May 16, 1916

CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Sir ROBERT BORDEN:

I understand:

but there is something else to be said about that. If you begin the construction of steel ships when the cost is at its highest, and are not sure -that you will have these ships .available at a time when tonnage is mostly needed, there is room for consideration as to whether the enterprise should be entered upon. At least, it has impressed the members of the Government that way, and I am inclined to think it would impress any hon. hon. gentleman in that way who would give to it much reflection. If we are to build ships when they cost at least double what they would under ordinary conditions, and if, after paying double for them, or subsidizing them to the necessary extent, at a time they are not

to be available when tonnage is most needed, of what advantage would a proposal of that kind be? The want of tonnage has been felt by all nations of the world, more or less, during the past eighteen months. On the whole,

10 p.m. however, the arrangements by the Allied nations aimongst themselves, particularly by the British Admiralty, have helped the situation a great deal, and I think, on the whole, the available supply of tonnage has done all the work that we could expect it to do. During the past winter I have had occasion to refer to the daily reports sent out by the Department of the Naval 'Service with respect to Halifax and St. John, and I have found eight, ten, sometimes twelve, transports loading at each of these ports-I think hardly ever fewer than half a dozen-except within recent weeks. So that the supply of tonnage, considering all the conditions imposed by the war, has been better than we could have anticipated, although not all that we could have desired.

If such action could be taken at once as to insure the delivery of ships at the time when tonnage is most wanted, no one would hesitate very much as to the question of the cost, because the importance of transportation is most imperative at this time, notwithstanding all that I have said as to the arrangements made by the Admiralty. But in what form, one might ask, should that action be taken? The Government itself might embark in the project of constructing ships in Canada. But all that could be constructed in Canada at the present moment, with any possibility of making them available before the conclusion of the war, would not amount to very much in proportion to the needs of the country as a whole. On the other hand, the Government might consider the proposals of corporations or syndicates which have come forward with the idea of building ships if subsidies were granted by the Government. Up to the present time we have not received any proposals of that kind which were of so reasonable a character that we could feel ourselves justified in proceeding with them further.

Then the hon. gentleman speaks as if, when the war is over, the demands for tonnage and the lack of tonnage will be very much, as they are at present. I do not speak at all with the authority of an expert, tout I think that any of us who desire to apply common sense to the anticipation of conditions as they will then

exist must reach one conclusion. Two considerations impress me-doubtless other considerations would impress those who speak with more authority on the subject than I can. One of these is the enormous amount of tonnage now diverted from commercial purposes which will be released and will be then available for commercial purposes. That will take place within a very measurable period after the conclusion of the war. In the next place, the world's demand for tonnage will, I suppose, be reduced also by the termination of the war, for the reason that an enormous quantity of stores and enormous numbers of troops must now be transported for the purposes of the war, and such purposes take precedence over all others. With the conclusion of the war there will, for a time, be less work, I should think, for the tonnage of the world to do. So that, looking at it in that way, you will have a much greater amount of tonnage available, and on the other hand, I suppose, you will toe confronted with a smaller demand than confronts the nations of the world at present. So it is not absolutely clear that there will be a dearth of tonnage when the war is over-although the considerations that have to be taken into account are so vast, so intricate and complicated in their character that one, speaking with as little authority as I do on the subject, would not venture a very confident prediction. This, in one sense, is beside the really important question the hon. gentleman has raised.

Leaving out other considerations, I agree with the view the hon. gentleman has put forward, that Canada ought to be a country in which the business of building steel ships will be carried on. We have the material for it, and we can soon train our men, I think, to undertake the work. In the past the difficulty has been the cost. Some four or five years ago I met delegations of the shipbuilders of Canada and discussed the subject with them. There has always been the suggestion of a tonnage subsidy. About eight or nine years ago, I think, I asked them frankly to give me a statement as to whether or not they could name any period within which the industry could be made self-sustaining, so that after that we might expect the business of building ships in Canada to be carried on without any tonnage subsidy. I cannot recall that on either of those occasions they were able to give me a definite statement on that point, which I regarded as a somewhat

