May 12, 1921

L LIB

Daniel Duncan McKenzie

Laurier Liberal

Mr. McKENZIE:

It is not the big interests in connection with coal and steel that are worrying me at all; it is the thousands and tens of thousands of men and women who must get the bite that goes into their mouths from what they earn from those interests. Those are the people about whom I am concerned, and incidentally, of course, benefits will come to capital, because we must not kill the goose that lays the golden egg. That is the position. The big interests are, as a rule, able to look after themselves; they usually have some money, and tliey can afford to bide their time until the psychological moment. The man who has five or six little ones waiting . for what their father brings home to pay for their breakfast, cannot afford to wait. Those are the people about whom I am concerned and whom I would like to see the Government help. If I had written that letter to-day, the minister might have said that I was trying to make a case; but that letter was written in August, 1918. It gave my views then and it gives my views now. I am pleased that the minister has given me such a sympathetic hearing, and after all, I am beginning to believe that he has some touch of humanity and human kindness. Nevertheless, there is the fact that, in the earlier part of the evening, I charged him truthfully with holding up a litlte boy who was carrying home a 25-pound bag of flour, untU he paid tribute to Csesar, and the minister was Csesar himself. I am willing to modify that to some extent provided that some good results will come from the discussion that we have had this evening.

I hope that, by some accident or otherwise, the Minister of Railways and Canals (Mr. Reid) when he comes back to the House, will read the few words that I am now going to say. I represent one of the oldest constituencies in Canada. The county of Victoria is as old and as well civilized a district as any on the continent of North America. The shores of Cabot strait, of which we have all heard, are in my county, and Cabot is supposed to have landed at a

place called Cape North in my county. Settlers came to that district in times far back, and they have been living in and developing the county of Victoria. The shores of Cabot strait, of which I speak, are 125 miles from the nearest railway. One would hardly believe that during all those years, there has- been in the county of Victoria a settlement 125 miles from the nearest railway. Ever since I came into this House, in Opposition or as supporting a government, I hai*e been trying to get railway facilities for those good, honest people. My one earnest desire before I leave public life is to see to it, if I can, that those people are brought into touch with outside civilization by means of a railway.

I came very near by objective, because in 1911 we got a vote to start this railway; a contract was let, and the work was practically under way when, unfortunately for us, a change of Government took place and everything went up in the air. Three railways were about to be built in Nova Scotia at that time, one in Halifax county, one in Guysborough county and one in my county. The then Prime Minister, I am sorry to say, built his own road in Halifax county; but like the man in the dream in olden days, he remembered not Joseph when he was in favour with the king. He did not build the Guysborough road, and he did not build my road. That part of the country has an abundance of fish; it is the most magnificent fishing ground in the world; there are also large quantities of pulpwood, which is now beginning to be very valuable; it is also a splendid agricultural country; but it has no railway, and I do hope that before very long something will be done to supply this great need. I am sure the road would not be a drag or deadweight if it was once built.

I am going to bring to the minister's attention what took place in the House in 1918 in connection with this matter. I have in my hand the journals of the House for 1919, and at page 97 I read this:

The House resumed the adjourned Debate on the proposed Resolution of Mr. McKenzie,- whereas on the 16th of March, A D., 1914, this Honourable House passed the following Resolution which was accepted by the Government.

You will note that the resolution in connection with the road was accepted by this Government, not by the Laurier Government.

Mr. McKenzie moved that, in the opinion of this House, the time has arrived for the extension of the Intercolonial Railway into the non-railway sections of the Maritime Provinces within reasonable range of the said railway.

That was the resolution that had already been accepted by the Government in 1914. Then on October 14, 1919, the Government accepted this resolution.

Be it therefore resoTved that, in. the opinion of this House, the proposals of the said Resolution of the 16th of March, A.D., 1914, should be carried forward to completion at the earliest possible date.

And the question being put on the said motion ; it was resolved in the affirmative.

The proposition for building this railway has therefore been twice accepted by the Government, in 1914, and again in 1919. I submit to you, Mr. Speaker, and to the House that there is no public undertaking in Canada in the same position as this road into the county of Victoria. The contract was let and the road practically started by a former government. In March, 1914, this House led by the right hon. the present member for King's (Sir Robert Borden) accepted my proposition that this road should be built. In 1919 I brought the matter up again, and the Government again renewed and accepted the proposition of 1914. It stands on the records of this House as having been accepted by the Government as a necessary and desirable undertaking to assume. I have already pointed out to you the splendid natural advantages of that section of the country; we have splendid fishermen, splendid farmers, capable men, but they are under the tremendous disadvantage of being such a distance from a railway. As the Government have already twice accepted this proposition, in 1914, and again in 1919, it is not surprising, Mr. Speaker, that I should take advantage of this opportunity of bringing this matter to the notice of this Administration in connection with other matters.

Mr. Speaker, I have taken more of the time of the House than I expected, but some of the things I have brought to the notice of the House, particularly in the latter part of my speech, are of such great concern to the people I represent that I felt it was my duty to do so, and to tell the Government that this railway in Victoria county is a business proposition, that it is in the interests of the county to undertake. We find no fault with the development of the West, with its railway building and settlement for the purpose of getting the advantages which these progressive movements will bring. Are we going to say to the descendants of the man who nearly two hundred years ago settled on the shores of Victoria county, and who, axe in hand, started to cut down

fMr. McKenzie.]

the trees and make a home for himself, and whose descendants to the third and fourth and fifth generation have lived on these shores, honest, straightforward, Godfearing, law-abiding citizens-are we going to say to them that they are not entitled to the same privileges that are accorded to the men in the West, in the Centre, and in the East of this country? I would be lax in my duty if I did not bring to the notice of the minister a good businesss proposition such as this, a proposition that has enough humanity in it and enough promise of national development to deserve the consideration of the Government and of the Minister of Finance. I have brought this matter to the attention of the Minister of Finance, in the hope that he may bring it before the Minister of Railways, and, of course, the record is there in the Journals of this House to speak for itself.

I have pointed out the sins of ommission and the sins of commission on the part of the Government. Having done all these things, I think that the responsibility of doing better in the future in connection with the ordinary business of the country, as well as in this special business that concerns the county I have the honour to represent, falls absolutely upon the shoulders of the Minister of Finance himself, and he will have no excuse in the last day unless he does what is right in connection with this matter. I conclude with the hope that he, and the Government of which he is a member, will, during the short time at their disposal, do better in the future than they have done in the past.

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UNION

George Brecken Nicholson

Unionist

Mr. G. B. NICHOLSON (East Algoma):

Mr. Speaker, in rising to occupy the time of the House for a very short time in this debate, I do so almost exclusively for one specific purpose, and that is to draw the attention of the House for a few moments to that part of the Budget statement referring to the obligations of the country in connection with the Canadian National Railways. I want first, however, to refer briefly to just one or two statements made by the hon. member for North Cape Breton and Victoria (Mr. McKenzie), who has just preceded me, and incidentally I might say that in the main they have reference in one way or another to the whole railway question.

