
was $825,000. We received therefore nearly -SI 23,000 more than
we expected. And yet it is the first year in nine years in which
this receipt has been less than a million of dollars. From 1883 to
1886 inclusive it was less than a million, but from 1886 until last year
it has quite exceeded a million. The condition of the lumber trade
of course largely accounts for the fluctuations in these receipts. We
had a sale of limits in October, 1892, and hon. geii^"> men well re-
membar how unprecedentedly successful it was, ami during that
year and the following year we received by way c*"' bonus very Hrge
sums. We received as bonus in 189J., $l,;317,79o ; in 18P", il§986,-
372 ; in 1894, ^,69,415, and in 1895 |76,570.

Tht imber dues alone for the same years have broti^ht us in 1892
.8797,680; in 1893, $707,746; in 1894, S844,216, and in 1895,
$715,106.

The receipts by way of ground rents have been, as we would ex-
pect, steady, and have increased somewhat year by year. We re-
ceived in this way in 1892, $59,112; in 1893, $62,886; m 1894,
$06,865, and in 1895, $61,493.

During this same period mining leases have given us by way of
rent considerable sums.

Our interest receipt is, it will be seen, less than that of some
former years. The interest receipt from the Dominion on account
of the capital sum it holds in trust for us is less than that of last
year by the sum of $47,746. In other words, we did not receive
last July the half-yearly payment of interest hitherto regularly
received on some of the funds the Dominion holds in trust for us
This amount is withheld for the time b^ing only, pending the settle-
ment of the arbitration which is now proceeding.

I will take occasion later on at some length to refer to this arbi-
tration, to the subject matter of it as well as to the results thus far
ascertained.

The interest receipt from our ovvn investments, from deposits in
banks and from drainage debentures is also less than that of last
year. We had smaller average balances in the banks, and we ob-
tained a lower rate of interest than we did in 1894. Onr schedule
of receipts, viewed generally, shows here and there considerable
change during the last few years. It discloses in some of its main
features both flexibility and variableness.

The Succession Duties.

For example, we received in 1891, only four years ago, not a dol-
lar from succession duties. Last year we received the large sum of
$298,825. Our tirst receipt from that source was in 1892. Thus
far under this head our receipts have been as follows: — In 1892,
$758; in 1893, $45,507 ; in 1894, $150,754, and in 1895, $298,825.
Our estimate for 1895 was $175,000. Altogether we have, up to
the close of last year, received in this way the considerable sum of
$503,319, all of which, I remind the House, we have of course
applied, in accordance with the provisions of the statute which
creates these duties, towards the maintenance of our hospitals and
asylums. This handsome receipt amply proves how useful and
fruitful our legislation has been.

Next to our Grown Lands roceipc, and leaving out of considera-
tion our annual fixinl subsidy given us under the B. N. A. Act,
succession duties constitute in 1895 our most important and valuable
source of revenue. And what is better, Sir, it will continue here-
after, beyond any dcubt, to grow in volume and importance. I
cannot, however, expect, I must frankly say, that 189G will yield as
large a return as 1895, and this because we received in 1895 $134,-
693 from one estate, the estate of th6 late Allan Gilmour, of Ottawa.
More than two-fifths of our total receipts for the year thus accrued
from one very lar^e estate. We may not, of course, receive so large
a sum from any one estate for several years to come.

;j*

In passing I wish to say that to thit larsje estate there were no
direct heirs, no v^ife or child entitled. Indeed there were no indirect
heirs even, no biood relations of any de<.;ree, the largest beneficiary,
I may well say sole beneficiary, being a complete stranger in blood
to the deceased. Would any one in this House, or out of it, for a
moment think of even questioning the fairness or the wisdom of our
legislation when applied to this, the most important case which has
arisen under it 1

And further, as an illustration of the fact that this kind of reve-
nue is easy of collection and of administration, I may add that in
the case of this, our largest estate since the Act came into force, we
agreed on the valuations, determined the interests of the different
parties and adjusted the amount due the Province with but little
difficulty and trifling expense, and were in actual receipt of the
duties within five months of the date of the death of the deceased.
The fact, then, that this will in a few years, if not immediately,
prove to be our most important source of revenue —the Dominion
subsidy and Grown Lands revenue, of course, excepted — warrants me
in adding somewhat to what I have already said on previous
occasions concerning it. I do not mean, of course, by way of justi-
fying it, since we have long since passed that stage. It needs
neither apology nor defence. On all sides it is at once admitted that
no means of raising revenue more fair, desirable or justifiable has
ever been devised.

This means of raising revenue long ante-dates all modern political
economy. In addition to its many other virtues it has that of anti-
quity on its side.

It has been thoroughly tested in several countries of Europe, it
is each year growing in popularity, it essentially embodies true demo-
cratic principles. England, France, Switzerland, Holland, Belgium
and even Italy, Prussia and Russia have long availed themselves of
it.

On this continent the States of Pennsylvania, New York, Maine,
Massachusetts, Connecticut, New Jersey, Delaware, Ohio, Oalifornia,
West Virginia and Tennessee, enjoy considerable receipts from it.

It is at the same time, all admit, capable of abuse, and in this re-
spect it does not vary from any other mode of raising revenue. Under
certain conditions it might even become the thin end of the social-
istic wedge, harmful and dangerous.

In France, for example, as much as fifteen per cent, or twenty per
cent, even is taken from the value of a single succession and there is
no deduction even for debts, but in this and other respects France is
a conspicuous exception to the almost universal rule. Different
schools of economists 'at variance as to many questions of taxation,
revenue and finance, fully agree as to the wisdom and fairness of
this legislation. For example Prof. Ely, of Wisconsin University^
a well known writer and admittedly high authority in such matters,
warmly approves of it. Andrew Carnegie, the equally well known
capitalist and millionaire, goes to extremes in supporting it. He
vigourously meets the arguments of those who object to inheri-
tance taxes because they constitute a tax upon capital. Not long
ago in a lecture delivered in New York City, speaking on this very
point he used these words : — " Every dollar of taxes required might
be obtained in this manner (viz,, by inheritance taxes) without inter-
fering in the least with the forces which tend to the development of
the country through the production of wealth." And many years
ago John Stuart Mill not only advocated progressive inheritance
taxes, but contended also even that there should be a limit to the
amount which anyone should be allowed to take either by inheritance
or bequest.

It is well argued, we should bear in mind, that we should regard
succession duties not as a tax on property, but as a condition of
inheritance, a regulation of inheritance, a regulation of bequest.

For many reasons this legislation is popular, it well accords with
unquestionably sound theory, since under it those pay, and those pay
most, who are most able to pay.

No means of obtaining revenue can be less oppressive. In what
other way would payments be made more willingly ? Succession
duties take nothing from the heir which they have actually enjoyed,
they deprive them rather of something which they never had. And

And

further, in the case of distant relatives it is not a very easy matter
to give a perfectly satisfactory reason for \he existence of intestate
inheritance. When property is acquired accidentally and perhaps
unexpectedly, the heir is more able to pay, and does pay with but
little reluctance.

Moreover, it is difficult to evade payment, and it leaves but little
opportunity for fraud. We readily see how important this is when
we notice to what extent income taxes, for example, are evaded.

For instance, the one per cent, tax on direct inheritance in New
York, which applies only to personal property, realized $700,000
from the Jay Gould estate. His personal property in his lifetime
had only been assessed for $500,000 for property tax purposes, but
after his death it was valued at 140 times that amount.

Pennsylvania has had an inheritance law for seventy years. Dur-
ing the fiscal year ending November 30th, 1895, its receipts from
this source were $1,117,974.

New York State received in this way, during its fiscal year ending
September 30th, 1895, $2,126,894.

Massachusetts received from collateral legacies and successions in
1894 $239,368, and in 1895, $399,292.

New Jersey, which occupies a unique position among the States
of the Union, in that it has no tax for State purposes and is practic-
ally out of debt, received through succession taxes $204,695 in 1894,
and $121,339 in 189"). This fortunate little State derives nearly all
revenue fr^ — i taxes on railroads and other corporations.

