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BUDGET SPEECH,

Delitered in the House of Commons of Canada, on Tues-
day, THE 1st Aprtl, 1873,

THE HON. S. L. TILLEY, C. B.,

ii»

MINISTER OF FINANCE.

Hon. Mr. TILLEY said : Mr. Speaker.— The course that I
propose to take is to make my statement while you, Sir, are in
the chair, and I think that course was sugjyested and approved
by leading members of the Opposition last year, when my pre-
decessor made his last statement.

Perhaps I shall be permitted in the first place, before enter-
ing upon the statement which I am now about to submit, to
offer a few personal remarks. I may say with truth that there is
not an honorable member on the floor of the House, who regrets
more sincerely than I do, that the statement which I am about
to submit to you, is not to be submitted by the distinguished and
venerable statesman who had that privilege for the last three
years. The Leader of the Grovernment, my colleagues, and my
predecessor himself, know right well that, when he intimated to
the Government and to me his intention to retire from public
life, everything that I could say, and every argument that I could
present, to induce him to remain with us, was made use of. I
did so for two reasons, first, because I felt that it was in the in-
terest of the country that he should retain his position in the ad-
ministration of its finances, as he had been most successful,securing
the confidence of the people of the country, and of a large propor-
tion of the members of this House. (Cheers.) Secondly, from a per-
sonal and less pertinent reason. I felt that it was desirable that he
should continue to occupy the position of Finance Minister
because, if he retired from that position, the burden would fall

'^^^

upon my shoulders, which I felt were li ss able to bear it, and I felt
also that I could less ably advocate the views and opinions of the
G-overnment in Parliament.

I felt also that following so able a statesman, and at so short
a notice, I was placed m a very unfavorable! position compared
with that which I might have occupied under other circum-
stances.

For these reasons, therefore, I did all I possibly could to
indu e him to remain, and it was only when 1 was told that he
had been inlbrmed by his medical advisers that, unless he retired
from nctive public life, the years of his life would be shortened,
that 1 ceased to further urge upon him the arguments that I had
made use of.

Leaving this point, I will now turn to the grave questions which
it is my duty to present to the House to-day. It is usual on
these occasions to take into consideration a period of three years ;
the preceding year, the current year, and the year that is to come,
I desire, however, to-day, to extend my enquiries farther
than has been customary, and to go over the first five years of
confederation. I do so because there are in the House a good
many new members — fully a third of the faces which I see being
new faces — who have not had an opportunity of looking into
and investigating the condition of the afiairs of the Dominion
during the last five years, and because, also, there are many old
members who have not had the same o^-portunity as members of
the Grovernment and leading members of the Opposition have
had, of enquiring into and investigating the financial condition
ot the Dominion during that period. I do so, sir, because
whatever may be said on this subject outside of Parlia-
ment, through the press, by the Government or by the leaders of
the Opposition, with reference to our financial condition in the
past, still there may be some question as to the correctness or ac-
curacy of these statements so put forth, as it may naturally be
considered that from what<n'er side* these statements were made,
the gentleman or the press who made them were infiuenced
by party motives. But here, sir, on the lloor of this House, in
the presence of the leaders of the Opposition, who have all the
facts and figures before them and who are perfectly cognizant of
all those facts, I feel fhat the statements made here cannot be
gainsayed, and that the country will therefore be in a position to
accept these statements as trustworthy and to be depended upon.

Looking at the history of the country during the last five
years, in reterence to its trade and commerce, its navigation, its
banking institutions, its tonnage and its exports and imports, I
find that from every aspect in which I view it, I rise from the
inquiry feeling the greatest possible encouragement, not only with

<4 :^.

reference to the past but with reference to the present and to
the future. (Loud cheers.) .

And now, with regard to the last five years, let me call the
attention of the House to a few facts which are calculated to show
the material progress of the Dominion during that period. First,
let me draw your attention to the marvellous and wonderful in-
crease in the capital invested in the banking institutions of the
country during that period ; and next to the extraordinary in-
crease in the deposits in the banks of the Dominion. Nothing
could show more satisfactorily the increase in the wealth of our
people than the facts to which I am about to direct attention.
Let me first refer to the paid up capital of the Banks for 1867,
and as I do not desire to weary the House, I will not give the
figures for the intermediate period. The paid up capital of the
banks in February, 1867, was $28,692,980; and at the same
period in 1873, it was $49,189,969; the deposits in 1867 were
$26,103,004; and in 1878, $59,560,003; thus showing a net in-
crease in the ordinary banks of the country, including Savings
Banks, of nearly $37,000,000 within the space of five years ; and
an increase of paid up capital of the banks in Ontario and Quebec
alone, (the banks in the other Provinces not being included, as
some of them have not sent in their returns) of $20,497,000.

This fact at once shows the wonderful progress of the Do-
minion, but I desire also to call attention to the steady progress
made in the value of the imports and the exports of the Dominion
since the commencement of the Union. In 1868, the exports
were $57,567,888; in 1869, $60,474,781 ; in 1870, $73,573,490; in
1871, $74,173,618; in 1872, $82,639,663; and in the first half of
the current year, $53,488,968 Now we come to the value of
goods entered for consumption during the same period. I take the
goods entered for consumption, as the value of goods imported is
not an accurate test. The value of the goods entered for con-
sumption in 1868 was $71,985,306, and in 18C9, $67,402,170. This
shows a decrease of four million dollars and upwards, and I may
perhaps be allowed to pause and explain the cause. During the
first year of Confederation different rates of duty prevailed in the
different Provinces, and it was, of course, natural that all those
who had goods in bond, and who were not at all certain of the
taxation which Parliament would impose — iii anticipation of an
increased rate of taxation, should withdraw from bond a larger
amount ol" goods than they required for actual consumption, and
thus the revenue of the first year was increased at the expense
of the second. In 1870 the value of goods entered for con-
sumption was $71,237,603; in 1871, $86,947,482 ; in 18'J2, $107,-
709,116, and for the first half of the current year, $72,Sil,668.
Thus making the exports and imports for the first half of the
current year |1£6,330,636, as against $129,553,191 for the whole
of the first year of Confederation, or a difference of about $3,000,-