I would refer first to his statement in regard to the floatation of Canadian National Railway bonds in the city of New York, to which transaction he took very

strong exception, and upon which he made some very definite statements. One was to the effect that while the province of Nova Scotia could float its bonds in New York at 102, the Canadian Rational Railways, or, as he said, the partner of the Government, were floating their bonds at 91, 95 and 96. The facts are these. The province of Nova Scotia floated its bonds at 102 payable in Canadian funds in New York, which meant to the province of Nova Scotia 87 cents on the dollar. The Canadian National Railways, having to liquidate a block of bonds falling due in the city of London, bonds that were issued years ago when the Canadian Northern Railway was financing and operating its own business, went to the city of New York and floated these bonds at 91, 95 and 96, not in Canadian funds, but in New York exchange against London exchange, and thereby saved to the people of Canada, through the National Railways, the sum of $6,000,000. In other words, for bonds at par, sufficient to retire the bonds that will mature in London in the month of August this year, the Canadian National Railways sold a block of bonds which they had in their treasury, guaranteed by the Dominion of Canada, at a sum that just simply reduced the liability by $6,000,000. And that is the transaction to which my hon. friend takes such direct exception, and for which he so roundly condemns the Minister of Finance.

The hon. member, speaking with regard to the Canadian Government Merchant Marine, referred to a statement made by Mr. Bosworth in the city of Vancouver, that it was possible to buy shipping at the present time on a gross ton basis of $50 per ton. He did not tell us, at the same time, that the Canadian Pacific Railway, just as the Canadian Government, have ships on the stocks under construction, which will be completed this year, costing them very close to $200 per ton, the Canadian Pacific Railway having entered into these contracts at a time when the price of shipping in all parts of the world was at that figure. The fact that tonnage has now gone down does not relieve the Canadian Pacific Railway, however, of their obligations in connection with these contracts, any more than it relieves the Government of theirs.

Mr. DuTREMBLAY: Are they the

same kind of ships?

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Subtopic:   REVISED EDITION. COMMONS
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UNION

George Brecken Nicholson

Unionist

Mr. NICHOLSON:

Steel ships. Now,

one other matter to which I wish to refer

Is the right-about-face which my hon. friend took on the subject of trusts, in an effort to make a case against the Government. The hon. gentleman said that in the city of Sydney, I think, or at all events in his own city, there was a steel and coal trust, who were squeezing the very life out of the Canadian people by the extortionate prices they were charging for their goods. In the very next breath, however, he tries to make a case against the Government because they had not forced the Canadian National Railways to pay this trust a price for its goods higher than the price at which they could buy the same goods in other places. But that is on a par with the hon. gentleman's arguments with regard to the management of the Canadian National railways. He condemns the Canadian National Railways for not adopting business management, and then he immediately turns round and censures them because they do not pay any attention the importunities of a member of Parliament to buy goods in his constituency when they can buy the like goods at a less price in other parts of the country.

The hon. gentleman bases a very plausible case on the fact that there are men in the city of Sydney who are out of employment. Well, there are men out of employment in Ottawa, in Montreal, in Toronto, in Winnipeg, in Vancouver,-men who could be put to work building locomotives and cars, laying tracks and building bridges, and doing works of this kind for the Canadian National Railways, if the Government would furnish the money to meet exorbitant rates. Would it be good business management on the part of the Canadian National Railways to embark on a policy of that kind? If the efforts of the hon. member for North Cape Breton and Victoria can influence the management of the Canadian National railways in any one case, where will it end?

My hon. friend made the statement that it matters not how hard the Government may try-I think these were his words- "we are not going to be drawn into a contest on the tariff." He says: "We will fight you on shipping, we will fight you on the railway question, we will fight you on anything else; but we had a convention in the city of Ottawa in 1919, and we drew up a platform and laid down a set of political principles which we claim to be identical with those of our friends immediately alongside of us, and you cannot draw us into a political contest on that platform; nothing doing. We are going to get away

from that platform,"-just as the hon. member for Shelburne and Queen's got away from it by moving the amendment which he proposed to the resolution to the Minister of Finance.

The hon. member found fault because the Government of Canada had granted credits to European countries to enable them to buy Canadian goods. Let me express my personal opinion on that subject. I think that if it were possible for Canada to continue granting credits to European countries to enable us to sell our goods to those countries, Canada would not be passing through the period of depression which she is experiencing at the present time. As I say, that is merely my own opinion. The hon. member said that if it had not been for these credits, and for the fact that thereby an avenue had been opened up through which Canada could export pork, beef, butter, cheese, etc., the prices of these commodities would have been depressed . down to a point that would have made it very much easier for the Canadian people to buy these things. I wonder what my hon. friends of the Progressive party think of a policy of that kind. The hon. member would make it so difficult to export the surplus products of this country that those products would be dumped on the market in such volumes that the Canadian people could buy at prices below value. Now, that is a sample of my hon. friend's political opinions.

Coming to the theme upon which-1 wish particularly to address the House for a few moments, namely, the Canadian National railways, I desire to make, first of'all, a brief statement by way of introduction. I believe I have the support of the House and of the country when I say that there is perhaps no more difficult question before the Canadian people to-day than the railway situation. I doubt whether there has ever been before this Parliament a civil question of greater difficulty or of a more complex character than the proper solution of the railway problem as it presents itself at the present moment. I am not going to go into the history of the railway question; I shall not refer to the way in which we got into this position. I do not believe we should get very far if we entered into any discussion of that kind. In my opinion, the only solution of the problem will be found in facing the situation as it is and in endeavouring if we can to find a solution for it. One of the things which, I think, are making it more difficult to solve the problem is the tendency

throughout the country to exaggerate the real situation. I do not know of any matter that has ever been so manifestly misunderstood, and in connection with which there seemed .to have been, on the part of some persons at least, so great a desire to misrepresent things and to create in the minds of the people the impression that the whole affair was absolutely insoluble- in other words, to break down the morale of the people on the whole question. Why that is I do not know, but as indicating the truth of this statement and the extent to which people go in that regard, I wish to quote some figures published in the Montreal Star of March 19, and issued by Mr. J. L. Payne, at one time statistician of the Railway Department. I have no idea what induced him to issue the statement he did. He may have issued it out of a desire to state the facts as they were before the people. But be that as it may, the statements are so exaggerated that one can only reach the conclusion that they were published with the intent of leading the public to believe the situation was something entirely foreign to what it is. Mr. Payne sets out that the total liability the peonle of Canada are carrying on ac. count of the Canadian National Railways is $2,274,125,057, made up as follows:

Intercolonial $563,000,000

Canadian Northern 624,000,000

Transcontinental 250,000,000

Grand Trunk Pacific 279,000,000

Grand Trunk Pacific branch lines. 17,000^000 Grand Trunk Railway of Canada. . 464,000,000

