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WKLUN( ION STREET. 4-*S'5) / \ THE FINANCES OF CANADA BUDGET SPEECH UKLIVERED IN THE HOUSE OF COMMONS OF CANADA, (i"tu friban, I'tbniarn 25, \8ZB, BY THE Hon. Richard J. Cartwright, Minister of Finance. lion. Mr. CAHTWKIGllT, in nrovinj,^ the House into Committee of Supply, said : Mr. Speaker, — In rising to move the I'osolution I am about to ])\in.'e in your hands, I nay say, at the outset, that it would be both idle and dishonest on my part to attempt to conceal from the House that the circumstances under which wo meet are such as deserve our very gravest consideration. It is, unfortunately, too true that we are now passing, and have been passing for a period of several months, through a commercial crisis of great and almost unparalleled severitj' ; and although I think that the statement made by His Excellency, in his opening address to Parliament, that the distress in question was rather local and special than general, and that the great bulk of our peojile still continue to enjoy a condition of I'easonable prosperity — although I say, 1 think that statement is true, and admits of reasonable demonstration, still I am not at all disposed to deny that there are cases of great hardship existing- ia this country. At the same time, I believe I am justified in saying that iilthough the particular crisis, and the particu- lar form which it has assumed, were not, and could not, in the very nature of things, be calculated upon in advance; still, as the House is tiware I have ^d ways contended, that a very considerable diminution in the imports and in the revenue derived thcreform, might, not unrea- sonably have been expected. This, in fact, was foiescen, and to a considerable extent discounted beforehand. And I think I shall be able to show the House that there are certain important mitigating circamsttinces, which go far to relieve the apprehension which many persons have naturally expressed at the state of things which at present exists. Without at all desiring to under-estimate the gravity of the conmiercial crisis to which 1 have referred, I believe, sir, that this country has experienced other and much graver crises in its finan- cial history than the one through which we arc now passing, arul that it has emerged from them comparatively unhurt and without serious injury to its reproductive powers. It may appear ].aradoxical to" say so; but in iny judgment, the position of this country to-day is really far less dangerous than it was two or three years ago. Ami I make this assertion the more pointedly because 1 sec that certain parties, both in this House and out of it, ai-e in danger of falling into an error which I desire to con-ect so far as in me lies.'' A few years ago, as everybody in this House knows, many persons were betraveJ into an undue confidence from supposing that the remarkable expansion which had then taken place indicated an absolute substantial progress. Now, I never desired or intended to deny that there was underlying that expansion a really great and genuine growth ..f the country. But I took occasion more than once to declare that it was not wise to base our policy on the hypothesis of the pernumence of the expansion to which I have referred. At present, the case is exactly opposite. In place of undue con- tidence, we have undue alarm and u.ulue apprehension ; a.ul as migld luive been expected, we find that nuv.iy of those very persons froni beinc. over confident, have passed to a state of what I may almost call cowtmlly alarn.. On former occasions I deprecated that over confi- aonce-(not wUhout sufficient reason-as I think the House will w 1^' li f\\\ J 4 admit) and now I equally dopi-oeate the undue apprehensions which I perceive to exist, as I hope and believe without sufficient grounds I think this country will be able to weather without permanent injury the commercial squall (the commercial tornado if you will), by which it 18 at present assailed ; and although I do not inten.l to enlaro-o on this point at present, I hope before the debate closes I shall be able to show some reasonable ground for entertaining that opinion. Now, ^L: Speaker, my iirst duty on the present occasion is to review, as briefly as I conveniently can, the position of the country m the year which has Just closed ; and that is of the more importance, because the results of the year's operations require to be carefully considered, in view of their bearino- not only on the prcseut year but also with reference to certain^'mat- ters which occurred in the past. If the House Avill look at the public accounts which have been laid upon the t they will per- ceive that the total ordinary revenue for the year wnich closed on the 30th of June, 1875, amounted from all sources to $24,648,715, and the ordinary expenditure during the same period to $23,713,071, leavinrr a balance of $935,044. They will also perceive from the 'trade jmd navigation returns that whereas the total importation in the year ending 30th June, 1874, amounted to $127,404,100, the total impor- tation during the year which has just closed only amounted to $119,618,657, showing a decrease in the importations of last year of $7,785,512. The exports during 1873-4 amounted to $89,351,928, while f(n- the year which has just closed thoy amounted to $77,886,979, showing a decrease of $11,464,949. It may be well to point out that of that decrease of nearly eleven and a half millions, about one million was due to a diminution in the amount of bullion exported, and about three and a half to a diminution in the exportation of goods not the produce of Canada. The total diminution of imports and exports amounted therefore to no less than $19,250,4()0, being a total decrease in the volume of the trade of that year of very nearly twenty millions of dollars as compared with 1873-4. Now, sir, it may be well, perhaps, to call the attcnti(m of the House to the fact that in the receipts and expenditures for the past year will be fountl a certain number of cross entries which swell the totals a little more than would otherwise be the case. This will be chiefly observed in the interest columns, and the 6 caure of it was this :— As hon. gentlemen know, we Avere compelled to pay off a very consiclevable portion of the public debt maturing- in London on the 1st of July, 1875, and to do so, we were obliged to keep a considerable amount of money lying there at interest. The receipts and disbursements on this account may therefore be considered as acciden tal, and practically balance each other. Moreover, in the pro- cess of paying off the Seigniorial Indemnity, up to the 1st of January, 1875, a large additional charge was inflicted on the present year, as I find^ for some reason or other, contrary to the usual practice, that the interest which matured on this fund up to the first of July, instead of being charged, aw customary in most cases, to the past year, has habitually been charged to the current year. I may further observe that as explained at some length in the Budget Speech of 1875, a considerable proportion of the receipts for 1873-74 properly belonged to the years 1874-75. Turning to the statement of receipts, the House will see that they exceed the estimates made in 1874, with the single exception of receipts on account of Excise, the diminution in which respect has been fully accounted for by the anticipation of duties which took place under the tariff of that year. I understand that some slight changes have been made in the mode of keeping the railroad accounts, which Avill explain in a great measure the trifling ditt'erence between the estimates I sub- mitted and the actual receipts in this case. It may be as well, at the same time, to observe that the receipts for Customs, although in excess of the estimates, do not fully represent the sum properly due for the year 1874-5, but this is also caused by the operation of the tariff' of 1874. I will further call the attention of the House to the circumstance that in the accounts of this year all the charges for eftect- ing the loan of 1874 are placed under a separate heading quite apart from items of ordinary income or expenditure. The reason for separ- ating such items from the ordinary consolidated fund are too obvious not to be satisfactory to most hon. gentlemen sitting in this House. There is another item to which attention should be directed— the item of $121,700, put down as a charge for the boundary survey between our territory and the United States. I mentioned in the Budget Speech of 1875 that this particular sum of money had been actually expended in 1873-4, and, also, that owing to a delay in the transmission of the vouchers on the part of the Imperial authorities, we Avore not li f m '• jible to ineliulo it in the ordinmy disburyoincnt* of that year. This, then, although charged to 1874-5, really and properly belonged to 1873-.4. The last and most important item to which I desire to call the attention of the House is tlie item on account of the change ot gauge. AVith respect to this I am perfectlj- Avell aware that in many cases the whole cost has been charged to capital account, and I am also aware that a good deal is to be said for that practice, inasmuch as the change of gauge is a permanent improvement which will never require to be repeated, and many railway companies, when it is nec- essary to make the change, do habitually charge it to capital account, taking, however, in that case, the precaution to charge a certain por- ti(^n of the amount to annual income for several years to come. There are obvious reasons why such a course is not expedient in our case, and therefore, after conference with my hon. friend beside me, ■\ve decided that although it was a permanent and useful improvement, adding largely to the efficiency of the road, still as it was the fact that a certain portion of the rolling stock was actually destroyed by the operation, our best course w^ould be to charge two-thirds to capital account and one-third to income, but not to make a further charge hereafter. With respect to the operation going on of substituting steel for iron rails, that is, I think, an item properly chargeable to income, and is intended to remain so charged. I am somewhat particular in making this statement because, as the Honse knows, we feel it incumbent upon us, as we are compelled to keep both a capital and ordinary ac- count, to be very scrupulous as to what we allow to go to capital ac- count. Xow, looking at general results, I think I am justified in saying that the total result for 1874-5 is, on the whole, eminently satisfactory. Notwithstanding the very heavy exceptional charges above mentioned we are able to show a good balance, amounting to nearly $1,000,000, and that too, in spite of the fact that a very considerable jDportion of the revenue which properly belonged to that year was anticipated in the preceding year. This is of the more importance, Mr. Speaker, because there