000. This is another evidonco of tho steady and progresBire
prosperity of the country.

We now come to another statement, and I desire to make
it here, though I shall refer to it again at a later period.
I would call attention to the rate of duties collected during
the first years of the union. The percentage in 1867, on
goods entered for consumption, was twelve and twenty-five
hundroths, which was increased in the next year to twelve
and thirty-one hundredths. In the third year, when Parliament
again imposed additional duties, it was increased to thirteen and
twenty-eight hundredths, and in the next year, it was raised to
thirteen and sixty-two hundredths. In the following year, how-
ever, it went down to twelve and eleven hundredths ; and for the
first half of the current year, on 172,841,668, of goods entered for
consumption, the revenue was |6,903,010, or nine and forty-seven
hundredths per cent. This has arisen from the reduction of
taxation which took place in 1871, and from the still further
reduction occasioned last year by the withdrawal of the duties
on tea and colfee. These are some of the facts which speak of
the progress and prosperity of the country.

I would now, for a few moments, call your attention to the
financial position of the Dominion. I have no doubt that every
honourable member who has examined the publ;3 accounts, will
have read the statements shewing the debt of the Dominion, and
the expenditures on capital account, with the greatest satisfaction,
for they shew that during the last five years there has been paid
out of surplus revenue, over and above the ordinary charges on
the consolidated revenue fund, and contributed towards the con-
struction of public works that were chargeable to capital, a sum
of $9,522,022.

I will now state the whole increase in the public debt since
1867. In 1867 the net debt was $75,728,641, and in 1872 it was
$28,187,072, making a net increase of the debt $6,458,431. Now,
sir, what, have we had in return for this increase. We find that
the increase of the debt of the Dominion is just the same as the
increase in population during the period mentioned, and no more ;
that the net debt in 1872, as compared with the population shown
by the census returns, is just the same in proportion to the popu-
lation as it was in 18(57 And, what have we done in that period ?
We have expended half the money necessary for the construction
of the Intercolonial Railway, and half of that great work has
been completed. We have purcha ed the North West Territory,
for which we paid three hundred thousand pounds sterling, and
we have paid another three hundred thousand pounds sterling for
opening up the country and establishing a 'Jovernment ; (cheers)
we have expende ! a million and a half of dollars for public works
chargeable against capital — works that it was understood by this
House should be chargeable against capital ; we have expended

(■•■

■i

■: -t

•y

^480,000 for the survey of the Pacific Railway, which, however,
will be paid back by the company out ol" its subsidy, and, we
have assumed the debt ol" the Province of British Columbia,
amounting to 1 1 ,(506,200 ; and this is represented by a population
equal in proportion to the p()i)ulations with which the other pro-
vinces came into the Dominion, lint after doing all this, after we
have half constructed the Intercolonial Railway, si)ent three
hundred thousand pounds sterling for the purchase of the North
West, another three hundred thousand pounds for the establish-
ment of Government there; a million and a half of dollars on
public works chargeable to capital ; ^480,000 lor the Pacilic Rail-
way, and assumed the debt of British Columbia, the debt of the
Dominion to-day is not one cent greater in proportion to the po-
pulation than it was five years ago. (Cheers.)

The interest may be stated in precisely the same way . The
interest is just about the same as in 1867, being one dollar and
twenty-two cents per head of the population. And now, let us
see what has been done during the existence of this state of
things ; and here let me call the attention of the House to one or
two extraordinary expenditures during that period. We had two
Fenian raids, which cost us a very large sum of money ; three or
four hundred thousand dollars were expended in taking the
census ; but notwithstanding these extra expenditures, the net
surplus was over nine millions and a half Let us see what
the taxation of the people has been. I wish here to call
the attention of the House to the fact that the taxation
to which I refer is for customs, excise, and stamps. I do
not include the revenue from the post office and from railroads,
because if any of the people were travelling on the Oreat Western
or the G-rand Trunk they would expect to pay for theiv passages,
and so would people who travelled on the Government railways,
T therefore say that the taxation is comprised of customs, excise
and stamp duties. These amounted in the live years to |69,937,-
057 which would give an average taxation of 113,987,411 per
annum, or a tax of |4.09 per head upon the whole population.
And here I may say, and I appeal to my hon. friends opposite,
who have had a great deal more experience than I have, because
they sat in the old Parliament of Canada befoye the Maritime
Provinces were represented here, that under the head of capital
in former days, and during the first one or two years of Confed-
eration, many items were charged against ca/pital which have
since been taken from capital account and charged against
income, whereas we now find that there are very few items
except those for the enlargement of our canals and the construc-
tion of railways, which are not now charged against income,
but yet, notwithstanding this, when we deduct the surplus, we
find that the whole expenditure for the past five years
averaged only $3.54 per head of the population of this Dominion,
and here 1 may mention, and I do not think that hon. members

can gainsay thfi fact, no matter how much some of them may
have ditreied as to the nature of the taxation, or its distribution,
that so far as the people are concerned it has not been felt as
generally oppressive. Let m, for a moment consider the experi-
ence of the past. While we have had an average tariff of 12 J
per cent, during the five years, we have paid all interest and
expenditures properly chargeable to income, besides large suras
ior lighthouses, improvement of navigation and other public
works, and |1, 800,000 as a sinking fund, towards redemption of
the debt, out of income, and have had left a sum over and above
which would have enabled the Government to pay interest an a
debt of thirty millions more than it now has.

