August 4, 1903

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The MINISTER OF FINANCE.

The value of heavy angles, structural steel as it is generally described, imported during the year 1902 was $789,644; of plates imported, $571,291; and of wire rods imported, $1,523,792.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

Before the hon. gentleman leaves that I would like to ask a question. He gave us a statement of 55,182 tons which I understand applies to paragraph (a) of the resolution, and he gave us 47,512 tons, but I did not quite understand whether that applies to paragraphs (b) and

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The MINISTER OF FINANCE.

Yes, it includes everything except rods amounting to 55,182 tons. The other item covers the remainder of the resolution..

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

You have separated (b) and (c) as to values V

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The MINISTER OF FINANCE.

Yes, I have a statement showing the values, the figures of which I have just given. If we manufacture in Canada one-third of the quantity of these articles which were imported in the year 1902 then we shall pay bounties to the extent of $150,000 a year. If we manufactured two-thirds of the amount we imported we would pay bounties to the extent of $300,000 a year. Some little time will elapse probably before the manufacturers will have their mills equipped for the manufacture of these articles and I think we are probably within the mark when we say that the current year's output will not exceed one-third of the import. That is only a matter of judgment and perhaps a matter of guess. Hon. gentlemen who have the information before them may form an opinion as to whether it is correct or not.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

There is no period of time during which the bounties shall continue fixed by the resolution V

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The MINISTER OF FINANCE.

No, we " have thought it better for the present that we should not name the period and for this reason, that where you name the period of the bounty you, in a sense, create a contract with the parties entering into these operations under which you would feel that you were bound to continue these bounties for the full term of the contract so called. We have thought it better to leave the matter indefinite so that the House will be entirely free to deal with the question at any future date in connection with any revision of the tariff that may be made. On the whole we think it is better that this bounty should not be offered for a specified time because it might create something like a specific contract. Our impression is that considering that it will take the companies several months before they can get into operation to earn these new bounties we probably would not be very far astray if we were to say that they will not during the current year produce more than one-third of the quantity imported during the year, the figures for which I gave, and if that is so we will pay about $150,000 in the form of bounties on the new articles, and there would be the increase already spoken of in the bounties on pig-iron and steel. These are the leading facts of the matter and with this statement we beg to submit the resolution to the consideration of the House.

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Mr. WIBSON@

Would the hon. gentleman be kind enough to give us a statement of the changes made since the present government came into office in the bounty on iron

and steel and the change in the duty if any V

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The MINISTER OF FINANCE.

In 1897 therejwas an increase of the bounties on pig-iron and steel at which time there was a reduction of the duty-I cannot give the exact figures in regard to all the details- but there was a reduction from $4 to $2.50 a ton on pig-iron and of course a further reduction under the preferential tariff. The bounties at that date were increased to compensate the industry for the disturbance which otherwise would have been created by a reduction in the duties.

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CON

Uriah Wilson

Conservative (1867-1942)

Mr. WILSON.

Would the hou, gentleman bring down a statement of those changes V

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The MINISTER OF FINANCE.

I shall be glad to bring down a statement in detail showing the change made in each of these items.

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CON

Albert Edward Kemp

Conservative (1867-1942)

Mr. KEMP.

I should like to ask the hon. Minister of Finance why it was that he came to the conclusion that the items of plates, steel ingots, puddled iron bars, and pig-iron should be dealt with on the bounty basis instead of by imposing a sufficient duty.

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The MINISTER OF FINANCE.

Because, as I stated earlier in the session, a change in the duty on articles of this kind which are the very basis of a great many manufacturing industries, would probably involve material tariff changes and we did not deem it in the interest of the country to make such changes at present.

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CON

Albert Edward Kemp

Conservative (1867-1942)

Mr. KEMP.

Shall we draw the conclusion from that that later on these articles may be protected by a duty and the bounties taken off '!

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The MINISTER OF FINANCE.

