May 18, 1921

L LIB
LIB

George Newcombe Gordon

Liberal

Mr. GORDON:

They are capable of

employing and do employ, I think, all the way from 500 to 1,000 or 1,200 employees, the number depending largely upon the quantity of export business, because it is an export mill. The small package is sanitary, clean, wholesome; it suits the purse of the workingman; the goods do not deteriorate, because it is done up in waterproof paper. A trade has been established in these lines of goods; hundreds of thousands of dollars have been expended in the development of this class of trade; the trade names of the package goods are registered; they are known by the various brands advertised, and a market has been developed

for them during all these years. If the legislation which the minister has introduced imposing this taxation is passed, the paper box industry and the labour connected with it will be seriously injured. The Nashua Gum Coated Paper Co., Ltd., a company that was established only three or four years ago and which is capable of employing many hundreds of men, will close its doors. Labour will be injured and seriously affected in this plant and the milling plants because in this package business, a large quantity of labour is employed for the purpose of doing up these goods in packages. The result will be that "barrel" quantities will be sold, and the grocer will attempt to sell from the barrel as he did in the old days. The situation is so serious, and it strikes the city of Peterborough to such an extent that it is feared there that there will be a great deal of unemployment for some time to come unless this proposed legislation is varied in some way. The reason why this package business has been established and such a market developed for it is that the products put up in this way are perishable and they need to be hermetically sealed. They also need to be hermetically sealed so that they cannot deteriorate or become tainted as frequently takes place .in the case of foods done up by other methods. The purchase of large quantities of these articles of food by the average family has altogether ceased, for the simple reason that it did not pay them to continue that method of purchasing. The prices were fixed and they could obtain these package goods whenever they desired them. In this way there has been developed throughout Canada, in the last six or eight years, a trade in package goods which is the surprise of every one. It is true that the small unit costs more initially; but goods done up in packages are cleaner, healthier, and freer from taint, and the possibility of adulteration is obviated. Therefore, in the long run the small unit of flour or any other cereal product is the proper and economical unit. This proposed sales tax legislation on flour, rolled oats, oat meal and corn meal, when purchased in quantities that practical experience has demonstrated to be best suited and most economical, as well as practicable for the people as a whole, is unsound and ill-advised. I submit that it has not been carefully considered, or it would not have got to the stage it has now reached. The standard of this package food is high. As the reputation of these concerns is at stake, they must necessarily keep their products up to a proper standard; there can be no adulteration, because these great

concerns stand behind the food they are selling to the people. The grocer, however has no difficulty in bagging this material and selling it as he sees fit, and there may be cases amongst the grocers where adulteration will take place.

The flour and cereal milling business in Canada, according to the Dominion Bureau of Statistics, had an output last year of $263,000,000, on a $78,000,000 capitalization, and had a $30,000,000 greater production than any other industry in Canada; so the milling industry is the largest industry in Canada, outside of agriculture.

The difficulty in taxing the food of the people in packages or parcels under 48 pounds is that nearly all of it comes in the small package. If these products are delivered from one wholesaler to another, the tax is pyramided by li per cent each time. Now, that affects the small mill, because it cannot establish its own sales offices, but sells first of all to a large wholesaler, perhaps in Toronto or Montreal, who in turn sells to a smaller wholesaler, located at Brantford, Peterborough, or some other of the smaller cities, and that wholesaler in turn sells to the retailer. Each time the article is turned over, li per cent is added to it, which the consumer pays. The tax is fixed upon the cost plus the freight from the terminal elevator to the mill in the East, or from the country elevator in the West to the mill, and I would just like to indicate to the minister how that works out. Take ploughs, for instance