I now wish to make one or two observations in lespect to
the receipts and expenditures of the last year. In the statement
made by my predecessor on the 30th of April latit it was esti-
timated that the revenue from customs would be $ 1 2,600,000,
and various other estimates were made in reference to excise,
post ofhce aiiJ. public works. I hold in my hand a statement of
the net receipts from customs, excise and stamps, which shows
that instead of the estimated 12 J millions the revenue from cus-
toms reached $12,787,082, and this I wish it to be remembered
was after a refund of $200,000, on tea and coffee, had been made
under the authority of Parliament, and the revenue from excise
was $4,735,651. This is a very considerable increase, and may
be explained in this way. In April last it was supposed that an
additional excise duty would be imposed, and just before the
financial statement was made by my predecessor, a large quantity
of excisable goods was taken out of bond, and therelore a large
amount of revenue was gained last year which this year lias been
lost. We then come to public works, which realized $11,729
over the estimate ; and there was an excess from the post office
of $92,374; and from miscell«neous $95,157; there was, how-
ever, a deficiency in the stamp duties of $8,0i5l, making a total
excess over and above the estimate of $(364,813. We find also
that while there was an excess of revenue the expenditure did
not come up to the estimates. This has been the case every
year. In public works there has always been an excess of
estimate over expenditure, and last year it^amounted to $654,852.
All these estimates are made suffiMently large to cover all that
can be required, an . then delays very frequently occur in
obtaining the titles of lands on which public buildings are to be
erected, and there is generally an amount under that item which
it is found impossible to expend " ithin the time.

Now, I wish to call the attention of the House to a few more
particulars in which there has been a reduction. Under the head
of Civil Grovernment there has been a reduction of $25,492. I
know that there is a general imprt ssion throughout the country
that the overnment has been extravagant, in reference to ex-

m may
bution,

felt as
experi-

of 12?
Bst and
e suras

public

ition of

d above

st an a

ipect to
itement
'^as esti-
500,000,

excise,
ment of

shows
om cus-
mbered
in made
a. excise
nd may
that an
fore the
|[uantity
t a large
las been
$11,729
>st office
ts, how-
' a total
ind also
ure did
e every
ccess of
654,852.
all that
ccur in
re to be
a which

w more
he head
,492. I
country
i to ex-

penditure under this head, but I think if there is one expendi-
ture more than another, that the Govornmont can well defend
it is this item of Civil tSorvice. I recently aske*.' the Auditor
to prepare me a statement of the increase during the
five years under this head, charging against 1807-08, several
expenditures that were not lormerly charged against the Civil
Service. For instance in the department of i*ublic Works,
several engineers were employed in outside service, and the
works to which they were attached were charged with their

v; services. These, however, are now charged to the Department.

^1 Then, again the Adjutant General's branch oi the Militia Depart-

I ment in 18^7, was charged against militia expenditures, whereas

J it is now charged to the Civil Service. At that time a system
prevailed in the Post Office service, by which large amounts of
printing were obtained and were executed under the direction
ol the different Postmasters throughout the l)( minion, while under
existing arrangements, a very large portion of the blank forms
and returns is printed by the contractor, and the accounts

I appear in the contingencies of the department. Then there are
the new departments — the Queen's Printer's and the Stationery
Department, both of which branches, although adding to the

' expenses of the Civil Service list have been instrumental in
saving large sums of money to the country. And let me say in
addition that under the Post Office Department we have been
establishing a system of savings banks in all parts of the country
involving the receipt of three or four millions of dollars, and
requiring additional clerks in the Department here, and addi-
tional post offices all over the country. Taking all these things
into consideration and deducting the salaries of the new Gov-

'• ernors for the two new Provinces established since 1807 ; and
notwithstanding the increased work of the Post Office Depart-
ment, which alone had increased the expenditure by -^27,000 a
year, the difference between the expenditure under the Civil
Service in 1867 and 1872, is but |1 1,000. How has this been
accomplished ? The fact that under the Civil Service Act rS50 a
year was added to the salaries of the clerks would alone bring
the sum up to the present amount, but by the reduction made
in the contingent expenses of the Departments the sum has
been reduced by an amount equivalent to the addition to the
salaries of the clerks. Then there have been also the following
reductions :

Justice $13,153

Penitential ies 85^520

Legislation 23,500

Militia 95,333

Fisheries 25,331

Light and Coast Service 14,189

Public Works 654,852

•

(Many of these works are carried over into the current year,
and make the expenditure heavier than it would otherwise be.)

Miscellaneous $167,864

Customs 18,666

Excise 67,867

Public Works, Railways and Canals 38,703

On the other side there was an increased expenditure last
year on account of the subsidies to the new Provinces, British
Columbia and Manitoba, which the House will recollect ; and
there were also the increased subsidies under the new census, to
Nova 8cotia and New Brunswick, none of which were contained
in the statement of my honourable friend last year and had
to be added to the estimates then submitted. Then there
was an increase in the charges of the year of $199,704, for the
management of the debt. I may say that this arose from the
fact that the Bank of Montreal had nearly two years payment
in that year, under the old arrangement ; and there was a large
expenditure lor engraving, striking off and publishing of the
Dominion notes under the Act of my predecessor. And then
there were the payments to superannuated officers, amounting
to $88,842. But, notwithstanding the refunding of the $200,000
on tea and coffee, the Revenue last year amounted to $20,714,813
against an expenditure of $17,589,468, leaving a surplus of
$3,125,345, or, adding a sinking fund of $470,606, a total surplus
of $8,595,961.

