June 5, 1922

PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

My right hon. friend is altogether mistaken. The Fordney measure, which affects the importation of agricultural products from Canada and other countries, is in effect, but the general tariff is not in effect. The tariff which is in effect is still the Underwood tariff passed in 1913, which contains a large list of free articles entering the United States. My hon. friends are extremely anxious to bring to Canada capital needed for Canada's development. They argue that it is necessary to secure money needed for the development of our resources. I think it was my hon. friend from Centre Toronto (Mr. Bristol) who urged the argument that because of the principle of protection in Canada during the last thirty years, 350 manufacturing concerns in United States had opened branches in Canada and spent one hundred million dollars in this country. I am not sure that is greatly adding to the wealth of Canada. To-day, United States manufacturers are turning their eyes to Quebec. Why are they doing so? In the words of a manufacturer of some note in the United States, it is because of steadier labour conditions in Quebec that they are

turning their eyes to that province as a manufacturing centre. But what profit is it nationally to Canada to have one, two, three or five million dollars coming in from the United States for the establishment of a factory in Sherbrooke, Three Rivers or any other town in Quebec for the manufacture of goods, and then to have all the profits made on those goods go back to the shareholders in the United States? Is that a sound policy of development?

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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Mr. McM ASTER@

Absentee landlordism.

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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

Absentee landlordism!

That is all it is. In order that this may be done, as I will presently show, we impose severe handicaps upon the natural industries of this country. I cannot for the life of me see the wisdom of any such proposal. The plain fact of the matter is this, that, in the United States to-day, some of the leading manufacturers are opposed to the principle of protection as regards the United States. They recognize, as has been already said by several hon. members in this debate, that if a country is going to sell goods, it must buy goods, and if it is going to buy goods, there is no sense in having those goods climb over a high protective tariff. The business of trade is not a one-sided business, although our protectionists assume it to be so. Our protectionist friends eternally lose sight of the fact that trade is not a one-sided affair. If you sell goods produced in a country outside of that country, you must buy in return, because that is the only way in which you will get paid for your goods. The United States are recognizing that principle to-day. They recognize that Europe owes them over $10,000,000,000, and that the only way in which they can get repaid is in goods. Consequently, instead of pinning their faith to the old fetish of protection, they are coming out into the sunlight of freedom of trade, and they are saying: "This thing is no good for us at the present time; it does not fill our needs." I venture to predict that within a few years the United States will have its face set definitely against the principle of a protective tariff, just as definitely as Great Britain to-day has its face set against that principle. But American industries which are looking for free trade for their factories in the United States, are not unwilling to have protection for their factories in Canada, and why? Because they wish to exploit the area of Canada as regards the things that they produce. It is

The Budget-Mr. Crerar

a significant fact that when the ex-Minister of Finance (Sir Henry Drayton) was engaged in that lengthy .peregrination over Canada a few years ago seeking evidence as to What changes should be made in the tariff, manufacturer after manufacturer in Canada representing American interests, took the view that they could not possibly live unless duties were kept up on the goods they manufactured, and they were branch houses of American concerns. I am very doubtful as to the wisdom of that kind of development.

We of the Progressive party stand unalterably opposed to the principle of protection in our fiscal policy, and I wish to make that as clear as I can make it. We are opposed to it for the following reasons, amongst others: First, that a nation grows rich by trading. No nation in the world ever acquired wealth, no nation ever acquired world prominence that did not trade with the world; and because we grow rich by trading, not within ourselves, but with the world, we are opposed to protection, for protection presents a barrier against trading with the world. A second reason is that protection retards the development of the natural industries of this country. What are the natural industries of Canada? They ar.e those industries which are based upon the natural resources of Canada. The Almighty, when He gave us this country, gave it to us filled with a wonderful richness, a fertile soil, wonderful forests, rich mines and splendid fisheries. These are the great natural sources of' wealth to this country. And how has protection operated to assist in their development? My hon. friends to my right argue-and I will say that I have not frequently heard that argument come fror. the other side of the House-that protection is necessary because it furnishes a home market to our Canadian producers of natural products. There never was a greater fallacy in the world than that as applied to this country. I will admit, for the sake of argument, that it furnishes a home market to vegetable growers around our large cities; but of what value is the Canadian market to the Canadian farmer who is producing in Canada enough wheat to feed 50,000,000 people when we have a population of only 8,500,000? What use is it to the Canadian farmer and the Canadian dairymen who are producing far away and beyond what can possibly be consumed in Canada? It is of no use whatever. Protection has operated to discourage those industries by mak-