and I think the hon. member for Brantford (Mr. Cockshutt) will appreciate this illustration. The Cockshutt Plough Company, let me say, sells a plough f.o.b. Hamilton at $100. Now, if the company sells the plough to a jobber who has no connection with that firm, the jobber in turn must sell f.o.b. his warehouse, and pay the tax on the price to him, which is $100 plus the freight to his warehouse. The Cockshutt Plough Company could sell direct to the consumer f.o.b. Hamilton, while the jobber could not do that. Now, the large concerns have warehouses in the various centres, while the small concerns have not, and that applies also to the small mills. The small plant must sell through a jobber, because it cannot establish and finance its own sales branches in the various centres in Canada. Dealing with that matter and how it affects Ontario labour, Quebec labour, and the Ontario and Quebec mills, take the price of bran, say, at Calgary, at $16 a ton. There is a three per cent tax on that, which amounts to 48 cents. At Montreal the

price, plus the cost of transportation, would be $31. The sales tax is fixed on the price of the bran, plus the price of the transportation to Montreal. At 3 per cent that makes 93 cents, or a difference of 45 cents a ton, or a difference on a 25-ton car of $11.25 in favour and to the advantage of the Calgary mill. In other words, tlhe Montreal consumer could purchase from the Calgary miller and save $11.25 per car, as he would pay no tax on the transportation cost on bran, from Calgary to Montreal, for there would be no tax on that. That means that the western miller, finding that the prices down East would be very much higher than they are in the West, would send his product East, to the ultimate cost of the consumer in the West, who would eventually be compelled to pay a higher price for the miller's product there. A miller in the Calgary zone can buy wheat on the Calgary price, which is the Fort William price, less the freight from Calgary to Fort William; but the Ontario or Quebec miller must pay on the Fort William price, plus freight to his mill. Upon that freight and the Fort William price a tax of 3 per cent is imposed. So he has to pay a tax on transportation cost, which may mean when the product reaches Montreal, as I have said before in the case of bran, twice the price in the Calgary zone.

The difficulty, I submit, with this proposed legislation is the manner in which this tax is imposed. The tax is imposed on the shipments f.o.b. the point of shipment of the miller, so as in the case of the figures which I have given the tax is imposed not on the actual cost of the raw product to the miller, but piled on top of that is the high transportation costs, which have reached a higher point than ever before, and from which it seems to me there is little relief to be expected. I therefore think that a wrong principle has been adopted, and that the Minister of Finance should vary this tax which he seeks to impose on the fi'ee food of the people, so that it will not directly have included in it a tax on the transportation cost, which is not, as a matter of fact, or should not be, a part of the actual cost to the ultimate consumer. At present an undue preference is given to the West. It puts a premium on western business, and injures to a very serious extent Ontario and eastern mills. The western miller can sell his mill product at the cost of the grain, freight, labour, and a reasonable profit, plus the tax. There is no freight in the Calgary zone to speak of, but when the

product comes east, there is pyramided on that cost, the freight costs, which may amount to almost the same value as the goods, and this tax is imposed upon the two. This is confirmed hy the regulations that have been issued by the Minister of Finance, and which have been released, I think, within the last 48 hours. At page 7 of the regulations, under the heading "Value for Excise Taxes" it is stated:

The Sales Tax on domestic sales must tie computed upon the regular (open) market value at point of shipment, provided, however, that the excise tax must in no case be collected on less than the actual net selling price of the goods.

When goods are sold at a delivered price and estimated or actual freight charges have been added to the price f.o.'b_ point of shipment to arrive at such delivered price, the actual charges so added may be deducted from the gross invoice value to ascertain the value upon which to compute the sales tax.

These regulations, which have been issued this week, and have gone out to the trade, will 'it seems to me seriously affect the employment of men in the large cities, where we have already so much unemployment. The miller must make a considerable computation, and he will in turn charge to the consumer the cost of that extra clerical assistance in computing the tax under so complicated a system. But if there were a simple turnover tax of, say, one per cent, he would require no extra clerical work. At the end of a week or a month he would know what his turnover was, and could readily compute it, and there would be no cumbersome and difficult work in connection with it.