important one. There is this to he said in that connection: the impression which I got from those with whom I discussed this subject upon the occasion of a visit to several shipyards in Great Britain four years ago next summer-I discussed it with a great many of the leading shipbuilders- was that the cost of building ships in Great Britain and the cost of building them in Canada would yearly tend to approximate. One very experienced man with whom I discussed the subject told me he believed that within twenty years at the outside the cost of building steel ships in Canada would be approximately the same as the cost of building them in Great Britain. If that opinion could be relied upon, it would afford an answer to the question which I put to some of the shipbuilders of Canada on the occasions to which I have alluded. However, the Minister of Trade and Commerce has been giving the subject very careful attention, and I am under the impression that he expected to make some statement to Parliament before the conclusion of the present session. He is chairman of the subcommittee of Council, which has been de-' voting a good deal of attention to the subject, and I hope that on some other occasion before we prorogue he may be able to speak at greater length and in more detail than I have been able to do to-night, as I was not aware that the hon. member for Pictou intended to bring the subject to the attention of the House to-day.

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LIB

William Pugsley

Liberal

Mr. PUGSLEY:

I am not sure whether my right hon. friend is aware of the fact that the Minister of Trade and Commerce did make quite an exhaustive statement.

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CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Sir ROBERT BORDEN:

How long ago?

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LIB
CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Sir ROBERT BORDEN:

It was since then.

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LIB

William Pugsley

Liberal

Mr. PUGSLEY:

I regret to say that while his statement was a very interesting one, it looked forward rather to what might be done in the somewhat distant future than to some measure designed to meet the present necessities. I am very sorry indeed that my right hon. friend has been able to see so many difficulties In the way of encouraging shipbuilding. Apparently he is not able, at the present time at all events, to present to the House any policy which the Government is prepared to adopt. It has been stated, I think by the Minister of Trade and Commerce,that one or two gentlemen have been asked for the figures which they would regard as sat-

isfactory for the building of ships-I think he was referring more particularly to wooden ships. But I think the best procedure would be to determine upon a policy; to determine whether or not they would give bonuses, and then let it be known publicly so that the people would be in a position to take advantage of it. The Prime Minister states that in consequence of the high prices of materials and of the uncertainty as to how long the war will last, it might not be very good policy to do what would be necessary to ensure the building of steel ships at present. Well, Sir, we have heard a good deal as to the probability that the War will last only a short period. The Minister of Finance stated not long ago, to my astonishment, that when the war broke out it was thought that it would not last more than three or four months.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

I said that it was thought by some, or by many.

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LIB

William Pugsley

Liberal

Mr. PUGSLEY:

The way the minister

made the statement would rather imply that that view was entertained by some in whose judgment he had confidence, because he was putting it forward as a statement of opinion which had been greatly disappointed by the subsequent results. Having regard to the great preparations which had been made by our enemies for many years, one might reasonably expect that the war would last for a considerable period. I think, however, that in the matter of shipbuilding and everything else connected with our part in the war, we ought to proceed upon the theory that the war may last not for one year or for three years, but for five years, and if the war should come to an end at an earlier period, we shall all be thankful. I say that we ought to make preparations ahead and do everything that is necessary to enable Canada to do her part, no matter how long the war may last. My right hon. friend has truly stated that owing to arrangements which had been made by the British' Government with this Government, there has been no undue complaint in the matter of transportation, or, rather that the conditions have not been as bad as they might have been. That is very true,, although the cost of transportation has increased from 800 to 1,000 per cent beyond what it was when the war broke out. But it must be remembered that ships are getting scarcer every week, every day almost. The submarine menace is a very great menace to shipping, and British ship-

