April 15, 1914

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Some hon. MEMBERS:

Hear, hear.

Topic:   THE BUDGET.
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LIB

William F. Carroll

Liberal

Mr. CARROLL:

Further, when an industry in this country has not only captured the Canadian market but has shown itself able to compete in the markets of the world, that industry should no longer receive protection from the Government of this country.

Topic:   THE BUDGET.
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CON

Francis Ramsey Lalor

Conservative (1867-1942)

Mr. LALOR:

Do the hon. gentleman's

remarks apply to such a concern as the Dominion Steel Company?

Topic:   THE BUDGET.
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LIB

William F. Carroll

Liberal

Mr. CARROLL:

The hon. gentleman need not worry. I am going to discuss that. I never run away from discussing any phase of a situation. I take the further ground that when the manufacturers of this country feel that they are able not only to capture the Canadian market but also to compete successfully in the markets of the world, they should be given their own way of thinking and their products should toe put on the free list. They are the best judges of the situation. I make those general remarks to show where I stand on this question. We are told by the Minister of Finance that his Government is a government of adequate protection. Adequate protection-that is the most indefinite thing in the world. Does he say that it is adequate protection to give between twelve and thirty-five per cent on the farming implements of this country, the manufacturers of which are able to compete successfully all over the world, and to give only the same protection to an industry just as important, if not more, that is unable to compete successfully even within Canada. Is that adequate protection? That indefinite phrase reminds me of something I read when a tooy. In Anthony and Cleopatra Septimus asks his friend Anthony, who had just returned from Africa, the following question:

Septimus: What manner of thing is your crocodile?

. Anthony: It is shaped, Sir, like itself; and it is as broad as it has breadth ; it is just as high as it is and moves with its own organs; it lives by that which nourisheth it, and the elements once out of it, it transmigrates.

That is about as indefinite an answer as could possibly toe given, and it fits in very well with the very indefinite phrase 'adequate protection.'

In regard to the changes made by the present Budget I wish to eay that anything

this Government or any other government does to help the steel industry of this country has my hearty and unqualified support. The bald statement that the present Government are doing something for the Dominion Steel Company looks very well. In a few moments I am going to analyse that statement and show what this Government has actually done for the steel industry of this country. Previous to 1896 the then Government gave a bounty to pig iron which was produced from Canadian native ore. That was the situation when the late Government came into power. In 1897 Mr. Fielding, in his Budget, extended that bounty to pig iron which was not produced from native ore, and I believe he did this substantially with the purpose in view of rendering assistance to the Dominion Steel Company at Sydney which uses altogether foreign ore in the manufacture of its pig iron. But he did make a distinction. He said that, whereas we shall give a bounty of $2 a ton on pig iron produced from foreign ore, we shall give a bounty of $3 a ton on pig iron produced from native ore, thus giving $1 of an advantage to the native ore. I believe that was a proper step to take. He reduced the tariff duties at that time also and in reducing those tariff duties he gave as his reason that the products of steel were so extensively used in all the manufactures of this country that it would be in the interest of Canada as a whole that iron should be reasonably cheap. While he recognized the fact that putting a duty on iron or steel would increase the cost of iron or steel, he took the position that by giving a bounty the manufacturers of steel would have protection and the users of steel would have cheap steel besides. That was the ground he took and I think that was a reasonable ground. These changes were on a sliding scale and the bounties went practically out of existence in 1907 and were renewed to the extent of about 55 per cent of their original proportions in 1907 and continued until the year 1910.

In 1907 Mr. Fielding gave a bounty of $3 a ton on wire rods and he gave as his reason for doing that instead of putting a protective duty on, that if he put a protective duty on wire rods it would necessitate changing the whole basis of the tariff on the products of these rods. In that his argument was unanswerable. He gave, as I say, a bounty of $3 a ton. It was proposed to encourage the steel industry in this country, and as a result of the bounty the Dominion Steel Company put up a rolling mill at Sydney at a cost of $1,000,000, and

the Dominion Steel Corporation

I -think they call it-at Hamilton, put up a Tolling mill costing in the vicinity of $800,000. While this steel company and this steel corporation received a -large amount of money from the public treasury of Canada in the form of bounties and bonuses, I believe that the Dominion of Canada got a return for every dollar of it. I am going to tell you why. In 1897, when the steel industry at Sydney was in its in-4 p.m. fancy, we had a population of

3,000 or 4,000, while in 1911, with the expansion of the steel industry owing to the great encouragement which had been given to it by Mr. Fielding and the late Administration, Sydney had grown from a hamlet of 4,000 to a very magnificent city of 20,000. The customs duties on articles imported not only at -Sydney but at other steel centres more than made up for every dollar paid by this Government through bounties upon the production of steel and iron.