The matter will be purposely left entirely open to the House so that it May deal with it in that way. It is quite possible, but of course, we can make no undertaking in regard to the future.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

I am sure that we can all congratulate the hon. Minister of Finance (Hon. Mr. Fielding) on having awakened to a realization of the condition of the iron industry in this country. He did not seem to be very fully alive to it at the commencement of the session when we were told that the only difficulty in regard to all our Canadian industries was that there were not sufficient men for the purpose of carrying on the work and that the warehouses were not large enough to contain the manufactured product.

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The MINISTER OF FINANCE.

Not as to all.

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Mr BORDEN (Halifax).

I have a pretty vivid recollection of what the hon. gentleman stated and I do not remember any ex-

ception. If he made any exception I am sure he will be glad to correct me as he will have an opportunity of doing so. I think we may also congratulate ourselves that the right hon. leader of the government as well as the right hon. Minister of Trade and Commerce, those redoubtable freetrader's, took occasion to leave the House while the hon. Minister of Finance was making his statement, realizing no doubt that a bounty is the most extreme form of protection and that the measure which is now being brought down by the hon. Minister of Finance is absolutely out of touch with the principles which these right hon. gentlemen up to a very late date, in fact up to the present session, have announced to the House and to the country as their political creed. Under the tariff which was established by the late government when Sir Charles Tupper was Minister of Finance, some progress was made in the iron industry and I have no doubt a very much greater development would have taken place except for the fact that the price of pig-iron fell all over the world and the development of this industry which might reasonably have been expected in Canada at that time did not take place. This government introduced its tariff in 1887 and I have already given the House the particulars of the decreases made in the iron duties at that time so that it will not be necessary to go over them again. It is sufficient to say that the decrease was very considerable in regard to many of these items. For example, on pig-iron there was a reduction of $1.50 per ton ; on scrap (cast) a reduction of $1.50 per ton ; on billets and blooms a reduction of $3 ; on scrap (wrought), a reduction of $3 ; on steel bars a reduction of $3 ; on steel bands a reduction of $3 ; on steel fish and ties plates a reduction of $2 ; on plates a reduction of $3 ; on shaftings and forgings, a very considerable reduction, and so on through all the list which I then read to the House.

Very shortly afterwards this government came to the conclusion that so serious a reduction in the duties on iron and steel was a mistake, and that that mistake might be remedied by a continuation of the bounties ; and the measure with regard to the bounties was brought down, although in proposing it the government went back on all previous professions of policy which it had preached to the country for eighteen years in regard to bounties. I need only, in that connection, refer to the language of the present Minister of Trade and Commerce (Rt. Hon. Sir Richard Cartwright), both with regard to duties on iron and steel and with regard to bounties. In 1890 the Rt. Hon. Sir Richard Cartwright said to this House :

I doubt exceedingly whether among the many injurious duties which the policy of the present government has heaped on the producers of this country, there is one which is calculated to do more harm on a larger and wider scale than Mr. BORDEN (Halifax),

the enormous duties which have been placed upon iron.

Then this government, having reduced the duty on iron, proposed immediately afterwards to neutralize to some extent the advance which they made in that direction by bringing down their bounty scheme a few years ago. But the Minister of Trade and Commerce, on the occasion to which I refer, continued as follows :

There is just this advantage in the proposition that to a certain extent it enables the people to see more clearly than in other eases how much the exchequer has been plundered because plunder it is, and how much the people are being inpoverished by this policy.

It is pleasing to know that the Minister of Trade and Commerce, at the present time-I regret he is not here to-day-joins most heartily and cordially in this measure for the impoverishment of the people in placing bounties on iron and steel. The Rt. Hon. Sir Richard Cartwright continued as follows :

This is merely a concession to certain favoured individuals, or certain favoured corporations to be paid for in all human probability by contributions to election funds, just as we know that other combines are in the habit of earning the gratitude of hon. gentlemen opposite.