ping is feeling' the effect of that menace. Ships are becoming scarcer and the question of transportation i= becoming more difficult day by day. Canada should look at the matter in this light; not that the time will come, but that the time may come when in the interests of Canada and m the interests of the Empire there will be absolute need of having greater ocean tonnage than we shall have if Canada does not do her part in the providing of transportation. Suppose we do pay out hundreds of thousands of dollars more than might be necessary if the war should come to an end quickly. Suppose the amount should even run into millions; if in that way Canada is better able to supply the Empife with her needs in the-way of foodstuffs, it will be money well expended; nobody will regret it. I do not want to find fault, but we have lost very nearly two years of time upon this important question. It does seem to me-and I say this in all sincerity and all kindness-that when this war broke out the Government ought to have anticipated the very state of affairs which exists to-day. A condition of war between England and her Allies and a strong resourceful enemy such as Germany and her Allies must necessarily exhaust the resources of the Empire. Knowing, as everyone knows, that the submarines would be effective in the destruction of shipping, we ought to have anticipated that the ocean ' tonnage would become scarcer as the months went by. But let us not criticise too much as to the inaction of the Government in the past. Let the Government, if it is a,t all possible, take hold of 'the question now and submit its policy to Parliament and the country. I venture to say that if a broad, liberal policy of assistance is laid down it will be found that the people of Canada are resourceful enough to take advantage of the opportunity afforded them and will engage upon the building not of steel vessels only, but of wooden vessels, which would prove of enormous advantage and would be fairly profitable for a good many years to come. Canada was once one of the greatest shipbuilding and shipowning countries in the world, if not the greatest of these in proportion to her population. Ships built by our own mechanics were found upon every sea, and performed a great part in the carrying trade of the world.

I believe that, were reasonable encouragement given, we would be able, in a comparatively few months, to have in Canada a large number of wooden vessels which

would be capable of doing a great deal in the way of transportation. In addition to giving aid by way of reasonable bonuses, the Government should, assist the ship builders to provide auxiliary powers for wooden sailing vessels by admitting machinery, the most modern engines for use as auxiliary power, free of duty into Canada. This would prove of great assistance, because the duty which has to be paid on this machinery is very heavy, and proves a serious burden upon the ship builder. I have quite recently received a great many telegrams from gentlemen who believe that wooden ship building ought to be encouraged, and that if it were encouraged it could be made very successful. I have talked with people who are interested in the subject, and I do believe that if the Government would come down with its policy, if it was a reasonable policy so far as giving assistance by way of bonuses and the* admission into Canada, free of duty, of machinery of a class not made in Canada, we would yery soon see shipyards established upon both the Atlantic and the Pacific coasts, upon the Gulf, and upon the Great lakes; and that before many months rolled by we would find a large number of vessels upon the stocks. It would not be many months before Canada would be able to do her part and a very creditable part, in the transportation business of the Empire.

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CON

George Henry Barnard

Conservative (1867-1942)

Mr. G. H. BARNARD (Victoria, B.C.):

I wish to say just a word or two on this matter, and to join my voice with those of the hon. member for Pictou (Mr. Macdonald) and the hon. member for St. John (Mr. Pugsley) in urging upon the Government the desirability of giving some aid to shipbuilding. It is a very vital matter with us on the Pacific seaboard, particularly since the war; although I may say that the shortage of tonnage was felt on that coast even before the waT commenced. As 'the gentlemen of the House are undoubtedly aware the interests of the province of British Columbia are very vitally bound up with the prosperity of the lumber trade. The great difficulty with the lumber trade there is to get overseas tonnage. There is no doubt that probably the finest stand of timber left in the world is found within ihe confines of the province of British Columbia. The difficulty we find there is that nearly all the ships that are in the lumbercarrying trade are under charter, and that the charters are controlled by San Francisco interests, which, naturally, send them to their own lumber mills on Puget Sound, with the result that our mills stand idle on

account of the difficulty of getting tonnage for the export trade.

I find that the Government of British Columbia has, within the last few days, brought down a Bill in the Legislature for the very purpose of aiding the shipbuilding business. The contemplation is, I think, largely to build wooden ships out of good British Columbia timber. We have demonstrated beyond question that ocean-going vessels of the very finest kind can be built out of timber on the coast.

