into calculation, and even though it should be a little more it would be better in a business sense to pay it than pay the present which is absolutely impracticable and which encourages dishonesty without really affecting anything."

The CHAIRMAN: In connection with what you said to us the other day I was applying the principle to the case of a man who had bought a piece of land and built a store upon it, a shop. He spends $7,500 upon it, for example, and he gets a rent of $50 a month. Well, I suppose $600 or $50 a month, would be his earnings in a case of that

sort ?

Mr. ROBINSON: Yes.

The CHAIRMAN: On the value of $7500 he would pay now in Toronto $150 for taxes. Upon your principle he would deduct 40 per cent. from the $600 which would leave $360; then applying the Toronto rate to that, his taxes would be $7.20 instead of $150. Well, why would not the principle be applicable to the case of a man whose investment is in improving a piece of land? If it is a good principle and likely to be fair to all companies and all kinds of business, why would it not be fair it that case ?

Mr. ROBINSON: The reason why I should have thought he should not be taxed on the same principle as a corporation is that that $7,500 is not invested in business at all, and the $50 a month that he is getting is not what he is getting as return of his $7,500 from property. His house is on a farm and he is getting something on the land too.

The CHAIRMAN: I am speaking of a shop on Queen St.; he rents it at $50 a month to a shop-keeper; why is not that like another kind of business ?

Mr. ROBINSON: As my learned friend suggests that is the earnings of land, not the earnings of business.

The CHAIRMAN: It is the earnings of taxable property.

Mr.. ROBINSON: Oh, it is the earnings of taxable property. I am perfectly free to say myself, so far as I have been able to consider it, I do not think you will be able to apply this principle to individuals, because you can never get individuals to keep accounts. There is no use trying to tax all merchants upon their gross receipts, because the smaller merchants will never keep accounts.

The CHAIRMAN: The principle of taxing an individual upon his land and buildings, the personal property, would be good if you could only get at it, if you could reach it, if everybody was honest.

Mr. ROBINSON: The only reason I think that it applies eminently to these companies and solely to these companies is this, that they are bound to keep such returns that you can always get their gross receipts. No company which has shareholders and pays dividends, etc., can possibly avoid putting down every sixpence they get. You can always get at it. The CHAIRMAN: You can find out their condition?

Mr. ROBINSON: You can find out their condition at once.

The CHAIRMAN: The value of their property?

Mr. ROBINSON: That is it.

The CHAIRMAN: What do you say to the principle laid down by Judge Brewer and Judge Miller in the Supreme Court of the United States?

Mr. ROBINSON: I do not understand myself how you are ever to apply that with

success.

The CHAIRMAN: I mean applying that to corporations, what would you say to that! Mr. ROBINSON: I do not remember what the reference was to.

The CHAIRMAN: Those two decisions in the Supreme Court of the United States from which Mr. Fullerton read-Judge Miller and Judge Brewer. What he says is this, if you take the capital of the company and estimate it at what it stands in the Stock Exchange, that is a very good criterion of the value of that part of their property; then if you take their bonds which they have issued and take their mortgage value also, and these two things put together constitute the value of that company's property and ought to be the basis of taxation; that would include all their land and everything els9.

Mr. ROBINSON: Well, that is merely suggesting one of the thirteen modes of taxation.

The CHAIRMAN: What do you think of that as a just method of taxing such companies as you represent ?

Mr. ROBINSON: Really that would mean taxing them by the amount of the par value, or the market value, would that be?

The CHAIRMAN: Taxing them according to the present principle.

Mr. ROBINSON: Would it be the market value or the par value of it?

Mr. CHAIRMAN: According to the market value of their property. These two things are ascertainable in nine cases out of ten.

Mr. ROBINSON: In the case of a great many companies I am speaking of, it would tax them out of existence. Take the Gas Company or the Bell Telephone Company, the market value of their property represents all they have expended and all they have done. The CHAIRMAN: No, it is what they who know best estimate their property to be actually worth.

Mr. ROBINSON: I think that would practically be applying the principle that we are told they never have been able to apply to merchants and manufacturers, taxing their whole property. I remember Mr. Thomson's statement that is seemed to be admitted that while they have the power of taxing them in full, they never attempt to put on any more than twenty-five per cent. To tax in the way you mention would be to tax all merchants and manufacturers at their full value, and the result would be to drive them out of business, that is all, as far as I can see. For instance, dealing with the Bell Telephone Company, that would be be a tax of several millions and as compared with what they are earning

The CHAIRMAN: That might be right.

