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western section, has been given ten year loans at four per cent. amounting to $25,000,000, guarantees of bonds thus far amounting to $67,000,000, and cash gift of $23,000,000,$13,000,000 in the form of seven year payment of the interest on the guaranteed bonds of the mountain section, and the balance because of a blunder in drafting or a blunder in interpreting a clause in the contract requiring the government to implement the difference between par and actual selling price of bonds, a clause which the Canadian government and the Canadian Supreme Court interpreted to mean guaranteeing additional bonds to make up the gap, but which the British bondholder and the British Privy Council, which had the last word, took to mean paying out the difference in cold cash. On the eastern or National Transcontinental section, the Grand Trunk Pacific is subsidized by seven years' use of the road rent free, equivalent to $37,800,000, a total cash gift of $60,000,000. Some critics have added to this cost the sum of the difference between the three per cent. rental charged the company and the three and a half or four per cent which it is declared the country is paying on the money borrowed to build the road; as a matter of fact the bulk of the money was not borrowed, and until we know whether the rate of interest the government would have to pay for the fifty years of the contract will be less or more than three per cent., it is too early to make calculations. The amount is large enough in all conscience without any hocus-pocus statistics.

The unique feature about the government bargain with the Grand Trunk Pacific, the encouraging feature so far as posterity is concerned, is that the worst is over; the bulk of the outlay has been made, paid out of current taxes, and the country now has a valuable income-yielding asset. Assuming that $50,000,000 of the cost of the National Transcontinental and the $23,000,000 to be paid as interest on the mountain section bonds are met by borrowing, then the country stands to pay out each year, at 32 per cent., $2,560,000, and to receive each year as rental $5,400,000.

The Canadian Northern has received from the Dominion some $21,000,000 in cash subsidies, and, through charter purchase, over 4,000,000 acres of land valued at $4 at the time of bonding and at least $10 at the present time, so far as the

unsold portion goes: from Ontario it has received 2,000,000 acres, of still uncertain value. It is, however, specially by guarantee that the Canadian Northern has been aided: the Dominion and seven of our nine provinces have aided the parent line or the subsidiary companies by guaranteeing bonds to the value of well over $150,000,000, of which over $130,000,000 has already been issued.

It is possible that the emergency in which the road is now declared to be, the danger of a financial crash, the generosity shown other roads, warrant still further aid. It is a question largely of the validity of the security offered; of whether the guarantee covers the whole property, terminals as well as track; of equal endeavor by those responsible for the road to give it help from their private means; of willingness to give complete publicity as to the complex financial arrangements of the many companies in the Canadian Northern system. If the taxpayers are to be made partners, they must be given a partner's privileges of full understanding as well as his obligations.

Electoral Reform.

To go to the root of the matter it is essential to reform our system of financing political parties. No one will deny that the campaign chests of both parties have been very largely filled by contributions from subsidy-seeking railway companies. We should at once insist upon full publicity of campaign contributions and campaign expenditures; publicity is even more important than forbidding corporations to contribute. Doubtless critics will urge the difficulty of ferreting out secret gifts; but surely our courts are not less efficient nor our corporations and politicians more adroit than those of the United States, where campaign publicity laws have proved of undoubted value. But negative regulation is not enough. The ordinary voter must be taught that it is his duty to finance his party, that elections cannot be won without legitimate expenditure for renting halls, for "literature," and scores of other purposes, and that if he wishes his principles, or his interest, to triumph, he must pay for the upkeep of his party, just as he pays for the upkeep of his church. When the bribable elector ceases to think that campaign funds come like manna from heaven or elsewhere, that election day is

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his chance to secure a share of this mysterious graft of which the higher politician secures his share after election day, we can expect a higher standard of political morality. The party which first makes a nation wide appeal for contributions from a dollar up, and agrees to publish the lists, will do good service both to itself and to Canada.

Who Shall Pay?

A question too much disregarded in the discussion of the millions our governments pour out is the method of raising the revenue. We have paid the millions spent in building the Transcontinental, the millions spent on armories, the millions paid the provinces in subsidies, by means of a few dollars more on our grocer's or hardware merchant's bills, a few dollars more on the freight charges on roads built with duty-burdened rails, a few dollars extracted painlessly or at least unconsciously at every turn. If in our growing time we must undertake large expenditures, take large risks, at least the burden should be thrown on those who benefit most from our half-continent's development.

We must face the question of a Federal income tax. No party is prepared as yet to endorse such a programme. No Finance Minister is going to borrow trouble by changing the method of taxation so long as the present methods yield sufficient feathers with so little squawking. But there is likely to be more squawking in the future, and the example of the United States will soon prove contagious. Land values taxes are out of the question for Dominion purposes. An income tax is the only practicable alternative to the present customs and excise duties. The provinces, however, require money even more than the Dominion does. Why not, then, following some European precedents, entrust the Dominion with the task of assessing incomes, since evasion is more difficult in the larger field, levying what per cent. it requires to supplement the indirect taxes, and then permit any province to levy additional mills on those subject to its jurisdiction, on the same assessment ?

Both to secure responsibility and care in expenditure, and to put the biggest burdens where they belong, on the broadest backs, the income tax must come. O. D. SKELTON.

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