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LIB
CON

George Henry Barnard

Conservative (1867-1942)

Mr. BARNARD:

The idea is to get the people interested in the lumber business to contribute timber for the building of the ships, and to take payment for it in stock in the ships. I may say that I received a copy of this Bill only to-day, and I have not yet had an opportunity of perusing it with any great care; but the main idea of it is that a commission is to be appointed which will give loans to persons building ships, to the extent of 55 per cent of the value of the ship, the balance of the loan to be guaranteed on very stringent conditions as to operation, etc. The Bill also proVides for a subsidy, or loan, to shipbuilding plants, of 55 per cent of the value of the plant. The total amount the province proposes to set aside for this purpose is some $2,000,000, and with that it is hoped to build up a .home-carrying trade. The conditions of the subsidy are that the. ships must return to a British Columbia port to re-load. It seems to me that if the Government could see its way to further this policy in some direction it would be of great benefit not only to my friends in the Maritime Provinces, but very much more even to us on the Pacific coast, and for my part I would be very glad, indeed, to see some action taken along these lines.

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LIB

John Howard Sinclair

Liberal

Mr. J. H. SINCLAIR (Guysborough):

I have listened with' great interest to my hon. friend from British Columbia (Mr. Barnard). I quite agree with him that this industry is of the greatest importance to that .province. It will be impossible to develop the lumber industry of British Columbia and the coal-mining industry of that great province without transportation facilities on the sea. My hon. friend, along with his colleagues, form a solid representation from the province 6f British Columbia supporting this Government. They have been here now for several year^. This question has been discussed in this House

year after year, yet nothing has been done. If my hon. friend has to go home at the end of the session without the Government having done anything at all in regard to this important question I fear it will be felt in the province of British Columbia that the influence of my hon. friend and his colleagues from that province is not felt as it should be by the present Government.

I take a very special interest in this question, coming, as I do, from a province by the sea, a province that has a great interest in the shipbuilding industry. And I am glad to inform the house that while we are talking here in regard to this matter, and doing nothing more than talking, in the town where I live an enterprising firm is laying a yard, preparing to build a steel steamer, and is starting the industry. That is being done, though under a great handicap, owing to the tariff that we have in this country. That, to my mind, is the great difficulty in regard to steel shipbuilding. There is no special difficulty so far as the work is concerned. Any person who visited Montreal yesterday and saw the splendid shipyard of Vickers, Limited, and the fine ship that was launched there on that occasion, could see that the workmen in this country are well able to do that kind of work.

I was sorry that we did not have Lord Churchill, the late First Lord of the Admiralty, yesterday with us in order that he might see that we already have done in this country what he advised the Prime Minister we could not do in fifty years. The foundations were all right; they appeared quite solid, although we were told that there was not on the coast of Canada any place where the foundation could be found solid enough for a shipyard. The cranes were, I doubt not, able to carry the 50 tons weight, although that gentleman said it would be found impossible to have such cranee in Canada. The way the rivets were driven and the general manner in which the ship was built, was a great credit indeed to the workmen of Canada. All tho.se things that we were told by that English Lord could not be done .seemed to have been well done. We saw none of those disheartening things that were. read to. us a few years ago by the Prime Minister of this country, who was cheered by his supporters at the time. These matters are now settled, and we have at least one good shipyard in Canada that has produced ships that

are now being usefully employed in the navy. A fine fleet of mosquito vessels is also being built in that same yard, and everything looks very prosperous indeed, and it looks as if it might grow into a great industry. A6 I said, the great handicap is the tariff. It costs more to get steel in Canada than it does in Great Britain. It costs more to get engines; and, if you have to import them from the United States, as we might have now to do, the tariff on these engines would be enormous.

As I understand our present tariff, articles that are not made in Canada are admitted free for the construction of a ship. If the plates are not made in Canada, and they are not, they can be imported free for ship construction, but most of the articles that go into the construction of a ship, and they are numberless, are subject to a very high duty, and in that way the Canadian builder starts with a very heavy handicap. If a ship cost about $20 a ton more than on the Clyde you have to pay a dividend on that additional capital, and she has to compete with the ships that are built under free trade conditions in the yards of England. That might be overcome to a large extent in Canada by a rebate, and it is an amazing thing to me that this Government, and the late Government, have not dealt with this question.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

Does the hon.

member think that that would be sufficient to establish a ship-building industry in Canada?