Corn flour is taxable in 48-pound lots or less, while cornmeal is taxable in any quantity. Now, cornmeal is the food of the workingman and is sold to a much greater extent than corn flour. It is a coarser product and does not require to be specially treated, as corn flour does. Corn flour is really used by the man of greater means who can afford to pay for it, and why it is not taxable in the same way as cornmeal, I am unable to understand. If t'qe food of the people in these industrial centres and, for that matter, in any part of the country, is to be taxed, we are failing to reduce the cost of food, and that in turn will have its effect on the cost of labour. I think that in taxing the food of the workingman we are simply keeping up the cost of living, just at a time when we should do our utmost to bring it down. The manufacturer says that he must have reduced costs, and he cannot get it if we tax the food of the men whom he employs, because they will necessarily demand wages to meet with the cost of living. Reducing

the cost of food would certainly reduce the manufacturers' cost of labour, and to do this we must avoid taxing the people on the necessaries of life. A tax such as this on cornmeal, for instance, is a discrimination against the workingman who has a large family, and if there is one class of taxation that should not be imposed, it is taxation on food. For three and a half years we have avoided the imposition of an income tax in this country, but this has not been through any fault of the present Minister of Finance (Sir Henry Drayton); it was due to a former Minister of Finance. There are men living in western Ontario, men who we know made enormous profits during the war, and the minister in those years might well have taxed their incomes. He should have told them: "Our boys gave their

service overseas and while they were fighting you promised that you would give your last dollar. Now we want you to carry out that promise." When the Minister goes to the city of Peterborough again, and expresses his interest in the people of that city and his affectionate regard for them, I suppose he will announce on the platform that diamonds are free. And so they are; they are free from the luxury tax and the customs' tax. Of all the useless and worthless modes of investment, when money is so badly needed, the indulgence in jewellery of this kind is the most reprehensible. In strenuous times like these, why in the world should the purchase of expensive jewellery be encouraged? Was there ever a time in the history of the country when it was more imperative that we should discourage that sort of thing, and when we should do everything possible to enable the workingmen in the industrial centres to bring up their families on a decent plane of living? I say, Mr. Speaker, that the taxing of foodstuffs in this way discriminates against the workingman, and the workingman alone. He is the man who buys these goods, who lives in the small house and cannot put in any large quantities of goods because he has not sufficient capital; and even if he could afford to buy things in large quantities he has no room. It seems to me that we are going back to the days of the Corn Laws in England, because this Budget simply proposes to tax the food of those people who are least able to bear taxation. When men are toiling and suffering from the conditions that are being created in the present readjustment; when everything is unsettled and unemployment is rife; when men in the city of Peterborough, as elsewhere, are out of

employment for months and months, the great industries are very much concerned over this proposed legislation, and they iare protesting in the most vigorous manner against it, because it will probably cut off business that would amount to millions of dollars in favour of what they call the *"barrel" business,-I do not mean since the referendum, but before that.

The hon. member for Shelburne and Queen's (Mr. Fielding), has stated the situation clearly in the words of the proposed amendment:

That the aim of the fiscal policy of Canada should he the encouragement of Industries based on the natural resources of the country, the development of which may reasonably be expected to create healthy enterprises giving promise of enduring success.

Those enterprises which we hope will have enduring success, based 5 p.m. on the natural resources of this country, includes the industries which depend upon the wonderful electrical energy which we possess all through the province of Ontario. That energy gives to industrial Ontario an advantage over all American concerns, such as, for instance exist in Bridgeport, Connecticut, an industrial centre which pays something like $20 a horse-power more than we do in Peterborough. If we are given an opportunity to develop these industries to a greater degree than we have reached it will mean a great deal of wealth for the country, but we cannot hope for any success if we tax the food of the people, thus increasing the cost of manufacturing. If you increase the cost of living to the workingman by taxing his food, he must in turn remand a decent wage from his employer, and the cost of producing will accordingly be increased, so that in the end the consumer must foot the bill.