Mr. ROBINSON: I am not saying that anything might not be right; I am only saying that when you come to look at it practically—

The CHAIRMAN: If you find a person had real property to the amount of several millions he would have to stand it.

Mr. ROBINSON: Well, yes, when you look at the thing practically I would say just the same thing of a merchant. If a private person, we will say, has property of several millions he will have to be taxed on it and stand it; I say if merchants and manufacturers have property of several millions they must be taxed on it and stand it.

Mr. FLEMING: Are the cases parallel?

Mr. ROBINSON: I don't know whether they are parallel or not.

Mr. JUSTICE MACMAHON: In the one case, perhaps one half of the capital is employed in the machinery and the requisite appliances in order to create the earnings which the company eventually have, and there may be more than one half of the capital absorbed in doing that very thing, so that you can only deal in that case with the earnings. Mr. ROBINSON: The capital is used up in producing the earnings 1

Mr. JUSTICE MACMAHON: Yes, the capital is absorbed in producing the earnings. Mr. WILKIE: A private manufacturer would be at a great disadvantage compared with an incorporated company carrying on the same business. We take a manufacturer of tin ware carrying on business in his own name, he will pay taxes on the real estate he occupies, and so much personal property as the assessor chose to levy upon him, but if he was an incorporated company he would escape everything except the assessment upon sixty per cent. of his gross earnings.

Mr. ROBINSON: No, he would not, he would get taxed on all his real property and personal too, if you continue to tax it, that was not used in his business.

Mr. WILKIE: I am speaking of what is used in his business.

Mr. ROBINSON: Then if he used everything in his business he would get off it! Mr. WILKIE: It would become necessary for every manufacturing business and other enterprise to be carried on by an incorporated company or else the others would be at a great disadvantage.

Mr. ROBINSON: It does not seem to me that that would be the case at all; if you take a private individual, all his property is not in his business at all.

Mr, WILKIE: I am supposing a manufacturer whose money is in his business. Mr. ROBINSON: Then he bas got no house and no dwelling, that is just the distinction. Mr. WILKIE: But I am speaking of a factory owned and run by an individual. In the one case he would pay taxes upon the value of that real estate and so much of his personal property as the assessor chose to levy upon, and his neighbour carrying on the same business under the name of an incorporated company would escape except so far as he paid taxes upon sixty per cent. of his gross earnings.

Mr. ROBINSON: All I can say is that should be remedied by some provision in the law.

Mr. WILKIE: But it is the plan that you suggest?

Mr. ROBINSON: We are not at present talking about manufacturers; we are only concerned with this class of companies that I am speaking of.

Mr. WILKIE: I am speaking of a manufacturer of light; there are establishments—
Mr. ROBINSON: Take an electric company that are doing the same business.

The CHAIRMAN: It might be carried on by an individual.

Mr. ROBINSON: It might be carried on by an individual, I suppose.

Mr. MACKELCAN: With us in Hamilton for many years the Hamilton electric light was carried on by an individual, the late R. M. Wanzer and not a Company at all.

Mr. ROBINSON: I do not myself see any answer to that except just this, that I should apply to an individual carrying on this class of business just the same rule 1 should apply to Companies, that is all. But I do not want to carry that into other kinds of business, because that might have a different application.

Mr. WILKIE: That is the point.

Mr. ROBINSON: Oh yes, I do not myself say as to an individual carrying on this business qua his business, he ought to be taxed as a Company is, but if he is living in the house or his foreman, that is different.

Mr. FULLERTON: Permit me to correct a misstatement in figures that I gave you—a return in the Electric Light Company.

The CHAIRMAN: It does not make any difference in the principle, in the argument, a few thousand dollars more or less.

Mr. HUTTON: I would like to call attention to the report of the Wisconsin Commission that Mr. Robinson read from, when he says "Gross sixty per cent." In no place in that book does it say that 60 per cent. is in lieu of taxes on real estate. It is all in lieu of taxes on the area plant and the plant in the street; it doesn't include real estate in any instance.

The CHAIRMAN: Mr. Robinson says that in order to make that fair, that should be done.