There was at that time a bounty of $3 on angles and plates and these articles also carried a duty of ten per cent. This was done away with because they were completely manufactured articles and on those completely manufactured articles duties were imposed up to $7 a ton. I want to reiterate that on its face $3.50 a ton duty on wire rods means a good thing for the industries manufacturing wire rods. The present tariff does not mean that and I am going to prove it. But before going on with that, I want to say that in 1903 the right hon. the Prime Minister (Mr. Borden), while there were large bounties paid on iron and steel, rose in his place in this House and condemned the Government of the day for not doing enough. He wanted a high protective duty on iron and steel and he wanted that duty, he said himself, -so that our own industries might capture the Canadian market. Notwithstanding that fact, while the steel industry of thi-s country was going through the crisis of its life in the last three years, the present Government sat motionless and mute without giving any assistance to the steel companies -either by bounties or duties. What does this $3.50 a ton amount to on -steel rods? Taking it on its face, I must admit it is a good thing for the steel industry of this country, but let us investigate. There was a demand in 1913 for 175,000 tons of steel rods. During that year there were 92,000 tons of steel rods imported into the country. I think I am fair in saying that what was not imported, and what was manufactured in this country.

went mostly into the production of nails at the steel mills at Sydney and Hamilton and that the 92,000 tons which were imported went into the manufacture of wire fence and nails by the smaller manufacturers of Canada. The Dominion Steel Company, or the Hamilton Company, do not need very much assistance on the wire rods that they manufacture into nails because they get a protection on the nails. What I thought they would be looking for would be a protection on the iron rods that they themselves do not manufacture but would be in a position to manufacture if they could compete successfully in the Canadian market. But the Minister of Finance says to the fence men who used perhaps half of the steel rods that were imported into this country last year: We

shall give you a drawback on the iron rods you import and put into steel fences. As far as the fence manufacturers are concerned, they are having free wire rods today

But what about the small manufacturers of nails, outside of the Dominion Steel Company and the company at Hamilton? The Minister of Finance holds a bludgeon over the Dominion Steel Company at Sydney and over the steel corporations of Ontario, and he says to them in effect: if you do not sell your wire rods to the small manufacturers of nails at a reasonable price, or at the price they were getting them at heretofore, we shall cut you out and remove the duty.

Topic:   THE BUDGET.
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?

Some hon. MEMBERS:

Hear, hear.

Topic:   THE BUDGET.
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LIB

William F. Carroll

Liberal

Mr. CARROLL:

I am glad to hear hon. gentlemen cheer that, because it shows they recognize my argument is correct. When the Conservative papers of the East call out: Hurrah for the Minister of Finance, he has done great things for the steel industry of the country, hon. gentlemen opposite by their cheering show that either they do not believe these newspapers ot they do not believe the Minister of Finance. I can give proof for this. The statement of the Minister of Finance appears in ' Hansard ' as if he said: we shall reduce the duty. But, what the Minister of Finance really said was: we will remove the duty if you do not be good to the small manufacturers of nails in Ontario. Not only that, but before the steel men got anything, I understand-and now I am only speaking from hearsay and am not so sure of my ground-I understand that before the steel manufacturers of this country rot. any satis-

[Mr. Carroll. 1

faction or encouragement from the present Government they had to go to Toronto and meet the smaller manufacturers of nails and tell them-and I understand that it was at the behest of the Minister of Customs they went to Toronto-and tell them: do not make too much of a howl; you know we have got to be good to you; the Minister of Finance is holding this bludgeon over our heads and we have got to give you cheap wire rods for the manufacture of your nails. You can see that while this thing appears on its face to he very plausible, it. does not mean that the steel manufacturers of this country who produce steel rods are getting a duty of $3.50 per ton on their output.

Topic:   THE BUDGET.
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LIB
?

Mr CARROLL:

It does. Let me draw to the attention of the House to another rather peculiar thing that attaches to this piece of legislation so far as the duty on wire rods is concerned. I find in the Votes and Proceedings, No. 56, of Monday, April 6, 1914, the following proposed resolution with regard tc this change:

Resolved, that the foregoing provisions shall be held to have come into force on the seventh day of April, 1914, and to have applied to all goods imported or taken out of warehouse for consumption on and after that day, and to have also applied the goods previously imported for which no' entry for consumption was made before that day, except as otherwise provided in the foregoing resolution.