Canadian Northern branch lines. . 10,000,000

Quebec and Saguenay ' 8,146,189

Quebec Bridge 22,000,000

Canadian Northern System 35,000,000

In order to arrive at these figures Mr

Payne puts the original cost of the Intercolonial railway and its branches at $152,300,044 and he brought that up, on a compound interest basis, to the present figure of $563,218,701. Now, as I said a moment ago, if I can understand the figures at all, they were put forward with the object of leading the people of Canada to believe that they were carrying these obligations because of having launched on a system of publicly-owned railways. But let us look at the figures for a moment and when we do . so we find that the liability on account of government-projected lines, the Intercolonial and the Transcontinental, amounts to $813,218,701 which if taken from Mr. Payne's total leaves $1,460,906,316. Carrying this calculation a little further we find that according to the last statistical report at present available, and prepared by Mr. Payne himself, the

bonuses granted to privately-owned railways amounted to $161,398,696, to which is to be added guarantees earned of $344,672,933, and the proceeds from the sale of 44,648,123 acres of land which, put at $2.25 per acre, gives $100,345,276 making a total of $606,504,905. Applying to these the same method of calculation as Mr. Payne applied to the Intercolonial, and compounding the interest afterwards, we find that it makes a total liability on account of subsidies to privately-owned railways of $2,426,019,620. Add this to the liabilities given by Mr. Payne himself on account of the Canadian Northern, and Grand Trunk and Grand Trunk Pacific railways and the grand total is $3,332,925,936 for which, on the basis of Mr. Payne's calculation, the people of Canada would be responsible on account of their direct assistance to privately-owned railways, as against $813,218,701 on account of publicly-projected railways. But from the last figure we should take $250,000,000 on account of the National Transcontinental Railway, which arose out of a contract entered into by a privately-owned railway, the Grand Trunk. This reduces the amount to $563,218,701 on account of publicly-owned railways as against $4,082,925,936 on account of privately-owned railways. If we wish to pursue this method of financial calculation to its logical conclusion and take in the moneys we have spent on canals, river improvements, wharves, and all that kind of thing we would find we have an amount equal to all that has been spent on railways, and it would bring the total liability on account of our transportation systems up to a figure between -seven and eight billions of dollars.

Now, Mr Speaker, my only object in presenting these figures at all is to show the length to which one can go in exaggerating a situation such as this, and also, if possible, to show the desirability of finding out ourselves, if we can, what the actual position is. It may be true that worked out on a strict basis of financial calculation, or a book-keeping basis, from the time of Confederation up, our liability on account of the Intercolonial railway is what Mr. Payne has stated it to be; but the same thing applies, in an equal degree to our canal system, our river improvements and everything else of that kind that we have. [DOT]

In this connection what seems to me to be a vital point is that it is

10 p.m. not fair to the Canadian National Railways, that the situation should be so exaggerated. What we want to know is what our actual obligations are in connection with these railway systems and what they must earn annually to pay their way, confining ourselves strictly to what properly belongs to the railway, and then from that standpoint endeavour to work out a plan by which we can make railways carry their own obligations. The fact is that we have these railways, approximately 22,000 miles in extent, projected into every part of this country from the Atlantic ocean to the Pacific-railways that are absolutely necessary to the industrial life of this country and railways, in very many cases, without which we cannot possibly get along. It may be difficult but let the load be as heavy as it may be, we have to carry it. We have to operate these railways, we cannot get away from it, and the question simply narrows down to this: what does the whole thing mean in dollars and cents and is there a solution for the difficulty.

Starting from that point let us see what the annual obligations are for which we are responsible in connection with these railways. I take first the Grand Trunk, and just let me say briefly that my reason for taking the Grand Trunk is that I look upon it as an absolutely essential that the Grand Trunk shall ultimately become parr of the Canadian National Railway system no matter what scheme we may later develop for its operation. On five per cent Grand Trunk debenture stock the obligation is $1,694,409; four per cent Grand Trunk debenture stock, $4,845,104; four per cent guaranteed stock, $2,430,000; on the first, second and third preference and common stock, the value of which is being arbitrated, $2,570,000; total $11,540,320. Which for the purposes of reasonable calculation should be reduced by $1,285,000 which is equal to one-half the amount of the possible award under the arbitration, leaving a net balance of fixed charges against the Grand Trunk Railway, of $10,255,320. On the Canadian Northern-as per statement of the Minister of Railways to be found on page 1052 of Hansard-$24,155,988; Grand Trunk Pacific $9,332,776, less the amount which should properly be written off on account of over-capitalization, $7,228,600, leaving the amount properly chargeable on account of that railway at $2,104,176. I want to say a word with regard to that. It will be noted that I have mentioned an amount of $7,228,600 annually that should be written off on accoupt of ever-capitalization on the Grand Trunk Pacific Railway. My reason for doing

that is, that we should never expect the Grand Trunk Pacific Railway to earn interest on money that did not actually go into the railway, and no man who gives the question even the slightest degree of study whatever will undertake to argue that the total amount of liability charged against the Grand Trunk Pacific ever went into the legitimate construction of a railway.

Now, let us take the National Transcontinental Railway and the liability on this line means a carrying charge of $12,500,000. Prom that again we should write off $7,150,000 for identically the same reason, leaving the annual charge $5,350,000. For purposes of operation, however, the amounts set against the Grand Trunk Pacific and the National Transcontinental should be eliminated for at least a period of ten years. As a railway proposition neither one of them can be expected to earn its operating costs and fixed charges for at least a period of ten years, and if the Canadian people entered upon an enterprise of that character they have a right to carry the load without expecting the railways to earn it. That leaves the net amount properly chargeable to the operation of the railways at $35,696,309.08 on account of present obligations. To this should be added the carrying charges on the operating deficit for 1920 on the Canadian National railways, amounting to $36,842,970.17 and the deficit in fixed charges on the Grand Trunk of $6,563,091.33, making a capital charge of $43,406,061.50, which means an annual charge of $2,387,333.37.

Then comes the question of completing and equipping the lines, for which approximately the sum of $250,000,000 will be required, upon which there will be an annual charge in round figures of $13,750,000, making the total annual fixed charges on all of these 22,000 miles of railway $51,833,642.45.

This year we have deficits in operation of $36,842,970.17, made up as follows:

Canadian Northern $16,258,579 80Canadian Government.. .. 10,449,876 43Grand Trunk Pacific

10,134,513 94

In making up this statement of carrying costs it will be noted that there has been included an annual charge on the sum of $250,000,000, estimated as required to bring the lines up to standard. In putting in that figure and making that statement I do so for the reason that I am convinced that the sooner the Canadian people get to know what is the exact situation the better for them and the better for the railways them-

[Mr. Nicholson.!

selves. I will come to the details in regard to that a little later.

In the meantime the question is: Is this financial obligation of such a character as to cause us to feel that it is greater than the Canadian people can legitimately face in connection with these transportation systems? Let us get the matter clearly in our minds. We have 22,000 miles of railway, and the problem is to make these railways earn their operating costs and a capital charge of $51,833,642.45. Again the problem is, can we do it? My personal opinion is that we can. The experience of the past two years would indicate that we cannot, but the question is: Has that experience been of such a character as to convince us that these railways are destined to be a failure? Again I say my personal opinion is that not only do I believe that the railways will not be a failure, but I believe that, properly co-ordinated, properly organized and efficiently operated, thew will ultimately prove to be a very great asset to this country.