I come now to a more interesting point, perhaps, and that is
to the operations of the present year. It will be remembered
when my predecessor made his statement last year, he estimated
the income at about $20,635,000, and the expenditure at about
$19,630, )00, leaving a balance of $1,000,000. But he remarked,
and very properly, that on that occasion as on all others, supple-
mentary estimates would be brought down, and when that sup-
plementary estimate was brought down, it was found that the
sum voted by Parliament at the close of the session against
income was $400,000, making the total estimated expenditure,
$20,030,000, as against an estimated income of $20,635,000. I
recollect that when my predecessor subsequently came to Par-
liament and asked that resolutions should pass for the reduction
ol' the duty on tea and coffee, Congress having decided upon the
removal of the duty on these articles, it was stated by hen. gen-
tlemen opposite that we were simply following the American
example. (Hear, hear, from Mr. Holton.) But we must neces-
sarily, ill dealing with the question of tariffs, have some reference
to the laws of the neighbouring Republic, in order to arrange
wisely for the purpose of securing a revenue and preventing
illicit trade. (Hear, hear.) When my hon. friend brought in those
resolutions, he stated that if they were carried there might be a

67,864
18,666
57,867
38,703

doficit'iicy of something like $600,000, bocivust^ the revenue obtain-
ed in 1S70-71 on tea undeollec was n<'iirly 1^1,200,000. He then
added that tlie I'xpendituie mi^;ht not reach the e8timat»>, but
still, for various reasouM, he did not leel himsell" justilied in
asking? lor the imposition of any additional duties until they had
the experience of at least nine months, tuid until Varliainent met
ttj^ain, in order to ascertain whether or not additional duties would
be nect!ssary. What is the position in which we lind matters
to-day ? We find that in all probability, notwithstanding the
reduction or the removal of the duty uu tea and colfee, which
amounted in 1870-71 to s^l, 200,000, there is every prospect that
the revenue from Customs will reach, at the close of this year,
the sum estimated by my predectsssor before that diity was
removed. (Cheers.) In the ebtimati- that is made of the duty
that will be derived from customs this year, we place the
amount at !|1 2,500,000, just the sum at which my predecessor
estimated it before the duty was removed. Let us Hee whether
we are warranted in this conclusion. The receipts up to to-day
from customs are $9,400,000, add one third to that, viss., #3,133,33-J
for the remaining' three months, and they are the three best
months of the year, and it amounts to $12,533,333. 1 think we
are, therefore, safe in estimating the revenue from customs at
twelve and a half millions. The revenue from excise was
estimated at $4,625,000, we now suppose we will receive
$4,550,000, a reduction in the estimate arising- 'om the
cause to which I have referred, that in the previous year a
very large amount of duties (about $200,000) on goods taken out
of bond in (expectation of an increase of duty, went to the credit
of the previous year, and reduced the amount of the current
year, tip to the present time we Lave received $3,358,000, add
one third for three months yet to come, and we have $4,470,666.
We then come to the Post Oliice, and find that our estimate was
$700,000. The revenue up to the present date is $546,000, add
one-third and it will make $728,000, still the Department estimate
it at $720,000 for the current year. Then for Railroads, C .nals and
Public Works, the estimate last year was $1,610,000, and probable
receipts $1,400,000 or $200,000 less than the estimate.

Hon. Mr. MA.CKENZIE— Are these gross receipts '?

Hon. Mr. TILLEY — They are. The difference arose from
the fact that a sum was asked for in connection with these works
supposing that the Intercolonial Railway would be open earlier,
and, of course, the income was calculated on the same basis.
While the receipts were less the expenditure would be less.

But sir, the result is that lotwithsU.iding the statement of
my honorable predecessor, tha. here migi«« be a deficiency, sup-
posing the whole ex\ iiditure ook plac» for public works ot
$600,000, it is found that, notWi''istandinj^' ihe supplementary

estimate new before the House, covering an expenditure against
income of ^200,000, that tho expenditure for all purposes during
the year will reach $1 0,000,000, and insiead of leaving a defi-
ciency, after tl- e reduced expenditure of $16r»,000 for the currtnt
year, it is estimatt^d that the surplus will be $765,000. (Hear
hear.)

I may say that in the estimated reduction of the expenditui^,
there are two or three items by which that reduction is covered,
and two of these have been carried over in the estimates of the
next year. There will be a reduction of $400,000 for public
works, then the Militia expenditure will be $93,000 short of
what w;is voted, and in the Census Department, the expenditure
will be 1180,000 less than the sum voted ; these reductions bring
the expenditure down to the sum named — $19,600,000.

We now come to the expenditure of the coming year. It
will be seen by the estimates that it is proposed to ask the House
ibr a total expenditure of 131,008,423.

Hon. Mr. HOLTON-
rized by statute ?

-Does that include the amount autho-

Hou. Mr. TILLEY — It includes the expenditures authorized
by statute lor construction of public works and all other charges.
Of this sum $9,974,240 will be chargeable to capital ; railroads
(Intercolonial), $1,335,240 ; canals, $5,277,000 ; public buildings,
including the library and g"vounds, $362,000 ; making a total of
$0,974,240 ; also deduct from this expenditure $93,000 in payment
of debt ; this leaves to be provided Icr during the coming year,
out of income, $20,941,183.