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LIB

John Howard Sinclair

Liberal

Mr. SINCLAIR:

I fear it would not be

sufficient; at the same time there are ships being built in Canada. On the Great Lakes quite a fleet is being built; ships are also being built in a small way, on the Atlantic coast, and, as I have said, they are being built in Montreal. But they are all subject to that very heavy handicap which should not exist at the present time. It does not exist in regard to other manufactures. The manufacturer of agricultural implements who imports steel from the United States for his reaper or his mower, and exports it to a foreign country goes, to the Custom house and gets back, I 'think, 99 per cent of the duty he has paid. But the shipbuilder gets nothing; he gets no rebate, and that is a condition of things which should not exist, and which might be rectified by an Order in Council. I trust that the Minister of Finance will see that the very next time the Government meets an Order in Council is passed that will

' enable shipbuilders in Canada to import their material from abroad and give them a rebate. I see no reason why it should not be done, and I am sure that my hon. friend the Minister of Finance sees no reason why it should not be done. It would be some encouragement, and everybody will agree that encouragement ought to be given to the shipbuilding industry in a greater degree than to the industry of Which I have spoken, because when a ship is complete she has to compete with the whole world for business. If there is any product that ought to have an even chance it is the ship that carries freight on the ocean. If there is any freight to carry in any part of the world, the ship has to compete for it, and all the other ships in the world are competing for it. The brokers in London, New York and other great centres throughout the world know that there is freight to carry from Australia, for example, to London. They are all trying to get it in normal times, and each one is competing against the other. Consequently when you launch a ship on the sea, she has to compete with the whole world for business, and she ought to be free from those charges which make ships so expensive in Canada.

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CON

John Dowsley Reid (Minister of Customs)

Conservative (1867-1942)

Mr. REID:

I do not want to interrupt the hon. member, but he knows that articles necessary for shipbuilding are on the free list.

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LIB

John Howard Sinclair

Liberal

Mr. SINCLAIR:

The hon. minister was not in the House when I explained that. I think I understand what the tariff is. There are a large number of articles on which no rebate is given. On articles that are produced in Canada, and that go to the construction of ships, there is no rebate. For example, if you produce marine engines in Canada, you cannot import marine engines from the United States and get a rebate.

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CON

John Dowsley Reid (Minister of Customs)

Conservative (1867-1942)

Mr. REID:

The articles are:

Masts, iron or steel, or parts thereof, and iron or steel beams, angles, sheets, plates, knees and cable chain, for wooden, iron, steel or composite ships and vessels; and iron steel or brass manufactures which, at the time of their importation are of a Class or kind not manufactured in Canada, when imported for use in the construction or equipment of ships or vessels, under regulations prescribed by the Minister of Customs.

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LIB

John Howard Sinclair

Liberal

Mr. SINCLAIR:

That is what I said; articles that are not manufactured in Canada. Nolt only the iron and steel, but the paint, bolts, locks, the articles for finishing the inside of ships, and innumer-

able other things, are all subject to heavy duty under the present tariff. Dulty must be paid to the Government by the manufacturer if a Canadian is going to embark in the shipbuilding industry, and that must be evened up in some way if the shipbuilder is to have a chance. I hope the Minister *of Finance will look into this question and endeavour to deal with it.