Thai is the usual resolution, but there is a proviso attached to it. I am not in a position to say whether this appears before or after the announcement made by the Minister of Finance, but I should think from its date that it appeared previous ti hi, pronouncement on the iron and steel situation. There is this proviso attached to the resolution.

Provided, notwithstanding any increase in customs under the said resolutions, that all goods actually purchased on or before the sixth day of April, 1914, for importation into Canada, on evidence satisfactory to the Minister of Customs of the purchase having been so made, and all goods in warehouse in Canada on such day, if entered for duty after importation prior to the first day of July, 1914, may be entered at the rate of duty in force on the said sixth day of April, 1914.

That is to say, steel producers in the United States were given this notice: Rush your orders of wire rods into Canada; you can get them all in free by getting your orders taken before the 7th day of April, 1914. I am informed on creditable authority that there were thousands upon thousands

of tons of wire rods sold in Canada under contract between the 6th of April and the 7th of April, 1914. I say that string was attached for the purpose, a very laudable purpose no doubt, of giving the small manufacturers of nails in this country a chance to take time by the forelock and have their importations come in without duty.

There are some other phases of this iron .and steel question that are worthy of comment.

' Mr. W. T. WHITE: I would ask my hon. friend if he suggests that any notice of that resolution was given except in the ordinary way. Does he say there is anything exceptional about that proviso?

Topic:   THE BUDGET.
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LIB

William F. Carroll

Liberal

Mr. CARROLL:

I think so. I do not

pretend to have very much knowledge about the matter myself, but I am informed that that is not the usual string attached to such resolutions regarding tariff matters. I find also in the Votes and Proceedings notice of this resolution respecting the iron and steel industry of this country:

Resolved, that it is expedient to provide that the Governor in Council, may under regulations made for the purpose, allow, on the exportation of goods manufactured in Canada and into the manufacture of which pig iron imported into Canada mixed with pig iron made in Canada has entered, a drawback, equal to the duty paid, less such deductions therefrom as is provided in such regulations, of all the pig iron imported and used by the manufacturer of such goods in manufacturing the goods exported and other goods, and the drawback may be computed on the total quantity of pig iron, including pig iron made as aforesaid, entering into such exported goods.

That is, as I understand it, that if the manufacturer of any article in this country imports pig iron which goes into the manufacture of that article which is subsequently exported, he gets a drawback on the duty, and consequently he has practically free pig iron. That is not only a blow to the iron and steel industy, but it is a blow also to the Canadian consumer who has to buy these articles, because it gives an advantage to the United States farmer over the Canadian farmer, in the fact that the manufacturer gets a drawback on the imported iron which entered into the manufacture of the article he exports to the United States.

The manufacture of structural iron and steel in Canada is not even in its infancy yet, and there is a chance to develop it into a very great industry in this country.

If the hon. Minister of Finance had encouraged this manufacture, which does not exist in Canada to-day, by a system of bounties, he would see the manufacture of structural steel in this country developing by leaps and bounds, as it will not under his method of a protective tariff. That, however, goes for what it is worth; it is a mere prophecy. I point that out to the minister, because he said that bounties were useful to encourage an industry, but that once it got upon its .feet it should be protected in another way. Once industries get on their feet and are able to hold the Canadian .market and compete successfully with similar industries throughout the world, they want neither bounty nor protective tariff. I think I have shown that, while the hon. Minister of Finance held out one hand to the steel industries of this country and said: Here is a $3.50 per ton duty on your wire rods, he destroyed that in toto by holding out in the other hand to the manufacturers of fences a drawback, and by having some of his satellities behind him wield the cudgel over the steel companies to compel them to he good to his friends the nail manufacturers of the province of Ontario.

I come to the question of coal. I think it has been said by Conservative protectionists that if we reduce the duty on coal or any other .article of commerce, it will be the entering of the thin edge of the wedge, and will be liable to cause the downfall of the whole structure of protection. Apparently the hon. Minister of Finance is not such an ardent protectionist as some of those who sit .around him, because he has inserted the thin edge of the wedge in so fax as the coal producers of Nova Scotia especially are concerned, because in that part of the country we produce only bituminous coal. My hon. friend the Minister of Trade and Commerce, in the old days, in his replies to the Budget speeches, used to taunt Mr. Fielding, then Minister of Finance, with sitting tight upon his coal scuttle. Mr. Fielding sat tight upon his coal scuttle, and, by the protection which he gave to the industry in Nova Scotia, that industry has developed. It developed between 1896 and 1911 from 1,000,000 tons to about

5,000,000 tons. We in Nova Scotia thank Mr. Fielding for sitting tight upon his coal scuttle, hut we do not thank the present Minister of Finance foT getting off that coal .scuttle and allowing .a few of his manufacturing friends in Ontario to put in the thin edge of the wedge in so far as the duty on coal is concerned.