The sister Province of Quebec received as succession duties : —
$40,313 for year ending June, 1893, $149,283 for year endin^r
June, 1894. and $162,535 for year ending June, 1895.

The exempt estates range from $250 in Maryland to $10,000 in
Massachusetts and Ohio, Tennessee being the only estate which
allows no such exemption.

In New York inheritance taxes amount to twenty and one-half per
cent, of all the State taxes, and contribute nine per cent, of its total
State expenditures.

In Pennsylvania they amount to more than twelve per cent, of all
the State taxes, and six and one-half per cent, of all the State
expenditures.

Well-known writers, who have given special attention to this ques-
tion, confidently assert that the experience of New York State
makes it plain that inheritance taxes and corporation taxes together
could in the majority of the States of the Union be fairly made to
pay all the State expenses.

Analysis of the Duties.

I know that hon. gentlemen will be interested in an analysis of
our succession duties receipts of last year. This analysis will fully
bear out my statement that our Act is a very moderate one ; that it
is chiefly characterized V)y generous exemptions, and that in its work-
ing it is fully consistent with that soundest of economic principles,
"ability to pay." Upon analyzing the returns made by the Olerks
of our Surrogate Courts I lind that 3,145 wills were proved and
1,519 letters of administration vere issued during 1895. Our Courts
in this way adjudicated upon 4,664 estates. The number the pre-
vious }ear was 4,815, and 4,574 the year before.

Out af these 4,664 estates reported in 1895 only 87 were dutiable
under our Act. The number which escaped duty was 4,577, the
number which paid duty 87.

Only one estate out of every 53 came within the provisions of
our Act. In no less than twenty of our counties in 1895 not a single
estate came within its provisions. Of these 87 estates which paid duty
twenty-two were reported as from the county of York, eight from
the county of Went worth, six from Brant, six from Oxford, five
from Middlesex and tive from Northumberland. Taking the Pro-
vince altogether, I. find that in more than one-half of the counties
last year there were no estates liable to euccession duties. A few
counties contributed nearly all of the revenue. In these counties,
of course, there are large centres of population. This fact, let me
again observe, proves that our Act contains large and generoa& ex-
emptions. We received from Oarleton county last year $162,778,

IT)

or more than 54 per cent, of our total receipt from Oxford county
$42,679, or more than 14 per cent, of our tot; 1 receipt ; from the
county of York $35,984, or more than 12 p(>r ctut. or the gross re-
ceipt. From these three counties alone we received more than 80
per cent, of all our succession duties during 1895.

We apply, as the statute provides, the revenue from succession
duties toward the maintenance of hospitals and asylums. Of last
year's revenue 8190,221 sufficed to meet our grants for the year
to hospitals and charities. The balance, viz., $108,604, assisted
in defraying our large asylum expenditures.

License Receipts.

It will be noticed that wp received from liquor licenses |272,883.
The previous year we received $277,330, while in 1893 we received
$294,516. The municipalities received from liquor licenses during
the same three years re.spectively, viz., 1893, 1894 and 1895, $289,-
970, $282,473 and $272,101. We are issuing year by year fewer
licenses, and, therefore, we have a falling revenue. We granted last
year liquor licenses, all told, in ninety-iive districts. In twenty-
seven of these districts there was a slight increase in the number of
licenses granted as compared with 1894 ; in forty-three districts
there was a decrease, while in the remaining twenty-tive the number
remained stationary.

We granted 3,151 licenses in 1894, as against 3,276 in 1893, a
decrease of 125 licenses in a single year. The following table will
show at a glance the steady and considerable reduction in the num-
ber granted during each of the last five years :

Tavern. Sh(,p. Wholesale. Total.

1890 3,073 428 134 3,523

1891 2,990 403 21 3,414

1892.. 2,966 378 2.-) 3,369

1893 2,888 357 31 3,276

1894 2,785 337 29 3,151

We issued 372 licenses last year less than we did five years ago, a
decrease of more than ten per cent. If this falling oflF continues, and
all indications lead me to think that it will, the many and serious

difficulties connected with the liquor traffic, will in a few years, to a
great extent, solve themselves. We issued last year one license for
each group of 670 of our population. In the Province of Quebec
there was issued a license for each group of 548 of its population.
We have in this Province, all told, 810 municipalities, and in 190 of
them no license of any kind was issued. One-fourth of the Province,
therefore, last year was not under license.

The Statistical Year Book of Canada for 1894, only recently is-
sued, gives a schedule of convictions for drunkenness in the several
Provinces.

On page 1022 of this volume having regard to this schedule of
convictions the following statement is made ; —

" It appears from this table that in 1894 out of every group of
667 of the inhabitants of Ontario one had been convicted of drunk-
enness, out of every group of 359 of the people of Quebec one had
been convicted of drunkenness, while in the Province of Nova Scotia
one out of every group of 361 had been so convicted. Ranged ac-
cording to position with respect to sobriety, as tested by convictions,
the Provinces stand thus : Ontario, Prince Edward Island, the Ter-
ritories, No\a Scotia, Quebec, Manitoba, New Brunswick and
British Columbia."

Brewers' Licenses.

Apart from the year's license isceipt, to which I have just referred,
we received $19,637 from licenses taken out by brewers' agents. In
referring to this subject a year ago I stated that the constitutional
question which it involves was then in the form of a special case
before our courts.

The constitutional question arose as follows: In the year 1878,
in the case of Severn vs. The Queen, the Supreme Court held that
the Province had no right to require brewers, distillers, and dealers
in liquor holding licenses from the Dominion Government, to take
out Provincial licenses. Subsequent decisions of our courts, notably
those in the cases of Hodge v.y. The Queen, Molson vs. Lambe, ard

to a
e for
lebec
,tion.
90 of
/ince,

ly is-
jveral

) of

au:

)up of
drunk-
le had
I Scotia
»ed ac-
ictions,
he Ter-
k and

referred,
nts. In
itutional
cial case

ear 1878,
leld that
d dealers
t, to take
s, notably
konbe, ar.d

Rpgina tv. Halliday, threw doubts on this decision of our Sui)reine
Court. To settle the important question of jurisdiction, therefore,
the three following questions were, at the instance of the brewers,
submitted as a test case to the Court of Appet 1 :

(1) ''Is sub-section 2 of section 51 of tht Liquor License Act, -
Revised Statutes of Ontario, chapter 194, requiring every brewer,
distiller, or other ])erson duly licensed by the Government of Canada,
as mentioned in sub-section 1, to first obtain a license under the Act
to sell by wholesale the liquor manufactured by him when sold for
consumption within the Province, a valid enactment 1

(2) " Has the Legislature of Ontario the power, either in order to
raise a revenue for provincial purposes or for any other object within
provincial jurisdiction, to require brewers, distillers and any other
persons duly licensed by the Government of Canada for the manu-
facture and sale of fermented, spirituous or other liquors, to take out
licenses to sell the liijuors manufactured by them, and pay a license
fee therefor ?

(3) *' If so, must one and the same fee be exacted from all such
brewers, distillers and persons ? '' '

Judgment was given on the 14th of January last. The first two
questions were answered in the aflirmative, and the third in the
negative, so that the contention of the Province in this regard has
thus far been sustained in all points. The brewers have appealed,
as it was expected they would, to the Privy Council.

Sale of Annuities.

It will be noticed that we once more sold annuities during 1895,
and thus realized 3171,520. It will be remembered that we are
onpowered, under the Act of 1884, to defer payment of our accruing
railway liabilities in any one year by the issue of new forty-year
certificates to take the place of the old certificates maturing during;
the year in question. We have, I need scarcely say, very exten-
sively aided railways in this Province, our payments in aid up to
the preeent date exceeding $6,266,000. The Sandfield Macdonald

2 Ji.

Government, while it set apart a railway fund, did not pay out a
single dollar in aid of railways. The matter of payment was one
of the legacies he bequeathed to his successors.

These railways have been a great factor in opening up our country,
in extending our trade and commerce, and in developing our resources
generally.

This class of expenditure will especially benefit those who come
after us, and it was therefore deemed reasonable and prudent that
provision should be made for deferring these railway liabilities in
order to be able more easily to meet the pressing and increasing needs
of a growing and prosperous Province.