Well, I do not know whether any comment is required on this or not. It would be, I suppose, out of place to ask my hon. friend the Minister of Finance whether there is any connection between the bringing down of this measure now and the reported approach of the general elections, having special regard in that behalf to the language which I have quoted from the Minister of Trade and Commerce. When it came to a question of bounties four years later, in 1894, the present Minister of Trade and Commerce (Rt. Hon. Sir Richard Cartwright) thought the proposition was so absolutely absurd that he refused to discuss it at all. He said :

I am not going to raise a discussion now as to bounties on pig-iron. I disapprove ,of the whole business altogether.

And he brushed it aside with a wave of his hand, and now his colleague, the Minister of Finance, brings down this resolution with the approval of the Minister of Trade and Commerce, but happily in that right hon. gentleman's absence at the moment.

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Some hon. MEMBERS

Hear, hear.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

The late Conservative government, and particularly Sir Charles Tupper, when he was in that government, were extremely anxious that this industry should be developed in Canada ; and I have more than once referred, not in this House, but out of this House, to an incident which took place when Sir Charles Tupper was made aware that the government proposed to give bounties to this industry. I remember very well the occasion,

and I remember very well what Sir Charles Tupper said. He said he was glad that the government had done it, and he added with some emphasis : He was glad indeed that the government had done it, even though it should have the effect of giving them another five years in power. That is the aspect in which Sir Charles Tupper looked at this industry in this country, and it is not out of place at the present time to say that Sir Charles Tupper, by the stand which he took with regard to this industry at that time, both openly in this House and by means of negotiations outside of the House, contributed very largely to the establishment of these bounties, and in that way to the development of the iron and steel industry in the maritime provinces. And, as some time ago, I think at the very time these bounties were introduced, there was certain correspondence read in this House, by means of which it was sought to discredit Sir Charles Tup-per's statement as to the part which he had taken in this matter, it is not out of place now for me to read a communication addressed to Mr. Henry M. Whitney, whose name was brought into that discussion ; and addressed to him, not at the instigation of Sir Charles Tupper, but quite independently of him, by a gentleman who had very excellent means of knowing what share Sir Charles Tupper had in these negotiations- I refer to Mr. Graham Fraser, whose experience in the iron industry, and whose efforts in developing that industry in the maritime provinces are well known throughout Canada. This is the letter to which X refer :

New Glasgow, N.S.,

September 5th, 1900.

H. M. Whitney, Esq.,

95 Milk Street,

Boston, Mass.

Dear Sir,-In the Halifax ' Morning Chronicle ' of Saturday, September 1st (cutting from which I mail herewith), I notice an article referring to a discussion carried on in the Canadian parliament, Ottawa, during last session by the Hon. W. S. Fielding and Sir Charles Tupper relative to the extension of the iron bounties, &c.

Owing to my absence in Great Britain when the discussion took place, I knew nothing of it until reading the article in last Saturday's! ' Chronicle.' As my name comes up somewhat prominently in the matter, and as I think your, letter is hardly fair to Sir Charles, I consider it my duty to state the facts as I know them. *

By referring to my notebook, I find that on. November 24th, 1897, I met you at your office in Boston, when we had some conversation relative to a supply of coal for a furnace plant which the Nova Scotia Steel Company proposed to establish at Sydney or Louisburg. On November 25th I went to Philadelphia and returned on Saturday the 27th, and again met you in your office and then gave you some figures as to the cost of making iron in Cape Breton. You then suggested a larger plan than outlined in our proposal. On Monday, November 29th, I saw you again, when you spoke in a very enthusiastic way of the proposed blast furnace project, and we then arranged for 10,000 tons of Cape Breton coal for coking test at the Ferrona

works. At that interview you stated that if the test proved satisfactory and we could get the Dominion iron bounty extended for five years from the time the furnaces went into blast, you would join us in the enterprise and help us get the necessary capital. This was said in the presence of Mr. Windsor, then vice-president of the Dominion Coal Company.