In looking for an answer to that, however, we might first ascertain what our situation is in regard to railway mileage. It has been freely stated from time to time in this House and by the press of this country that the railway mileage in Canada is entirely out of proportion to the population-to some degree that may be true-and that certain of that railway mileage should be eliminated. Just here let me say briefly that in the co-ordination and organization of our Canadian National railway lines there are duplicate lines that should be wholly eliminated, situations where two lines of railway owned by the Canadian people are running so close together that you can throw a stone from one train to the other. The point, however, is, have we reached the place where our railway mileage bears such a proportion to the business that the railways have to do that it cannot be expected that they can earn their operating costs and fixed charges and at the same time give adequate service at reasonable rates.

On the subject of railway mileage in proportion to our population, frequent reference is made to the mileage of our railways as compared to that of other countries. We must always bear this in mind, however, that with the same mileage of railway you cannot serve people scattered over a country the size of the Dominion that would serve the same number of people if they were situated on the island of Montreal. And yet if all the

people of Canada were living on the island of Montreal they would bear a relation to our railway systems that the same number of people do who live in the cities of Liverpool and Manchester. It is true that our railways may have been projected a little too soon, but comparing Canada with the United States it will be found that we require to less than double our population before our railway mileage in proportion to population will be just about equal to the railway mileage of the United States in proportion to the population of that country. I do not think that we are anticipating the future to too great an extent when we say that the time is not far distant when our population will be doubled.

But making a comparison with conditions in Canada before the lines of the National Transcontinental, the Grand Trunk Pacific and the Canadian Northern were projected, on the basis of the traffic producing possibilities of the country, it will be found that the comparison of freight tonnage available for all Canadian railways is as follows:

In 1900 total number of ton of

freight handled 35,946,183

1905 50,793,957

1910 74,482,866

1915 '. .. 87,204,833

1919 116,699,572

Or an increase just about three and a half times within the period.

The number of passengers carried in 1910 was 2,466,729,664; in 1919 that number had increased to 3,074,664,369. The gross earnings of all Canadian railways in 1910 were $173,956,217; in 1919 they had grown to $382,976,901, or nearly two and a quarter times. Speaking on this subject a short time ago the hon. member for Halifax (Mr. Maclean) told this House that we did not handle as many passengers on our railways in 1920 as we did in 1919, and on the strength of that statement he built up an argument to show that we had gone over the peak, so to speak, and that our railway business was now declining. The explanation is very simple. During 1919 our army was brought back to Canada and demobilized and the men were sent to their homes, making a tremendous increase in the number of passengers carried. From those figures it will be seen that we have more tonnage and more passengers per mile of railway than we had before the Canadian National railways were projected.

Let me give one other comparison. In 1895 the earnings of all the railways in

the territory now served by the Canadian Pacific Railway, the Canadian Northern, the Grand Trunk Pacific and the National Transcontinental were in round figures $38,000,000. The earnings of the railways in the same territory in 1920 were $297,745,297.76, an advance of almost eight times. I am pointing these things out because I feel that the situation has not been understood, and, as I stated a moment ago I think the sooner the people get to know just what the situation is the easier it will be for us to find a solution.

All this, however, does not get us away from the fact that there are deficits, and serious deficits, and for these we have to seek a remedy. In looking for an explanation one naturally turns to the report of the Board of Directors of the Canadian National Railways submitted to Parliament by the hon. Minister of Railways (Mr. Reid): I may say that I was personally very much disappointed when that statement was presented by the Minister of Railways as the report of the Board of Directors of the Canadian National Railways to the Government and to Parliament. Faced with such a serious situation in connection with this railway problem, it seemed to me that the Board of Directors should have made a complete survey of the conditions and should have stated to the Government and to Parliament in plain terms just what their opinion was as to the solution of the difficulty, if they could suggest any. If they could not suggest a solution, they should have come forward and said frankly that they looked upon the successful and economical operation of the Canadian National Railways as an impossibility. But when you scan the statement from end to end you find but two references to the deficits or to any possible solution of the difficulty, to any possible remedy for these deficits. One is the statement to be found at page 1053 of unrevised Hansard, in which the hon. minister stated that the management figured on considerable reduction in the deficits on operation owing to the curtailment of train services, reduction of maintenance forces, and other economies. He went on to say that they also expected a readjustment in the price of materials and in the wage schedules and working conditions. Again, on page 1055, the minister states that the solution of the problem is one which will require joint action by the management and employees. With the exception of the reference to the curtailment of train services, these statements

referring to prices for materials, wages paid to employees, as the result of the several McAdoo awards, etc., do not in my judgment present that comprehensive review of the whole situation which I think the Government and the House had a right to expect from the Board of Directors of the National Railways, faced as they are and we are with present conditions.

_ As to the added cost of material and the increased wages paid to employees, as I view the situation these are merely details in connection with the whole problem which will naturally and essentially work themselves out. If excessive rates are in effect, if there are inequalities in services, I am confident that the common sense of the men and of the operating officials will, if the problem is properly taken hold of, work out an adjustment which will be satisfactory to all parties. The whole record of the relations existing between railway operators and railway employees during the last thirty years is of a character to justify the conclusion on the part of any one who studies the question that railway employees will not and do not ask anything unreasonable.

Just here, Mr. Speaker, I wish to refer briefly to what I consider to be a campaign of unjust misrepresentation which is going on from one end of the country to the other with regard to the railway employees of Canada, not only on the Canadian National railways but on all railways. A systematic effort has been made in this House, through the press and by statements given out by certain railway officials to create the impression that the employees on the Canadian railways as a mass are receiving a base rate of wage out of proportion to that received by any other class of workingmen in this country, I wish to say, Sir, that such is not the fact. You will find that the base rate of remuneration paid to a railway conductor, a train despatches a machinist or a locomotive engineer on the Canadian railways is not as high as the base rate paid to bricklayers in the city of Toronto, not as high as the base rate paid to stonemasons working on the tower of this building. These men- railway conductors, locomotive engineers and train despatchers, are charged with the most responsible duties that any class of men can be charged with in this country. Let me just give you one little illustration: go to the train despatcher's office in either of the railway terminals in this city, the Canadian National or the Canadian Pacific, and what do you find? You fMr. Nicholson.]

find a man going on duty to-night at twelve o'clock and sitting down before a train sheet having to do with thirty, thirty-five, forty, perhaps fifty trains running in each direction on the section of line over which he has control. It is his business to keep these trains clear of each other, and if he makes a mistake of one single word,

* yes, in many cases of one single letter in a train order, he not only loses his position but he renders himself liable to prosecution before the courts on a charge of manslaughter. Many of these cases are happening from one end of the country to the other; yet we find the chairman of' the Board of Railway Commissioners going from coast to coast creating the false impression that these men are paid at exorbitant rates. I say again that the base rate upon which their remuneration is calculated is not as high as the base rate upon which is calculated the remuneration of bricklayers in Toronto.