No new liability, we must remember, was created or sought to be
created by this Act of 1884. No new liability, not even to the
extent of a single dollar, has been in fact created by the Act
authorizing the sale of these annuities, and nearly eleven years have
gone by since the Act was passed, It merely authorized, I repeat,
the deterring or postponement of each year's railway obligations.
Wp have, in fact, only availed ourselves of its provisions in seven
out of the twelve intervening years. We were fortunately able in
1888, 1889, 1890, 1893 and 1894 to meet the maturing railway
certificates out of funds in hand, and without resorting to this Act
which allows us to defer payment.

And during these same twelve years, be it remembered, we have
erected these Parliament Buildings, as well as the large, new, com
fortable, substantial and imposing Asylums for the Insane at Orillia,
Mimico and Brockville, not to speak of considerable other perma-
nent public works entailing, all told, a capital expenditure of more
than 85,000,000.

We have been thus, year by y( ar, making very important addi-
tions to our fixed permanent wealth, and substantially adding to our
assets, and all this without increasing our liabilities or appreciably
lessening our surplus.

The Honorable E. B. Wood, Treasurer of Mr. Sandfield Macdon-
ald's Government in 1869, and again in 1871, boasted, and of course

11)

y out a
vas one

jountry,
esources

10 come
ent that
ilitiea in
ling needs

»ht to be
sn to the

the Act
ears have

I repeat,
oligations.
g in seven
ely able in
ig railway
:o this Act

3, we have
new, com
; at Orillia,
her perma-
ire of more

ortant addi-

Iding to our

appreciably

3ld Macdon-
,nd of course

I do not use the word otlensively, of the large capital expenditures
of his Government. In 1869 he stated that they had spent $486,000
on capital account during the previous two md a half years, and
again in 1871 he stated that their expenditur«s on capital account
during three and a half years had footed up to vhat he calls the very
large sum of $S09,86G.

Every one knows, Hir, that our capital expenditures have reached
much greater proportions, averaging for years together sums two or
three times as large as those named by Mr. Wood. I refer to this
simply to show that our growing needs, our doubled territory, oar
increased population, and our progressive legislation have from time
to time inexorably demanded larger and still larger expenditures.

A Successful Sale.

•

I will once more invite your attention to our last sale of annui-
ties. The Treasurer in 1884 expressed the opinion that we could
issue new certificates on a basis of four and a half per cent. The
first sale, that of 1884, was effected exactly on a basis of four and a
half per cent., and each succeeding sale, you will be glad to know,
on a more favorable basis. In 1892 I succeeded in effecting a sale
at less than four per cent., and last year's sale, that of 1895, was
on a basis of less than three and a half per cent. We realized at
our first sale $1,848 for every 6100 of annuity, and at our
last sale $2,144 for every .$100 of annuity. The purchaser at our
last sale will receive less than three and a half per cent, interest on
his investment. I make bold to say, Mr. Speaker, that at no time,
on no occasion in our history, has the Dominion, or any one of its
Provinces, or any city within its borders, effected so favorable a sale
of securities. The purchaser at this, our last sale, is a resident of
this Province, and we were, therefore, absolutely at no expense what-
ever on account of exchange or commission. Brokerage fees, stamp
duties and exchange add materially to the rate of interest when a
foreign investor is the purchaser. I will give an illustration : the
<^uebec Government negotiated a loan of $5,333,976 in Paris in
December, 1894. The net proceeds of this loan amounted to

.$4,104,803. Apart from various contingent expenses connei ted with
it, $53,329 was spent in commissions and advertising. The Pari"*
capitalists realize more than four per cent, on their investment. I
take these figures from a recent official return of the (Quebec
Legislature.

Our railway obligations in years to come will be much hjss than
they have been. For example, the certilicates maturing and paid in
1885 amounted to ii?"250,808 ; those maturing in 1895 amounted to
$159,403. We paid for railway aid during the last four years
$610,529, while for the period of four years just preceding that
time we paid $990,825.

The near future will witness considerable further reductions.

We will pay lor example next year in retiring maturing railway
certificates $20,552 less than we will be required to pay this year.

In 1898 the amount maturing will be lessened by a further reduc-
tion of $28,513. In 1899 the amount will again be diminished to
the extent of $14,432, and the yearly reductions thereafter up lo
and including 1904, continue to be considerable. The amount we
will be called upon to pay this year is $159,157 and the amount
payable in 1904 is $32,741, a decrease in eight years of $126,416.

The smaller items of revenue do not call for extended remarks.
On other occasions I have given some explanations concerning them.
We received nearly $10,000 less from law stamps than we did last
year, and nearly $5,000 more from the Education Department.
Our casual revenue, and we include under that term a dozen or more
of minor sources of revenue, exceeded our expectations. It reached
a higher mark than it did the previous year. The revenue from our
public institutions also exceeded our estimate, the excess being mainly
due to the very good results attending last year's operations at the
Central Prison.

All told, our receipts for the year were very satisfactory. We
estimated that our total receipts would be $3,149,372. The actual
receipts have proved to be $3,364,955.

We are, therefore, as the result of the year's operations, so far as
our receipts are concerned, $215,583 better off than we expected.

d with
e Pari=i
ent. I
(^)uebec

ss than
paid in
unted to
ir years
ing that

ons.

railway
B year,
ler reduc-
nished to
ter up to
Qount we
e amount
26,416. '

remarks,
ling them,
e did last
apartment.
;en or more
It reached
le from our
;ing mainly
ions at the

story. We
The actual

a, so far as
ixpected.

In these receipts I have not included receipts by way of payments
to the Province on account of drainage debentures, nor the proceeds
of our sale of annuities, since these items were not included in my
estimate of the year's receipts. '^

I now invite the attention of hon. members to last years' expen-
ditures.

Expenditures, 1895.

Civil Government. $ 244,72(5 47

Legislation 150,058 G7

Administration of JutsticH 453,564 99

Education 693,042 95

Public Institutions Maintenance 799,222 15

Immigration 7,<S14 86

Agriculture 181,2.33 11

Hospitals and Charities 190,221 08

Repairs and Maintenance 7<1,518 14

Public Buildings 265,600 90

Public Works 28,739 70

Colonization Roads 116, 706 59

Charges Crown Lands 112,423 .33

Refunds 18,.583 33

Miscellaneous 137,895 22

$ 3,476,351 49

Drainage Debentures 24,835 51

(Tile) 19,800 00

Railway Aid Certificates 159,408 44

Annuity " 78,200 00

S 3,758,595 44

Under Civil Government, which, speaking generally, includes
inter alia all salaries paid to the officials in the various departments
of the public service and all departmental expenses, we expended
$2,436 less than the House authorized us to spend. Aa we under-
take additional work and extend existing services, our expenses
under this head must certainly increase. In a great and important
Province such as this we must advance ; we will not be allowed to
be content to stand still or mark time. An enlightened public senti-
ment would sternly rebuke us if we did.

For example, we spent |!7,923 last year in connection with the
Bureau of Mines. This Bureau has been in existence for only four

years. We all approve of this expenditure, and dgree that it is our
plain duty as best we can to foster and aid the development of oui
mining industries, and thui attempt to bring to light our dormant
wealth. We only regret that we seem to be unable to do more in
this direction.

The Department of Agriculture furnishes another case in point.
In order to increase the efficiency of the Bureau of Industries, which
in under the charge of the Minister of Agriculture, it was found neces-
sary, first in January, 1893, and again in January, 1895, to add a
clerk to the permanent stafF. These appointments, which were ab-
solutely necessary, have added $1,700 a year to the cost of Civil
Government.

Or take another illustration : the office of the Superintendent of
Neglected Children entailed an expenditure last year of S'2,521.
This office was tirst created in 1893. We all most heartily approve
of the work which is sought to be done by this Department. If we
can arrest criminal tendencies in the young and reclaim outcast and
neglected children, we are not only doing a good work, but we are
doing it in the most economical and thorough way possible. As a
well-known writer observes, it pays the State to study crime accur-
ately, to seek for its causes, to ascertain all its concomitant condi-
tions, and in a variety of ways to recognize and classify the criminal.
The House well knows that we have been compelled from time to
time, urged on by humanitarian promptings, to undertake new
services such as the one I am now speaking of, and in this way add
to our expenditures.