Diamonds, however, are free, and while the minister may think that this fact will help him in any way, when he goes to Peterborough, I have my doubts.

The other day, because some of us presumed to express some different opinions from the Prime Minister's, that right hon. gentleman must needs taunt those sitting on this side of the House with being tools and minions; but his taunt is just about as effective and valuable, and goes just about as far as the taunt of the school boy who sits on the fence and makes faces at the passers-by. We have a right to our opinions, and in this free Parliament we have the right to voice them; and we resent such aspersions as the Prime Minister saw fit to cast upon hon. members of the House.

And then he makes a plea for consistency. Well, those who have read the utterances of the Minister of Immigration (Mr. Calder), will recall that he has given expression to the same great principles which we have always espoused, and I should like to quote from the Official Debates of the session of 1919. Let me read very briefly from page 70, where the Minister of Immigration expresses himself very well, as he usually does.

Just let me say (that when 1 joined this Government I joined as a Liberal, and I am a Liberal to-day.

That declaration has an honest ring to it. He goes on:

More than that no person can make me anything else. There may be those who would like to drive me out of the Liberal party, but they cannot do it.

He will not let them drive him out of the party, let alone leave it on his own accord.

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L LIB

Ernest Lapointe

Laurier Liberal

Mr. LAPOINTE:

It would be very hard to drive him out.

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?

An hon. MEMBER:

"Far, far away."

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CON

George Gordon

Conservative (1867-1942)

Mr. GORDON (reading) :

I care not whether I am in the organization or whether I have any part in the organization- that means very little in times like these. I have had letters from my friends out West saying: For goodness sake, Calder, come over while there is time-as somebody said to-day-or it may be too late.

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LIB
CON

George Gordon

Conservative (1867-1942)

Mr. GORDON (reading):

The question of party is a very small thing at the present time, in my judgement. There is something bigger at stake than mere politics at the moment. .

It would be rather interesting for us to know what the minister had in mind when he said there was something bigger at stake. I think there was more than a single meaning to that.

We have bigger, more important work to do. When the time comes later on there may be those who will desire to play politics in this country. Well and good; let that be done when the time does come. Just now we have something else to attend to.

And then he continues in some very interesting statements which I will briefly quote from Hansard of 1919, page 3340:

The time has arrived, 'I believe, when a thorough study should be made of Canada's economic situation in order that we may have a general revision of the tariff.

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L LIB
LIB

George Newcombe Gordon

Liberal

Mr. GORDON:

The hon. the Minister of Immigration.

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L LIB
LIB

George Newcombe Gordon

Liberal

Mr. GORDON:

Yes, again; in 1919. He goes on to say:

The existing tariff, in my judgment, has outlived its usefulness. It was made for a period some ten or twelve years ago, and it is chock-full of all sorts of anomalies which should be straightened out. A thorough investigation and inquiry, as forecasted by the Minister of Finance,1 should be made with a view to having a general revision of the tariff.

The minister follows that up with a further statement which I will briefly quote:

When I joined the Government in 1917-

I am now quoting from page 3341:

-I did so for a very definite and specific reason. I did so because I believe the proposals that were put forward at that time set out the only policy that would enable Canada to see this war through, so far as our part in it was concerned. Now I believe it to be my duty to stay with the task I have assumed until demobilization has been completed and our soldiers are returned.

They are back to Peterborough I know.

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?

An hon. MEMBER:

He means demobilization of the Government.

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LIB

George Newcombe Gordon

Liberal

Mr. GORDON:

That is on the road. The minister continues:

I do not purpose to allow any temporary changes in the tariff to divert me from my duty in that respect as I see it.

The Prime Minister has charged hon. gentlemen on this side of the House with inconsistency. Does it lie in his mouth to say that we on this side have not been quite as consistent as some in his own family circle? Now Mr. W. F. O'Connor opposed the present Government in the Peterborough election. Mr. O'Connor was the High Cost of Living Commissioner appointed by this Government. He was well-named as the High Cost of Living Commissioner, because while he was commissioner the cost of living went up, and when he resigned it came down.