This is in excess of last year, which was, as I have stated,
$10,600,000, and is increased in part in the following manner :
Interest on debt, ;:.4G4,3i)8, Intercolonial loan, which will have to
be put in the market ibr the completion of that Railway. Then
we have added to the expenditure, under the head of Greolo . ical
Survey, Meteorological Observatories, &c., $26,792. This latter is
for the purpose of providing that most important infor*-
mation for all parties who are concerned in the navigation of the
Dominion. (Hear, hear.) Last year the Minister of Marine and
Fisheries brought this matter up, and the Grovernment feeling the
great importance of the subject, asked Parliament lor a vote of
$10,000, but that sum was found inadequate. The G-o-
vernment have in the past five years expended large sums of
money lor the construction of lighthouses and improving the

t
I

igrtinst
luring
la defi-
mrrtnt
I (Hear

[dituFe,
)vered,

of the
[public
lort of
iditure

bring

ar. It
House

autho-

lorized
larges.
ilroads
Wings,
otal of
yment
year,

tated,
nuer :
ive to
Then
> . ical
iter is
infor*-
•fthe
I and
gthe
teof

ao-

18 of

the

navigation generally, thus reducing insurance and increasing
the value of property shipped from this country, and following
out the same policy, they will ask the House for an additional
appropriation of $26,792 for this service for next year.

Then we come to Penitentiaries. Under this head there
will be found an increase of $91,672. This is principally con-
nected with the expenditure for the new Penitentiary in the
Province of Quebec, in the erection of buildings, salaries, &c..
Under the head "Miscellaneous," there is an increase of $111,-
736. Now under this head there will be found this year
$144,000 in payment of the third instalment to the Imperial
Grovernment for arms and ammunition purchased from them at
the time the troops, or a large portion ol them, were removed
from Canada. That appeared under the head of IMilitia
formerly, but is now under "Miscellaneous." There is also an
increase in the boundary survey. Last year the appropriation
was $50,000, and from the report of the officers in charge, it is
now estimated that $120,000 will be required for no^t year.

I will now refer to the expense for the maintenance of Public
Works. In this there is an increase ol $588,669, being principaly
in the maintenance of the Railways and Canals — a small portion
of it, inrrease of wages and salaries to officers in connection with
the canals and railways, but the greater part of it is owing to the
extended mileage to be opened for traffic o]i the Intercolonial
Railway, and the payment ol' the running expenses, salaries of
officers, &c. •

Then in the Post Office, we find an increase of $304,000,
and I desire to make a few observations on this item. A system
has prevailed up to the present time, with reference to the mode
of dealing with the Post Olfice Department, varying from ihat of
all other departments of the service. In the other departments the
monies received have been deposited to the credit of the Receiver ,
G-eneral. Not so with the Post Office Department. In the Post
Offices in Toronto, London, Montreal, Quebee, and, until last
year, the Post Offices in Halifax and St. John, they collected the
revenue, paid the postmasters and officers out of it, and simply
remitted the balance. It has been considered desirable, inas-
much as at this time, these postmasters have largo powers under
the money order system, that they should remit their receipts
daily. It has been considered desirable in the interests of the
public, and the interests of the officers themselves, that this
course should be taken. It is but right that this Department
should be placed on precisely the same footing as all the other
Departments, and this increase, to a very great extent, or up-
wards of $200,000 of it, arise from the necessity of paying
the salaries of postmasters and clerks at Toronto, London,
Montreal, and other large post offices ; therefore the increase is

more nominal than real, and the estimated revenue of the post
ofhces will of course be increased in about the same porporticn.
Looking at the progress that has been made, the work that is
l)erformed, and the facilities given to the public, in connection
with this department, the increased expenditure for that service
appears to be fully justified. I hold in my hand a statement by
the Postmaster Greneral, showing the wonderful increase in the
business during the last five years :

No. of Tost Offiws.

Mile- iimniiilly tnivellcd by
mail

No. of Itittors ]>y post in
the voar

No. oi' iicwsjiapcrs by post
ill tlioyear

No. of rogistori'd li'tton
posted ill tlic year

Amount of postal reveiUK.'.

Amount of E.vponditures. .

Amount of Mouoy (Jrdcr
issues

1S6S.

3,638
lO,6-'2,21ti

IS, KXjjCHM)
|S,SrtU,(M)(>

7()4,(XH)

$1,U1'4,7J(>

§1,053,57(1

186'.).

1870.

3,756
11,261,897
21,92(>,(J(J()

IS,7U(>,(KHJ

85(),(KJ(>

!?, 973,056

$1,079,828

3,820

11,695,726

24,500,000

20,150,(K)0

1,0(J0,(K)0
$1,010,767
$1,155,261

1871.

1872.

3,943i 4,135

$3,342,574 $3,-551,55

11,992,898

27,050,000

22,250,(XK)

1,100,000
$1,079,767
$1,271,006

.\mount of i'ostoffitv niv-,
ings Banks of Ontario
and(iucl)oc ' $856,814

$3,898, 747l$4,537,902
$1,588,848 $2,497,259

12,548,389

30,600,000

24,250,000

1,277,000
$1,193,062
$1,369,163

$5,123,551

$3,096, 5(K)

Now, I come to some of the proposed reductions of next year.
Under the head of t)cean and River Steam Service will be found
a sum of $!^0,51(3. This is under the new contract with Sir Hugh
Allan. After conversation with the Postmaster Greneral on this
subject, I think I am justified in saying that it is hoped that in a
very snort time the receipts from that service will be equal to, if
not in excess of the sum which it is proposed to pay under the
contrart. (Cheers.) There has been a considerable increase in
the last year or two in the number of the letters transmitted by
that line, and it has arisen from the fact that the steamers of the
Cunard Line do not now carry the mails, and the other steamers
sailing to and from United States ports, carrying mails, do not
make the passage as rapidly as those of the Allan Line. (Hear,
hear.) The result is that parties in Europe communicating with
Western States select the Allan Line as their letters reach their
destination by that line earlier than by any othor.