I allude to this. Sir, simply to show how unfair and misleading
it is to make a bald comparison between different periods of time
without giving any explanations such as I am now making, and in
effect to say, " You spent more this year than you did four or five
or ten years ago, and therefore you are extravagant." If our expen-
diture is necessary, if it is clearly in the public interest, and if we
get full value for our money, surely there is an end of the whole
matter. It counts for absolutely nothing, it is idle to say that five or
ten years ago the estimates were so much, that to-day they are so

IS our

of oui

ormant

nore in

point.
, which
d neces-
add a
ivere ab-
of Civil

ndent of

^2,521.

approve

If we

cast and

we are

e. As a
ae accur-
nt condi-
criminal.

time to
ake new
way add

isleading
I of time

f, and in
r or five
ur expen-
nd if we
be whole
lat five or
ey are so

much more, and from such a statement to infer extravagance. What
are we to do ? The public service can be neither stinted nor starved.
We must educate our youth, foster agricultu "e, administer justice,
take humane care of our atllicted classes, and levelop our rich, new
northern country. The C^ueen's Government must be carried on.
Where shall the lopping-ofl process begin? Shall we reduce our
grant for education, or for agriculture, or close the doors of our
asylums 1 Either the Province or the munitdpalities must main-
tain these and other services and do so efficiently, decently and
creditably. What do our critics suggest 'I Is part of the burden to
be tiansferred to the municipalities ? A single practical suggestion
would be worth more than any amount of vague, general, intan-
gible, indefinite, pointless criticism. (Applause.)

The over-expenditure under the head of Legislation occurs mainly
in connection with i f item, namely, that of stationery, printing and
binding. The expenditure in connection with the Legislative
Library exceeded the estimate of $1,006. We spent more than
twice as much on the L'brary last year, as we did five years ago.
The apparently large item of expenses under the head of T-egislation
is accounted for by the fact that part of the stationery supplies
used in 1894 were carried over for payment to 1895.

I have in prevfous years asked the House, and especially the Print-
ing Committee, to diminish, if possible and where possible, the
expenditure under the head of Printing and Binding.

The Legislature has, of course, a large measure of control in this
matter. If it continues to order the printing of voluminous returns
and reports, large additions of them, and a greater number of them
year by year, then of course the public accounts must inevitably dis-
close greatly increased expenditure under this head. I now ask the
Printing Committee once more so far as possible consistently with
plain public advantage to limit this item of expenditure.

My meaning will be made more clear if I giva some illustrations,
For printing and binding we spent as follows :

In 1891 $19,258

Iul892 $27,057

In 1893 $26,449

In 1894 $32,754

In 1.SJ5 $38,706

We have thus more than doubled this expenditure in five years.

The number of reports published for the Legislative Assembly
in 1894 was 93,050, while in 1895 it was 116,490, an increase of
more than 2.3,000 volumes in a single year.

It cost $8,882 more to publish them in 1895 than it did in 1894.
We published no fewer than fifty-nine different reports for the
Legislative Assembly in 1895.

In 1885 we published for the Legislative Assembly and for the
departments 117,580 volumes. In 1895 we published 273,800
volumes, an increase of 56,000 volumes in ten years.

We spent for this purpose $24,031 in 1885 and $39,065 in 1895.
Thirty-four diflferent reports were published in 1895 which were not
published at all in 1885.

For example, we published inter alia in 1895 reports of the Bureau
of Mines ; of the Game and Fish Commission : of Fruit Stations ; of
Neglected Children ; of the Inspectors of Factories ; of the Farmers'
Institutes ; of the Bee-Keepers' Association, and several volumes of
the Bureau of Industries.

These represent, for the most part, departments of work which
bad not been undertaken ten years ago.

All those reports, as well as dozens of others I have not named,
contain very valuable information and cannot be too widely circu-
lated. At the same time I submit that it is well worthy of the
consideration of the Printing Committee whether or not smaller
additions in certain cases would not suffice, and whether some of
them could not be condensed without lessening their value.

Our expenditures under the head of Administration of Justice in
1895 were abnormally large, I should say unprecedentedly large. We

bratioD9,

)8
57
t9
4
)6

ars.

Lasembly
rease of

in 1894.
for the

for the

273,800

in 1895.
were not

e Bureau
bions ; of
Farmers'
lumes of

k which

b named,
ly circu-
1 of the
k smaller
some of

istice in
ge. We

never 8j)ent as large a sum for this service in any one year in the
history of the Province. We expended in this way $4:18,476, and
this is $35,000 more than we spent in 1894, $73,000 more than we
spent in 1893, and $122,000 more than we sf ent ten years ago. We
paid to the counties $28,085 more than we lid in 1894. We paid
to the County of York alone $3,087 more thtn we did in 1894, and
to the City of Toronto $5,7P0 more than in 1894. At the same time,
Sir, it is only fair to observe that instances have not infrequently
occurred in which county treasurers have neglected to send in their
accounts and returns promptly, and that in this way the expenditure
of a given year is unfairly charged with payments which should have
been made the previous year.

Our expenditure last year for Education was the largest we have
ever incurred as yeb in any one year, and the same remark applies to
our expenditure under the head of Agriculture. We have no differ-
ences of opinion in this House as to our duty in promoting these
very important interests and in providing for them generously and
without stint. Onetifth of all our ordinary expenditure of last year
was applied for purposes of education. We must expect that fresh
demands will be made upon us from year to year in both these
directions.

The Minister of Agriculture has been untiring in his endeavor to
extend in all directions the usefulness of his department. During
last year, for example, w:th the sanction of this House, he added
three new departments to the College at Guelph at an additional
expense of $1,900 a year. I refer to bacteriology, poultry and bee-
keeping. Each of these departments we all recognized was essential
in any well-equipped s;3hool of agriculture. The Dairy School at
Kingston, established mainly through our grants, had its first session
last year, and its second session is now in progress. A similar
school in Strathroy is now holding its first session.

In 1894 for the first time we gave a grant for experimental fruit
stations, and this grant was repeated last year. Last yeai' also, for
the first time, experiments and teaching in the spraying of fruit
trees were carried on under the direction of the Minister. Towards

the close of 1894 a Superintendent of Farmers' Institutes was
appointed, and the result is that the number of institutes has been
increased, more meetings have been held, more speakers employed
and paid by grants from this Legislature. Early last year the West
Algoma Pioneer Farm, situated in the Wabigoon district, of which
Jlie Globe newspaper recently gave an interesting account, was
established.

These, Sir, are some of the additional objects to which, with the
sanction of this House, legislative aid has recently been granted. I
could easily, Sir, instance other new expenditures not only justifiable,
but demanded by the spirit of progress which has always actuated
this Legislature. Our first expenditure in connection with Algon-
quin Park, situate in Northern Ontario, was incurred in 1893.
Oar total expenditures in connection with it up to the end of last
year amount to $11,901. A year later, viz., in 1894, we established
Rondeau Park in Western Ontario, and in the last two years its
maintenance has cost us §4,948. A School of Mining and Agricul-
ture, situate at Kingston, in the eastern part of the Province, was
first established in 1S93, and thus far we have spent towards its
maintenance 822,600. In 1894 and 1895 we spent for mining
development, another new item of expenditure, $9,643. And last
year for the tirst time we had a summer mining school in operation
in the northwestern part of the Province at a cost for the year of
11,329.

These items alone, taken singly, may appear trifling. Taken in
the aggregate, they make up a considerable annual charge, viz,,
about $50,000, and they illustrate the fact that the various needs of
every pare of the Province — north, south, east and west — and of
whatever kind — agricultural, mining or otherwise — are neither over-
looked nor neglected.