was a very per- ceptible diminution in the total volume of the imports and exports 173 And if we should reverse that entry of $121,700 paid on .cco^nt of the boundary survey, to which I alluded, and place it m the year in which that expenditure occurred, we would have a total bahmce of not less than $715,000 of controllable expenditure m favour '' And 'now, sir, I come to what is probably a more interesting portion of the present statement-viz., to oiir position for the cur- rent year, 1875-0. The House will no doubt perceive from the state- ment which I had the honour to lay upon the table yesterday, that there has been a very serious diminution in our total receipts tor the &.st seven months of this year. I find that up to the 10th of lebru- •u-y 1870 our total revenue, from all sources properly belonging to 'the'consolidated fund, amounts to $12,870,875, as against similar re- ceipts for the corresponding period last year of $14,850,121, being a difference, as nearly as possible, of $2,000,000 against this year, and in favour of last. Now, it is quite true that a comparison of those seven months may possibly to a certain extent deceive the House, and for this reason: that the receipts during the first half of 1874-5 were unusu- ally large, I believe larger than the hon. Minister of Customs at al expected and therefore this falling off, although very important, is not miite as significant as might at first sight appear. I intended to have laid upon the table of the House a comparative statement of the ex- ports and imports for the last six months, which, by permission, I will do now, and hand to the hon. member for Cumberland. I'^'om ^^^^^ statement it would appear that whereas, in the half year ended 31st December, 1874 we imported and entered for con- sumption $09,093,978 of imports; in the six month ^vhich closed on the 31st December last, we only imported foi consumption $51,923,230, showing a decrease hi these six months of very nearly $18,000,000. On the other hand we exported, during ttic / 9 R-rs ooiTespoiulin^r period of 1874, the fiuantity of $53,740,720, and diinii derived in 1874 from that source amounted to $5,034,000 as against ^3,174,000 in 1875. In other words, almost ihe entire loss under Customs revenue dunng the preceding six months has acerued on the 17^ per cent. list. Those figures ai-e very remarkalde. They indicate that there was a considerable and undue inflation; but it must be borne in mind, in this pai'ticular as in some others, that what is bad fop the n'vi'niu' in. o»>. tlio whole, irood t(>r tlie countrv. The resi'.lt of the figures which I have sub»'iitted ajjp'Mirs to prove conclusively f t f i t I T r 11 thtit ulthougli tlio revenue of Canada has lost one or two millionH, the people of tlio Dominion have gained many millions. It proves that they have been able to buy a large quantity of these goods for a less price than they previousl}- cost, and that the country is, in one sense, largely the gainer by this diminution of values. There is, of course, a drawback to this. It has undoubtedly contributed, (in connection with other things) to add to the depression that has overtaken the manufacturing and commercial interests of the country. I am riot disposed to underrate that effect, but still I must call attention t() the fact that as our exports have not been appreciably diminished, and as it appears that a very large proportion of the dimi- nution of our imports does not arise from any decrease of consuming ]iower on the part of the people of Canada, but simply from the circum- stance that they get better bargains for their money than before, it is on the whole an advantage, and not an injury to the people. Now, it is, of course, rather difficult to estimate minutely what particular portion of the loss of revenue is due to shrinkage of value, and what portion to diminisbed consumption, but I am inclined to think if we could accurately discriminate between the two causes, we would find the larger part of the loss is due to shrinkage, and not lMce. We find the imports entered for consumption increased as follows: — From ^ST.OUOOOO in 1.S71, to $107,000,000 in 1HT2; and $127,000,000 in 1«7:{; that then they remained stationary for a year, and last year they fell to $110,000,000. We Hnd during the same ]>eriod that the baidv discounts rose from $50,000,000 on the 1st of 12 July 18b*0, to $G 1,000,000 at the same period of 1870, $70,000,000 in 1871, $102,000,000 in 1872, 6116,000,000 in 1873, $130,000,000' in 1874, at Avhich point they appear to have remained tolerably stationary. It is jierfoctly clear from these tigures that tiicre Avas, to say the least, a very considerable risk that many of our importers were holding vastly larger stocks than it was at all prudent for them to do, and that then, and after this process had gone on for some 3-ears, they were suddenly confronted with the disturbance in values to which I have alluded. It is no wonder ver}- serious distress was inflicted on sonie of these people. These causes operate in two ways. In the first place there was a very large depreciation in value caused by the simple fact of carrying over these stocks from year to year. In the second place their value was still further reduced l)y the positive shrinkage above mentioned. There can be no doubt a ver}- large portion of the distress in commercial quarters is atti-ibutable to this cause. The second cause which has opei'ated very powerfully is the ur.fortunate depression which has prevailed for some years in that great branch of industjy, the lumber trade. Everybody Avho has paid any attention to our ordinary Ijusiness affairs, ])articularly in Ontario, (Jucbec and New Brunswick, is aware that this is perhaps, the largest sin- gle interest in the country except the agricultural. They are also aware that it gives support and em))loyment to several hundreds of thousands of people and furnishes 'iie-third of our exports to foreign countries ;^ and further that, from the nature of the trade and the amount of money it ])uts in circulation, It is one of special importance to the commercial classes of the community. It is no secret that tliis industry has been for a considerable period in a state of great depression, and I believe, that it will be found that no inconsiderable part of that de])ression resulted from fhe veiy common cause that a number of people without suflicient capital and expei'ience, (stimulated no doul»t iiy tiie fact that nniny of my lion, friends engaged in this occupation had been supposed to be accumulating very rapid foi'tnnes) chose to engage in the production of lumber in the face' of a falling nnirkef. Then, sir, when the great fall of prices took jiiace in the United Stales two or three years ago, thereby cheapening, of course, the cost of prai'ticulai'ly as several new districts have lately been thrown open in that market. And this, I deem to be another and very potent influence indeed in producing the present depression. There was besides all this that general extravagance and over specula- tion, which unfortunately always follow any period of inflation or even of great prosperity continued for several years. Every one knows our markets are limited. Every one knoAvs that there are few manu- facturing industries which will allow more than a certain number of people to engage in them, and I think, sir, most people who have watched the course of business in this country will agree with me that during the last few years a ver}' considerable number of persons have engaged in manufacturing enterprises, for whom thore Avas really no room, and, as was Avell said on a recent occasion that many of them possessed neither the brains nor the money to bring their enterprises to a successful issue. And although I know that our banks as a I'ule are well managed and conservative in their mode of carrying on business, and although I don't at all mean to say they are one whit worse than their comjieers in the United States or Gi-eat Britain, either, for that matter — still I say that various banking insti- tutions of this country have been not Avholly faultless in this matter. Every one who knows much about practical bank- ing is aware that banks, when they have accumulated large sums of money, are veiy apt to discount largely to men of straw. Nothing they do does such frequent injurj'^ to banks as encouraging adventurers of that class who have entered into rash speculations ; and I don't hesitate to say that no inconsiderable portion of the existing depression has arisen from that cause. I repeat that I don't mean that our banks are worse than those of other countries; I merely mean to say that it is one cause of mischief common to all banks in all countries— so fai" as 1 know—to grant discounts at sucii times to such persons on terms which no legitimate enterprise would warrant. These, Mr. Speaker, appear to be the chief internal causes, so far as I can at jiresent ascertain, v.diich have led to the existing depression. But it must be remarked that our distress has been considerably aggravateil by external causes over which we haigh- bouring Republic we find Governor Tildon, the chief magistrate of the groat State of New York, in his messnge to the Legislature, speaking in the following terms ;— S( n si a 15 of 1^ " Few kinds of business have been recently cariled on at a profit. Labour finds scanty employment even at reduced wages; incomes are lessened or fail altogether; many invectments have become wholly or partially unremuneratlve ; property is- shrinhlng, losing for the time its circulatory character, and becoming unavailable as a resource to pay debts or to raise money." Were I inclined to nmltlply other proofs, I might find them in the ftict that many important staple articles of English export have dimin- ished both in quality and value, and that we have gentlemen in the House of Congress rising and proposing resolutions with the view of obtaining more protection for the languishing industries of the United States. I do not believe it is necessary for me to dwell upon this theme any longer. From all these facts this result, if no other, appears tolerably patent to my mind— if more men and more capital are engaged in any business than it legitimately requires, there is nothing more likely than that you will have distress among the pro- ducers^and it does not matter whether your market be four millions or forty millions, or four hundred millions, over production will always pi-o- duce distress. Nor does it very much matter, for that particular purpose, whether free trade or protection is the policy. There is another question on which I desire to say a word or two. It has been asked in this House, and outside this House, whether, and to what extent, this Government were responsible for the distress which we have witnessed. Now, if this question be asked of me, I should say that neither the present nor the preceding Government vivvo directly responsible for that inflation or ^r the consequent distress. That inflation would have taken place whoever sat on these benches, in my opinion at least. I do not believe that in a free country it is in the power of a government to restrain their people from embarking foolishly or recklessly in improvident speculations. All, I think, any government can do is to warn, to caution, and to carefully restrain its own operations within safe limits, and if it fail to do this then, so fur, possibly, a govern- ment may be indirectly responsible for inflation. Wherever a govern- ment is found treating a temporary inflation as indicating a stable, enduring prosperity, or entering into engagements which the country cannot possibly fulrtl, unless that inflation become permanent, then in such a case I can agree that the government should be held dii-cctly 16 losponsiblo. And I leave it with confldcneo to the people of this oountiy and to the members of this House whether that is a fault Avhich can properly be charged to the present Government. Now, I propose, Mr. Speaker, to call the attention of the House to tb.e estimates of the current year, recently laid on the table. But before I proceed to details, it may be as well that I should say a few words on one important feature of the general policy of the Government. The House is aware that when we en- tered upon office we found a very large number of minor pub- lic works, of the class o.