June 6, 1922

CON
LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

He knows as well as 1 do that at the time of being selected leader of the Liberal party I spoke before the convention which drafted that platform and expressed my views in regard thereto. Broadly, I stated that I would regard that platform as a chart which indicated the direction that the Liberal representatives assembled expected the party to take if returned to power, but that I would be guided as to how far it was wise to go at any particular time by the collective wisdom and the judgment of the ablest men whom it might be possible to bring together to direct the affairs of this country. I made that statement, not at some remote gathering, but at the very convention which enacted the platform.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Does the right hon. gentleman suggest that he had the right or the power to amend or vary his party's platform?

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

I think that it is most distinctly the duty of the leader of any party, if he wishes to take a particular position, to state that position immediately to those who belong to his party, and if they take exception to his stand, then is the time to discuss further whether or not matters shall be further amended. I contend that every Liberal who was present at that convention heard that statement and accepted it, and there is not a single Liberal throughout the country, so far as I am aware, who has taken exception to that interpretation. That is what I am concerned about-the view the Liberal party takes of its own platform, and of the interpretation put upon it; and when there is no exception taken within the ranks of

2542 COMMONS

The Budget

Mr. Mackenzie King

the Liberal party itself, it matters very little to me what my political opponents think or have to say.

But I might go a step further. Apart from that interpretation, the Liberal party at the last session of Parliament stated its position on the tariff very emphatically. Let me draw the attention of hon. members to this circumstance, that that was done before the Liberal party made its appeal to the people. Between the time the Liberal Convention was held and the time of the general election, the Liberal party as represented in this House of Commons, were sitting opposite, where my right hon. friend and his supporters are sitting at the present time, and there the Liberal party stated their position on tariff revision as it was to be considered when the time of the elections came. I have in my hand the amendment moved. Here are the essential features of it, and I contend that every one of them has been carried out in the proposals of the Minister of Finance-not in full, perhaps, but that every proposal is in accordance with what is here laid down.

That while recognizing that existing financial requirements of the Dominion demand the maintenance of a Customs tariff, the House is unable to concur in the declarations by the Government that the tariff should be based on the principle of protection ; the tariff is a tax, and the aim of legislation should be to make taxation as light as circumstances will permit;

That the aim of the fiscal policy of jCanada should be 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.

That such changes should be made in the Customs duties as may be expected to reduce the cost of living, and to reduce also the cost of implements of production required for the efficient development of the natural resources of the Dominion;

That, while keeping this aim clearly in mind, the House recognizes that in any readjustment of the tariff that may take place, regard must be had to existing conditions of trade, and changes made in such a manner as will cause the least possible disturbance of business.

There is the position of the Liberal party as stated in the House of Commons, and that was the position which members of the party took throughout the campaign in setting forth their stand on fiscal reform and tariff revision.

But I might go a step further. Let us come to the campaign itself. There, it seems to me, is where we are to be judged, as to whether or not we appealed to the people on one particular ground or another. It is not honest to say that the platform as laid down at the Liberal Convention was the basis of our appeal; indeed the charge

made over and over again by the right hon. the leader of the Opposition throughout the campaign was that the Liberal party had thrown its platform to the four winds of Heaven. That was given as a reason why the party should not be returned to power. The right hon. leader of the Opposition is pretty good at hunting up speeches that have been made in the past, and he has plenty of assistants working for him who are busy gathering and assembling this kind of material. He has not called attention to one single speech or utterance of mine made throughout the last campaign which in the slightest particular conflicts with the budget proposals now before the House. I submit that that is the best evidence as to whether or not there was any deception of the electorate. There was no deception of the electorate, as a matter of fact. I did not hesitate to state where I stood and where the Liberal party stood on the tariff, and throughout the course of the campaign I stated it not in a single province but in every province, with the exception of one, where however I had publicly stated it in the preceding year.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Did it differ from the

statement made by the right hon. gentleman in the House last session?

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

It did not

differ in any particular in one province or another or in one city or another.