Public Institutions,
We spent last year for the maintenance of our publio institutions
within a trifle of $800,000, or about $2,190 per day. Nearly one-
fourth of all our expenditures went in this one direction. This is
more than $42,000 in excess of the expenditure of the previous

VIZ.,

year. It is $11,000 in excess of our estimate. ^Ve spent about
$10,000 more by way of maintenance at our new Asylum for the
Insane at Brockville than we expected. This institution, hon.
gentlemen will remember, was opened only in Decerrber, 1894. It
cost us for maintenance $8,120 in 1894, and 047,863 in 1895. It
had under treatment last year 208 patients.

The total number of patients is still year by year increasing. In
our seven insane asylums we had last year under treatment 5,454
patients, as against 5,021 in 1894. The number in 1893 was 4,893.
This large number of patients was last year distributed as follows :
Toronto, 809; London, 1,180; Kingston, 724; Hamilton, 1,117;
Mimico, 730 ; Brockville, 208 ; Orillia, 606.

The new insane asylum at Mimico was opened in 1890, and during
the last four years its cost of maintenance has averaged nearly
872,000 a year. This Legislature has honestly and generously
attempted to discharge its full duty toward our atilicted classes.
But few countries even attempt to do what we have been constantly
doing so successfully in this regard. The State of New York is the
only State in the Union which supports the insane exclusively in
State institutions, and in which their maintenance is arranged for
by a general State tax.

At the first glance the constantly increasing number of patients is
calculated to cause a feeling of alarm. A more carefal view of the
facts however leads us to doubt whether or not the number of our
insane is really rapidly increasing.

The lloyal Edinburgh Asylum is one of the most important of its
kind in the world. Dr. Olouston, its able Medical Superintendent,
in his last report (and it is the 82nd annual report of the institution)
makes the following statement : —

"It must not be supposed that the increasing number of patients
sent to us year by year necessarily prove an increase of mental
disease in the community. On the contrary, careful examination
into that great question by many competent authorities from differ-
ent points of view, and my own investigations, seem to me to prove
definitely that on this point there is little cause for alarm. All the

facts point to this, that there are now more people sent to hospitals
for mental disease than there were formerly, and that when they get
there they live longer and are better treated."

May it not he the case, we may hope that it is at any rate, that
the opinion he thus expresses is correct when applied to our own
Province

Our expenditures for hospitals and charities keep increasing
During recent years they have been growing at the rapid rate
of about $10,000 a year. We spent upon Ihem in 1894 8182,692,
and in 1895 .^190,221. Last year's payment was the largest we
have yet made. The amounts paid depend upon the earnings during
the; previous year of the various institutions in accordance with the
terms of the statute. Last year's increased payment is due to the
fact that five new institutions, two hospitals and three homes, had
been added to ths list. There was also an increase in the number of
patients treated as compared with the previous year.

Reduction in Yearly Extenditurks.

I need not refer at greater length to our expenditures for the
year.

Although we have not neglected or stinted in any way the various
interests which it is our duty to subserve, it is worthy, I think, of
special mention, and I ask hon. members not to overlook the fact,
that during the last five years we have year by year been able to
reduce our total expenditures. Our total expenditures in 1891
amounted to $4,158,459 ; in 1892, $4,008,257 ; in 1893, $3,907,145 ;
in 1894, 13,842,505 ; and in 1895, $3,758,595. Further, let me add
that our total expenditures in 1890 amounted to $3,896,324, so that
last year's total expenditures were lowei* than those of any year since
1889. It does not affect my argument to say that we spent less
money in 1895 than formerly for new public buildings ; that we have
overtaken our needs in that direction, since, in order to be able thus
to reduce our expenditures year by year, we must have constantly
exercised vigilant control and practised strictest economy.

•Jf»

In discussing increased expenditwrea I remind hon. members that
it would be both interesting and instructive to institute a comparison
and to examine with as much detail as anyone would wish into the
increased expenditures on similar lines of, for example, the Dominion
itself, or of any of the sister provinces. The result of such a com-
parison would, we all know, be extremeiy favorable to this Province.
A similar comparison between provincial expenditures and the
expenditures of our own municipalities, civic or otherwise, would
lead to the same resrult. With every confidence I invite such
comparisons.

ArIUTBATION FROCEEDI\(iS.

I will be expected to say something of the arbitration now pending
between the Provinces and the Dominion, the actual proceedings of
which, under the joint and concurrent legislation of 1891, began in
April, 1893.

As long ago as 1879, nearly twenty years ago, the treasurer of
this Province in making hi-s iinancial statement said that he had
hoped to have been able to have laid before the House a statement
of the tinal adjustment of the accounts between Ontario and the
Dominion and between Ontario and Quebec, and again in 188i,
about twelve years ago, his successor said that he hoped at the
following session to be able to congratulate the House on the settle-
ment of the disputed accounts.

A dozen years have come and gone, and 1 am not even now able
because of the great volume of business, extending over very varied,
novel and difficult subjects, to definitely state a time within which
the learned arbitrators will have completed their very arduous and
very responsible duties.

1 am glad to be able to say however that very satisfactory progress
has in fact been made, and that step by step important branches of
the case have been concluded, and that, so to speak, at any rate we
have reached the beginning of the end, and up to the present time
without any reverse.

I will endeavor, Mr. Speaker, to give a very brief summary of the
proceedings and results thus far.

wmm

The first matter taken up in 1893 concerned the claim of the
Provinces relating to the allowance of interest on the accounts gener-
ally and the method to he adopted in taking the accounts.

This interest question, as it is called for the sake of brevity, prov-
ed to be, as was expected, a large and difficult question.

The argument concerning it commenced at Ottawa, June 13th, 1893.
After five days' argument the case was adjourned until the 10th of
July, when it was resumed at Quebec. This sitting lasted four days
when there was another adjournment until September 14th. The
day following the argument was concluded, and the arbitrators
published their first award on the 2nd of November, 1893.

By paragraph eight of this award the question " as to whether or
not the Dominion shall be allowed simple interest at the rate of five
per cent, per annum on any balance that may from time to time be
found to exist in its favor in the separate accounts of Ontario and
Quebec," was reserved for further argument.

Argument on tiiis reserved question took place at Ottawa on the
i 1th and 12 th of January, 1894, and the decision of the arbitrators
thereon constitutes their second award, which bears date August 31,
1894.

The first award, that of November 2. 1893, directs that Ontario
and Quebec shall be credited with the subsidy half-yearly in advance,
that the deductions for interest on the excess of debt of the Province
of Canada over i?G2, 500,000 as actually ascertained in amount at
each period shall be made at the end of each year down to and includ-
ing January 1, 1873 ; that the first of such deductions shall be made
on the 1st of January, 1868.

(2) That in the Province of Canada account there shall be credited
on the 23rd day of May, 1873, the $10,500,088 remitted by 36 Vict.,
ch. 30, and that there shall be no deduction from the subsidy there-
after.

(3) That on and from July 1st, 1884, the provinces shall be
: lit?A with the additional subsidy granted by 47 Vict., ch. 4.

^i?der this Act we became entitled to receive interest on a capital
,f ,J!2,8 ! f^ 289, and this interest has been regularly paid to us each
haU-yiia' since.)

(4) That each provime shall be credited as of date July 1, 1867,
with its share of $200,000, representing the purchase money of the
Ottawa Library and othei personal property.

(5) That the trust funds shall be treated as intact and unimpaired,
and interest thereon at five per cent, half-yearly carried into the
separate accounts of Ontario and (} uebec.

(6) That the Province of Canada account shall be made up at
simple interest at five per cent, per annum.

(7) That in the separate accounts of Ontario and Quebec the said
provinces shall be allowed simple interest on any balance from time
to time existing in their favor at five per cent., unless some other
rate has been expressh agreed to.

Appbai by the Dominion.

The Dominion, objecting to certain findings in the first award, that
of November 2, 1893, appealed to the Supreme Oourt for the follow-
ing reasons : —

(1) The award decides that interest on the excess of debt of the
Province of Canada is to be deducted from the half-yearly subsidies
only at the end of each ]\alf-year, instead of at the times when euch
half-yearly payments of subsidies are by the British North America
Act directed to be credited to the provinces.

(2) To so much of the award as determines that the Dominion is
not entitled in its accounts with the Province to make twelve half-
yearly deductions of interest on the said excess of debt existing at
the time of the union.