And now with reference to the Militia Department, It

fe post

)rticn.

bhat is

[ection

(ervice

mt by

lin the

will appear by the estimates before the House as if there
would be a reduction of #653,887, as compared with the estimates
of the current year, but fairly there should be placed against that
$144,000 that was Ijefore charged against Militia, being the third
instalment for arms to which I have referred, as now chargeable
under the head of "Miscellaneous." There should also be
deducted from it $93,000, which it is estimated will not be
expended this year. The difference therefore will be about
$426,000 oi a reduction in the expenditure under the head of
Militia. Then with reference to the Fisheiiss, there is a reduction
of $61,900 under this head. This was an expenditure in the
current year for the support of the marine police, and of the
vessels that were to look after and protect our fisheries from the
encroachmemt of American fishing vessels, and no longer required
under the Washington Treaty arrangement.

Now, the question arises, how is the G-overnment to obtain
the means of paying for this increased expenditure. It was
intimated last session, that after having made a reduction of
$1,200,000 of duties, the Government would probably have to
ask the House this session for increased taxation in some direction.
And I can quite understand, sir, that hon. members and the
country generally would not be disappointed if the Government
were to declare on the present occasion that such was their
intention ; but after having surveyed the whole matter carefully,
and looked into it with a most rigid scrutmy, they have arrived
at the conclusion that it is not wise nor is it necessary to ask
Parliament this session to impose any additional taxation, (Loud
cheers.)

I know it may be asked, are the Government not prepared
to make some readjustment of the tariff, and my answer is, that
the Government will not, during the present session propose to
touch the tariff in any particular. (Loud cheers.) There are I
admit some few interests in the country, in relation to which if
the tariff were opened at all, the Government would feel justified
in asking, and would feel it their duty to ask for some readjust-
ment, but under the peculiar circumstances in which we are
placed, and with the certainty nlmo.st, looking at the increased
expenditure of the next year, that some readjustment must take
place next session, the Oovernment have concluded to make no
present change, inasmuch as they l)elieve that they will have
means amply sufficient to meet all the requirements of the
country. (Cheers.) Their desire is to tamper with the tariff as
little as possible unless some radical changes are found necessary
in order fhat the people of the country may understand that it
has a real permanency of character. Now. let us sde whether or
not we are justified in arriving at the conclusions at which we ha\re
arrived a,s to the means at our dispo'^al being ample for the public
service. It is estimated that the revenue from customs during the

ensuing year will be $12,500,000. I know that honorable gentle
men opposite may say your estimate is excessive, as it is supposed
that during the past autumn the imports were largely in excess
of what they outyht to have been ; and that there are now lying
on the shelves of the warehouses, goods unsold and unconsumed,
that will come into competition and take the place of others,
that under different circumstances would be imported in the fol-
lowing season; But after a most careful examination of the
whole matter T have arrived at a different conclusion and though I
admit the excessive importation during the past autumn, I
believe there is no good ground for uneasiness in connection
with this matter. Let us for a moment look back to the history
of the past live or six years and it will be found that during the
first five years of Confederation there appears to have been an
excess of imports over and and above exports of $60,000,000
or fli:,000,000 a year. I know it is very natural for persons
looking at this subject cursorily to suppose that this cannot
but lead to financial embarrassment, but let us examine into
the matter. Here we have something like $12,000,000 a
year excess of imports over exports. Add to that the interest
on the debt of the Dominion payable in London $4,000,000
more, and we have $16,000,000 a year to be provided for
which our exports do not appear to cover. But if we
look into the matter more carefully we will arrive at
the conclusion, and the just conclusion, that there are
no good grounds for apprehension. Of course the matter
can only be approximately estimated, but I have taken
some pains in the matter and taking one city in the Dominion as
an illustration, I find that in the case of the City of St. John,
the city I have the honor of representing in this House, from a
very careful examination made by the President of the Board of
Trade it appears that the return freights from that city amount to
$2,000,000 dollars a year, and if that be the case in the city of St.
John, we may fairly estimate that from $5,000,000 to $6,000,000 of
profit from freights are received every year, by which the surplus
as between imports and exports is very materially reduced. If we
go further and take into consideration the expenses incurred in
the shipping of the produce of the Dominion, which amounts
to $70,000,000 or $80,000,000 a year, for which disbursements
bills of exchange are drawn, we shall find that these two items
alone are suflicient to make up the difference.

Let us now come to the question as to whether our estimate
of $12,500,000 from Customs duties is likely to be realized
or not. Our estimate for the present year is $12,500,000
and why should we not have as much in the ensuing year ?
I have in my hand the returns of revenue collected for the
first eight months of the current year, and I have examined
it very carefully to ascertain wheiher we can gather from it that
there was an excessive importation last year, upon which duty
has already been paid, and that any considerable portion of

1ft

gentle
Apposed

excess
lying
Isumed,

others,
Ithe fol-
]of the
(ough I

these goods have not been sold, and are still unconsumed, and
what do I find: I find a reduction of |h24,757, during the eight
months, $761,702 of which was on tea and coffee. On the other
side I find a total increase of $932,988, shewing a net increase of
$108,231. What are the ite.ns on which this increase has
occurred ? The increased amount on silk and satins, on jewellery
and on other articles coming under the fifteen per cent head, is
$370,000. This increase is not in excess of the increase on other
goods, only taken out ol bond when required for consumption.