Mr. HUTTON: Yes, but he held that up as the place where they got that idea from. Mr. MACMURCHY: I would like to correct my friend. Mr. Robinson read from page 122. I am responsible for this quotation :-"The Corporations which are taxed by methods other than those applied to natural persons are for the most part corporations of the class known as quasi public corporations. The method is in form an annual license fee in lieu of taxes upon property and franchises". That is, in lieu of taxes on property, which includes land, real estate and everything else.

Mr. W. M DOUGLAS: Although I stated I represented seventy four companies, the point raised by Mr. Wilkie reminds me that several of those companies are really private individuals. There are I think probably a dozen or more of so called companies not incorporated; they simply carrying on a Gas or Electric Lighting business themselves. But I did not for the moment apprehend that the Commission in dealing with these would draw any distinction between a company incorporated and an unincorporated company or an individual carrying on a particular class of business which is designated in this class before the Commission. I thought they would all be treated alike.

The CHAIRMAN: And you think they ought?

Mr. DOUGLAS I think they ought, most decidedly.

Mr. R. J. FLEMING, Assessment Commissioner, Toronto: The ground has been very fully covered by Mr. Fullerton, I think on behalf of the city. What does appear to us as being unfair is for the representatives of the companies to come forward and make a proposition at this time that will put municipalities in a far worse position than they are in at present: and they make that proposition based upon the advantage that they have at present, that the balance of the community have not. For instance, if the companies would come forward, and say, "Now, we are prepared to be taxed upon the same basis as every individual, that is to be taxed upon our real estate, the same value as a man is taxed upon his house, all our real estate, but as a simpler way, we will pay into the public treasury upon gross receipts as we are paying now," that is, both starting out upon the same basis there might be something fair in that; but to come to the Commission at a time when they have an immense advantage over the general public and asking the municipalities to accept something of that kind, does strike us as being extremely unfair. Now I maintain that these companies are not entitled to even as much consider

ation as a property owner is, for this reason: there is no company that I know of in the City of Toronto that is not paying a handsome dividend to its stockholders and that is not putting away a large reserve every year. Now that does not apply to the thousands of people who hold houses throughout the City of Toronto. There are thousands of them who are not getting three per cent. on their investments. I think, Mr. Chairman, that you struck the kernel of it, that if this system proposed by Mr. Robinson is good for the companies, why not apply it to the man that holds real estate? And if it is applied to the man that holds real estate, then I presume there would be very little objection to it. But to adopt a system in favour of the companies that is going to be immensely to their advantage, we maintain will be most unfair to the community at large. By the judg ment that was delivered in the Bell Telephone case we were struck on the right cheek, and now they come and ask us to turn around the left cheek. I think that that is a most applicable illustration. It does strike me that the proposition is fraught with disadvantages to the community. I can quite see where, right on the receipts that they are taking in now, they could go and buy a block of property-take that block that is for sale by the Ontario Government that brings in possibly a couple of hundred thousand dollars assessment a year. There is nothing to prevent one of these companies purchasing that, holding it there and placing the cars upon it and keeping six thousand dollars a year, possibly, in taxes, from the city; that would be the result of it, and their gross receipts would be no more. I think that the whole proposition really, as far as we can see it, is an unfair proposition to make, and one that we would scarcely expect from a getleman of the standing of Mr. Robinson. He says, "If it is neces

The CHAIRMAN: Mr. Robinson is very fair and candid.

sary to produce equality and fairness, let them be taxed on the land besides."

Mr. FLEMING: If they were to be taxed upon their lands and if we were to have conference so that they would be paying what was fair in proportion to the balance of the community, nobody would object; but to adopt any such proposal as they have made here—well, we think it is wholly wrong, and if it were not for the fact that it is being put forward by such a respectable gentleman, we would feel disposed to use very strong language in reference to it.

The CHAIRMAN: Is there anyone else desiring to be heard?

Mr. GEORGE J. BRYAN: The inference I wish the Commission to draw from my question to Mr. Robinson in regard to whether the income from stocks should be included in the gross proceeds, was that if it was not so included then the dividends paid to all this stock must come out of the proceeds, therefore the proceeds submitted for taxation would be less than what properly should be levied for taxation.

Mr. WILKIE: Mr. Robinson included all gross earnings of the company.

stock has nothing to do with gross earnings.

Mr. MACMURCHY: The dividends are taxed as income.

:

Watered

Mr. BRYAN But I maintain that the dividends would be taken out of the proceeds.
Mr. MACMURCHY: And the income in the hands of the shareholder is taxed.