ing it costly and difficult to secure the very things that are necessary to carry them on. In order to build up a few factories and crowd a few cities, for forty years we have imposed this enormous burden on the masses of the real wealth producers of this nation. Protection has had no other effect.

The absurdity of the thing is discovered when you examine into some of its oddities, some of its peculiarities. Let us take rubber, for example. Rubber shoes, rubber belting, rubber goods of all kinds, are taxed under the general tariff either 30 or 35 per cent-I cannot at the moment recall which. Not an ounce of raw rubber is produced in Canada; we have to bring the raw material for these factories hundreds, yes, thousands of miles, to this Dominion. And then, in order to create an industry that will give employment to a few hundred or a few thousand people at the very outside, we say: "we will put a protective duty of 30 per cent on all rubber manufactured goods coming into this country, and we will build up in this Dominion a home industry that the Dominion may be proud of. That is the theory and doctrine of my hon. friends to my right. I wonder how many of my hon. friends to the right of you, Mr. Speaker, down in their hearts believe in the economic wisdom of that policy.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Frank S. Cahill

Liberal

Mr. CAHILL:

Not many.

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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

I should say not; I would hope not. What is the effect of protection in that particular case? We tax the Canadian consumer of rubber goods to the extent of 30 or 35 per cent-indeed, with the present sales tax, the tax is more like 40 per cent. In other words, every person who wants to buy a garden hose, or a piece of rubber belting, or a pair of rubbers, or any class of rubber goods, has the cost of it increased by that amount. And for what purpose? To bolster up and support and maintain in this country an industry that gives employment to a few thousand people at the very outside. I put it to the com-monsense of this House: Is that a: sane policy? I know the Minister of Finance in his heart does not believe it is a sound policy. I give him credit for haying too much vision and business commonsense to believe in it.

I have talked so much about cotton that I am getting a little tired of the subject in some ways, but I want to refer to it to-day for a specific reason. For many years we have had, on cotton goods coming into this country, a protective tariff of

The Budget-Mr. Crerar

over 30 per cent under the general tariff. Cotton is not produced in Canada. This is another manufacture where the raw material is brought into this country free of duty. It is true it gives employment to a few thousand people in Sherbrooke, Valleyfield, Cornwall, and other places where they manufacture these cotton goods; but in order to sustain these few thousand you put a penalty of 30 per cent on every cotton consumer in Canada. And not only that, you do even worse; because the finished cotton goods is the raw material for some one else in this Dominion. Now, it is an interesting fact that in the late election one of the most enthusiastic supporters which the Progressive cause had in the city of Winnipeg-and we had many there-was a manufacturer of workingmen's overalls, smocks, and shirts. He was frankly a supporter of the Progressives, and was opposed to the tariff for this reason. He said: "It prevents me from buying my raw material where I can get it to the best advantage. My raw material is the cotton goods made in these factories, and when I come to buy it I have to pay the price the manufacturers lay down; and they even go so far as to specify the quantities I shall have My hon. friend from Brome (Mr. McMaster) gave us some interesting information in his address the other day as to the operation of trusts and combines in matters of this kind. The manufacturer of overalls did not have any advantage from the tariff, because he paid his duty to the Canadian cotton manufacturer; and although there may have been a protection to him against the goods he manufactured, coming into Canada, he enjoyed no real protection in his industry for the reason I have pointed out. And that is the inconsistency of the thing all through the piece; for under the protective tariff, what is the finished article of one factory is the raw material of another, and you cannot possibly define any system of customs tariff that will work equitably. It simply cannot be done.

