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We contend (1) that by the system adopted by the Dominion for the payment of the sub-- sidies, the retention on account of the excess of debt until the same was wholly assumed by Canada, and the holding and beneificial use of the assets of Ontario and Quebec, including the trust funds, and by agreement, the accounts between the Dominion of Canada and Ontario and Quebec respectively, are to bear interest at the rate of 5 per cent. per annum, compound-- ed h(llf-)':".lrl_v * (M that tha mananal mele Hiag w« 231 November, 1882." n(l)sn:o';:;-uded on behalr of the !'rovlnc't)n ! that this memorandum was approved of y both the Finance Minister at Ottawa* and h deputy. The accounts, calculated on the basis of compound interest, prepared in exact ac-- cordance with the principic set forth in the memorandum, were sent to the Treasurers in, 1835, thirteen months after the date of the . memoraadum, no word of objection or protest having been raised in the meantime. Theose same accounts were in the session of 1884 pre-- sented to the Dominion Parliament. In Oc-- tober, 1884, a second conference was held at Ot-- tawa at which were present the Treasurers of the Provinces, the Finance Minister of the Do-- minion and his deputy, Mr. Courtency. 'These same accounts were placed before the members of the conierence, and an examination into their dotails was continued for two long days. Items were discussed pro and con, inquiries made into this and that account, but not one vword of protest uttered against the rrinclplo upon \\'{nich the accounts were calculated. The Dominion Act of 1884 (47 Vic., ch. 4) now calls for some remark. It aimed at declaring the intentions of the act of 1873, to which aliu-- sion has been made, 'The one is the comple-- ment of the other. The act of 1873 relieved the Provinces from the excess of debt, that of 1834 cancelled the charges made against the Provinces from year to year as to the interest on -- this _ excess. in other words, by the operation of the act of 1884 the Dominion of Canada became liable for ?'13.006.%8 as the debt of the late Province of 'anada on July 1st, 1867. 1t was claimed for the Provinces that, while they were charged compound interest on these accounts, this act of 1884, which aimed at reimbursing them to the extent of the interest charges on the ex-- cess of debt, did not allow compound interest. Inasmuch as the act of 1884 was passed after the accounts of which we have been speaking had been rrepnrod. it became necessary that they should be re--cast, A re--cast was accord-- ingly prepared by the Finance Minister, the basis of calculation being again that of com-- pound interest, and sent to the Treasurers of the two Provinces in January. 188%6. The Finance Minmister, after so sending the ac-- counts to the Treasurers, accepted corrections made on behalf of the Proviness and adopted said corrections without reservation or objhec- tion, It is important to remember also that Mr. MeLlel+n, Finance Minister at that time, laid before the House without request of Parliament the accounts of the Dominion with the Provinces from 1st of July, 1867, to 30th of June, 1083, made up at compound interest. A third conference was held at O:tawa in Oct., 18393, and then for the first time during all these years the objection was taken by the T)ominion Government that the interest had beon cal-- culated on a wrong basis, that the memo-- randum of 1882 was not binding and that the | Provinces would not be allowed more than 5 -- per cent. simple interest on these accounts. The Contentions of the Government. n \}'e contend (1) that by the system adopted eq paj¢ _ _ _ _' ber cont. per annum, compound-- ed half--yearly ; (2) that the general rule that payiments made by the debtor should be ap-- plied primarily in reduction of the interest ac-- erued on the creditor's advance is to be ob-- served ; (3) that in respect of certain funds the mt(: (.)f Inferest o D6 Lorne LRArAnn 18 & wan D2 e cent. per annum Mi+, I n rate of ;) OV in respect of certain funds the rate of interest to be borne thercon is 6 per cent. por annum, This question is of such serious importance to the Province that we would lose the large sum of $857,000 if w &re compelled to aeccept a settlement on the basis of 5 per cent. simple in-- terest, that being the basis of the new accounts submitted in 138%. Aside from every other consideration the reasonableness of the de-- mand of the Prov; ges that they should receive 5 per cent. lntcmst'ompoundo:l and computed with half yearly Fests on the very large s OO hoid for them in trust _ by the Dominion since the date of Con-- federation, -- is very apparent when _ we remember thar 37. "Pbaren P P mt This «'umtion is to the Provinee 1 sum of $857,000 1f settlement on tha CC ETT 1000 consideration the mand of the Proviy 8 por cent. interest with half yearly amounts held ~ j the Dominion s federation, is v. f Lo n CV for them in since the dat very . apparent during / & -- Jar -- _ Treasurer of Ontario. * J, WURTELE, " Treasurer of Quebec. "s, C, Woon, Cace 000 heid unt of subsidy, ou wido'\':" p(ml. s, Upper (D?M:; noun! comin "2@ far the ll%rl_l sho wink large part of i nf thia usitu qi lr oo ors (uunseqrots alteratio : of the boundaries of townships are settled. Our liability to Quebec in the matter of the Common School fund is )lainly set out in the statement in the hands of 'hon. gentlomon. The statement before us shows that our pre-- sent liabilitics amount to only $3,220. We have never included as a present liability our railway aid certificates, nor do wo now so in-- clude them. We need not this moment concern ourselves with the quetion of payments which were as a matter of deliberate polic{hpostc{)oned for future years, which were nover tended to ETTE CCE LSC" i i4 d C EEG§OUUUUY EL CHO date of Confederation instecad of in 18373. Therefore, on the one hand, we remove this sum of $2,818,000 from the credits in the On-- tario account as well as the items charged against us as in{crest on the surplus debt. and on the other hand we place to our credit the items which the Dominion retained from our subsidy from 1867 to 1873 to mcet the interoest on our excess of debt. In this way, starting with the accounts as submitted to us by the Dominion in 1886, we arrive at the balance of subsidy referred to. The three special trust funds, viz., L'ppe: Canada Grammar School fund, Upper Canada building fund and the land improvement fund, uggrcfiuting nearly $2,000,000, having been referred to so con-- stantly in previous years, cail now for no re-- mark. These trust funds came to us under the award, the Dominion continues to hold them for us, we get interest on them regularly and we have not touched a dollar of them. These investments, bringing us in half--yearly pa}'ments of interest, are admittedly of the safest character possible, and it can no longer be contended in the face of the letter of . the Finance Minister at Otiawa, suggesting such legislation as would result in placing the Com-- mon School fund completely under our con-- trol, that they are not available assets. We have to our credit bank balances to the amount of $43,792, and this leaves us altogether a sur-- plus of assets over and above all lia-- bilities at present payable of $5,809,995, Liabilities. 464. As to the next branch of our assets, that which appears under the title of *"Capital held and debts due by the Dominion to Ontario bear-- ing interost," it will be remembered that the late Treasurer departed last year from the classification followed in 1889 and previous years in which u{»pourod the item of $2,848,2839, which was our share of the capital sum given to us under the provisions of 47 Vic. ch. iv., to which 1 have already alluded. The reasons assigned by him for this departure commendecd themselves to the House. I foliow, therefore, the arrangement of our assets as set forth in the tinancial statement of last session, and in place of this item of $2,848,289 I substitute the item of $1,590,519, being the balance due to us of unpaid subsidy and other credits. This last named item is arrived at as follows:--It was agreed at the conference of 1383 that the acts of 1873 and 1884 should be so interpreted that Can-- ada was to be considered as having assumed the surplus debt of $10,506,000 at the A Comparison--Assets. I will now briefly allude to our statement of assets and liabilities, It will be noticed that the sum invested in drainage debentures is con-- siderably larger than it has been for some years {,m-'t. We purchased last year municipal de-- entures for drainage purposes to the amount of $85,654. _ We received last year as payments on debentures $41,192, so that our investments fu:' this purpose cxcc't-dcd our receipts by $44,-- _ I have given this brief explanation as to the disputed accounts, not by way of argument, inasmuch as the question is so large that it would, if fully discussed in itself, take up a whole afternoon, but with the hope that it would prove interesting especially to those who are sitting here for the first time, and espc(-iullf' bocause 1 am delighted to announce that J fuilly expect that the whole subject will soon be disposed of without further irritation and in the most friendly spirit possible. (Ap-- plause.) _ _ _ rrTncipnl lylnf to our credit. In this way we ose interest a u?wther on these large accumu-- lating credits of interest, so that the new ac-- counts when analysed do not allow us even 4 per cent,. interest on our trust funds. hoii s d mt lt o J ui.A 4 0 ds . 4BB A 0 d 2A a scb i i i Flves us credit in them for large accruals of nterest and that the payments of interest paid to us are not charged against this accumulat-- ing interest credit, but are charged against the that ~HUAM6® the -- Dominion continued to y 6 per cent. and even 7 per cent. in some rl::lumces on borrowed money, that in their accounts they credit us with 5 per cent. com-- E)unded $ 'equs on our share of the Common thool tun&. and that they have allowed 6 per cent. contlnuouuli on other funds such as the Indian trust fund and the Seignorial indem-- nity fund of Lower Canada. The utter un-- reasonableness of the new accounts submitted by the Dominion is just as apparent when we notice that from year to year the Dominion