Mr. MACKENZIE — Has the hon. gentleman a statement
for the last two months as compared with the same two months
of the last year.

Hon, Mr. TIIXEY -Yes, I have, and to my surprise it
shows an increase. I fully expect that in the next three months
there will be a reduction, and my estimate has been made upon
that expectation.

Hon. Mr. MACKENZIE— I meant February and March.

Hon. Mr. TILLEY — Yes, and I was surprised to find an in-
crease. TVe have an increase on the amount of sugar entered for
consumption of over $370,000 hi the eight months I have men-
tioned as compared with the previous corresponding eight
months. I desire to call the attention of the House to this fact,
because it is very important and significant, as we all know per-
fectly well as previously stated, thit merchants dealing in sugar
and spirits on a large scale do not pay duty unless these articles
are required for consumption. On fancy goods the duty, as a
rule, is paid when imported, but this is not the case with sugar.

Hon. Mr. MACKfiNZIwl— It is whcm for the refinery.

Hon. Mr. TILLEY — Th^t may be, but this is to a large extent
refined sugar imported. Th<m we eouie to the duly paid on
brandy, wines and spirits, and here we find an increase of $72,000,
and these articles also are not taken out unless for consumption.
Then wo find on goods paying lifteen per cent an increase of $386,-
000, while the increase or. sugar and wines and spirits amounts to
$450,000, and from this I think we may hiirly infer that there is
a steady and very important increase i;i the consumption of every
description of article of consumption in the country, and that tlie
importations, though th«^y may be h'ss on a few articles, will
altogether fully equal what they have been hitherto, so that we
may fairly expect irom Customs an amount equal t3 that received
in the present year.

We now come to the item of Excise, and it is estimate d
by the Department that the revenue will be $4,725,000,

•*rr

a little in excess of the estimate of the present year, because
there has this year been a los* for the reasons to which I have
already referred. From stamps I expect ^195,000 ; from Post
Office $720,000 up to $970,000 ; arising in the manner I have
described ; from Railroads, Canals, Dawson Route, and all the
other Public "Works, 02,250,000, which is only $150,000 or $160,000
more than the estimated expenditure for those works. Thus
while we have added to the proposed expenditure $583,000 ;
there is also a considerable increase in the ostimated income, and
it may be that the whole of estimated expenditure may not be
necessary. $250,000 is for the purpose of working and running
a railway from Riviere du Loup down the St. Lawrence, and
it may be that some arrangements may be made with the G-rand
1 runk, if considered desirable, by which the expenditure may
not be necessary. Supposing the Government work it, we ex-
pect to get an equal revenue from the expenditure asked.
As to miscellaneous we place it this year at $1,100,000. During
the year the whole )f the Intercolonial loan cannot be used,
and we ought to get $100,000 interest on the balance not ex-
pended during the yeai.

On the whole if our estimates be based on correct principles,
we will have a revenue of $21,740,000, against an estimated ex-
penditure of $20,826,840, or a surplus of $913,161. Of course
there will be supplementary estimates, and other propositions
which may cover a largo portion of this estimated surplus, but
the Grovernment feel that they are not in a position requiring
them to ask additional taxation.

Now, having dealt with this point, I trust the House
will pardon me for a few moments if I refer to the future
with reference to our liabilities and engagements, and our
prospects of meeting those liabilities. In doing so I must
again refer to the past, and I will do it in a very few words.
We have an annual surplus, after meeting all engagements and
providing the necessary sinking tund, sufficient to pay the interest
on a debt of $30,000,000 more than the debt now is. We have in the
present year a surplus, without taking into account the sinking
fund, amounting to something like three quarters of a million.
We are, hovover, entering upon new and increased engage-
ments, involving a very large sum of money. We are enter-
ing upon works— we have already done so — which will re-
quire a large increase of our debt. We have $10,000,000 to
expend on the Intercolonial Railway. We have $30,000,000
for the Canadian Pacific, and the canal system that has been
accepted by the Grovernment will involve an expenditure of
at least $20,000,000. These are serious matters, inasmuch as
they add $60,000,000 to our existing debt. Let us now see
what is the annual charge involved in this matter. In the
first place we have available the Imperial guarantee for

lecause
have
Post
have
\ll the
[60,000
Thus
J,000 ;
fe, and
lot be
ming

iJ2,600,000 sterling given to us in lieu of the Fenian claims.
Then we have a guarantee of i;i,500,000 for the construction of
the Intercolonial Kailway. "We have also a guarantee of iJ300,000
for the North "West Territories, and I may state to the House that
the Imperial Government has assented to the transfer of the
fortifications guarantee of .€1,100,000 to be expended in the
enlargement and construction of our canals,
struction of the Pacific Railway. (Cheers.)
a total amount guaranteed of .€5,400,000,
which we can obtain at an interest of four per cent. On that
item alone we have, therefore, an annual charge of $1,040,000,
and on the $34,000,000 remaining, the annual charge, at five per
cent., will be $1,700,000. For the Sinking Fund of one per cent,
we require $600,000, and for commission on interest $27,400,
making a total annual charge, when these works are completed,
of $8,367,400.

and in the con-
Thus we have
or $26;000,000,

iples,
d ex-
■ourse
itions

i, but

Let us now consider for a moment whether, under
the circumstances, we arc likely to be able to meet this lia-
bility in the future without imposing heavy burdens upon the
people of this Dominion. I would like to take you with me in
imagination to that period ton years hence when the great Pacific
Railway shall have been completed. (Cheers.) And I hope and
trust, and lirmly believe, that there is too much patriotism among
us to allow any personal or political consideration to interfere
with the progress of such a work as this, and I look upon its
construction with as much confidence as upon any proposition
made and accoptod by tiiis Parliament during the past five years.
(Cheers.)