(3) To so much of the award as decides that the deduction of
interest on the said excess of debt from the half-yearly subsidies is to
be based upon such excess of debt over 862,500,000 as is actually
ascertained in amount at each period on deduction, instead of being
based on the excess of debt as actually ascertained at the time of the
passing of the Act 36 Vict,, ch. 30, or as actually existing at the
time of the union.

This appeal on the part of the Dominion was argued before the
Supreme Oourt at Ottawa on the 9th, lOth and 12th of November,
1894. Judgment was given on the 6th of May, 1895, dismissing
the appeal with costs.

32
The Second Award.

The second award, that of 3l8t August, 1694, which deals mainly
with the reserved question to which I have referred, directs that in
certain cases the Dominion shall be allowed five per cent, and in
other cases four per cent, simple interest on balances in its favor.

In connection with this interest (|uestion alone we have thus had
a most exhaustive and able argument, lasting fifteen days, and, con-
sequent upon it, two awards and a judgment of the Sui)reme Court.
In a word, the result is as favorable to Ontario, in fact, as any other
form of the stating of the account which had been discussed, and
more favorable than any form in which the Dominion was willing to
concede the account to be stated or taken.

Indian Claims.

The next important matter taken up by the arbitrators was the
claim of the Dominion, filed in October, 1893, against the late Pro-
vince of Canada, and the Province of Ontario as well, on behalf of
the Ojibeway Indivins for arrears of annuities and increased annuities
alleged to be payable under the Lake Superior and Lake Huron
treaties, sometimes called the Robinson treaties of 1850. The claim
for arrears against the Province of Canada from 1851 to 18G6
amounted to $10l',000, and for interest alone to the end of 1892
^223,000. The claim against Ontario alone for arrears and increased
annuities from 1867 to the end of 1892 amounted to $314,000, and
for interest to $109,000.

These claims were argued in October, 1894, and an award was
made on the 14th February, 1895.

The first four clauses of this award declar..^ in effect that if in any
year since the treaties in question were entered into (1851) the ter-
ritory thereby ceded produced an amount which would have enabled
the Government, without incurring loss, to pay the increased annuities
to the Indian tribes mentioned therein, then such tribes were entitled
to such increase, not exceeding S4 for each individual from time ta
time belonging to the tribes entitled to the benefit of the treaties.

aainly
bat in
,nd in
or.

as had
i, con-
Court.
r other
id, and
ling to

7 as the
lie Pro
ehalf of
[inuities
Huron
le claim
to 1866
of 1892
ncreased
300, and

v^ard waa

if in any
) the ter-
B enabled
annuities
e entitled
a time ta
e treaties.

Any liability to pay the in ;reased annuity in any year before the
union is declared to be a ( ebt or liability which devolved upon the
Dominion under section 111 of the B. N, A. Act, and to be one of
the matters to be taken into account in ascertaining the excess of
debt for which Ontario and Quebec are conjointly liable to Canada
under section 112 of the B. N. A. Act.

In other words, if, on investigation, it is found that the territory
ceded produced sufficient before 1867 to have enabled the Govern-
ment of the old Province of Canada to have paid the increased
annuities without incurring loss, the Indians are now entitled to
increased annuities a^ stipulated in the treaties with them, and
Ontario and Quebec are ultimately liable therefor.

Paragraph five of this award reads: "That interest is not recoverable
upon any arrears of such annuities." The effect of this is to strike
out at once as untenable $273,000 of the claim.

Our counsel contend that during a part of the period for which the
claim is made, and speaking without prejudice, reaching probably
back to 1872, inci*eaaed annuities could not have been made without

incurring loss.

The arbitrators further held (Chancellor Boyd dissenting) that the
Dominion was entitled to interest on each year's payment of increased
annuities from the time of each payment thereof when properly
made, say, from 1872, on estimate and without prejudice.

Ontario's Appeal Sustained.

Ontario appealed to the Supreme Court from parts of this award,
viz., paragraph six, which fastens the ultimate burden of payment of
the increased annuities after the union upon Ontario alone, on the
ground that the ceded territory became the property of Ontario
under section 109 of the B, N. A. Act. and that it was su^>ject to a
trust for the Indians ; and also to that part of paragraph nine which
says that any payments of increased annuities properly made by the
Dominion since the union are to be charged against Ontario as of
the dates of payment.

, B ^ ■" - " "•

This appeal was argued in May, 1895, and judgment given sustain-
ing the appeal in December, 1895. In his judgment, delivered
December 9th, 1895, Chief Justice Strong of the Supreme Court
says : —

" This appeal must be allowed, and the award must be varied by
substituting for the sixth paragraph thereof the following: — The ceded
territory mentioned became the property of Ontario under the 109th
section of the British North America Act, 1867, absolutely, and free
from any trust, charge or lien in respect of any of the annuities, as
well those presently payable as those deferred and agreed to be paid
in augmentation of the original annuities, upon the condition in the
treaties mentioned. And, further, by striking out the seventh and
ninth paragraph of the award.

" The Province of Ontario is entitled to the costs of this appeal,
to be paid by the Dominion."

The judgment of the Supreme Court supports the contention of
the Attorney- General, Sir Oliver Mowat, as communicated to Mr.
Blake, then Minister of Justice, in 1875, that the claim on the part
of the Dominion, if any, is a liability of the late Province of Canada
and that Ontario alone is not to bear the ultimate burden of the in-
creased annuities.

The Dominion has taken steps to apply durmg this month to Her
Majesty's Privy Council for leave to appeal against this judgment.
The Province of Quebec is applying to be heard before the Privy
Council as a party interested.

Immigration Expenditures.

Three other matters, relatively speaking, of much less importance
than the interest question, or the question involved in the Huron
and Superior treaties, were next taken up by the arbitrators.

The first of these concerned certain immigration expenditures.
The Dominion claimed from Ontario a refund of $68,635 under an
agreement made in January, 1873, for the transport of immigrants
from Quebec to points in Ontario during the years 1878-79 and 1880.
This case was argued at Quebec on the 12th of February, 1895, and

an award made on tl e day following disallowing 8^)5,549 of the claim.
When the account i i taken it is expected that it will be found that
Ontario is entitled to recover a small balance.

The second was a laim preferred by Ontario against the Dominion
for an unpaid balance of $21,444 belonging to the Upper Canada
Municipalities Fund, which in 1866-G7 and 1868 had been misap-
plied. The award of February, 1895, on this head allows $15,732
against the Dominion, and directs that amount to be credited to
Ontario as of date, July 1, 1872.

The third of these minor claims was that made by the Dominion
against Ontario to recover a balance on some interest coupons paid
in London in 1861 by the late Province of Canada and assumed by
the Dominion at Confederation. These coupons were collected by
Ontario, but the proceeds were not paid over to the Dominion. The
award as to this matter is against Ontario, and orders that the Do-
minion of Canada be credited with $16,781 as of date, December
3l8t, 1892.

Other Claims.

Two other claims of the Dominion against the late Province of
Canada have been argued and decided. The one, a claim for
$21,083, was made on behalf of the Delaware Indians for lands
drowned at Dunnville in 1829-33. This case was heard at Quebec
last November. The arbitrators disallowed the claim in toto. The
other was made on behalf of the Mississagua Indians, of the River
Credit, for the value of Indian lands sold between 1826 and 1858, it
being alleged that the Province of Canada received the proceeds,
but did not pay them over to the Indian Department. The amount
thus claimed was $78,774. Ontario not only denied all liability, but
also tiled a counter-claim against the Dominion on the ground that
the Dominion had improperly charged $5,582 against the Widows'
Pension Fund and credited it to these Mississagua Indians. This
case was argued last November in Quebec. The arbitrators dis-
missed the claim of the Dominion, and allowed in part the counter-
«laim of Ontario.

3(i

Common School Fund.

The questions concerning the Common School Fund furnish the
only other important matter which has been presented to the arbi-
trators up to the present time.