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?

Some hon. MEMBERS:

Hear, hear.

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LIB

George Newcombe Gordon

Liberal

Mr. GORDON:

As I say, Mr. O'Connor opposed this Government in the Peterborough election; he was on the platform of the Labour candidate and supported him against this Government. Yet the Minister of Militia, when the Bankruptcy Bill was being considered by the House in Committee of the Whole, had Mr. W. F. O'Connor sitting in front of him in this chamber and assisting him. So Mr. O'Connor is still in the employ of the Government and was in its employ at the

time referred to in the city of Peterborough. There is another sample of the consistency of hon. gentlemen opposite.

Now this jockeying of the tariff question cannot go on very much longer. The manufacturers demand and require something to be done to change the situation, which has not been varied, I may say, to any degree, or to any material extent, since 1911. The manufacturers want it, the business men want it, and the consumer is entitled to it. This thing, as the Minister of Immigration and Colonization said, has been going on for all these years. My hon. friend complains very bitterly about that, and I agree with what he says. I hope when the vote on this amendment is taken the minister will remember the statements I have j'ust quoted to him and will not forget his duty to the people he represents.

The Minister of Finance a short time ago expressed the hope that this unrest, this disturbance, this discontent would be removed and the people would be relieved. I agree with him as to the desirability of that if such a state of affairs exist. But the returned man is at his forge, he is working at the lathe, he is employed at the bench-he has filled in his place well. There has been no disturbance on his part -he fitted in as naturally and well on his return from war as if he had returned from a visit of a lengthy period to his friends, he has found his place. It is not the returned man who is causing unrest, it is not the working man who is causing discontent-the trouble arises from such things as I wish to describe now.

In the summer of 1920 I attended before the president of the Canadian General Electric Company in the effort to settle a strike in the city of Peterborough-I was there with the mayor and the chairman of the Board of Works of the city of Peterborough. The then president of the company said that he could not pay his employees, who were asking for a new schedule and a wage increase of five cents an hour, what they demanded; he said that his great competitor, the Westinghouse Company, of the city of Hamilton, was competing with him at so close a margin that he could not afford to. It was not possible for the increase asked for to be granted and these men would have to accept the wage that he offered. I am sorry to say it but in that great plant in the city of Peterborough was an arsenal deposited by the management of this concern. They had firearms there ostensibly for the purpose of protecting the property,

but it was a dangerous thing to do when there was never a question of any violence being displayed. In addition to that, men were brought across from the United States, most of whom I examined under oath, and they were men of a low type with every mark on them of dishonesty and crime. These men were employed and kept at the best hotel in Peterborough by the management of this concern and paid far more than the men who were seeking an increase of their wages. That strike or lock-out, whatever it may be called, was crushed, and some of the employees lost their places never to regain them,-men with families. But what happened later on to this president of the Canadian General Electric Company? On March 26, 1921, the Toronto Telegram stated:

$595,350 from Canadian General Electric for Hon. Fred Nicholls?

The president of the company who could not afford to pay his men on account of the competition of the Westinghouse company.

$53,040 for Life, including shares worth $311,200, as token of regard.

What is the annuity?

Opinions vary as to whether it is $30,000 or $35,000, and President Dyment, of the Canadian General Electric, is not communicative.