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CON
LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

If it differed in any particular from what my right hon. friend has just read I am sure he would have drawn the attention of the House to it.

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CON
?

Some hon. MEMBERS:

Order.

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CON
LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

I think my

right hon. friend is quite able to find that out for himself, and I am prepared to give him that opportunity. He will recall that when the campaign opened last September he led off in a speech which sounded what he believed was to be the dominant note throughout the campaign. He (said in so many words: Let us make it a protectionist campaign. True, before the contest had run very far we did not hear very much about the iprotectionist proposals which he made at the start. But he was very definite in putting the question to me

The Budget-Mr. Mackenzie King

as to -where I stood, and that question I never failed to bring to the attention of every audience I addressed. I propose to read it to the House and ask hon. members, in the light of it, when on this occasion we are talking of a disregard of political honour, of betrayals and deception and the like, how the country will view the amendment moved by the party opposite to the budget proposals now under discussion. An amendment, mark you, Mr. Speaker, which condemns the Government for not putting that platform into effect in its entirety. Speaking in London, Ontario, on the 1st September last my right hon. friend said:

To-night I put on record the question-Does Mr. Mackenzie King stand pledged to put that platform in effect if returned to power? That question admits of two answers, and two only, one is "yes" and the other is "no". He cannot refuse an answer.

Let the answer come. I state my position now. Put that convention platform in effect and you add enormously to unemployment. As it is we have enough, and far more than enough; but we have the least for our population of any country that went through the war. Put that platform in effect and you cripple the industries and darken the horizon of many a town in this country. Put that platform in effect and by wiping away the small barriers we have to the influx of foodstuffs of the United States you make more hazardous the market and more burdensome the lot of every farmer in this country. If Mr. King answers "Yes", I say he should not have power because his platform is unsound and un-Canadian, false to the interests of our people of every class and occupation. If he answers "No", which I shall not presume until he says so, then I say he is unfit for power because he deliberately contemplates bad faith. If he refuses to answer at all, then he is unfit for high office as lacking in frankness and candour.

Well, that was boxing the compass very successfully on the part of my right hon. friend. But I did not hesitate to answer. I read that statement and I stated very frankly to every audience that I addressed that I did not stand for the Liberal platform literatim et verbatim in the manner in which my hon. friend would like to have the public believe I did.

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CON

William Alves Boys (Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. BOYS:

Was the right hon. gentleman a party to the insertion of the platform of 1919 in the handbook of 1921, which bears his photograph?

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

Let me just deal with that for a moment. The platform of 1919 was certainly inserted in the handbook, and it would have been an extraordinary thing if it had not been. But the platform of 1919 was not put forward throughout this last campaign as a pledge or promise on the part of the Liberal party of its proposals if returned to power.

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CON

William Alves Boys (Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. BOYS:

My question, if the right hon. gentleman will answer me, is this: Was he a party to putting it in that handbook?

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

Just a moment. I think hon. gentlemen opposite have discovered for themselves just how far the Liberal party in the campaign through which we have just passed made the platform of 1919 a pledge and promise to the electorate.

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CON

William Alves Boys (Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. BOYS:

Why not answer the question directly?

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

I have

alluded to the fact that earlier in this session an amendment was moved by an hon. gentlemen opposite the member for Parry Sound, on a motion to go into Supply, condemning the Government for not having carried out, as it said, certain resolutions forming part of that platform. The amendment which is now moved is in the same language, almost the same words in every particular, but the amendment which was moved by the hon. member for Parry Sound (Mr. Arthurs) had in it certain words which have been dropped from the present amendment-why? Because hon. gentlemen opposite know they could not sustain them. The resolution of the hon. member for Parry Sound read:

That the policy embodied in such resolution so adopted was continuously thereafter held before the people of Canada, and in an official hand book issued in October, 1921, by the Liberal party under the authority of its leader, Hon. W. L. Mackenzie King, the said resolution was quoted and reaffirmed.