Returning to the other matter referred to, namely, the curtailment of train services, an analysis of the operating results on the several parts of the Canadian National railways leads to the conclusion vthat when the Board of Directors stated that they expected to reduce the operating deficit because they did not expect to handle so many trains and because they expectec to effect certain economies in that regard they were speaking from actual experience If the whole operating statement'of the railways is taken into account and analysed it will be found that the more traffic they handled the worse off they were; that on the parts of the line where they had the heaviest traffic they sustained the heaviest deficits. If you carry that to its logical conclusion you will say at once that if you reduced the whole National Canadian Railway system to impotence, to a point where it would have no traffic at all, you would thereby reduce the annual deficits. There is something in that; I expect you would, on the basis of the statements that have been made.

In that connection I would like to refer briefly to what the operating figures really are. The Canadian Northern operating revenue for 1920 was $6,764 per mile; operating cost, $8,414, a deficit of $1,650 per mile. On the Grand Trunk Pacific the operating revenue was $5,278 per mile, the operating cost $8,993 and the operating deficit $3,715. On the Canadian Government Railways the operating revenue was $10,536 per mile, the operating cost, $13,135, and the operating deficit $2,559. In making up the returns of operating revenue

the report does not give the revenues of the Intercolonial and the Transcontinental separately, but it does give the operating deficits separately. Working it out on a mileage basis-and I would like to emphasize this point, the result is as follows: the operating deficit on the Intercolonial was $4,325 a mile, and on the Transcontinental-that part of the line running from Moncton to Winnipeg, the leanest part of the whole system-$1,386 a mile, bearing out the statement of the directors themselves that by reducing the number of trains-by doing less ^business, if lyou will-they hoped to reduce the deficit.

Let us make a further comparison. The figures given in the statistical report of the Railway Department for 1919 show that the operating revenue of the Intercolonial Railway was $16,776 a mile, the operating cost $18,842, showing a deficit on the Intercolonial for that year of $2,066. Compare this with the operating revenue and operating cost of the Canadian Pacific Railway. For the same year it will be seen that, with an operating revenue of $13,156 a mile, the Canadian Pacific had an operating cost of $9,731 a mile. Just let me repeat that. While' the Intercolonial, with an operating revenue of $16,776 a mile had an operating deficit of $2,066 a mile, the Canadian Pacific, with an operating revenue of only $13,156 a mile, had an operating surplus of $2,421 a mile.

What seems to me to be an illuminating comparison, can be drawn between the operating cost of the Canadian Pacific and the operating cost of the Grand Trunk Pacific. In 1919, the last year for which a statistical report is out, the operating cost of the Canadian Pacific was $9,731 a mile. In 1920, the operating cost of the Grand Trunk Pacific was $8,993 a mile, or a difference of only $738 a mile. When you turn to the operating revenue, you find that, with an operating cost of $9,731 a mile, the Canadian Pacific earned $12,152, as against $5,278 earned by the Grand Trunk Pacific with an operating cost of $8,993 a mile. If those reports mean anything, they mean that, as the system is operated at present, the more traffic the lines handle, the greater the deficits that we are going to have. Is the conclusion, however, that the only way to reduce the deficits on those lines is to reduce the business, an inevitable one? Is it wholly unavoidable that we must, of necessity, pay more for carrying a ton of freight a mile than we receive for carrying that ton of freight a mile? All

the figures so far presented would bear out the contention that that is the situation. But let us examine the matter just a little closer in order to see whether these figures are wholly justified. Let us take the mileage earnings for 1919 and 1920 on the Intercolonial, Grand Trunk and Canadian Pacific. In 1920, the Intercolonial had an operating revenue of $16,776, the Grand Trunk, $19,942 and the Canadian Pacific, $13,156 a mile. Hon. members will note that both the Grand Trunk and the Intercolonial had greater operating revenue per mile of their line than the Canadian Pacific had. In 1920 the operating revenue of the Intercolonial increased to $19,629, that of the Grand Trunk to $23,528 and that of the Canadian Pacific to $16,164 per mile. That shows that, in 1919, the mileage earning of the Intercolonial was 22 per cent more than that of the Canadian Pacific and that the mileage earning of the Grand Trunk was 34 per cent more than that of the Canadian Pacific. In 1920, the comparisons were 18 per cent for the Intercolonial and 31 per cent for the Grand Trunk higher than the mileage revenue of the Canadian Pacific. If the ratio of operating cost to operating revenue had been the same on the Intercolonial and Grand Trunk as it was on the Canadian Pacific, the net result would mean a profit on the Grand Trunk of $12,800,000, and a profit on the Intercolonial of $9,056,495, or a total net revenue, instead of deficits, of $21,856,495. If we take this figure of $21,856,495, the operating revenue that we might reasonably have expected from the Grand Trunk and the Intercolonial, it would reduce the fixed charges to be provided by the people of this country through Parliament to the sum of $29,977,147, provided always, of course, that the other portions of the lines had earned their operating costs. In any ease, it would reduce the operating deficit by the sum of $6,549,629.48, the amount of the deficit on the Intercolonial alone.

My point in connection with this is as follows: Is there any good reason-why the Intercolonial railway and the Grand Trunk, projected and built as they were, equipped as they are, running through a densely populated country with a traffic averaging 20 per cent greater than that which the Canadian Pacific has on the whole of its mileage, should not be able to earn their operating costs and fixed charges? I say at once that there does not seem to be any good reason why they should not earn their operating (osts and

fixed charges. Right there is where I believe we touch the vital point. Bring the operating efficiency of the Canadian National railways up to standard, and our deficits will be automatically wiped out. I do not wish to take a harsh position. Every one must recognize that the organization of a railway system such as the Canadian National railways is not a simple matter, and we - have no right to expect that these railways should earn their operating costs and fixed charges, as a whole, in the first few years of their existence. But there does not seem to me to be any good reason why two lines such as the Intercolonial and the Grand Trunk, should not earn their operating costs and fixed charges, if nothing more.

Just one other illustration. What was accomplished on the National Transcontinental from Moncton to Winnipeg last year, which is as I said before, recognized as the leanest part of the whole Canadian National system, where the operating deficit was brought down to a little more than a thousand dollars a mile, is evidence of the fact that the application of efficient operating methods on all parts of the system, should, at least, make those lines maintain their operating costs and gradually work up to the point where they could earn their fixed charges. I am aware that it is easy to make abstract statements and say what ought to be done, when it may not be so easy to say how it could be done; but there are certain general principles underlying this whole question that are applicable, and I believe a study of the whole operating figures will convince any one, at all familiar with the matter, that it is possible to bring those railways up to such a state of efficiency that they will earn their operating costs and all of their fixed charges, including interest on the capitalized deficits that may occur on parts of the line during the next five to ten years.

In a statement given to the press by the Board of Directors of the Canadian National Railways a short time ago, it was stated that this whole matter was a financial one. It is a financial one in this regard: either the railways must either earn the money with which to pay their operating costs and fixed charges, or the people of Canada will have to pay that money out of their pockets. But in the final analysis, the problem resolves itself into nothing more and less than the proper co-ordination of a great national system of railways and their efficient and economi-

cal management. The question is: Can those railways be so organized? I believe they can; but they can be organized only if, as I said at the beginning, we face the issue fairly and squarely and set our minds determinedly to find the right solution.