There is one phase of the shipbuilding question which I have brought repeatedly tc the attention of the present Government, and why it has not been dealt with passes my comprehension. Sailing ships on the eastern coast of Canada are not allowed at the present time to sail further south than 5 degrees north latitude. The most profitable business for the ships at the present time is in South America. 'There are good freights for the river Plate and for Rio and other ports on the coast of South America, but the coasting vessels of Canada cannot engage in that trade because we have a silly and absurd clause in the shipping law whieh does not allow a coasting captain to go further south than 5 degrees north latitude. The captain can go as far north as he likes, he can go to the North Pole if he can get there; he can sail in the most dangerous [waters in the world, but when he gets in the [waters of the sunny south, where the trade ;winds are and everything is favourable he must stop at 5 degrees north latitude. The Minister of Marine and Fisheries has struggled to justify this several times, but he has not been able to tell the House why the Government maintain that regulation in the shipping law. Each session during the last three years, I have introduced a Bill [to correct that condition, and to enable the Canadian coasting vessels to earn money by going as far as the river Plate. In old times they went round the Horn. I remember the time very well when the coasting vessels of Nova Scotia went round to California. A coasting captain never had any trouble in navigating; ,he could go anywhere on the ocean, but in the Marine Department at Ottawa they ,have the absurd idea that a coasting captain sails along the coast, sees a lighthouse at one point, watches for the. next one, and prawls along in that way until he gets to his destination. When these men were examined in the room upstairs, the Marine .Department officials could not understand how it was that a coasting captain could cross the gulf. of Mexico because there were .no lighthouses to guide him. ]That is the idea entertained in the .Marine Department regarding coasting

,captain3. The people who know anything about the matter are laughing at the notions which they have in the Marine Department in regard to that matter. Why should the coasting captains not be allowed to go where the business is profitable? In the whole history of shipbuilding in this country there was never a case of a coasting captain who did not get to his destination. The Deputy Speaker knows that. None of the captains who sailed for any of the ports in the south ever failed to get there because it was too far away. But that is the idea they have in the Marine Department. I have been trying during the last three or four years to get this amendment passed. The Bill now before this House has passed the second reading stage, and it has passed the Marine and Fisheries Committee, but it is at the foot of the list of Bills, and, of course, being a private member, I cannot proceed further unless it is adopted as a Government Bill. If there are any members on the Government benches who take the slightest interest in shipbuilding, or in transportation by sea, I wish they would look up the amendment and ask why it has not been passed into law. It would take only five minutes to pass it. It would be a great relief to the shipping industry of this country, and would mean hundreds of thousands of dollars during the coming year to the people who own coasting vessels.

We like to have vessels sailing under the Canadian flag. We are proud of the Canadian flag and we are fighting to maintain it. But we are driving the coast shipping of this country away from the Canadian flag. Every year a number of vessels that were formerly registered under the Canadian flag and owned by Canadians, are driven outside and forced to seek a home somewhere else in order that they may carry on their business. Some sixty coasting vessels from Nova Scotia are registered in Barbadoes because they could not remain under Canadian register and carry on their business or go to these southern ports. Some are registered in the United States. When American registry was opened no less than fourteen Canadian vessels were registered in a short time in the United States, but when the war came the British Government passed a regulation, and the Canadian Government a similar regulation, that Canadian vessels could not be sold or registered in a foreign country during the war. Consquently, that was stopped. Otherwise many of these vessels

sailing under the Canadian flag would have gone under the American flag. That is the condition in regard to coastal shipping. If there is any one in this Government who takes an interest in this matter I wish he would look into it and try and rectify it. I wish we could have something done in regard to it because this is the most important question that is before the Canadian people to-day. The question of the Quebec and Saguenay railway is a small question compared with this. I have no doubt that the expenditure would be small and that if you had a bounty for the first few years, it would not amount to very much. The money we voted a few minutes ago to a worthless property in Quebec would keep the shipyards of this country busy as far as construction is concerned for the next five years and produce a large number of Canadian ships. That would be something big for the Canadian Government to do. I do not know whether they are big enough to do it or not, but at all events I think it is time the Government formulated some policy that would be a credit to themselves and that would promote this great industry which is so important for the future of Canada.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