You will find that phraseology in both these amendments; but here are words which follow in the amendment proposed in regard to the soldier question which are not in the present amendment in regard to the tariff:

And the promise and pledge embodied therein declared to be the policy of the Liberal party.

These words are not in the amendment respecting the tariff proposals which has been moved, in this debate and which is now before the House and their omission is very significant; it proves of itself that hon. gentlemen opposite know very well that throughout that campaign no effort was made to say that the Liberal platform as drafted in 1919 would constitute a promise and pledge to the electorate if the party were returned to power.

Now, I am sorry to have taken up so much time on this matter, but when charges of duplicity and betrayal and the like are made, it is, I think, only proper

2544 COMMONS

The budget-Mr. Mackenzie King

that they should be answered in a sufficient degree at least to enable the electors to decide for themselves whether such charges are true or false.

Let me ask, in conclusion,-because I do not wish to go over a lot of ground that has already been covered in this debate or may be covered before the motions are put-what was the position taken by the Liberal party as respects the tariff in the last election? On what appeal did we get from the electorate the support which we received; and by which we are bound at the present time? We stated first of all -and may I for the moment use language that I used in the different provinces? -that the Liberal party was not a free trade party, as my right hon. friend would have had the electorate believe when he was speaking in some of the urban centres; secondly, that the Liberal party was not a protectionist party, as my right hon. friend tried to urge when he was speaking in the rural centres. I pointed out that the question that was before the people was not a question as between protection and free trade, but was a question of the revision of the tariff; that the Liberal party had stood for tariff revision on the basis of a tariff for revenue; that that had been the historic and traditional policy of the Liberal party; that we believed that a tariff was necessary for the purposes of revenue, and that that was the basis which we would keep in mind in revisions of the tariff.

It was further stated that the revision should be downwards, in the interests of producers and consumers, and that in such downward revision we would seek to lower the duties on the instruments of production in the basic industries and on the necessaries of life, with a view to increased production and the lessening of the cost of living to the masses of the people. Finally it was stated that in the changes to be made there need toe no fear of injury to any legitimate industry earning legitimate profits as a consequence of the revisions affected.

I contend, Mr. Speaker, that in the budget proposals as introduced those pledges have been fulfilled, not only in spirit but in the letter, and this, not at the last but at the first session of this new Parliament.

Let me point out further that all this has been done without any flare of trumpets, and what is of even greater importance at this time, without cost to the country of tariff commissions travelling to and fro

across the land, conducting make-believe inquiries and compiling voluminous abortive reports.

Finally, may I make mention of one further representation. The country was led to believe that if the Liberal party was returned to power the work of tariff revision would be entrusted to that much revered, and greatly trusted public servant, the Hon. W. S. Fielding. Through the providence of God that all-important hope and pledge of the Liberal party has also been fulfilled. Many hon. gentlemen opposite have joined with others on this side of the House in expressing their pleasure and pride in having been privileged to witness the presentation, of his sixteenth budget in Parliament by the present Minister of Finance. May I say that their kindly references in this regard are not less appreciated by the Minister of Finance himself than by those of us who, through longer or more intimate association with him, are even more favourably situated than hon. gentlemen opposite to judge of his great personal worth and inestimable public service. It is not alone the Minister of Finance who is to be congratulated upon the achievement we have witnessed, but the whole of Canada. And in recording their votes upon the resolution and the amendment thereto which is before the House, I would ask hon. members not to be unmindful of that fact. The measure of tariff revision you are asked to support is what, in the light ot his mature and wide experience, has seemed wisest and best to the one man upon whose judgment more than that of any other living person the people of Canada are ready and willing and desirous of relying in tariff matters.

It is to the benefit of all classes and parts of our Dominion that, if possible, there should be stability in tariff matters and confidence in the judgment by which that stability is secured. All circumstances considered, stability and confidence alike will, I believe, be secured in greater measure by the adoption of the resolution the hon. the Minister of Finance has moved, than by any amendment that can be offered to it; and on this all-sufficient public ground as well as because of what it may afford of more than merited recognition of the wise and prudent counsel of the veteran statesman of this House of Commons, I hope its hon. members will accord to his motion an overwhelming if not a unanimous support.