Looking first then to British Columbia, what will be the
effect of the construction of the railway there { "We know
that the miners engaged there are now paying fourteen cents a
pound for the conveyance of all descriptions of goods from
Victoria to the mines ; in consequence of these high charges,
the miners must earn $4 or $5 a day to induce them to remain.
These men, however, do earn that amount, and more than that
amount, and, consequently, they remain there, notwithstanding
the high cost of living. But I can understand, and the House
will appreciate the effect that will be produced in that far off
colony when the railway shall be in full operation. These
miners can then live for a dollar and a half a day, and then,
earning as they will do, four or five dollars, is it not reasonable
to expect that there will be an influx of emigrants into that
colony that will largely increase the population, the fertile valleys
will be settled by industrious agriculturalists, the populations of
the cities and towns will also increase largely, and there will be
a corresponding increase in the revenue contributed to the
Dominion (Cheers.)

Further east we come to the North West Territory, a terri-
tory than which there is no better on this continent, a territory
capable of the hij^hest state of cultivation, the fertile lands
immediately adjacent to the proposed Railway, three times
the size of the State of Illinois. This being the case, is
it unreasonable to expect that with railway facilities for
taking- in immigiants, and bringing back their produce, there
will be a large inllux of population, and may it not be very
reasonably expected that at the expiration of the ten years we
shall have another Province, or perhaps two Provinces, between
Manitoba and the Rocky Mountains, the population of which
will all be contributing to the Dominion Treasury.

Coming further east still, let us but have our canal
system completed, our connection with the Pacilic Railway
at the head of Lake Superior, the North "West becoming
rapidly settled, the exports of the settlers passing through our
canals, and the whole system of the Ontario railways completed,
and the result will be that the trade of the City of Toronto,
which has doubled in live years, will be quadrupled, and the
case will be the same with Hamilton, London, and other cities
in the "West. Such will be the direct and indirect results of
these great facilities, and is it unreasonable to suppose that there
will be increased ability to contribute to the revenues of the
Dominion ^

Ho the n
ftnd the
■winter
result
portion
develop
also coi
;present

Passing

magni-

to the Province of Quebec, with this
ficent canal svstern, and the improved navigation between
Montreal and (^icbec, drawing, also, an increased trade from
the "Western State.s, there will be nothing in the world to pre-
vent Montreal becoming the rival of New York, and quadrupling
her present trade and commerce. The case will be the same as
regards the City of Quebec, for considering the public spirit and
enterprise manifested by her people of late years there is little
doubt she will bid high to largely increase her business.

Next we come to my own Province. With perhaps
limited advantages from these public works as compared with
Ontario and Quebec, she also will be ready to compete for her
share of the trade coming over this extended rnilway communi-
cation during the winter months. We shall then have completed
a railway system unequalled in any part of the world, and with
the impetus which will thus be given to the trade and com-
merce of New Brunswick, and to her manufactures, is it not
reasonable to suppose that she will contribute more largely than
at present to the Treasury of the Dominion ?

Passing to Nova Scotia, I have no doubt, before the
expiration of ten years, her system of railways from Gape Breton

In-

Us
is
ibr
jro
jry

Ml
3h

to the most westeiiy point of the Province will be completed,
ftnd then with Halifax taking her share of the business, both
winter and summer, which must come to her as the necessary
result of the completion of the Intercolonial Railway, with a
portion of the ocean steamers touching" there, and with the
4evelopment of her vast mineral resources, will not Nova Scotia
also contribute to the Dominion much more largely than at
;;present.

And can we suppose that with all these inlluences, there will
not be an increased revenue sufficient to meet the interest on
increased expenditure for public works ? (Cheers.)

^ But supposing that all this is a vain delusion, suppose that

Ipnotwithstanding this enormo is expenditure, suppose that nat-

withstanding the completion of the Pacific Kailway and the

opening up of our magnilicent canals, the population should not

increase beyond the per centage of the past ten yeart Suppose

there should be no increase in the importations and in the g»meral

trade, which is supposable, but which certainly will not be

realized. Let us see what our position would then be in the

event of our having to fall back on increased taxation to make up

deficiency. I have stated that in the last five years the average

(of duty collected on the imports was 12/ per cent. For the first

six months of the current year it was not ten per cent. At the

expiration of the year it will not exceed ten percent. Suppose it

became necessary to impose additional taxation on the people

equal to that which has been exacted during the first five years

of Confederation, by increasing the average from 10 to 12] per

•cent. Has the taxation of the past been oppressive ? Have our

■ people felt that it was grievous and hard to bear ? I think not.

But let us apply that increased taxation to the imports of the

present year which will probably be $125,000,000. This

would give us $3,487,500 to meet the interest, and the sinking

fund, and the commission on interest amounting altogether to

$3,367,000. Bearing in mind that during the last live years we

could have borne an increased debt of $30,000,000, we can

I bear $30,000,000 more in the next ten years, without materially

i increasing the taxation of the people, while at the same time we

% are opening up a magnificent country for the millions who will

1 pour into it, and are increasing the strength and power of this

JJominion, and making it what I trust it will ever continue to be,

i; the strong right arm of our own British Empire.

(The hon. gentleman resumed his seat amid loud and pro-
longed cheering.)