At the beginning of my remarks I gave a figure of $250,000,000 as the sum that would be required to put the whole Canadian National railway system into such a state of efficiency as would make it possible to operate it economically. That is a large figure. I mentioned that to a gentleman a few days ago, and he said: "If you went out and told the Canadian people that they would be expected to spend an additional $250,000,000, on the Canadian National Railways, they would say: "Scrap the

whole outfit." We are faced with one or two alternatives. Either we shall have to spend the money, or we might just as well scrap the whole outfit. You cannot run a railway any more than a business, if it is not properly equipped. Before you can operate a railway you must have

the railway itself. You cannot simply run a railway along a barbed wire fence, or on a trail that you may trace out through the bush. You must have a proper road-bed to run it on; you must have proper equipment, proper terminal facilities, round-houses and everything else that goes into a railway. After all, if we could get away from the situation we are faced with in 1921 of putting $70,000,000 into the Canadian National railways to wipe out the deficit on the roads, by spending enough money to bring the railways up to a point where they can be operated efficiently, would it be good business to do that, or would it not? Take the case of any other business you like. Give a man 1,000 acres in Western Canada; let him spend money on it, fence it, and erect buildings on it, and get it all ready for cultivation. After he has done all that, if he only has machinery and equipment enough to cultivate one-tenth of his land he would not very easily earn his operating costs and fixed charges on that

1,000 acres, but if he spends money enough to equip himself with the proper machinery there is a possibility that he will make the thing a success-and the same thing applies to the organization and operation of the Canadian National railways.

In 1918, when the subject of the Canadian National railways was before the House, I took the liberty of making a statement with regard to the then existing conditions on the group of railways comprised

in the Canadian National railways and the Grand Trunk, and I gave the estimated cost of bringing these roads up to standard. That will be found in the Hansard of that year, from pages 2041 to 2051. I have given the situation further study and I have reached the conclusion that the statement that I made at that time was as close to being correct as it possibly could be. I at least have found no reason to change the estimate that I made at that time, and in making that estimate I had the assistance of men who know something of the railways of this country. It is difficult to make an absolutely accurate estimate of the present position for the reason that very considerable sums of money have been expended both on the Canadian National and Grand Trunk railways, the details of which are not available. There are, however, certain facts manifest to any one who will study the reports at hand and the situation generally, that enable us to reach a fairly accurate conclusion. To furnish the lines at present under the management of the Canadian National railways with freight cars will take approximately $75,000,000, and for passenger cars $20,925,000. This would provide approximately 20,000 standard freight cars, 1,500 flat cars, 1,000 stock cars, 1,000 coal cars, 1,000 refrigerator cars, 2,500 miscellaneous and road cars, and 150 tank cars, and others; I need not go into the details.

For locomotives, the sum of approximately $40,000,000 would be required, and this would provide 550 modern passenger and freight locomotives of the different types required, and from 200 to 225 switch engines, making a total for rolling stock alone of $135,000,000.

In 1919 I, put the sum required to bring the Canadian National railways up to standard in road-bed, intermediate and terminal facilities, round-houses and water services at $75,000,000, the sum required for the same services in connection with the Grand Trunk Pacific at $25,000,000, and for the Transcontinental $22,000,000. Since that time very considerable and substantial improvements have been made on these lines, and the merging of the Grand Trunk with the Canadian National railways will reduce by a very considerable sum the amount necessary for terminals for the Canadian National railways. At present I believe that a close estimate of what will be required to bring the road-bed, and all the facilities that go into what you might call the road-bed itself, up to standard, will

be from $65,000,000 to $75,000,000, making the total for the Canadian Northern, Transcontinental and Grand Trunk Pacific in the close vicinity of $200,000,000 to $225,000,000.

The situation with regard to the Grand Trunk proper, both in relation to its cost and the sums required to bring it up to standard, were set forth in the statement I gave in 1918, and here again, after examining that statement closely, I have no reason to change the estimate I then gave. As with the Canadian National railways, however, there have been expended in the meantime considerable sums on capital account, and the Government itself has paid directly for a considerable number of locomotives, cars, etc. The road bed and general equipment of the Grand Trunk including terminals is admitted to be in really good condition. Some improvements are necessary, but the extent of them is not yet known. Economic operation, however, will make necessary the expenditure of a very considerable sum of money in the purchase of motive power and rolling stock. In 1919, at the time the Grand Trunk question was before the House, I put the figure for motive power alone, in order to bring it up to an economic standard, at $35,000,000; I do not wish to weary the House by going into all the details. As a matter of fact, the officers of the Grand Trunk Railway Company have themselves made the statement before the Drayton-Acworth Commission that they required $50,000,000 to bring their rolling stock and general rolling stock equipment up to the standard, they requiring 200 locomotives and 10,000 box cars. While there have no doubt been additions in the meantime, it can nevertheless be taken for granted that there is required to-day, or will be when the Grand Trunk is co-ordinated with the Canadian National Railways, a sum approximating to $50,000,000 to bring that part of the Canadian National railways to a point where it can be operated economically and efficiently.

The question is, can the country face this expenditure and face the problem of operating these railways? The answer to that is that we have the railways, and whether the task is easy or difficult, we have to operate them; we cannot get away from that. The industry of the country demands that we should' find a way to operate these roads economically, and in that connection might I say one word with regard to the statements that have been issued so many times about the operating deficits

being due to excessive wages and excessive material costs? I have no doubt that these things will work themselves out, but I think I am in the judgment of the House when I say that there are a lot of people in this country looking forward anxiously to the time when freight and passenger rates will be reduced as a result of the operating cost of the railways being lowered; but if we are to accept the statements that are being given to us from time to time, it would look as though we were going to be loaded with the present freight and passenger rates for all time. I believe that any one who studies the situation that this country is faced with will agree with me when I say that we must find some way of organizing and operating our railways so as to bring the cost of transportation down, as well as to wipe out the deficit. I have already stated my belief that our railways can be co-ordinated, can be organized, and can be operated, without these constantly recurring deficits, and operated so that they will earn their fixed charges. But the question is, how is this to be done? It is very easy to make academic statements as to what ought to be done, but it is not so easy to suggest a way by which it should be done. Now, there have been very many suggestions put before the Canadian people in one form or another as to what the solution of the railway problem is and how we should operate the lines so that they may be successful and that the Canadian people may be relieved of the present burden in connection with the railways. If the House will bear with me I will refer briefly to a few of these suggestions. The first suggestion is to turn all the lines back to private control.

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?

An hon. MEMBER:

Hear, hear.

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UNION

George Brecken Nicholson

Unionist

Mr. NICHOLSON:

An hon. member opposite says, "hear, hear;" well, that is a very easy thing to say. I should like some one, however, who says that we should turn back the railways to private control, to show me a group of men who would be willing to undertake to operate these railways economically and efficiently, and give the people satisfactory service. It is a very simple thing to say, turn the railways back to private control; and it was equally easy to say in 1917, 1918, and 1919 that we should have left them under private control. If we had talked that way in 1903, 1904, and 1905, there might have been some reason in such suggestions. But faced with the present problem, I should

like any man to show me the means by which we can turn these lines back to private control with a reasonable guarantee for efficient operation.