At six o'clock the House took recess.

The Budget-Mr. McTaggart

After Recess

The House resumed at eight o'clock.

Mr. NEIL H. McTAGGART (Maple Creek) : Mr. Speaker, in rising to say a few words on the question before the House I deem it a privilege to associate myself with other members who have congratulated the Minister of Finance (Mr. Fielding) on the clear and lucid way in which he delivered the budget speech. I am not ashamed to say that my earliest recollection of Canadian politics is closely identified with the name of the Minister of Finance, as well as with the name of his late chieftain, Sir Wilfrid Laurier. I well remember the pilgrimages made from this country by the Minister of Finance in order to try and secure wider markets for Canadian produce, as well as the removal of the restrictions to Canadian trade. Because of those efforts I looked forward to very substantial relief in the directions indicated in the present budget. I am sorry to say that in this anticipation I have been very much disappointed. Let me remark in this connection that I am reminded of a prediction made by the right hon. leader of the Opposition (Mr. Meighen) in the early days of the session, in which he stated that the Progressive party would be sorely disappointed when the budget proposals were brought down. It would seem that the reputation of the leader of the Opposition as a forecaster of coming events has not suffered very much by reason of that prediction.

I understand that it is the custom in this House to make references to the speeches of preceding speakers. As a new member I am sorry that it is possible I cannot pay the due meed of credit to the two splendid orations that were delivered this afternoon. I am not going to attempt to do so, but I have just this to say: I listened with deep interest to those speeches but was disappointed in that I could not discover in either of them any solution to the problem which confronts Canada to-day. If protection is a good thing for this country ought we not to expect that the speeches of the leaders of the two great political parties would contain some substantial proof of the benefits which Canada has derived from a protective policy? I can say in all sincerity, that although I listened with deep interest to both speeches I could not discover that they contained any proof of the benefits derived by Canada in the past or the benefits which she might expect to receive in the future from a protective tariff.

The debate on the budget has had a very wide range and the ground has been, I believe, almost completely covered. I would not attempt to project myself into this debate at all, were it not that I believe I can treat this question from a new angle. I am not going to attempt to repeat the arguments that have been already advanced, and particularly those brought forward by my honoured chief, the leader of the Progressive party. I will, however, say this-that the situation in Canada at the present time is not encouraging. We have a huge national debt, we have a rapidly increasing taxation, we have idle factories and thousands of unemployed, we have depopulated areas and a rapidly increasing number of abandoned farms. When I think of this situation, and I do not wish to indulge in any levity, I am reminded of the ground hog which was travelling rapidly in the direction of the nearest tree. Some one said " What is he running to the tree for? Surely he does not hope to climb it?" The friend of the observer replied, " He will be compelled to climb it, the dogs are after him." Now, Mr. Speaker, so far as Canada is concerned, the time is rapidly approaching when she will be compelled to make readjustments of her economic structure, to put her house in order so to speak, and to make it possible for all classes of her people to establish comfortable homes. Of course, when mention is made of the situation as it now exists in the Dominion, the war is always blamed; and I will admit that the war has imposed upon our people a heavy burden. But the responsibility does not rest so much upon the war as upon ourselves; I maintain that the war is not wholly responsible. It is my conviction that the people who are to-day engaged in the work of developing the natural resources of this country are carrying a heavier burden than they can bear, and that substantial advances in that direction will be impossible in the future until we have a readjustment and a revision downward of the customs tariff. It is also my conviction that on December 6 last, the people of Canada made a definite pronouncement in regard to the customs tariff. It is my opinion that the verdict cast by the people on that date was that the policy of protection as enforced in Canada for over forty years had failed all along the line, and I would say this further-that unless this burden is removed at an early day the future of this country will be seriously jeopardized. As regards the present budget I am in sym-