My hon. friend

(Mr. Sinclair) has raised the question as to whether this Government is big enough to do anything to( encourage the shipbuilding industry. That implies that the Government of which he was a follower for many years was not big enough to do anything, because nothing was done. My hon. friend suggests that a bounty for the encouragement of the shipbuilding industry should be provided. The very item of the tariff to which my hon. friend has drawn attention was either inserted at the instance of the late Government, or remained through its term of office, because it is not a new item. The *item that my hon. friend called attention to provides that the materials used in shipbuilding shall be subject to a duty if made in Canada. The object of that provision of the tariff is quite obvious. It is tor the purpose of giving Canadian steel and other manufacturers the business, of supplying the material which may be used in connection with the building of ships. My 'hon. friend has suggested that the duty should be removed. Without passing for the present upon the advisability of such action on the part of the Government, I desire to say to my hon. friend that that would not afford sufficient encouragement for the establishment on a 256

large scale of the shipbuilding industry in Canada. My hon, friend, I think, agrees with me in that, because I understand him to say that that would not be sufficient, but that further steps should be taken. .This matter can be looked at from two points of view: In the first place, from the standpoint of the desirability of establishing upon a large and permanent scale the shipbuilding industry in this country; and, secondly, from the standpoint of providing for the transportation needs of Canada in addition to the ocean tonnage available for carrying Canadian produce to foreign markets. In so far as that is concerned, it is a very important question. I have given very careful consideration to the question of how to establish on a large and permanent scale in Canada the shipbuilding industry. We have coal, we have steel and iron manufactures, and what would seem to be a desirable adjunct to these great industries would be the shipbuilding industry on a large scale.

It is to be pointed out that in the establishment of an industry like the iron and steel industry, or an industry such as the shipbuilding industry, the usual mode of encouragement is by bounty in the first instance. But it has been demonstrated that a bounty in itself is not sufficient unless it is supplemented by a protective tariff. The iron and steel industry has been built up in this country by the granting of a bounty in the first instance, and by a protective tariff, and there we have the case of an industry which has been .established in a large way. But, in so far as the shipbuilding industry is concerned, it does not seem possible to encourage it by a protective duty, because, as I understand the situation-I am not absolutely clear as to this^I am speaking .from memory-there seems to be a difficulty under the Merchant Shipping Act in the way of the Government of Canada giving protection in so far as ships are concerned as it has been able to give protection in so far as manufactured products are concerned.

Great Britain has an enormous advantage over Canada in shipbuilding. There is a labour market that gives her an advantage. I mean to say that labour in normal times is cheaper in the TJnited Kingdom, that capital is cheaper, and, besides, that shipbuilding is an old-established industry. By reason of doing an enormous business, doing the shipbuilding of the world, she is able

to observe economies that would not be possible in a new country embarking upon the shipbuilding industry. The United Kingdom possesses that advantage over Canada in the building of ships. That 'difficulty might be overcome in whole or in part by the granting of a bounty for the protection and encouragement of shipbuilding. My own view would be that such a bounty would have to be one extending over a long period, much longer than has been the case in connection with industries which it is possible to protect by protective duties. Therefore one way of assisting in the establishment of a shipbuilding industry would be by the granting of bounties to get it established, and to maintain it until such period as it would be able to compete with the shipbuilding industry of Great Britain.

There is another .aspect of the matter-and I am only referring to these to show that it is a question that cannot be solved without much patient thought and consideration. In the case of the bounties which were given upon iron and steel, it was provided that they should only apply where the iron and steel was sold for domestic consumption and not to iron and steel exported. The reason is obvious. Foreign Governments would have ground to complain if steel and iron upon which a bounty had been granted in the country of manufacture entered into competition with the same products in the country in which they were sold. A countervailing duty in such a case might be imposed by the Government of the country to which such products were exported. Once a ship is built it may be used for home trade or it may be sold abroad. The result is that the granting of a bounty for the encouragement of shipbuilding, while it might build up a large shipbuilding industry, would not necessarily have the effect of ensuring that the ships so built would be available for the purpose of Canadian trade, for they might be sold to ship-owners of the United States or of some other country.

Topic:   ENCOURAGEMENT OF SHIPBUILDING.
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LIB

John Howard Sinclair

Liberal

Mr. SINCLAIR:

You would not favour any restrictions in that respect?

Topic:   ENCOURAGEMENT OF SHIPBUILDING.
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May 16, 1916