Shortly stated, the origin of the Common School Fund was that
in 1841 an Act was passed providing for the establishment of "a
permanent fund to consist of such monoys as may accrue from the
sale or lease of any lands which, by Legislature or any other com-
petent authority, may hereafter be granted or set apart for the en-
dowment, maintenance and support of Common Schools and of cer-
tain other moneys." The division of the fund between Upper and
Lower Canada was to be made l^y the Superintendent of Education.
This was amended fn ^843 by 7 Vict., chap. 9, which provi<led that
the income from the lund should be apportioned between Upper
Canada and Lower Canada according to the census next before
taken.

Then comes the Act of 1849, which recites that it is desirable
that the annual sum of c£ 100,00') should be raised from public lands
of the Province of Canada for the maintenance and support of Com-
mon Schools therein, and " that so much of the first moneys to be
raised by the sale of such lauds as may be suflicient to create a capi-
tal which shall produce an annual sum of £100,000, should be set
apart for such purpose." The Act provides that all moneys which
shall arise from the sale of any public lands of the Province shall be
set apart for the purpose of creating a capital sufficient to pro-
duce the said £100,000 per annum, and also provides for the ii). vest-
ment of the money.

This Act provides that 1 ,000,000 acres of public lands of (Jariada
should be set apart for the purposes of the Common School Fund.
In pursuance of this Act and by an Order-in- Council dated the 5th
of November, 1850, 1,000,000 acres of land in the Province of
Upper Canada, now Ontario, was set apart to comply with this
statute. At the time the provinces were Confederated by the Brit-
ish North America Act of 1867 all lands within the confines of the

old Province of Upper Canada, now Ontario, vested in the Province
of Ontario. Sales were made, and at the time of Confederation
nearly the while of the million acres had been sold, but as to a larj^H
part the instalments of purchase money had not been paid, and a
portion of the lands remained unsold at Confederation.

After Confederation, and owing to defaults by purchasers, some
of the sales previously made were cancelled and the lands resold, and
a portion of the lands, which at the time of Confederation were un-
sold were subsequentl sold by the Province, and at the present time
a few hundred acres remain unsold.

The Province of Ontario, according to the original award of 1870,
has never received from the Dominion any of the moneys which
came to the hands of the old Province of Canada as a lesult of
sales of these lands prior to Confederation, but the Dominion has
held this money as trustee for Ontario and Quebec under the award
of 1870, and Ontario has received credit for certain amounts of in-
terest thereon.

The amount required to produce $400,000 per annum was $6,666,-
666, and the total aggregate resulting or to result from the sale of
the 1,000,000 acres would not produce this sum.

Quebec's Claim Disallowed.

Quebec has piit forward a claim that the deficiency estimated to
amount to $1,451,741 should be made up.

The question of the liability of Ontario in respect to this claim of
Quebec was argued before the arbitrators in July, 1895, and judg-
ment rendered on the 6th of February, 1896, unanimously disallow-
ing Quebec's claim.

Since Confederation Ontario has collected and paid over to the
Dominion on account of sales of Common Scho'»l lands sums aggre-
gating $936,728, and the arbitrators have found: — "(1; That the
sum held by the Grovernment of the Dominion of Canada on the 10th
of April, 1893, as part of the principal of Common School funds,
amounted to $2,457,688, made up of $1,520,959, that at Confedera-

tion came into the hands of the Government of Canada, and the
sum of $936,728 for which the Government of Ontario has accounted
to the Government of the Dominion of Canada."

Quebec claimed that this should be increased by the sum of
$124,685.18, which had been deducted from the Common School
Fund and credited to the !Jpper Canada Improvement Fund, con-
tending that the transfer of this sum to the Upper Canada Improve-
ment Fund was contrary to law.

Ontario contended for the validity of the transfer, which was ex-
pressly authorized by the award of 1870 made by the arbitrators
appointed under section 142 of the British North America Act,
against which Quebec had unsuccessfully appealed to the Privy Coun-
cil. The majority of the present arbitrators decided in favor of
Ontario, but from this tinding Chief Justice Sir L. N. Casault dis-
sents, being of the opinion " that the sum so held by the Dominion
Government as part of the principal of Common School Fund was
greater than has been stated by an amount of $124,685, which sum
in the said accounts had been deducted from the said fund and
credited to Upper Canada Improvement Fund."

The award of 6th February, 1896, holds that, subject to certain
deductions, Ontario is liable to the Common School Fund for the
amount received by her since Confederation or to be received from
or on account of Common School lands. From this finding as to
liabilities. Chancellor Boyd dissents on the ground that there is no
liability by Ontario in respect of the Common School Fund or lands.
The Arbitrators decided unanimously by the award of February 6th,
1896, that, as provided in the award of 1870, Ontario is entitled to
deduct six per cent, for management.

The majority of the Board hold that in rjspect of "noneys arising
from sales made between 14th June, 1853, and 6th March, 1861, the
Province of Ontario is entitled to deduct and retain twenty-five per
cent, of the balances after deducting the six per cent, for sale and man-
agement, following the award of 1870 which directed that the said
twenty-five per cent, shall be taken and retained by the Province of
Ontario for the Upper Canada Improvement Fund. From the find-
ing Chief Juatico Oasaults dissents.

The amount involved in this part of the present award in favor of
Ontario is $217,294, which Ontario has deducted in respect of collect-
ions up to 31st December, 1892.

A Satisfactory Result.

There are othei questions involved in this very important matter
which were ai-gued in July last, and as to which the arbitrators have
not as yet made their award. Since June last accountants appointed
by the arbitrators nave been examining as to the validity of the sums
mentioned in the accounts submitted to the arbitrators. My pre-
decessor, the Hon. A. M. Ross, was appointed accountant for
Ontario, Mr. Machin, Assistant Provincial Treasurer of Quebec, for
Quebec, and Mr. Dickieson, Chief Accountant of the Finance Depart-
ment at Ottawa, for the Dominion. On the threshold of the enquiry
the representatives of Ontario and Quebec were met with a serious
question. The accountant for the Dominion, under the advice of
counsel, contended that the Act of 1873 which relieved the Provin-
ces from the excess of debt precluded them from objecting to any of
thfi items composing thft $10,506,088 mentioned therein as the ascer-
tained excess of debt appearing on the books of the Dominion at the
time of the passing of the Act, and asserted that the grant of
$10,506,088 was based on that sum being the true excess of debt.
This important question, having bsen thus raised, was argued before
the arbitrators at Montreal last September. The arbitrators decided
that the it';ms appearing in the Province of Canada account between
1867 and 1873 and as rendered by the Dominion to 31st March,
1892, are subject to examination and verification. The accountants
have, as their reports from time to time fully prove, given much
thought and attention to their important work. At their last meet-
ing held in Ottawa a few weeks ago they had nearly complt . d their
examination of the accounts.

Speaking for this Province, I am safe in saying that I have p;ood
reason to be more than satisfied with the results of their examin-
ation.

Will honorable gentlemen now turn for a moment to the schedule
of assets in their hands 1

ASSETS OF THE PROVINCE.

1. Direct Investments : —

Drainage, 5 per cent, debentures invested

31st December, ] 895
Tile, 5 per cent, debentures invested

3l8t December, 1895

Drainage works— Municipal amountH
Other debentures, etc

2. Capital Hklp and Debts Due uv the

Dominion to Ontabio, Bear-
ing Interest : —
U, C, Grammar School Fund (2 Vict.

^_ Cap. 10) $312,769 04

U. C. Building Fund (IS Sect., Act 1854) 1,472,391 41
Land Improvement Fund (see Award) . . 124,685 18
The CaiMtal under Act 1884

(Award '(»3) $2,848,289 52

Less estimated balance due

the Dominion 2,000,000 00

848,289 52

$197,500 49

134,16(» 15

136,218 2:>

3,000 00

$470,883 89

Common Schooj. Fdnd :—

Collections by Dominion 1,520,950 24

Collections by Ontario, paid over to the
Dominion in 1889 and 1890, after
deducting Land Improvement Fund
and 6 per cent, for collections 936,729 10

2,758,135 15

Ontario's share according to population,
1891

3. Bank Balances : —
Current Accounts
Special Accounts.

$2,457,679 34

1,441,882 90
4,200,018 05

87,580 89
350,000 00

- 437,580 89
$5,108,482 83

LIABILITIES OF THE PROVINCE AT PRESENT PAYABLE.