There is another reason why we are opposed to protection, and it is that protection is sectional and selfish in its operation. What is needed in Canada is a policy that will unite the Dominion. But protection has built up a few large cities; it has done very little else; -and it is all the veriest nonsense to say that this system is

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necessary to provide employment for Canadian workingmen. Where are the skilled workmen in Canada going? They have been going in shoals to the United States in the last ten years. We know that the immigration figures in connection with the United States during the last ten years show a balance against Canada for actual purposes of residence, although there has been a big flow of population both ways. People have come from the agricultural portions of the United States to settle on our cheap lands in western Canada. What, then, has constituted the drift of population from Canada to the United States in the other direction? It has come from the labouring people of the Dominion; and that is why I urged the Minister of Immigration (Mr. Stewart) the other night to see to it that records are kept of the people going out of Canada, what parts of the country they come from, and what their occupations are. And why has there been such an exodus of population from the East? The reason is simple. The cost of living is less in the United States than in Canada, while wages, on the whole, are just as high. The Canadian workman will work in a country where the same amount of wages will buy more of the necessaries of life he requires, and that is why many of our workingmen go there. I say, therefore, that this system of protection, created to build up the Dominion, is absolutely unsuited for the purpose. And what has been the effect on the maritime provinces of forty years of protection? During the last election I spent a week or ten days in that part of Canada advocating the Progressive cause. I will confess that the results were not very fruitful.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Duff

Liberal

Mr. DUFF:

Hear, hear.

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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

Nevertheless it gave me an opportunity to get an insight into and to study the conditions in the maritime provinces such as I never had before.

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LIB

William Duff

Liberal

Mr. DUFF:

We are all Progressives down there.

Topic:   THE BUDGET
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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

And I make this assertion, Mr. Speaker, that there is not a single part of Canada that has suffered so much under protection as the maritime provinces.

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?

Some hon. MEMBERS:

Hear, hear.

Topic:   THE BUDGET
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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

I am very glad to see that I have some support on the other side of the House. What was the condition of the maritime provinces prior to Con-

The Budget-Mr. Crerar

federation? When you had freedom of exchange your ships were going into practically every port of the world. But for 40 years we have had a system of tariffs in this country that has made it difficult, if not impossible, for the maritime provinces to trade with the world, and the result is the stagnation of the natural industries of those provinces. But our protectionist friends say that the remedy is to get manufacturing industries in the maritime provinces. Well, of what use will they be? Can you create manufacturing industries in the maritime provinces that will compete with the industries of Montreal, Hamilton, Toronto, and other larger cities? It cannot be done. The whole tendency to-day in the manufacturing business is towards centralization, and the big centralized protected manufacturer controls the field and can crush out competition. I say to my hon. friends from Nova Scotia, New Brunswick and Prince Edward Island that they will never have manufacturing industries in the maritime provinces under this policy of protection; never in the world. What about Ontario? Well, Ontario has been lauded and has been cited as an example of the efficacy of the principle of protection. But what a change has taken place in Ontario. Study the figures of population as disclosed by the census returns and you will discover this undeniable fact, that some of the finest agricultural counties of old Ontario have gone down steadily in population in the last 30 years. My hon. friend from West Toronto (Mr. Hocken) says that the people will not get married. They will not get married, I apprehend, because they cannot afford to do so under this system of protection; and I would invoke the assistance of my hon. friend in getting this thing righted. That is the condition of affairs. Is it a healthy condition? I put it to the common sense of hon. members, is that a healthy condition of national growth and development? I submit that it is not, and I say to my hon. friends to my right, and to hon. gentlemen opposite who believe in the principle of protection: Try to justify this system on the ground of what it has done in Canada during the last 40 years either in the way of increasing population or in extending the national wealth, and you find that you cannot justify it. And what about the prairie provinces? We have heard a good deal of criticism, or at least we have seen considerable criticism in the eastern press, of the prairie provinces. I