Mr. DuTREMBLAY: What do you think of transferring the railways to the Canadian Pacific Railway?

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UNION

George Brecken Nicholson

Unionist

Mr. NICHOLSON:

I was just coming to that. The second suggestion one hears is that we should merge all the railways of Canada into one great system. There are two schools of thought in regard to that suggestion. One school advocates putting all these lines into one great system and operating them as one publicly-controlled concern; another scholool says that we should combine them all into one system and operate them privately. And in that connection we have the suggestion, in a letter to the Right Hon. the Prime Minister (Mr. Meighen), from Lord Shaugh-nessy, to turn them over to the Canadian Pacific Railway. Any statement made by Lord Shaughnessy on the railway question in this country must be given some consideration, because-and I do not believe I am overstating the fact-he is one of the most outstanding railway organizers and operators that the American continent has ever produced.

I shall deal with this question of merging all the Canadian railways into one great system, both from the aspect of public ownership and from that of private control. The country, Mr. Speaker, requires something more than the mere earning of operating costs by its railways; it requires service. Service means as much to the Canadian people in connection with the operation of the railways as does the wiping out of the deficits on the Canadian National railways. Unless we can be assured satisfactory service, I have very grave doubts as to whether we should gain very much by reducing the deficit. Now, I just put this question: What has made the Canadian Pacific Railway the success which every one looks upon it as being today? You say at once that it is the efficient management and operation which it has had. Well, I agree absolutely with that. And what was it that produced that efficient organization? It was the stern, determined competition which the Canadian Pacific railway encountered right from its inception, and which made it absolutely necessary that it should develop just that kind of organization; otherwise it could not have carried on successfully. The question is, if you put the whole of the railways

of Canada into one great merger and operate them, either under private control, or under public management-private control, with dividends to the stockholders guaranteed for all time to come,-is it reasonable to expect that we are going to get that type of service which we should receive as a result of the competition that at present exists? My personal judgment, so far as that is concerned, is that while it may be ideal-there are a great many things that are ideal, but are not practical -that all these railways should be put into one great system and be operated under either private or government control, it is wholly impracticable, and if it were done the Canadian Pacific Railway would deteriorate and ultimately become what the Canadian National Railways are to-day.

Another suggestion is that a new company be formed and given a block of stock in the Canadian National railways, and that the operation be under private control. Weill, if some one will find a group of practical railroad men anywhere who will be willing to pledge forty, or fifty, qr sixty millions of their own money in this enterprise, and undertake to operate the Canadian National railways as co-partners with the people of Canada, risking some of their own money in the venture, then, so far as I am personally concerned, I would have no great objection to the experiment. But I have great doubt as to whether it would be possible to find such a group of men.

Another suggestion is that we abandon the Grand Trunk altogether, leaving it just where it is; that we retain the Canadian National railways as they are and endeavour to operate them as we are doing at present. My position with regard to that is simply this: The Canadian people have been betrayed a great many times in connection with railway problems in this country, but I would look upon it as the greatest possible betrayal of the public in connection with railway matters if we left the Grand Trunk in the hands of the present owners, relieving them of all obligations in connection with the National Transcontinental and the Grand Trunk Pacific, allowing the shareholders of the Grand Trunk to retain that portion of their lines that has some potential advantage, while the Canadian people have foisted upon them those parts with their terminals so to speak, up in the air, and without any prospect of efficient operation. Any one who will look the situation in the face at all, cannot escape the conclusion

that as a railway project the Canadian National railways, the Transcontinental, the Grand Trunk Pacific, and the Canadian Northern cannot be operated without the eastern connections. Why should the Canadian people be asked to spend hundreds of millions of dollars in producing these connections and let the Grand Trunk Railway Company of Canada, who at least were partners with the Canadian people in bringing about this situation, get away with all the advantages while we carry the load? I say again, I would look upon that as the greatest betrayal of the Canadian people that has ever been perpetrated in connection with the whole railway situation; and that is saying a good deal.

Now, the last proposition is the coordination of all the present lines of the Grand Trunk, the Canadian Northern, the Grand Trunk Pacific, the National Transcontinental and the Intercolonial into one system operated under government control. Whatever my personal opinion may be on the merits or demerits of government control of railways, I say, what I have said a good many times, I see no other possible solution than this last proposition. I do not believe it would be possible to bring about a merger with the Canadian Pacific railway such as Lord Shaughnessy suggests, even supposing such were accepted as the solution. I believe the only solution is the proper co-ordination and organization of these systems. Get the Grand Trunk linked up with the Canadian National railways just as quickly as possible and organize the whole system efficiently.

I am not going to criticise any individual or any group of individuals; I am not in a position to do so. I do not know what the exact situation is. I have not had the opportunity, and would not have the capacity if I did have the opportunity, of determining what the facts are. I am confident, however, that there is something wrong somewhere, and I say to the Government, with all frankness, that the time has come when they should find out what that difficulty is: I do not believe that

there is any reasonable justification for the operating deficits that we have had in the last year, and previous years, on the Canadian National Railways. And just incidental to that I would refer briefly to something said by my hon. friend from North Cape Breton and Victoria (Mr. McKenzie) with regard to the Canadian Northern Railway when he remarked that a gentleman from Western Canada had told him nobody would use that railway.

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Let me tell my hon. friend that in accepting that statement he is too easily imposed upon. I have every reason to believe that' the Canadian Northern Railway handled fifty-one per cent of the western wheat crop of 1920, and handled more than fifty per cent of all the stock passing through the city of Winnipeg during the same year. Now these are facts and, such being the case, why is it that railway cannot earn its operating cost at least? Another point is: Why should we go to the end of the financial year before the Government, or anyone else, is able to ascertain that these railways are not paying their way? Simply because there is something wrong somewhere in connection with the organization, and I say that without, as I said a moment ago, finding any fault with anybody, or with any particular individual or group of individ-auls. I believe that there are on the Canadian National Railways just as capable railway operators as there are in Canada or in the United States, but there is something the matter with their organization-there is something the matter with their equipment-there is something the matter somewhere, or they would make a different showing from what they are doing; and it is up to this Parliament to see to it that some means is found to bring about an organization that will make this economical operation of our railways possible, and that will get us out of the difficulties that we are in at the present time. I have every confidence that this can be done, but somebody has to take hold of the job with both hands.