1.— Balance Due to MrNioiPALiTiES re

Surplus Distribution 51,-91 dU

2.— Land Improvement Fund :—

Balance du< to Municipalities under 45

Vict. C ip. 3 and 49 Vict. Cap. 6. . . . S3, 256 57

Bala,n(;e due to Municipalities under 54

vi-on..« _i;'^^ „,„,,,,

3.-QrEBEc's Shark of Collections by

Ontario on Account of Common

School Lands in 1890-91-92-93-

94-95:—

Collection on lands sold between the

11th June, 1853, and 6th March, 1861 $55,3r.6 55

Leas 6 per cent, cost of management 3,,321 39

52,035 16

Leas •ue-juarter for Land Improvement

Kund ^13^0,S^9

$39,026 37
CoUecti'^ns on lands sold since 6th

March, 1S61 1.^578 17

Less 6 unr cent, cost of management 934 69

14,643 48

$53,669 85
Quebec's proportion according to popu-

iation.1891 _!!:!!_!!

Total ^29^02^

S-^rnlus o* asw*;p .niter deducving Liabili-

Ues present's nayabie ■ ii^^^lgQJ:^

We hold drainage and other debentures to the amount of $470,883.
These are for the most part, of course, municipial debentures, and
can be readily sold at a premium. I place the item of capital held
in trust for us by the Dominion at the same figure as last year, viz.,
$2,768,00^ T can speak more positively of the item than I could a
year ago. ': h^> item of $2,000,000 is, as stated only an estimate

■

In the light of the arbitration proceedings I can safely say that
$2,000,000 is not an excessive figure. There can be no doubt what-
ever as to the amount of our interest in the Common School Fund
being at least as large as the figure stated. It may be found that I
have considerably understated our assets in this schedule. My
total, therefore, of $5,108,482 will not be questioned.

The liabilities, amounting to $29,502. similar in character to those
of other years, need no explanation. After deducting these liabilities
we have, therefore, a ver)- substantial and real surplus of $5,078,980.

Honorable members will be plep ,dd to observe that at the end of
the year we had at our credit in the banks a comfortable cash balance
of $437,580.

Estimated Expenditure FOR ''9^,

A very brief reference^ Sir, to the current year j ynditures will
suffice, since more extended reference will be made to them when
we reach the Committee stage.

We ask for authority to expend $3,483,000. Deducting the
exceptional item of $40,000, which the Attorney-General asks for
statute consolidation, and this item appears but once in ten years,
we have as our estimate for the expenditures of 189G a sum very
little in excess of the estimate of last year. Compared with last
year the votes we ask for Legislation and Public Institutions mainten-
ance remain practically the same, while those for Civil Government,
Agriculture, Education and Administration of Justice are increased.
We invariably keep well within thu fsti mates. For example, we
spent in 1893 $200,041, in 1891 6150,741 and in 1895 t22,G62 less
than was voted.

ESTIMATED RECEIPTS, 189G.

Subsidy.. $1,196,872 80

Interest on Capital held, and Debts due by the

Dominion to Ontario $262,000 00

Interest on Investments 40,000 00

302,000 M

Crowx Lands Department :—

Crown Lands

Clergy Lands

Common School Lands,
(rrammar School Lands
Woods an. I Forests . , .

? 55,000 00

5,000 '30

13,000 00

2,000 00

725,000 00

Public Institi noxs :-

Toronto Lunatic Asylum S 39,000 00

London

Kingston

Hamilton

Mimieo

Brockville

Orillia

Reformatory for Females .

Boys
Central Prison

12,500 00
6.500 00

12,000 00
2,500 00
1,200 00
3,400 00
3,500 OC
oOO 00

20,000 00

Education Department

Casual Revenue

Succession Duties

Tavern Licenses

Brewers' ''

Law Stamps

Algoma Taxes

Assessments, Drainage Works ....
" Insurance Companies

•• Removal of Patients

800,000 00

101,100 00

5C,000 00

80,000 00

200,000 00

270,000 00

20,000 00

80,000 00

3,000 00

10,000 00

3,000 00

t;,ooo 00

Total 83,121,972 80

We estimate our receipts for the current year at §3,122,000.
We place Grown lauds at $800,000, licenses at $290,000 and succes-
sion duties at $200,000. Our total estimate will, I am .sure, prove
to be a moderate one, and, as in the past, so in 180G, the actual
receipts will be found to exceed the estimate. We commence the
year, as I have said, with a cash credit balance in the banks of
f 437,580, to that we can safely expect from the receipts of the year
to be able to provide efficiently for all our varied needs.

I ask honorable members to discuss our finances with fairness, and
in a spirit, devoid of partizanship. I am well convinced that honor-

able gentlemen sitting opposite to me, irrespective of party, in their
hearts believe, as we do who sit on this side of the House, that the
Attorney-Genoral, who leads this House, has always most conscien-
tiously done everything which possibly could be done to secure for
this Province economical and efficient administration, and that he is
as anxious, and that he has always been as anxious, as they them-
selves possibly could be to avoid even the appearance of waste or
extravagance. His signal and unvaried success for so many years in
securing the one and avoiding the other has won for him over and
over again the confidence and esteem of our people.

Some one has said that economy in a public sense, at any rate, is
a lost art, and there is good reason to fear that there is, generally
speaking, much truth in this observation. However that may be,
we in this Legislature may well congratulate ourselves that the
spirit of true and enlightened economy still survives, and bids fair
long to survive, in the Province of Ontario. (Applause.)

APPENDIX.

Statement showing amounts payable annually for Certificates, issued
by the Treasurer of the Province of Ontario, for " Aid to
Rail vays " and " Annuities."
\

Year.

1896..

1897..

1898..

1899..

1900..

1901 . .

1902..

1903..

1904..

1905..

1906..

1907..

1908..

1909 . .

1910 . ,

1911.

1912 .

1913.

1914.

1915.

Railway

Aid

Certificates.

A.nnuities.

Year.

159,157 52
138,605 66
110,092 66
95,660 27
89,587 26
57,781 85
41,624 25
33,l.-)6 57
.32,741 28
32,741 2S
32,741 28
32,741 28
32,741 28
32,741 28
32,741 28
32,741 28
32,741 28
32,741 28
32,741 28
32,741 28

82,200 00
82,200 00
82,200 00
82,200 00
82,200 00 i
82,200 00
82,200 00
82,200 00
82,200 00
82,200 CO
82,200 00
82,200 00

Forward

1,1)8,561 40

82,200 00 :

82,200 00

82,200 00 :

82,200 00

1,644,000 00|

1916....
1917...,

1918...,
|1919...
;i920...
il921...
|1922...
!l!l23...

1924...
,1925...

1926...

1927...

1928 . . .

1929...

1930...

1931 . . .

1932...

19.33 . . .

1934...

1935...

Railway

Aid

Certificates.

Annuitie.«.

!5 c.

1,118,561 40

32.741 28
32,741 28
32,741 28
32,741 28
32,741 28 1
32,741 28 1
32,741 281
32,741 28 1
32,741 281
32,741 28;
32,7- !. 28
32,7' 1 28
32,741 28
32,741 28
32,041 68
28,543 68
' 21,547 68
I 18,749 28
16,650 48
4,757 28

Totals . . . .

1,644,000 00

82,200 00
82,200 00
82,200 llO
82,200 (.0
82.200 CO
82, 200 "00
82,200 00
82,200 00
75,500 00
61,800 00
48,6.n0 00
36,2" 00
30,000 00

30.ooa 00

30,000 00

23,000 00

12,000 00

S,000 00

8.000 00

4,000 00

1,699,229 40, 2,668,800 00

JVo<«.— Present value of Railway Certificates— (interest 2g per cent.

half-yearly) $1,298,376 89

Present value of Annuities— (interest 2i per cent, half-yearly) 1,435,774 31

C. H. SPROULE,

Provincial Auditor.

Provincial Auditor's Office,

Toronto, February 19th, 18?G,