Mr. BRYAN: My inference in that respect was an error; but the arguments advanced by myself and one or two others in regard to the taxation of franchises of these corporations have not been answered. They stand unanswered. Mr. Fullerton in presenting his case has fortified the ground which I chiefly took, that the easiest, most equitable and just method of assessment as applied to corporations of the character being treated of this afternoon is that which is imposed upon the franchise value. That has not been touched by any speaker. Mr. Douglas and Mr. Robinson in their various arguments tried to show that many of these corporations have no franchise value, and as a matter of fact that if there is a franchise value, that under the present methods of taxation, they are already assessed. As a matter of fact they are not assessed, As proof of that we need only mention the case of the Street Railway Company, which is assessed for something around $700,000, and they have a stock issue of $6,000,000 on which they pay dividends. The total value of their plant and equipment must come up to $2,500,000, but they only pay on an assessment of $700,000 in all; therefore I maintain that the difference between the value of the plant and equipment and the total issue of the stock is the value which is being exploited for the benefit of the stockholders of the Street Railway Company. This is merely an illustration of what goes on in connection with every other incorporated company-the company is exploited

with the issue of stock. I maintain that every dollar issue of stock is based, not upon the value of their plant and equipment or their buildings, but upon the franchise value, the use value, which is obtained annually and is terminable just as any other value is terminable. Therefore the position which I have taken in respect to the treatment of franchise corporations is, in my judgment, the most sensible one to be taken by this Commission and the Government in enacting legislation. There must be clearly a distinction drawn between those things which are monopolies and those things which are not monopolies. It has been proven to our satisfaction that theoretically they may not have been exclusive monopolies, but practically they are monopolies. A competition cannot exist between these different organizations as competition can exist between one manufacturer or one storekeeper or another. They maintain an exclusive privilege obtained through special legislation; and therefore I maintain that the Legislature in treating with these different corporations should tax the franchise as the fairest and most equitable that can be imposed. Adjourned at 5 p.m. till to-morrow at 10.30 a.m.

NINETEENTH DAY-FRIDAY, DECEMBER 14TH, 1900.

Commission resumed at 10.30 am.-Present all the Commissioners.

The CHAIRMAN: We shall now proceed with the consideration of the insurance companies.

Mr. J. K. MACDONALD, Esq., Managing Director of The Confederation Life and President of The Managers' Association: Your Lordship and Gentlemen of the Commission, I am asked to present our case before you, although we would ask the privilege after I have got through of perhaps some other gentlemen who are present supplementing what I have to say.

The CHAIRMAN: Certainly.

Mr. MACDONALD: Before entering upon the matter I wish to thank your Lordship and the members of the Commission for your kindness and consideration in giving us this appointment, and we regret if it has caused any inconvenience to the members of the Commission, but we appreciate fully your kindness in postponing the meeting and appointus this meeting to day. I would just mention to you some facts in reference to that which we represent tc-day that will bring before you some idea or notion of the importance of the subject at least. I may say to you that we represent here to-day insurances upon the lives of very nearly $300,000,000, with assets in the Canadian and British Companies, excluding the American Companies, of some $71,750,000. It will be seen from those figures that we represent to-day a very important interest indeed, and we therefore ask you all to consider with patience what we have to bring before you. The CHAIRMAN: You mean $300,000,000 ?

Mr. MACDONALD: The British and Canadian Companies represented $209,227,644 at the close of 1899.

The CHAIRMAN: And you also represent American

Mr. MACDONALD: Well, our Association does not include the American Companies, and therefore we represent the British and Canadian Companies.

The CHAIRMAN: You said something about 72 millions?

Mr. MACDONALD: That is assets. I have not the exact figures of the British Companies, but an estimate which would be sufficiently within the mark I think would abov the assets that we represent here to-day as $71,755,000.I would start out by laying down the proposition that with the exception of dividends to shareholders the nature of life insurance funds is such that they ought not to be subject to taxation. That is the proposition that I would lay down, that the life insurance funds, from their very nature, except so far as they relate to payments to shareholders, should not be subject to taxaIn order to make that good I have to ask you to be patient with me in enabling me to bring before you what may be to a certain extent the minutiae of our work. Life insurance companies have only two sources of income. I would like the Commission to bear that very distinctly in mind, because it will help us as we proceed. These two sources of income are premiums and interest. The second, interest, is only brought into existence by the first. Interest can only be earned after premiums have been paid and have become

tion.