That is what is causing discontent, that is what is causing unrest, that is what is causing unhappiness in this land. When men say that they cannot pay a wage that will maintain a fair and honest standard of living for the workingman in order that he may keep his family of boys and girls comfortably housed, respectably clothed, and properly educated, and when those men get together in high places and take from the coffers of a great concern over half a million dollars, we may well say that it is not the war, it is the greed of such men whetted by the excessive profits made during the war that is causing unrest in this country. And here is another instance of what breeds discontent. In this House one afternoon the postman's bonus was cut 25 per cent. Their life at that particular class of work is limited to a few years on account of the heavy mails they have to distribute in all kinds of weather over the hard pavements of our cities. Many cases occur where these men early in life are discarded, like an old horse turned out to pasture, on account of their inability to carry on their work. These poorly paid civil servants suffered a cut of 25 per cent in their bonus, and it was 225

done in a pretty short way by the right hon. gentleman who occupies the Prime Minister's seat. An hour after that the second or third reading of a Bill was moved by the Prime Minister "whereby the Chief Justice of Canada was appointed administrator at a salary of $5,000 per year on top of his $10,000 as chief Justice, and in addition to that he was given exemption from income tax on $10,000 of that $15,000 income. That also breeds discontent, unhappiness and unrest. It is not the returned men who are causing unrest, it is those who in high places are assuming to do what they have not any right to do. We need big business, it is necessary "with our developed civilization to have big business, but we want big business to be fair, and we want men in high places with great means to share honestly and fairly their profits with those who are entitled to participate in them. And no man has a right to take from those who are unable to defend themselves, as was done in the case of the minority shareholders of this company, what he has no moral right to take.

The charge is laid that we are inconsistent and unfair. I do not know what the Prime Minister's ideas of sportsmanship are. but I know that in the games we play it is not considered the best of form to attempt to steal one of the other fellow's players. Some believe in those methods, but I think that the best of Canadian manhood does not believe in them whether in political life or in sporting life. The Prime Minister knows the overtures * that have been made not only here but in West Peterborough. I think he knows the situation because when the hon. member for West Hastings (Mr. Porter) and I met the Prime Minister about the power situation in the Midland part of Ontario, the lattel was good enough to say to me that he had heard of me from a certain gentleman who was supposed to head the Round Table group in Toronto-a well-known and prominent lawyer there. This same well-known and prominent lawyer was busy for a long while, and finally it developed that overtures were made to various Liberals that if they could succeed in defeating a former supporter of this Government, Mr. J. H. Burnham, the Government would not put a candidate in the field, but would assist them to that extent. The hon. member for Parkdale (Mr. Mowat) knows that. He happened to be present one night when the executive of the Liberal association in Peterborough was meeting. The Prime Minister must have had some knowledge of

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what was going: on, because he held the writ for a sufficient length of time to let these things be developed. So I say it does not lie in the mouth of any member of the Government to charge members on this side of the House with inconsistency. The inconsistency of taxation which has been developed by the Budget is one of the most dangerous to the consumer of milled food products that has ever been imposed in this country. It means unemployment, it means increased cost of living, it means the people will have to pay more because their food is taxed the same as the food of the people used to be taxed in England, for the benefit of those who had great wealth that they might accumulate more. As I said before, the Minister of Finance has brought us back to the days of the Corn Laws in England. If the present unemployment is aggravated by the taxation that is now sought to be imposed, which will force these great mills to absolutely discard one method of packing food, he can blame his proposed taxation. There is an easy and a fair taxation to impose, which means that the man in the Calgary zone does not get his milled product for half of what we require to pay between Peterborough and Montreal. That can be done, and the milling industry of this country will not be injured. The great mills of the Midland district of Ontario and those in Peterborough particularly, will not be affected. But if this measure goes through in its present form, and this taxation is imposed, it will simply add to the numbers of the men who walk the streets day after day looking for positions, and are turned away, like beggars on the street, because unemployment is being created by the direct act of this Government.


UNION
UNION

Hugh Guthrie (Solicitor General of Canada; Minister of Militia and Defence)

Unionist

Mr. GUTHRIE:

My hon. friend is quite wrong in his figures.

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UNION

John Frederick Johnston

Unionist

Mr. JOHNSTON:

When I get through

the minister will have an opportunity to refute my statement. The hon. gentleman also laboured to show a big per capita expenditure for Australia and a small one for Canada.

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May 18, 1921