The Budget-Mr. McTaggart

pathy with the removal of certain restrictions to trade. With these, I am not going to deal; they have been fully dealt with by previous speakers. One objectionable feature, however, is the increase in the sales tax. I believe that this increase will render heavier the burden now resting on those who are engaged in developing our natural resources. I have wondered ever since it was introduced where the idea originated of having this sales tax increased, and I am going to read for the benefit of the House a recommendation made iby the representatives of the Canadian Manufacturers' Association to the Government on February 23 last. These recommendations are contained in a little booklet entitled " Statements in regard to matters connected with Trade and Commerce presented to the Government of Canada by a deputation from the Canadian Manufacturers' Association." Now on page 11 of the booklet we find these recommendations:

That duplication of taxation be avoided as much as possible.

That the Income War Tax Act as regards corporations shall be repealed.

That the present Sales Tax shall be adjusted so as to provide additional revenue.

As regards the new budget which has been brought down, I am in sympathy with the statement which has been made that this is a protective budget. I am not surprised that Conservatives, who have been so much interested in "morganatic alliances", refrain from criticising the taxation proposals as outlined in this budget. The minister, in a statement which he made when he brought down his budget, intimated that Canada's expenditure for the current year would be very large, and that the revenue would scarcely meet these burdens. It was also intimated that there was expected to be a reduction in the amount derived from the customs tariff, and this is the particular feature of the budget to which I wish to refer. It seems at least a strange thing that a reduction in revenue should be contemplated from the customs tariff, notwithstanding that the tariff, generally speaking, has not been changed to any appreciable extent. It is my opinion that industrial and commercial institutions in Canada of an international character have found a means to circumvent the tariff. We learned in this debate from the previous speakers that large amounts of American capital are invested in Canadian industries, and the point I wish to make is that this outside capital

which is invested in Canadian industries, has been used to exploit the Canadian consumer. I am going to endeavour to give the House a case in point, and I believe that what I am going to describe applies to many other articles of commerce in Canada to-day. I have in my hand a package of cut tobacco, and I believe this article of commerce is sold to-day in almost every community throughout the Dominion of Canada and the United States. I purchased this tobacco in the city of Ottawa a few days ago, and this is the trade mark on it:

The genuine Durham Smoking Tobacco ; W. T. Blackwell and Company; Blackwell and Durham Tobacco Company, Successors, Durham, N.C. Manufactured by the Imperial Tobacco Company, Limited, Montreal, Que.

This package contains, according to the stamp on the package, one-fifteenth of a pound, and on the tag which is attached to this package, we read this slogan: "None genuine without the bull on each package." What I have to say about this package of tobacco is this. When I purchased this package of tobacco on Sparks street, I asked the salesman if this package of tobacco was made in Montreal, and he stated that he thought it was. I asked him if he could sell me the same tobacco imported from the United States, the American make, and he said that he could not. I asked him if he could procure the American Bull Durham tobacco, and he said that he did not know; that he thought it possible that he might. I want to give the House some figures in connection with this tobacco from the constituency in which I reside. I paid 20 cents in Ottawa for this package, and it retails in my constituency at 20 cents. What we might call the American Bull Durham tobacco is put up in packages of 1J and 11 ounce sizes. This tobacco contains Ills of an ounce of tobacco and sells wholesale in Saskatchewan at $2.38 a pound. This same tobacco sells wholesale in the state of Montana at 80 cents a pound- The retail price of this tobacco in Saskatchewan figures out at 181 cents an ounce; in Montana, the retail price figures out at 61 cents an ounce.