UNION

Levi Thomson

Unionist

Mr. LEVI THOMSON (Qu'Appelle) :

Mr. Speaker, the Finance Minister has brought forward a new Budget. He has clothed it in robes of flowery eloquence, and has held it up with pride to the admiring gaze of his supporters. It plainly belongs to the old protectionist family- though it may be a more lusty child-as did his last Budget, only its weight is greater from a protectionist standpoint. The minister is careful to tell us the tariff will not be revised this session, and he apparently wishes to have it impressed upon us that the duties have not been materially increased. Notwithstanding that, however, he has taken care to give the tariff a canny hoist in ways that he thinks will not be very much noticed. Apparently in the future the price paid for the article imported will not be the basis on which the customs duty will be paid; the duty will be based on the value placed on the article by the officials under the

minister-a very convenient method which will give the customs tariff a hoist under cover. Then my hon. friend provides that the sales tax on all imported articles shall be higher than on home manufactured articles-another substantial hoist to the tariff. He also advocates a further change in the valuation of goods imported from foreign countries whose currencies have greatly depreciated and he adds:

Under the law, valuations are made in the currency of the country of export and this value has under customs ru.ing been adjusted to the basis of exchange prices. The increased cost of production in the foreign market does not, however, bear a direct inverse relation to the extent of the depreciation of the currency, more particularly so having regard to countries where currencies are depreciated to a greater extent than 50 per cent. It is therefore proposed to provide that any depreciation of a foreign currency greater than 50 per cent shall be disregarded, and that the lowest valuation which can be made will be arrived at by a depreciation of 50 per cent.

It seems to me that in many cases this will have the effect of another considerable increase in our customs tariff. In many of the European countries the depreciation in currency is very much more than 50 per cent. In some cases the value of currency, in comparison with the gold standard, would be not more than one-tenth of the value of our currency. The effect of this, it seems to me, will be that if a Canadian imports from such a country goods which in that country are worth $100 in our currency, the value of such goods in native currency will be $1,000 and by reason of only 50 per cent depreciation being allowed they will be valued at $500 if the policy described is followed out by the Customs Department. If the customs duty of these goods is 20 per cent the importer will therefore have to pay five times the amount which would be $100, or 100 per cent customs duty. One hundred per cent customs duty will be a pretty fair protection and, in my opinion will place us at a great disadvantage in comparison with our American neighbours, where a different plan is adopted. Worse than that it is continuing by artificial means the inflated prices of manufactured goods, while I do not notice that the minister is taking any steps to retain the artificial pfices of what the farmer sells. While the Minister takes care that the inflated prices of manufactured goods shall be retained by artificial means, he does not take any such pains in regard to what the farmer produces. The products of the farmer must be sold in fierce competition with other countries and no relief is pro-

vided; the minister does not seem to consider that any relief is necessary. In my opinion it would not be necessary to give any relief if the minister treated the farmers fairly as compared with the customs duties placed on manufactured goods. These plans of the minister while nominally not increasing the tariff will, in effect, increase it to a very great extent. The minister evidently recognizes that tariff increases are not popular, and adopts this plan of increasing the protection enjoyed by his manufacturing friends when nominally there is no increase at all. While apparently the protection on imported dutiable goods is 20 per cent, I am satisfied these changes will have the effect of increasing it to at least 25 per cent or more. This is an excellent system of camouflage, but camouflage is very popular with the manufacturing and protectionist friends of my hon. friend.

The platform of the Canadian Council of Agriculture has attracted wide-spread attention. Generally Canadian proposals regarding the tariff have been from interested classes asking for increases in the customs tariff on what they produce and want to sell, or for decreases on what they buy. The Canadian manufacturers have pulled both those strings with vigour. They call lustily for a high protective duty on all they wish to sell, and they call almost as lustily for free trade on what they want to buy. The representatives of the farmers who framed the platform of the Progressives adopted a different plan. They evidently recognized that the people were getting tired of these selfish appeals, and instead of asking for protection they actually insisted that everything they themselves produced should be placed on the, free list, while they agree that on many things they purchase the custom duty should be retained for a time at least.

This was so entirely different in spirit from the appeals of the Canadian Manufacturers' Association that it attracted considerable attention and caused something of a panic in that association. Although the association would not for a moment consider the adoption by themselves of any unselfish political policy, they seem to have known enough of human nature to see that those unselfish proposals of the Progressives alongside their essentially selfish and class proposals and appeals would capture the heart of the Canadian people. So like the German when he found his opponents getting too strong for him, and like the minister when he wants to give the tariff a hoist without

attracting too much attention, they adopted a policy of camouflage. They adopted a new name, the pleasing and high sounding name of the "Canadian Reconstruction Association", and under that name they flooded the country with literature. No doubt this literature costs a lot of money, but possibly the association passes it on, like the sales tax, to the customer. That association does not make much use of the terms "protection" and "customs tariff"; its promoters prefer to boom those things by indirect means. They cover their actions under the Canadian flag. They lay great stress on the danger of buying from abroad and profess great reverence for the British flag, but when it comes to a question of trade they have no more use for that flag than they have for an old gunnysack. Trade with Great Britain is to them "foreign" trade, and for trading purposes the Union Jack is a "foreign" flag. They make great efforts to show that it is the patriotic duty of every Canadian to buy only Canadian-made goods. One would infer from their literature that Canadians who are buying foreign goods are disloyal. They especially condemn the farmers' organizations for buying their implements from foreign countries rather than at home, and the Minister of Militia enthusiastically joins in that condemnation, ignoring all the time the very evident fact that the reason why the farmers' organizations are doing that is because our manufacturers have refused to sell to them. It is the old cry over again, "you shall and you sha'n't, you will and you won't; you will be damned if you do, and you will be doubly damned if you don't."

But, after all, who are the Canadians who are buying such great quantities of American goods? I know of no official statistics that show the amount of goods imported by the different classes of our people, but I find that during the fiscal year ending March 31, 1920 the last fiscal year of which we have complete trade returns, , Canada purchased goods from the United States to the value of over $301,000,000, which were duty-free goods. I have gone somewhat carefully into those free lists, and judging by the returns I am quite sure that the great bulk of those free goods were imported by our manufacturers- these people who say we should not import anything from the United States. Besides this, I find that our manufacturers have been given, during the same year over $15,500,000 by way of drawback on customs duty. This possibly represents over another $75,000,000 worth of goo(ls

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Morley Currie

Mr. CUERIE:

How can they run their factories when you will not buy their goods?

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UNION

Levi Thomson

Unionist

Mr. THOMSON (Qu'Appelle) :

I think I have already dealt with that. [DOT] The Grain Growers' organization do not buy from the Canadian manufacturers because the Canadian manufacturers will not sell to them. That is an assertion which is not denied in this House, and the Minister of Militia (Mr. Guthrie) when we attempted to put it up to him during the course of his speech, refused to allow any interruptions because he knew that was coming. He would allow interruptions from any one except from cross-benchers but he was careful not to allow them to interrupt because he knew what was coming. I repeat that the Grain Growers' organization did not buy from the Canadian manufacturers because the Canadian manufacturers would not sell to them.

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UNION

Levi Thomson

Unionist

Mr. THOMSON (Qu'Appelle) :

I believe some of them now are willing.

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UNION
?

Some hon. MEMBERS:

Order.

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Some hon. MEMBERS:

Sit down.

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UNION

John Allister Currie

Unionist

Mr. CURRIE:

I have been doing business with the western farmers for twelve years, and will sell to any of them who want to buy a carload of stuff. I have never refused them if they had the money.

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UNION

Levi Thomson

Unionist

Mr. THOMSON (Qu'Appelle):

It is true that they have bought some things, though my hon. friend contradicts completely the Minister of Militia in his statement. But the reason why they did not buy more is because the manufacturers refused to sell to them.

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UNION

May 12, 1921