Coke is allowed to come into this country free of duty. Before the Budget speech was

delivered, bituminous coal was allowed in free when it went into the manufacture of coke and was used for smelting purposes. I think that is a fair statement. The Minister of Finance comes along and disturbs the coal industry of this country by removing the duty from all bituminous coal used in the manufacture of coke, and it does not matter now whether it is manufactured into coke by the people running blast furnaces or not. If I start a coke oven in Nova Scotia, New Brunswick, or any other province, and sell the product of that coke oven to the manufacturers of steel in Ontario, I get my bituminous coal in free. It is a serious thing for the Minister of Finance to interfere with the coal tariff in the province of Nova Scotia. In proof of that, I may say that almost before he made the announcement, a cry went up from the Canadian Manufacturers' Association for free bituminous coal from one end of the line to the other. Mr. Rowley, who was I think at one time president of that association, says that, he considers this a fine thing-why? Because, he thinks, if a delegation headed by himself come to the Minister of Finance next year and say they are using bituminous coal in the manufacture of matches in Hull, they are as much entitled to free coal as are the coke manufacturers; and I think he is right in that contention. The Min:ster of Finance, perhaps unintentionally, has hit a blow at the bituminous coal industry of this country. I may be told by whoever follows me that, in the election of 1911, as a candidate on behalf of the Liberal party in the province of Nova Scotia, I favoured a reduction of 7 cents a ton on coal. I did so, but we were getting a quid pro quo under the contention. The Minister of Finance, perfectly free market in the United States for our slack coal, which constitutes between 30 and 35 per cent of the output of the Dominion Coal Company, and, I believe, as large a percentage of the output of the other coal companies of Nova Scotia, and that would much more than make up for any hurt that the reduct on of 7 cents a ton might do to that province. The people apparently believed so, because there was not in the province of Nova Scotia a coal county, with the exception of Cumberland, that did not return a Liberal to this Parliament. That in effect meant that they were all satisfied with our policy in regard to the coal industry.

There is one item of particular interest to the people of this country with which the hon. Minister of Finance, if he approached

it, stayed only a very short time. I refer to the question of the high cost ef living. If we are to believe the Minister of Labour, that we must have hard times before the price of food goes down, we should be getting foodstuffs dirt cheap in this country to-day, because we have had a very hard time financially for the last eight months or a year. Various causes have been given for this high cost of living. In a speech which my hon. friend the Minister of Finance made on the Address, he said that it is often caused by the exhaustion of natural resources. Surely no one will say that holds good in Canada. Instead of our natural resources being exhausted, they have barely been touched so far. We have been told by hon. gentlemen opposite that this high cost of living is a worldwide tendency, and that you cannot legislate against a tendency.

That may be good economics; but if you cannot legislate against a world-wide tendency, at least you can change the trend of that tendency within your own jurisdiction in various ways. Now, the high cost of living is a world-wide tendency-to a certain extent; but let me give you first some figures for the last twelve years and then figures for the last five years. In the last twelve years the increase in the cost of living has been as follows in the various countries named: Belgium, 32 per cent; France, 28 per cent; Germany, 28 per cent; Japan, 28 per cent; United States, 43 per cent; Canada, 51 per cent; Great Britain, 15 per cent. Then, from figures which I have taken from an article by Professor Stephen Leacock, whom I consider an authority on this question, it appears that in the last five years, whereas the high cost of living has increased throughout the world at from 10 to 12 per cent, it has increased in Canada by 35 per cent. Why should this be? How is it that in a young country, with its natural resources practically undeveloped, the high cost of living is going ahead in ratio compared with other countries as 35 to 10? ' You cannot legislate

against a tendency,' but I contend that this Parliament can pass legislation which will bring down the high cost of living. And I am going to show you how.

In the calendar year 1913 we paid $7,000,000 taxes on foodstuffs entering this country. That is practically $1 for every man, woman and child throughout the length and breadth of Canada, perhaps between $20 and $25 or more for every head of a family. And I believe that the poor man pays more in proportion than his rich