-dinarily charged to income, in course ot construction or arranged for. I stated at the time that it would be impossible for us to make any reduction in that item of expense for several years. I stated also that I did not expect it wo.dd be perma- nent, and that a reduction in that respect was one of the resources upon which I relied, in the event of any temporary diminution of imports, to nuUce both ends adjust themselves. I think, sir, the House will see, in looking at the estimates, that we have succeeded in car- rying out our policy with a very reasonable degree of accuracy. AVedid not deem it wise to suspend or interrupt any of those public worlcs to which we found the Government committed, for two reasons. In the first place, we found that owing to the low price of labour and material It was on the whole advisable to proceed with the completion of those undertakings as early as possible; and neither my hon. friend (Mr. Mackenzie) nor myself thought it expedient in a time of great depres- sion to delay the progress of any of them or to restrict ourselves to those which were absolutely necessary. We know those works had to be completed sooner or later, and that they to had be paid for, and our policv was to avail ourselves of the cheapn.ss of the times, and also, to a certain extent, to relieve the distress which we, as M^ell as every one else 111 this country, must desire to alleviate if we can. If the House will resent occup} . No doubt the sum total demanded for the Indian vote will appear considerable, but the House will find in the future that it is far less expensive to settle with these people in this Avay than to employ several hundretl addit'omil mounted ti-oopers to keep the peace in those teri'itories. These, I thir.k, compi-ebend the chief services in which Ave shall ask for additional votes, Avith the exception of some small increase in the vote for printing in connection Avith the Legislature, and sonu' addition for the Post Ofilce Department, Avhich my hon. friend (Mr. Huntington) Avill explain Avhen the estiinate is arriA'ed at. CVnning now to the other side of the account, the House Avill perceive that in Civil Government Ave have eifected a decrease on the estimate for last year of $27,253; on that for Dominion Police of $10,000; on Penitentiaries, S20,(>59 ; on Arts, Agriculture, and Statistics, §15a,(380, (this, I think, being chiefly composed of some charge in connection Avith the Philadelphia Centennial) ; on Immigration and Quarantine, $192,760, (partiy in consequence of not requirinir any further loan for the Mennonites, and partly in consequence of some other reduced expenditures whicli will be seen on referring to 18 the details.) Tn tlic important item of Militia, we have effected a reduction of $395,848, leavinj.- $949,151 as against $1,345,000 for the preceding year. I am not about to enlarge upon that f' this moment, as I am quite aware that I shall have plenty of other opportunities. Hon. Mr. MITCHELL— I am glad my hon. friend has adopted the suggestion I made last year. Hon. Mr. CAETWEIGHT— I am glad to hear from the loader of the Left Centre— the suggestions of the Left Centre will always receive due consideration. Coming to Public works and buildings chargeable to income, the House will see that the expenditure under that head has been reduced to the lowest amount consistent with a due regai-d to our engagements. On that vote we propose a total reduction of S1.T01,200. On" the item of Ocean and river Service, on ANhich there were unusual charges last year, there is a decrease of $171,847 ; on Light-house and coas^ service, $146,750. The item of Boundary surveys, $100,000, we have dropped, as we think we can manage without it on this occasion. On the item of Dominion lands, which have been a source of very great expense for a considerable number of years, we have reduced our total expenditure by $170,000. There are some other minor items of reduction, but I will not detain the House by referring to them at present. The result of all this is, that although we have been obliged by unavoidable circumstances, and by the necessity of carrying on the great public works on which we are engaged, to make a total addition To our expenditure of $776,000, we have, at the same time, effected such reductions as amount in the whole to $3,247,000, being a net decrease on the estinu\tes submitted last year of no less than two and a half million dollars. If my hon. friends desire to know whether any further reductions are practicable, I may say that I do not believe that it would bo in the interest of the public service to make any more at present. It maybe possible, however, for my hon. friend beside me to n\ako some further diminution in the expenditure on maintenance of the Intercolonial Hallway, some voy important sections of which we have been engaged almost ever since we have been in the Government in putting into better order. That expenditure is rapidly coming to an end, and I hope that in a short time my hon. friend Avill be able to show a fui-thor icluction in that item of some two hundred thousand dollars, > VI . A f 19 more especially in vi.'.v of the fact that, as I reinai-ked before, iron is beintr rejilacctl by steel, contributing materially to the economy and better working of the road. I might, also observe, under this head, that although we cannot be con- gratulated on having heretofore derived a large revenue fi-om the public works of the countiy, and although I have frequently found it an obstacle to our financial negotiations that our public works, up to the present time, have only contributed indirectly to our general pros- ]>erity, still I think tliat when the AVelland Canal is completed we will be able to show for once an exception to that general rule. I would not dare at this moment to form an}' estimate of the revenue imme- diately likely to be derived from that source, but looking at the fact that even in its present imperfect condition, it yields a moderate revenue, I cannot be much astraj- in supposing that the receipts which will be obtained from this source will at any rate give us some considerable return for the large sum Avhich it has cost us. With regard to our other public works, I am soi-ry to say that my best hope is that the deficit on working expenses will be gradually reduced. As honourable gentlemen will see, we are obliged, for their maintenance, to make provision for a considerable outlay over and above the total receipts. But I may state that it appears at the present time to have reached a maximum, and that there is reasonable ground for believin"* that the ex]ienditure under this head Avill tend to equalize more nearly with the outlay in the future than in the past. Now, sir, if the House will refer to the Budget speech I addressed to this House in 1874, honourable members will see that I thei. took occasion to caution them that even after the extraordinary charges to which I have alluded had been disposed of, the total expenditures of the country (apart from interest, subsidies and the charges on nmintenance of ]>ublic works) could hardl}' be brought below the sum of seven millions; and I also told them that in the course of two or three 3'ears I Avould endeavour to do it, and hon. members looking over the various items in the estimates will see that I have redeemed my pledge, for the total vote asked for these pui'])Oses on the present occasion is Avell within that sum. I might also add that these estinuites ai'e in reality slightly less than they appear, because there are certain ex])enditures which will jjrobably be recouped by fees (although there will, no doubt, be a 20 deficit on the g-enci"il working of tho.sc services) which were not luken into account in that statement to which I have referred. Before I proceed further with my remarks, it may be as well to explain to the House the reasons which induced me to anticipate slightly the time for making the loan which as the House was uware was expected to be made in the course of the cnrrent year. They are several in number. It is quite true that when I last addressed the House from this place I did not intend to appear in the London market again until the spring of 1870, and I believe I then so stated ; but after full consideration I thought it would be more in the public interest to effect this loan last autumn. In the first place, Mr. Speaker, the time was eminently favourable. There was a lai'ge accumulation of money seeking investment in Ijon- (lon, for which few eligible investments ottered; and in the next place I desired as much as possible to spare the resources of our people. AVe had exhausted all our means in London of necessity, because we were obliged during 1874-5 to pay the siim of ten millions of our indebtedness, bearing a high rate of interest, and to expend seven or eight millions in ])ublic\vorks, in connection with which, also, vei-y large disburse- ments were being made during the current year; and in the peculiar condition of the country, it did not appear to me that it was desirable to exhaust too completely the reserves we held on this side of tlie Atlantic. Moreover, sir, I considered that the House would be in a better position to discuss the proper policy to be adopted at this crisis, if it was known that we were in no immediate w.mt of money, and I felt tolerably certain that I would be able to secure better terms last November than in April of the present year. Then, sir, there was a very considerable advantage to which I Avill allude generally. By taking this course, we would be in a position to push on our works with all possible speed. Those who are best acquainted with the avei-age cost of constructing public woi-ks know that for a very long time past contractors have not been able to execute these so cheaply and expeditiously as at present, and that they are now pushing forward their various contracts to completion with much greater rapidity than usual, and are making, consequently more extensive demands on the public treasury than Avould occur during an ordinary year. I was also bound to take into consideration ( .. 