The 10,000 tons of coal was shipped to Ferrona, the test proved satisfactory, and on January 25th, 1898, I again met you in Boston, when the results of the coking tests were submitted to you. You then suggested that legislation be at once got from the government of Nova Scotia incorporating a company and that in the meantime the Nova Scotia Steel Company should, through their solicitor and agents, do all they could to induce the Dominion government to extend the bounties.

We did secure from the Nova Scotia legislature an Act incorporating the company (The Nova Scotia Steel and Iron Company, Limited), but entirely failed to get during that session of the Dominion parliament any legislation extending the bounties. And on June 4, 1898, I wrote you as follows : * I regret to inform you that we did not succeed in getting the Bill through parliament extending the bounties on pig-iron ; so the matter of erecting furnaces at Sydney or Louisburg is, I suppose, off for the present.'

I heard nothing more from you until I received a telegram asking me to meet you at Syduney on the 17th of August, which I did. You then stated that you thought we had better go on with our new works as you did not believe the Dominion government would extend the bounties, and as Sir Charles Tupper was going over to England you would get him to introduce us to parties who would find the capital. In reply, I said : ' If you begin to build the large plant you are talking of, I do not believe the bounties will ever be extended. Sir Charles came in later, when you repeated to him our conversation. Sir Charles then said : ' Mr. Fraser is quite right about the bounties. You should get the Finance Minister to get an Order in Council passed extending the bounties before starting your works-it will be a great help in getting the capital. I will see that there will be no opposition to it from the Conservative party, and I will see Mr. Fielding and take up the matter personally.' When I saw Sir Charles about a month later, namely, September 16th, at the Windsor Hotel, Montreal, in the presence of yourself and Senator Mackeen, he told us that he did see Mr. Fielding at the Royal Hotel, St. John, and had a discussion with him in regard to the matter of extending the bounties.

Now, in view of the above facts you can hardly say that you were not interested in the iron and steel business at the time Sir Charles Tupper referred to, namely, August 17th, 1898. While^we personally did not visit Ottawa to interview Mr. Fielding on the bounty matter, he was approached at your suggestion by the agents of the Nova Scotia Steel Company and also, I understand, by Messrs. W. B. Ross and B. F. Pearson, of the Dominion Coal Company, but without result at that session.

I well know that you are a busy man and unlikely to recall conversations such as referred to with the dates on which they took place, but when I repeat them to you as above you will, I think, recall them and agree with me as to their accuracy, and I know that you are fair enough to give Sir Charles credit for the part he took in securing such bounty legislation as

was finally passed, although it is not as favourable as you asked for, namely, ' five years from the date at which the furnace went into blast.' as provided by the Bounty Act introduced by the late Finance Minister, Hon. George E. Foster, during the session of 1894.

The difference it would make to your company you can no doubt appreciate, as it would have been unnecessary to rush construction at excessive cost.

Don't you think that some acknowledgment should now be made to Sir Charles ?

The favour of your early reply will oblige, Your respectfully, .

(Sgd) GRAHAM FRASER.

To that letter Mr. Whitney sent the following reply :

Boston, September 7, 1900. Graham Fraser, Esq.,

New Glasgow, N.S.

Deiar Sir,-Replying to your letter of the 6th instant, I have to say that I am well aware that Sir Charles Tupper was always friendly to the extension of the jron and steel bounties and gave to the proposed bounty legislation his hearty support.

The statement which I felt obliged to correct in my letter to Sir Charles was that Mr. Fielding was unfriendly to the matter and that I visited Ottawa with you and implored Mr. Fielding ' to extend that measure of assistance necessary to the organization of this great enterprise and that we went home utterly discouraged.'

As you yourself say this was not true of either of us ; and, so far as my expression goes, Mr. Fielding was, as I stated in my letter, ' friendly to the matter of the extension of the bounty period from the time of my first mention of the subject to him.'

Yours truly,

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August 4, 1903