neighbour. When our crops come in in the fall, a man who has spare cash can go to a wholesaler and put in a store which will tide him over until the next fall. But the poor man who is living from hand to mouth has not this amount of ready cash, small though it be, and so he has to pay the high prices that rule when the articles become scarce. The poor man i3 the one who pays the most of that $7,000,000 of taxes on foodstuffs. We imparted foodstuffs from fifty countries, our greatest import being from the United States. From that country last year we imported foodstuffs to the value of $23,072,160, and paid duties on those imports of $4,860,782.82, the duties on goods from other countries making the total oveT $7,000,000. But hon. gentlemen opposite may say: Oh, well, the consumer doe3 not pay that. Then, might I ask, who does pay it? Does the Minister of Finance throw $7,000,000 into the treasury and say: Here is the taxes on the foodstuffs for the yeaT? Does the wholesale importer pay it,-a generous man to be sure, but not generous enough, I think, to pay $7,000,000 out of his own pocket into the treasury of this country. Of course, he passes on that $7,000,000 to the retailer with his own profit, to which he is entitled. And are the retailers of foodstuffs so generous that they are going to put $7,000,000 into the treasury? I think not. On the contrary, they are entitled to a profit on the duty and on the wholesaler's profit on that duty, and this they duly collect. Who, then, pays this duty? The man who buys from the retailer pays it in the last analysis, and in the last of the last analysis it is the poor man who pays it.

But some hon gentlemen opposite may say: But even if you reduce the tariff, that will not make foodstuffs cheaper in this country. Well, let me point out to you a very anomalous state of affairs with regard to flour-and no food is more largely or mare commonly consumed than flour, and Canada is a great flour-producing country. I think I am within the mark when I siay that the producers of flour in this country have absolute control of their markets at this time, and not only that but they have successfully competed in the markets of Great Britain. Great Britain is not a flour-producing country, and one would naturally expect that flour would be dearer there than in Canada. But take the grade of flour which cost? $5 a barrel in Winnipeg, $5.10 in Montreal, $6.50 in Halifax, $5.50 in St. Johns', Newfoundland, and you find that it sells for $4.18 in the London market. Is there any hon. gentleman on the other side of the House who can tell how that is accounted for? I will give my version of it and I do not think it can be successfully contradicted. My version is thi3: The foodstuffs of all countries enter the market of Great Britain free. Consequently, when the flour merchant of Canada goes there he must compete with the world, and so he must bring down his prices to ' synchronize ' with those of the old country.

Topic:   THE BUDGET.
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CON

Francis Ramsey Lalor

Conservative (1867-1942)

Mr. LALOR:

Is the hon. member speaking of retail prices in Canada and wholesale prices in Great Britain?

Topic:   THE BUDGET.
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LIB
CON
LIB
CON

Francis Ramsey Lalor

Conservative (1867-1942)

Mr. LALOR:

I merely asked if they were the same.

Mr. GEO. E. FOSTER : The hon.

member is certain, is he, that his basis is the wholesale price?

Topic:   THE BUDGET.
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LIB
CON
LIB

William F. Carroll

Liberal

Mr. CARROLL:

I do not see what difference it makes. If you pay $6.50 retail in Halifax for an article that you can buy for $4.18 retail in London, what difference is it going to make? It simply shows that the millers of this country have a monopoly here; and that shows that the duty on flour should be taken off. The Government is not doing its duty to the people of Canada when it allows such a state of affairs to go on, when it maintains a high protective tariff which enables the Canadian producer to monopolize the Canadian market and make the Canadian consumer pay twenty-five to thirty-five per cent more for the same _ brand of flour than is charged the consumer in Great Britain. When such a state of affairs exists there is something wrong, absolutely wrong; and it is a serious matter that this Government should take into its immediate consideration-provided they

have at heart the benefit of the majority of the people of Canada, as I have no doubt they have.

But let me hope that they are not so wedded to a policy of high protection as to allow such a state of affairs to continue. I am told that the millers informed the Minister

of Finance that they were making no profits on this flour. I am not in a position personally to say what profits these millers are making, but I am going to give the House the statement, based, I presume, on ripe experience, of a gentleman who wrote some days ago in the Montreal Standard, which I look upon as a very reliable paper. He says that the Canadian people would not eat the inferior grades of flour that they send over to England. That assertion bears its denial on its face, because any one who is familiar with the conditions knows that the very best of everything must be used for export, especially to England where we have to compete with the exports of the whole world. It is pointed out by this gentleman that the very best brands go over to Great Britain-and that is just what I would expect. He points out that several milling industries in this country-the Ogilvy, the Lake of the Woods and the International Milling Company-according to their own published record, made last year a profit of from thirty to sixty per cent upon their capital. What their capital is, no one knows but themselves. It may be half water; two-thirds of it may be water, and the other third actual cash. I do not make the assertion that this is the case, but it may be so; at any rate they miade a profit on their actual capital of from thirty to sixty per cent.

Topic:   THE BUDGET.
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CON
LIB
CON

April 15, 1914