21 ( the possible risk of foreign complications in connection with the English market. It is perfectly well known that the state of Europe at large has been considerably unsettled of late, and I received advices from London which led me to believe that I would incur a greater degree of risk than I would be justifiable in incurring for the sake of saving a trifling amount of interest, if I did not avail myself of the then fiivourable condition of the English money nuirket ; and accordingly, after full consideration and after consultation with the financial agents of the Government, and with my friend Sir John Rose, to Avhose zealous and hearty co-operation on tJiis and previous occa- sions I am very much indebted, I decided to issue a loan some- what in imitation of the loan cft'ected by that gentleman in 18G8-9, though in different proportions. The latter consisted of one quarter of Canadian five per cent, bonds, and three quarters of four per cent, guaranteed stock, and my loan of two-fifths, or neai'ly one half, of Canadian four per cent, bonds, and the remainder, of £1,500,000, of bonds secured by Imperial guarantee. We obtained a total avera«>-e of £99 Is. 6d., as reported by our London agents, and the result, I am warranted in stating to the House, has been exceedingly ftxvourable and satisfactory. With respect to the disposition to be made of this money, I mtiy briefly state that a certain considerable proportion will be employed to pay off debts and obligations of the countrj', which bear a much higher rate of interest than that to be paid by us; another considerable j^ortion will be invested in such works as the improvements which are being made on the St. Lawrence and the payment of sums due to the Province of Prince Edward Island, and in connection with one or two matters of the same kind ; while the remainder Avill be ap])lied either to public woi-ks in progress or in taking up some other loans I expect shortly to mature. I may add, that there is one important point to which I will call the attention of the House, and which affects (to a great extent) our present position. I think that comparatively few members are aware of the enormous amount of the minor obligations Avhich this Government found itself compelled to discharge within the last two or three yeai-s. When we entered ofiice we found a ver^\- heavy outlay going on with reference to the Intercolonial PtailroaJ proper and the Pi-ince Edward Island Railwav; also that o-> lai-^'e expoiHliturcs were requisite in order to put the Nova Scotia and New Brunswick lines in good running condition, and push forward the minor public works to which I have alluded. Considerable sums were due on account of the St. Lawrence Elver improvements, under statutory enactment ; a large sum Avas due by treaty to Prince Edward Island for the redemption of its lands, and a very hovy outlay was being made on the Canals, the Pacitic Eailway Survey, and for similar purposes. Now, sir, the greater portion of these sums we liave already paid, and the remaining obligations we have ample funds to meet in full. In order to give the House a better idea of the sum total, I have prepared a short analysis which I will read: On account of the Prince Edward Island Eailway, we have spent, since we came into office, two millions of dollars; for redemption of lands we have to pay or have paid, about $800,000 more; Minor works, as closely as I can estimate, have involved an outlay of about four mil- lions of dollars; the St. Lawrence improvements, including the Quebec Graving Dock, probably some two millions. Hon. Dr. TUPPEE — Allow me to ask how much has been paid to Prince EdAvard Island ? Hon. Mr. CAETWEIGHT— The total expenditure has been about two millions, in which, however, I include some two or three hundred thousand dollars he will find in the current estimates. I am speaking of the sum total, in this respect, that has been paid since the Govern- ment came into office. Hon. Dr. TUPPEE— On capital account ? Hon. Mr. CAETWEIGHT— Yes. These Minor public works are not, as the hon. gentleman knows, strictly a charge to capital, but I am now giving the amount of former obligations of all kinds, (over and above our ordinary expenditure,) which Ave have had to discharge. To resume my statenient, Ave compute that Ave have sjient, or Avill spend, the pum. o/ il see millioiMs of dollars, on repairs, the change of guage, the substitution of steel rails, and other matters in connection Avith the Nova Scotia and Ncav BrunsAvick railroads while the debts Ave have taken up amount to no less than ten millions of dollars, and our expenditure on the Pacific Eaihvay, Canals, and the Intercolonial Eaihvay, Avill i-each A^ery near eleven millions of dollars in I'ound niim- bcrs, making tlic sum total — almost all of which Ave have discharged ( / ( / 23 —no less than $32,800,000, since We took office, to which I will add about two millions falliuiif due within the next six months. Now, the House will see that it is no light matter to provide the waj's and means for the payment of about thirty-five millions; but yet we have done this and in addition we have a ver}^ respectable sum of cash in hand, mostly a])plicable to expenditure in proj^ress on that important work, the AVel land Canal. I have been more particular in drawing attention to this, because it is very desirable that honourable members should know how much has been done, as well as what still remains to bo iiccomplished. Hon. Mr. TUPPKll — Will my honourable friend have the kindness to state the amount of available means on hand ? Hon. Mr. CART WRIGHT— Well, I can hardly give it off-hand ; but as I see the honourable gentlemen has a motion on the j^aper in this connection, I will furnish the details in one or two days. "We will have in hand, in all likelihood, about ten or eleven millions of dollars available taking into account our i-eserves on both sides of the Atlanti<^ . That is rather under than over the mark. Now, as I remarked before, (and to this point I direct the special attention of the House,) it has been a serious aggravation of the difficulties with which the Govern- ment has had to contend, that it has been obliged to keep unusually strong and to make provision far in advance, chiefly for debts matur- ing. We could have managed our affairs much more easily and more profitably to this country if a little more foresight had been exercised before we engaged to construct enormous public works in all parts of the Dominion in the precise years in which a large portion of our debt m;vtured. I may explain to the House — if it requires explanation — that this is one main reason why I have been anxious to preserve large amounts in hand, and rather to anticipate than to delay the contraction of public loans. I will give a list of the various debts which mature in the next four or five years, being the precise period (luring which many of those public works will approach completion, from which the House may judge of the correctness of the statement I have made, I find in the current year that we have to provide for $1,879,000 of djbts maturing; in 187T-8, for $5,731,000 ; in 1878-9, for $7,624,000 ; in 1879-80 for $6,060,000, and for smaller sums in the years immediately succeeding. Tt is needless to state that that fact adds 24 and ahv!i}'8 has added very considerably to the embarrassment of my position ; aiui I re,i>Tet very much that those hon. gentlemen who had previously eharge of the tinances of the country did not choose to' begia those ])ublic works either a little earlier or a little later. There is no doubt the circumstance that those works inust be paid for at the voiy same moment that we have likewise to (iischai'ge a very heav}^ indebtedness, places us under consideral)le disadvantage in. contracting our loans. It is probably desirable that I should now state to the ifouse what amount of oi'dinary revenue we expect to receive during the ensuing 3'ear. I submit the estimates, after my experience of 18*; 5, with very great caution. All I can say with ie-;pect Ic them is, that I think, as far as myself and my hon. Iriend the Minister of Customs can venture to form an idea in antici]>ation of the actual fact, there is a reasonable probability of their being realized. I expect to receive from Customs during the ensuing year, $13,500,000 ; tVom Excise, $5,500,000; Stamps, S250,000 ; Post oftice, $1,100,000 ; Public works, $1,700,000 — the increase over last year being estimated for in consequence of the additional amounts ex])ected to be received fi'om the Prince Edwai-d Island and the Intercolonial llailways. From Miscellaneous sources and Interest, Ave cx])ect $1,200,000, which makes tlie total recei]>ts, $23, 1^5;), 000, as against an estimated expentliturc of romewhat less than that amount. These tigures compi'ise the nuiin facts to which 1 think it necessary to call the attention of the House. 1 think i will be quite obvious to the House and to the countiy that the Gov- ernment are justified in hoUling the ])resent ]»ositi()n to be one of a purely exceptional character. Any one who considers the very I'emarkable expansion which took place in ISTI, 1^72, 1873, 1874. and ccMitimied very nearly to the close of 1875, can see that that expansion — or inflation if you will — was one ol' an cxcei>tlonal nature, and I believe the present depression will prove c(|ually exceptiomd and that the country will recover ere long although I admit that it is oidy loo likely that the recovery will be a gradual, and in nniny res|)ects, a painful one. No doubt, however this nmy be, it becomes us to consider the various remedies |)roposed tor this unfortunate slate of affairs. Jn the first ]»lace. I dosjio (o s.mv a few words on the general impression which prevails oven in .