want to say in this House, with a full sense of my responsibility, that the prairie provinces will never become protectionist. You may send, as has been done in the past a first class hidebound Tory protectionist from the province of Ontario to western Canada, and while the heresy may last with him for a few years it will not affect those who come after him in his family. And I will tell you why. Western Canada cannot have manufacturing industries. In the first place, we have not the coal and iron upon which manufacturing industries largely are based, and in the second place the climatic conditions are such that the manufactures based on these articles cannot be developed in western Canada. On the other hand, what have we received from protection? It has not helped us. Western Canada progresses in spite of protection. Our chief exports have been wheat, live stock and agricultural products, and the home market has not been of the slightest value to us in respect of these things. Then again take British Columbia. This province is supposed to have some belief in protection. I was much interested a short time ago in seeing a proposal advocated, I think by the Board of Trade of Vancouver, for the purpose of making Vancouver a free port. I think my hon. friend from Vancouver Centre (Mr. Stevens) favoured that proposal.

Topic:   THE BUDGET
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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

Does my hon. friend desire to be accurate?

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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

Yes.

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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

Then let me correct him. What the Board of Trade of Vancouver asked for was a free port zone in the harbour of Vancouver; which is slightly different from what my hon. friend said. It was for re-packing and re-exporting goods.

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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

I am glad to have

my hon. friend's explanation, although I remember reading the bill that they propose to submit to the House and his explanation is not my understanding of it, but I may be wrong. What was the purpose of that? It was simply to get away, if possible, from the evil effects on the trade of thai city. That was the whole purpose behind the proposal. _

Now, what this country needs is a policy that will unite it from one end to the other. And I repeat, Sir, that the system of protection is selfish and sectional in its operation and unsuited to our national needs. The real wealth of Canada is pro-

The Budget-Mr. Crerar

dueed from its natural resources. Let me give you figures of our exports in that respect. Agriculture 'has prospered in spite of protection; the West has prospered in spite of protection. But why? What has been the history of protection in this country? It was introduced in 1879 and for ten years, when we had a period of great depression and our people were leaving by the tens of thousands and going to the western states. In the early days the party that had been responsible for introducing protection was shifting its ground, speeches were being made about the need of "lopping off the mouldering branches," and in 1897 a very substantial reduction was made on the tariff upon imports from Great Britain under the change of government that had taken place. But the prosperity that Canada enjoyed from 1900 to 1912 was not due to the tariff at all, but was due to the fact that the great West with its vast areas of free lands was opening up, people were coming into this country by hundreds of thousands each year, and capital was pouring in by the tens of millions of dollars annually; railways were being built, public works were being carried on. Those were the conditions that gave prosperity to Canada at that time. That prosperity was not due to the tariff; indeed, the manufacturing establishments of Eastern 'Canada were practically "on their uppers" until the western development started.

But even in spite of the tariff, our natural industries have prospered. Let us look at the export figures for last year. Our total exports then amounted to i$740,000,-000-a very considerable total, although a substantial reduction from the figures for the previous year. Now, the wealth of a country is measured by its trade figures. That is why finance ministers, not only in this country but in every other country, dwell on these figures as a measure of prosperity. As I say, we exported goods to the value of $740,000,000 last year. But where did those exports come from? Last year was a year of trade depression, a very trying year throughout the world. Of this total, vegetable products accounted for $318,000,000, and animal products, $135,000,000; in other words, $453,000,000 of the $740,000,000 of exports last year had their origin in the farms of Canada.

Topic:   THE BUDGET
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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

In that connection, has my hon. friend figures for the total production of the farms of Canada last year to compare with the amount exported?

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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

I have not those figures, Mr. Speaker, and they have nothing whatever to do with the question.

Topic:   THE BUDGET
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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANTON:

In my opinion they have.

Topic:   THE BUDGET
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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

We produced enough on our farms to maintain our own population and have a surplus for export. I am pointing out the surplus we exported last year.

Topic:   THE BUDGET
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An hon. MEMBER:

What about cotton?

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June 5, 1922