|inirlers where J 25 wc would hnrdly expect to find it, that it is in the power of this Gov- ernnient, oi* any other Government, of thin Legishiture, or an}' other Legishitiire, to make a country prosperous hy the mere stroke of a pen, or the enactment of Acts of Parliament. I would like hon. gentlemen in this House and out of it, who entertain that illusion, as I consider it, to realise to what such a course would lead, and I ask them if they are ])repared to pay the price. You can not have at one and the same time a free Government and a paternal Government. If the Finance Minister, whoever ho may he, is to bo held responsihle for the success of the commercial community, he niust have power over that community; if he is to he responsible for the prosperity of our manufactui-ers, he must decide what persons shall carry on manufao turinuj, what manufactures they shall carry on, and how much they shall produce. Perhaps under such circumstances and conditions an iutellig-ent despot might create prosperity. Wc find a fine illustration of this in the territory of Bi-igbam Young; but can honourable gentlemen point to any constituency in Canada, or to any gentleman representing any constituency in Canada, who would adopt such principles as are carried out in that region. Igive the territory of Utah as an illustration, because it is a remarkable proci'of Avhat a resolute, determined, intel- ligent nnm can do in the way of creating a very considerable amount of industrial prosperity under very disadvantageous conditions, and I also mention it for the benefit of tbose persons who think a Finance Minister can restore ]»rospcrity by the mere wave of his haiKi. There is no use in concealing the fact that the (Jovernment have been imiiortuned from many (puirtei-s to declare themselves in favour of a bigli fai-itf. Sonu.i of the gentlemen who have addressed us have done so as the advocates of Protection pure and simple; others, and 1 think I may say abler reasonors, liave contended, iind not without force, that circumstanced as we are, in connection with the peo- j»Io of tbe United States, it becomes the duty of the Administration to moot the ])eculiar policy of that pe()[)le with a reciprocal policy in the same direction. I am averse to indidgingin purely abstract discus- sions on tho questions of free trade and protection ; but aa a nuitter of fact, it is necessarv for me to r"\iew at some length the various argu- ments advanced on the subject, I don't entirely agree with tho.-^o gcntleinen who maintain that theie is no grounii for the champions of 26 the Protectionist party. I have always my.self been of opinion that in a new country like this there is considerable force in the argument that it is not well to allow oureelves to depend exclusively on foreign manufactures; and that if we do there is some chance that we maj^ be supplied with the mere refuse of their exportations ; and probably in that way we do derive some considei-able indii-ect advantage from the establishment of maiiufactories amongst us. Also, I am inclined to believe that under certain circumstances a i-evenue tariff may l)e advantageously imposed, and may affoi-d considerable benefit in ovei'- coming temporary obstacles in the Avay of infajit manufactures but I don't believe any tariff can overcome natural obstacles except at a very undue cost. As to the vexed question of the surplus population or labour wliich is emplo^'cd by native manufactures, I can only say this: --that probably there may be some foundation for it ; but still 1 think tlie amount of the employment afforded is vastly less than has been alleged. I may also add that the result of the inves- tigations 1 have maile on this and vai'ious o'Ay, we are bound to consider our geographical position, placetl as we :-, -e alongside the people of the U.iited States. We have had theirexperii^nce as to the effect which a considerable dilt'erence in duty (amounting, perhaps, to 20 or 25 per cent) between the cost of |)roduction in Canada or the cost of laying down goods in Canada, al'ter |)aying our rate of duty, has bad in fostering smuggling fi-oni Canada to the United States, and when the cost of ju'oduction becomes so low that corresponding advantages would bo oblaine I i)y smuggling goo l-i fn.Mn the United Slates into Canada, we would have precisely a rejtetition of the doings which wtMit on along our own frontier in bygone years. The American authorities put tlu' total of this illegitimate trade at an extremely liigh figure — higluM" than. I think, facts at all warrant — but in any case I have no (l<»uht that a considerable projxu'tion of the imports into Canada from »>ther countries first paid our taritf. and were fiinilly smuggled into the American liepnblic, and paid for by 28 American <:;okl. Tlio fiu't is, it win intinitoly e.isio;' in the iiitoi'cst!< of the maniifHcturerH, to impose a hi^hei* tarirt' before this Clovernment came into office, wlien the cost of production was higher in the United States than it is to-day. My hon. friend, tlie Minister of Customs, informs me that even as it is he has great difficulty in protecting the revenue against the smuggling of certain articles on which our tariff is higlier than the average rate. Now, sir, as the example of tlie United States has been quoted very often as one we should iniitate and follow with all possii)le speed, I may say that T, too, am disposed to quote it as the best possible warning to the people of Canada not to be led into the delusion of imposing a high tarifl'. Under the combined influence of their high protective tariff and their paper currency, I believe very grave and serious evils have resulted (luring the last ten years to the ](eople of the United States. In the first ])lace, it has led to an enoi-mous waste of public resources. Jt is computed by American statisticians that for every dollar coming into the American treasury the j)ulilic loses three by the operation of their high tariff, or in other words, the waste in the United States I)y their larilf lias aniounted nearly to SOOO.OOO, 000 a year for the last ten years, or a loss of $(),000,000,000, neai-ly double the entire amount of the national debt of that country. I do not pledge myself to this statement, though it is made by men of considerable weight, but I will crave permission to i-ead to the House the observations of the lion. David AVells, made on July 12th 187.'), on this subject. What he says is as follows : — " For fifteen years now the experiment of protection to home Industry has been (rlcd in tiie United States on tlio largest scale and unde; che most favourable circumstances lor success that tlio world lias eversoen, and under Its influence the domestic Industry of the country, to use a slaufj; expression, luis been ' getting no better very fast.' Eveiy propliecy, soconlldently made in the past as to the results of protection in Inducing natural prosperity, lias ))een falsified ; and one has only to pick out tlie separate indus- tries which have been esecialiy jirotected to find out the ones wiiieli are more especially unprofitahie and dependent. Thus, in tlio manufacture of pig iron, excessive profits luivo given rise to sucii excessive competition as to render the wliolc business ruinously unprofitable, a condition of tilings from which there can be no recovery, except through a continued suspension or curtailment of production, the utter abandonment of many lurnaces, and tlie utter loss of a vast amount of recklessly invested capital. In the manufacture jether rulnouH. In the nmnufacturo at' wool— an ImluHtry In whioli tho roprost'ii- '• # '• f 29 tatlves of protection were allowed to dictate without Interference the exact measure of protection which seemed then desirable, and caused the enactment of duties rang- ing from 50 to 150 per cent.— it is sufficient to say that the existing depression and stag- nation are without parallel ; eight of the principal mills of the country having been sold on compulsion, within a comparatively recent period, for much less than fifty per cent, of their cost of construction— the Glendam mills in particu.ar, one of the largest and best equipped woollen establishments in the United States, auvantageously located on the Hudson, about fifty miles above New York, and representing over one million of dollars paid in— having changed since the first of April last for a consideration of less than §200,000." Sir, those ai-e pi-eg-nant remarks, aivl without coimnittini>- myself as all to the details which Mr. Wells has given — altliough he is a gentle- man who would not put his name to a statement of facts wiiich he did not know to be well ascertained — I repeat that they are pregnant with A\ iirning to the people of this countiy and the members of this House. My next objection to the system of the United States is this: that under the combined etl'ect of a high tariff and inflated iiaper currency they have impoi-ted an exceedingly strong gambling element into all commercial transactions, to the great detriment of the large businosK class in that community; and further, I say that any man who care- fully examines the woi-king of their s3'stem will find that their high tai'irt' has tended most matei-ially to enrich a very few and seriously impoverish the great masses of the people. I regai-d that result as of great importance. There is no pi-oblem harder to solve than how to distribute wealth in a highly civilized country like ours. You may ti'iist the instinct of the people to acquire wealth, but the difttcnlly is to distribute it. My belief is that the inti-oduction of a high i)rotective tarilf would tend to enrich a few, but it would diminish in the long run the wealth and comfort of the many. This is one among many reasons why I (U) not believe that we should be asked to imitate the United States in the imposition of a high tariff. J believe the creation of co- lossal fortunes such as has taken ]»lace there, and pei-hajts in other countries, does threaten serious mischief 1 have lu) objection to the accumulation of reasonable indci)endences, noi- do 1 indulge any hope of enacting sumptuary laws to limit the amount which any man should accumulate in a lifetime; but I do say that any legislation which over- rides the ordinary natural laws, and o])erates in the dii'ection of creat- ing large accumulations in a few hands, is dangerous lu <^ ou;;ht to be (liscoiirageil. 1 doubt exceedingly whether it is in the intoI•e^t of any ao 'coiiiitiy that there Bhould be a few colossal fortunes and the public should be taxed to contribute to these fortunes, and I venture to any, if I ma}' do so without infringing the rules of debate, that we have had a notable illustration in this country of how the possession of an un- usually large fortune by one man may imperil the best interests of the Dominion. Then, lastly, I have an objection which, I think, ought to weigh formidably with the Legislature. I believe a high tarilf neces- sarily encourages the foi-mation of rings, and that those rings will involve briber}-. Every protected interest will inevitably form a ring. Every ring will inevitably bribe. We have seen enough in past times of the mischief which can be done by large corpoi'ations, or rather by wealthy or iinscrupulous men controlling sucli corporations. I don't want to see a permanent lobI)y formed for the purpose of watching the readjustment of the tariff. I think without its aid those who are charged Avith that duty are amply able to take care of themselves. I kno V it is commonly asserted that the manufactures which would spring up under a high tarilf would, at any rate, add considerably to the population of the qountry. N^ow, I have carefully considered this point, and my opinion, formed from studying from the working of things in Canada, and such information as I have been able to collect from gen- tlemen who are familiar Avith the question in the United States, is this: The effect of a high tariif is not to add to any great extent to the ])opulation of the country, but to promote an artificial transference fi'oni the rural districts to the tOAvns and cities at the expense of the agricultural interests. If you disciiminate against the agricultural in- terests, if you enact that they shall receive less from the results of their labour than they woidd without your intei-feronce, then you undoubtedly ])roniote an artificial ti-ansference from the country to the town. I have no objection whatever to see our towns and villages increase to any si/.e that may be desired by a natu- I'ai and healthy growth, but I do not a])pr()ve of this artificial trans- ference. I do not think we should stimulate a movement that already exists too hirgely. I have seen hundreds of men who would have made succesNful farmei-s, forsaking the rural districts to enter into commercial ])ursuits, for which they were very indifferently suited. There is not the slightest doubt that this has been one — although I will not say a very great — cause of the commercial depression in this mm 31 country, tliat many pernons quitted tlioir avocations in tlie country and became nmall shopkeepers and tradesmen of various kinds, and that by their competition with each other, tJiey have added to the depres- sion which prevails. If hon. gentlemen will look at the last census returns for the several Provinces, and Ontario and Quebec especially, they will see that my apprehensions on that score are not altogether unfounded. Although it is quite true the population of Ontario increased considerably from 18G1 to 1871, it is nevertheless the case that in fifty out of our eighty-eight electoral districts, the rural constituencies hardly increased at all, and an analysis of the census Avill show that a very large proportion of the increase, where it did take place, was not in the townships, but in the towns and villages. In Lower Canada it is well known there was hardly any increase at all outside of the cities of Quebec and Montreal. If any honourable gentlemen are disposed to assert that the reason our ])eople have forsaken our rural districts was because there Avas no more room for them there, because the fei'tile country was cntirel3' occui)ied and well cultivated, I must respectfully dissent from that proposition. I say there is ample room in our lural districts, and it would in many cases be a most profitable diversion of our ca})ital and labour to send them to the countr}- to cultivate it better than it is tilled at present, and I earnestly recommend that course, not only to some of my hon. friends, but to the people they severally represent. I do not deny that the policy of the United Htates may have fostered, and perhaps considerably fostered, certain special industi-ies. I think this exceedingly likely. It would be a gi-eat wonder if, after the enormous tax they have inflicted on themselves, they had not done so, but I doubt very much whether those industries are worth what they cost to the people of the United States, and I doubt still more whether, if they had adopted a more rational policy and let their manufactures severely alone, they would not have been in quite as prosjierous a condition as wo now find them. I belie, o the people of the United States have harmed themselves a great deal by the jx'culiar policy they have adoj)ted. I do not at all mean to deny that they have, at the same time, harmed us considerably. I have pointed out several reasons which lead me to believe that if a great depression ]n'evails in the United States, because of over production there, it must react • I 32 very t i adv;nitngeou.sly on ])eople Avho ai-c cngag-od in the same occupations here. I regret ilmt this is so. I desire, if I could, to ]'emedy it; but when Ave are asked to deal with a peculiar exigency, atfecting any industry oi class in this country, we must considei' what effect our action would have upon the bulk of our population. Of course the action of the United States is ad'-erse to our sense of fair play, and as regards American niauifactuiers, mj- sym- pathies are entirely Avith oui- own people. It is undoubtedly a hardshi]) they should be excluded fi-om the nuirkets of the United States, Avhile our tariff" enables American manufacturers to compete Avith them in ours, or, as it is called, slaughter their goods; but I doubt if the fact that the Americans IniA^e done themselves and our people a gj-eat deal of harm, is sufffci.ent ground for askijig the (.Tovernmont of this coun- tiy to iufliet a lasting injury on the i)eoi)le. Noav, sir, I am ifraid I n\\\ tiring the ]>atience of the House. (No, no— go or.). Ali.iough I don't on usual occasions make much use of scrap book,*, I Avouid claim indulgence Avhile I read a few renuirks fi-om an eminenl A nerican paper. It is always well to see ourselves as others see \is ; and there ^ire some things in the ai-ticle I have before me, Avhich I think avc may. Avithout any harm, consider a little. The article is headed " Protrx'tion in Canada," and is as follows: "A recent discussion in tlie Canailiivn Parliament shows tliat there ,s a very lormidiible movement in the Dominion to so revise their revenue tarilt iaws as to apply the theory of • protection ' to Canadian m..*iiufactures. Regarding this move- ment from a purely selfish American point of v'.ow, one is inclined to wish that the Pro- tectionists of Canada will carry th Jir .scheme through. It will be largely in the Interest of the United States Govprnment to ho '^ i svstem of hig > tarifr dutle,. adopted in Canada as will place the two coun^nc. '.footing In this respect. As it is now, Canada has the decided advantag,.,. v)indii n products of the farm and forest have the same foreign market as the . f the United States. The Cana- dian farmers and producers get as g:>od pric. . .road as the farmers of l^ew Yorlf New England, Pennsylvania, and Ohio, and ootter prices than the farmers of Illinois' Wisconsin, Iowa, and Minnesota, because the latter are furtlier removed from the Kuropean markets, and have to sacrifice more in the way of transportation. At the same time, tlie Canadians are able to purchase all their manufactured goods at from •Z; to 40 per cent, less than the people of the United States, owing to the absence of the protective element from their tariflT. This circumstance has developed a gi-antic system of smuggling all along the border from Maine to Oregon, which amounts in tlie aggregate to perhaps not less than $2.>,00(),()00 annually. If the manufactured goods In Canada are placed on the same plane In the way of ta^ as the manufactured goods in the United States, this amount of money will be saved to American shop-keepers and manufjvcturorK, and the vicious and dcmorullzlng custom of smuggling will be 1 O.J checked to that extent. As long, therefore, as the United States are cursed with a species of robbery known as ' protection,' it is to our Interest that Canada shall be similarly cursed. In order that the Canadian farmers and people generally shall be compelled to compete on equal handicapped terms with their neighbours on this side of the line, and that the enormous smuggling business shall be stopped. Government loses several millions a year of revenue from the evasion of the Custom House duties, and our shopkeepers, and tailors, and manufacturers are deprived of many millions of dollars of demand for their goods. When the Canadian tariff is advanced to the beastly high level of our ' protective • crushing machine, the natural advantages of the United States will enable our dealers and manufacturers not only to secure the trade they now lose, but to soli more goods in Canada than at present, as everything will become dear and high priced over there, except agricultural products, lumber and fish. , ^ ^ i, » At the same time, while fighting to rid this country of the incubus of protection, it would be unfair not to expose the folly and stupidity which have prompted some of the Canadians to seek a repetition of our own disastrous experience. This new move- ment on their part is prompted by the recent financial depression in Canada, which has been falsely attributed to the difference In the tariff laws of the two countries. The fact that this Is not true may be readily demonstrated by a comparison between the foreign trade of the two countries. The United States, with a population of •14,00(J,- 000 souls, have a foreign business amounting, in round figures, to the following state- ment :— $000,000,000 i"^i'"'f ryi5,000,000 H\ports „ , , ,1 S 75,000,000 Balance In gold ' The imports and exports of Canada, with a population of only 4 000.00 ), were as follows in the year ending June 30, 1875 :- ' ^ , $119,(ilS,c.57 Imports $77,880,970 (ioods smuggled Into the United States '2,%m,m $102,886,970 T(ital exports $ 10,701,078 Balance The following shows the heads under which the exports were chiefly made, with th. value of those exports :— $ :?,878,050 Produce of the mine r, .jg,) r,.,^ Products of the fisheries ;.':,■.'.■.■ 24,781 i?.^) Products of the forests • ^^^^^^^^^^ Animals and provisions .,^.^ Agricultural products ■.;.■.'■,■.■.'.... 2,m,im Manufactured goods "This onlv includes the registered products which are exported, and does not uJnae.ny of the cheap foreign'^oods smuggled Into the United Sta es, such as silks, la s, velvets, shawls, ladles' toilet articles. Jewellery, broadcloths, clothmg :^ZXo cutleo-, queensware, and a thousand other things which are Imported nto the Dominion at one-fuurth to one-sixth.the American taritt taxes. 34 " The foregoing figures show that Canada, with only a million more people than the State of Illinois, and not so many as the State of New York, has a foreign business about one-fifth as large as all the United States, with eleven times as many people, and natural resources infinitely superior. The Dominion Is almost destitute of ti>ose great and essential elements of strength and development, coal and iron ; neither has she in quantities which pay for working such minerals as gold, silver, lead, copper, zinc, or mercury; her petroleum wells are little better than delusions, (I do not quite ao-re'e with this, I may remark) ; and she is wholly lacking In those rich, agricultural sraples of cotton, corn, tobacco, sugar and rice. Yet the extent of her shipping and commerce, and the value of her surplus products, are truly remarkable for a country of so scanty population and restricted natural resources. " The reason for this large commerce and the prosperity of her farmers, in spite of all the natural disadvantages. Is simply because Canada has had a tariff averaging only about 12 per cent., while the United States has had a tariff averaging 48 per cent., or four times as much. The Canada tariff has been a tariff for revenue only; the United States tariff has been a tariff for protection— against coi>sr.mers. " It Is absurd in the face of this showing to claim that a protective tariff will be of any benefit to Canada, especially to her farmers, and lumbermen, and fishermen. It is true that there has been a decline In the value of the commerce of the Dominion during the last year,'but there was a marked increase every year up to 1874. Tlie fallin"- off of the last year has amounted to about 10 per cent., but it can all be accounted for by the decline in prices; there has been no decrease in the bulk of tlie trade. But this failure to maintain the ratio of Increase in the past has been owing simply to the commercial depression that has prevailed throughout the entire world and with special hardship in the United States, Canada's nearest neighbour and chief customer. The general depression In this country was brought about directly by the two evils of over protection and an Inflated Irredeemable currency. Canada has suffered infinitely less than the United States. As to any other difference in favour of the United States, It must be looked for In the enormous natural advantages possessed by this country. If Canada possessed the rich and vast deposits of coal and the great mountains of iron which the United States have, and If she were blessed with a climate that would ferow corn, cotton, tobacco, sugar, rice, peaches, grapes, and oranges, the difference In her tariff laws would enable her to completely outrun the United States In commerce and manufactures ; but these natural disadvantages cannot be offset, but will only be Increased by the adoption of the protection fallacy. If, how- ever, Canada desires an experience of her own in this respect, and is not satisfied with ours, let her try the experiment and see how it works." lion. Mr. TUPPKR— Who wrote it, and what pa])cr is it? lion. Mr. CAETWlJKillT— It is the Chieai-o '^Tiibuno," 21st Fehni- ary, 187(i. Does my hon. friend mean to insinuate that I was a party to writing that article? I have no such influence over that influential paper, the/'hicago "Tribune." AVe have had proof enough in the various debates which have preceded this discussion of the great diversity of opinion which prevails with reference to this most import- ant subject. It is natui-al enough that there should be diversity of opinion; and all I will say on that point is this: The (Jovernment have iclt it their duty to give their most anxious atiention to all manner of people than the >relgn business ! many people, stltute of tbose )n ; neither has r, lead, copper, (I do not quite ch, agricultural r shipping and 3 for a country lers, in spite of arilf averaging fing48per cent., venue onlj'; the s. ariir will be of I fishermen. It f the Dominion up to 1874. The it it can all be the bulk of the has been owing he entire world [hbour and chief ; directly by the cy. Canada has ?nce in favour of ritages possessed lal and the great blessed with a les, grapes, and Jtely outrun the vantages cannot fallacy. If, how- lot satisfied with it? s" 21st Fc'l.!-u- wasii pju-tyto lat infliiential iiouy'li in tilt' of tlio o-reat * most iinpoi't- >e diversity of /^ernmcnt have uU muniiei' of 36 evidence, and to weigh every kind of information Avhich as been laid before them. Wo do not desire to conceal tliai the responsibility that rests upon us is most grave. We don't desire to conceal that the result we have arrived at has been attained by anxious, protracted deliberation, as to whether we could at once relieve our manufacturers, and yet do justice to the other portions of the people. But when we are asked, as we are now asked, for radical changes — cha)iges which will alfect our whole system and policy, financially, ]wlitically, socially and morally — I say wo may well pause and hesitate before we reverse what has been after all the uniform policy of all Governments for twenty-five years. Whatever ai-guments may have been used, it still remains the fact that the Canadian tariff is substantially a revenue tariff; and if we are asked to create a high protective tariff, I must repeat that even if I have been mistaken, in any case the time chosen for those proposed changes is most inopportune. There have been, as wo know, violent disturbances in trade and in values, rendering it almost impossible for any man, no niatter how experienced or how skilful in commercial matters, to estimate with anything like accuracy the consequences that would flow from any radical changes in the tariff. We are not at all in a normal condition of affairs. We have enormous engagements which will tax all oui* resources to enable us to fulfil them, and some of which it will be out of our power to fulfil in any shape ; and if ever the onus was thrown on gentlemen asking for radical changes of estab- lishing a perfectly clear case in their own favour, 1 say the onus is now thrown upon those who advocate a high protective larifl^^. Let them consider for one moment what they ask this Govcjiiinent to do. They ask us to tax nineteen-twentieths of the population for the sake of one- twentieth. I am quite aware there is considerable misundei-standing and misapprehension on this point. I am quite aware that many gen- tlemen, looking simply at the ordinary statistics furnished by the census returns, believe that the manufacturing interests represent three or four times as large a percentage as I have stated. But if these hon- ourable gentlemen will take the trouble to examine these returns minutely, they will find that of the 200,000 or thereabouts set down as engaged in industrial pursuits, probably To per c^nit. must be taken as not concerned in the protective movement, and that only the number 1 have named are really to be considered as in any way ititereBted in that direction. Of our indu«trial population at leant 40,000 are eno-af>-cd in the lumber trade, and to them a high tariit' would be no Hort of advantage, but rather a serious impediment, as tending of neceBBity largely to increase the cost of producing lumber. The industrial class also comprises 10,000 or 12,000 blacksmiths, engaged in serving the agricultural population; and a very large number of carpenters, and innumerable other trades of similar character. Far be it from me, however, to deny justice to a •1 minority But on the other hand there mast be the most 'imperative necessity demonstrated to exist beti>re wo can think of sacrificing the prosperity of nineteen-twenticths of the population lor that of siich a small minority. And when these gentlemen allege that this is a slaughter market, and that American manufacturers make Hacritices for the sake of selling here, I do not pretend to deny that this agtn-avates the case of our manufacturers; l)ut 1 may state that the°evidence laid before us does not bear out their assertions, at any rate, to anything like the extent to which they have been mjule. There is no doubt that immediately the cost of production in America Ixjcamo cheapened there was an increase iu the number of articles brought into this country, and that this circumstance, although advan- tageous to the bulk of our people, did press with severity on a certain portion of our manufacturers. But there is also no doubt that a very considerable number of our manufacturers, embracing three or four of the most important trades, and employing a very large proportion of the number I have mentioned as desiring protection, do not dread American competition at all, but are afraid of British manufacturers. And this is a point which the House would do well to bear in mind- that a good deal of the American competition is not the competition of American with (Canadian industries, but American with British manu- iacturers, the Canadian consumer being benefitted by the operation. Moreover, we must recollect that when, as has been the case recently, there has been a very large reduction in the demand for articles of foreign production, there will naturally be a large reduction in the demand for home manufactures also. When the state of things is such that we find that the importation of articles in the ni])cr cent, list (which contains the bulU of the articles with which our home numufactures come into competition) is reduced in six months to the amount shown by the 1 I. I 3t Trade and Navigation Returns, we must conclude that it is only natu- ral and inevitable that there should be a considerable reduction in the total demand lor the latter also. It must be further borne in mind that were we to impose a high tariff we would have to ira}X)se a high tariff all round ; and that if we impose a high tariff' all round it will assuredly affect, and affect largely, the general cost of production of the very manufactures which are thus protected. This effect has been produced time and again and is actuallj^ the case at this moment in the United States, where many of the ablest manufacturers are con- vinced, from the extent to which the cost of ]n-oduction has increased from this cause, that they Avoiild be able to manufacture more cheaply and make more mone.y if they had the tariff' reduced to something like an equality with ours. There is no interest in this countiy which more deserves the favourable considei-ation of the Government than the lumber interest, and I have not yet received one demand for jwo- tection from the able and intelligent representatives of that industry in this House. Whether it is to come or not I do not knoAV ; l)ut this much I may observe, that the imposition of a high tariff' would cer- tainly affect them very seriously, and that those who are engaged in that great industry have an interest in this matter quite apart from that of the persons who are now demanding an increase in the tariff. It may be well to remind some of my honourable friends that if we were to undertake a general and thorough revision of the tariff' we might find it necessary to do a little levelling down as well as a little levelling up. They must recollect that there are several very import- ant articles on which the tariff is at present all but prohibitory, and I must caution them that it might be exceedingly difficult to get the Legislature to avoid the conclusion that there was no reason for exce])- tional favour being shown to the producers of those articles. Up to the ])resent time our tariff' has been substantially a revenue tariff", but it is noteworthy that as our country groAvs older the tariff', even if ur altered, lends always to become more protective, and that a taritt which a few yeai-s ago might have atlmitted foreign articles freely, may, with the gi-owth of the countiy, become ])!'ohibitor3' in a short time. Then we have to consider a little the rate of the taxation which the peo])le of this countiy at ])fosent labour under. As compared with that which prevails in othor countries, and especially in many othei' 38 colonies, the rale in Canada is low enough ; but taken per se — consid- ering the fact that a population of scarcely foui- millions are obliged to i-aise every yeai- $23,000,000 or $24,000,000, to defray the expenses of the Dominion Government alone, irresj^ective of what they must con- tribute for municipal purposes — we must be verj' cautious how we increase the burden furthei-. Every family in Canivda has to pay from $25 to $?>{) towartl meeeting the expense incurred in their behalf hy this Legislature. That represents something not very far from the value of a month's labour, and that, though it can be borne, is a severe drawback on the ]ii'oductive jwwer of this country. 1 am cautious enough — conservative enough, if my hon. friend likes — to regard everj- increase in taxation as a positive evil in itself. If we have to impose additional taxation, it must be for the benefit of the whole country, for the purpose of maintaining the public credit, or carrying on the public works in which we are engaged. This is jiractically a question of cost and come to, and it is also, to a certain extent, a question of conve- nience. Theory apart, there are very fcAv of us who woukl object to a moderately low rate of duty, or would cai-e much to be found opposing 11 tiU'iff, though in defiance of free trade theories, which would bring a large addition to the population of the countiy at a very moderate cost to the remainde!-. On the other hand, there are very few, I think, so enthusiastic that they would be willing to submit tu a high rate of duty if it was demonstrated to them that it would make but a small iuldition to the number of the people. What the country needs at pre- sent is more time. Tt is undoubtedly in a depressed condition, but a condition which, 1 believe, unless some further disaster overtakes us, will bo only temporary. 1 have pointed out that there wore numerous causes for that state of depression, and that they were causes over which the (Tovernmont had no sort of control. I have pointed out that those causes have largely <'ontributed to bring about the present tlistress, and I may add that had we been more cautions in the past, had we refrained from anticij)ating all our resources and throwing valuable rosorvos away, we might have been in a position to try more experiments in legislation than we can afford to do just now. I say this is no lime lor experiments. This country requires all the revenue its peo])leca!i contribute, and il would beadangerous Ihingfbr ustoenter upon a policy the issue of which no man cmi at the nresunt oerceive, i 39 Reviewing, therefore, as briefl}^ as I can, the general position of this eountiy, I take it to be somewhat this: I do not believe (although the comi>ariHon has been often made) that we are at all in so disastrous a condition as that in which we were in the year 1858, and in the years which immediately succeeded ; in my opinion our position is very much less serious. The causes which have brought about the present state of things are clear and well detinod ; and the^ are iar less likely to be permanent than the causes which led to the depression of 1858— a de- pression which is no doubt exercising a powei'fui influence in the minds of the people of this country at this moment. Let us consider what was the state of things at that ])eriod. We had, in 1858, just con- cluded a period of very heavy expenditure on railroads, chiefly supplied from foreign capital, wdiich, as comjiared with our present resources, would have amounted to an expenditure of two or three hundred mil- lions during the past four oi- five yeai-s. There had also been an increase in the price of staple articles of produce, owing to the Crimean war, so great that in some cases men were able to pay for their farms with the price i-cceived for a single year's crop. This led to wide-spread inflation. We do not see these causes at woi-k now. I think we will have, on the whole, but a tcmporaiy depression; and it is for that, and that only, that we will have to provide. Let us consider the favoui-able points. We have at present a condition of things in which we find our exports scarcely dijninished, excej^t in one article. We have a full treasury. We are not obliged to go immediately to the Knglish market. Ample funds are provided for cariying on our public works and meeting the public debt as it matures. A lai-gepurtof oui- ex])enses durin the past two or three years, as 1 have pointed out, were of an exceptional charac- ter, not likely to occur again. 1 admit, and always have admittwl, that we had considei-able inflation from 1871 to 1875. I)ut it is very im- j»orlant that the House should bear in mind that along with, and underlying that inflation, there was a great and general growth throughout this country. There is no doubt that (Canada has nuule very rennirkable real progress during the last ten years. No man can look at our great cities, r)o man can ae(|iuiint himself with the condition of the agricultural |)0|)ulation. without seeing that what I am saying in that ri-sjieet is liieially true. I di'|)end on the gain of six years' growth to bring us back to llie position we occupied in 1871. which I 40 think may be regarded as a fair no; nml 3'^ear.''' I have deliberately re- jected all abnormal and extraordinajy growth, and depend on the jiatural growth, which even in the worst times, and nnder the worst circumstances, we have never found fail in Canada. In dealing with this matter the Government have had to consider ver}^ carefully not what was to the interest of any one Pi-ovince or any one class, but what was to the interest of the whole Dominion. In concluding, I may say, sir, I am extremely sorry that I have been obliged to dittei* in opinion with some friends whom I value highly. I admit that there was con- siderable force in the arguments they employed ; undoul)to(lly a great deal of distress exists among certain classes, and in certain parts of the country; and I regret exceedingly that the Government have not been able to see their way to relieve this distress, except at the risk of in- flicting ultimately very great and permanent injury on the whole population of Canada. Although the hard tinier attect these poor people, they also are seriousl}' detrimental to the Government, and every administration, no matter what its opinions may be, must be mo.st sincerely anxious — if it knows hoAV — to remove such a state of things, and create general peace, plenty and prosperity. Sir, we have been called upon for a national ])olicy; so far as our policy is concerned it is a policy of justice to the whole D )minion, and of patience and economj^ until the present evil time be over- past. But I do not propose for the adoption of the people of this country a policy of which it can only be said that it is a servile plagiarism of the worst blunders which the United States have over committed — blunders of which I verily believe the American people are now repenting, and from which 1 trust that they will very speedily succeed in extricating themselves. The jiolicy which I have the honour, on behalf of the Administration, to ])r()|»ound for the acco])tance of this House and the country, I desire to repeat, has not lieen arranged hastily or inconsiderately; and if we are wrong in this matter, we have at least neglected no etfort, we have spared no })ains, and we have taken all possible trouble to convince (Kirselves that we were right in the course we have decided on. Sir, I have the honour to move that you lea^'e the chair, and that the House do resolve iself into Committee of Supply. * yiiln for n. mnre detailed naoount of (rroundn for ihlH opinion remarks quoted In Appendix. 4 I ralcly re- el on the the worst ling with Dfiilly not but what may say, n opinion ! was con- ly a great irts of the i not been 'isk of in- he whole hese poor rnent, and , must bo a stjitc of , wo have policy is nion, and be over- lie people ;hat it is ted States American will very eh I have d for the il, has not ng in this no ]>ains, IS that we lie honour olvc iseir 41 f'^l h APPENDIX. Its quoted In I desire now to speak of a subject more practically important, perhaps, than any I have touched upon. It is important, no doubt, to know who are primarily respon- sible for the present state of things, which is a matter for grave consideration, not unfraught with alarm ; but it is of more practical importance to know what grounds I have for saying that we can fairly and honestly, without placing too great burdens upon you, meet the liabilities we have assumed. The question, therefore, is how far the precautions we have taken are likely to be sufticient to meet the emergency, and I am the more desirous of explaining these fully, because I am inclined to think there is a tendency in some quarters to underrate their value and extent. Now, I have never denied the fact, so clamoiuously insisted on by the Opposition proper, that the taxation we imposed would have produced much more than I estimated it at, provided things had remained as they were in 1873-4. Their estimate, and I am not prepared to g.iinsiiy it, was that the new taxes would swell the revenue; on that condition lo 27 millions, even if no increase took place, and that if trade improved 'during the next year in the same ratio as it had been doing for some years l)ack wi- would receive no hisp Mian thirty millions or thereabouts. Unhaiipily, their finan- cial castle, if not in an-, was at least built on a very sandy foundation, 'i'hey were wrong in the all-important point of mistaking an abnormal increase for a steady growth of prosperity, and still more unfortunately they had pledged us to a policy, which would only have been justilied Imd their anticipations (vide Mr. Tllley's budget speech) been fulfilled lo the letter. F. r me, on the other hand, feeling quite as positive that a check must come, and that speedily, it became acjuestion of great delicacy and ditfi-..a.,c lor a scries of years, and the year I chose was the ordinary, not the fiscal y.ai 1871. On the years' imports, which are nearly as far removed from the minimum of 1868 as they are from the extreme expansion of 1873, I thought we might reekon in the main with tolerable security making, o course, a proper allowance for the revenue to be derived from Prince Edward Island and British Columbia. You will perceive, therefore, that we allowe' a very large margin against contingencies. Not only have we declined to reckon onthee-xtraordmarymcreaseof 1872 and 1873, but wc have taken no ..count of 871 to 1876, and we have on the other side allowed one or two very large items of he expend! ure to remain unreduced for the express purpose of completing a quan- t-tyof smal works and afterwards cutting down that expenditure to vfry LI Zr L " ? ^\ 'r*'^'""' "'^" "^"^"^ ''' ''''^'' ''"-"- «^- annual' xTn- a.tUK> amy budget speech of 187-., in which I pointed out that there were good ^']^::r''^'uT-^'' "'"^"^" ^^ "^^ ^^^^ '---y -^-tant items of pubhc >No