When my friend in Saskatchewan called my attention to this particular feature of the customs tariff, I asked him: "Why do you not import this tobacco from the United States?" I understand the duty on this tobacco is 95 cents a pound. If he purchased it at 80 cents a pound in Montana and paid the duty of 95 cents, that would make $1.75, and that would still leave 63

The Budget-Mr. McTaggart

cents, which would be more than enough to cover sales tax and other charges. I was, therefore, surprised that my friend did not import this tobacco. I want to give the answer of that friend in Saskatchewan in regard to the matter, and it is that it is impossible to import this tobacco into the Dominion of Canada because the Canadian authorities refuse to put a revenue stamp on the American pack because it does not conform to the particular value of our revenue stamp. There is a diiference in the weight of the two packs of 7-120ths of an ounce; but the American tobacco cannot be imported today into Canada, for the reason that the size of the American pack does not conform to the particular value of the revenue stamp as it at present exists in Canada. I said to my friend: "Surely there is a way to circumvent even that. Why not write to the American Tobacco Company and have them make a pack conforming to the Canadian revenue stamp?" My friend had forestalled me in this, as he had already written to the company on several occasions. There are two replies, which I am going to read because they are more or less evasive. This is one dated October 18, 1921: i i

F. O. Barnstad,

Shaunavan, Sask.

Dear Sir,-We are just In receipt of a reply from the American Tobacco Company, in regard to putting up the 2 oz. package of Bull Durham which you requested that we try to order for you from them.

They state that they put up a ljth oz. pack only, which is the one that we carry in stock at the present time.

We regret our inability to fill your order on the particular sizes that you request.

Yours very truly,

Minot Grocery Company.

This is another letter:

Re your letter September 15. Replying to above letter on Bull Durham tobacco, we carry the ljth ounce bag, put up 24 in a carton, and 12 cartons to the shipping case. This l|th ounce bag costs $.96 per dozen and is retailed at ten cents here.

We do not carry cigarette papers in stock.

This is an argument in favour of the statement I made that American industrial and commercial campanies of international character are finding a way to circumvent the tariff, and Canada does not secure the revenue. I hope the House will understand that I am not finding fault with the high price of tobacco in Canada, or in Saskatchewan. I would be perfectly willing to pay those high prices for that tobacco, provided I used it, if I knew that the excess price which I was paying over and above

the legitimate price was going into the Canadian treasury. This is another letter, from the same gentleman by the way, dealing with some of the abuses of the customs tariff on goods coming in from the United States. He says:

I enclose herewith facts in regard to a shipment that I just received to show you how charges are piled on to a shipment so that It is almost impossible to import tobacco.

I enclose bill of lading to show that shipment consisted of 54 pounds, cancelled draft shows that I paid for same $47.63 plus $2.42 American exchange or $50.05. This is what I paid the shippers for the 54 pounds prepaid to Shanil a von.

I also enclose my expense bill from the Canadian Pacific Railway who cleared this shipment through the customs at Weyburn. Their bill calls for $64.64, or a total of $1.19 per pound, whereas our tobacco duty is supposed to be 95 cents per pound.

There is another letter which deals with the duty on cigarettes. It is as follows: Shaunavon, Sask., March 21st, 1922. Neil McTaggart, Esq., M.P.,

Ottawa, Ont.

Dear 'Sir,-I attach a price list that I just received from the J. R. Reynolds tobacco as I desire to call your attention to the ridiculous rate of duty charged on cigarettes. You will note that I can buy Camel Cigarettes freight paid for $3.65 per thousand list price (They allow 10% discount from this list) but call the cost freight paid $3.65 per M.

Our rate of duty is $4.10 a pound on cigarettes plus 25% of invoice price, also at present there is a surcharge on account of exchange and a 4% sales tax on the duty paid value of a shipment and a charge by custom officers for attaching revenue stamps.

For figuring duty charges the customs department, figure in the weight of the package that the cigarette comes in, this is shown in the list as 3.5 lbs. per M.

If you will figure out the duty you will find that on a thousand cigarettes that cost me freight paid $3.65 I will have to pay over $16.00 duty, etc. I am told that the Canadian manufacturer of cigarettes pays a little less than $7 per M; as to that I cannot vouch but I believe it about correct.

Instead of a per pound charge why would it not be best to have duty figured on the invoice price of cigarettes, I would suggest 100% duty on the invoice price, this certainly should be sufficient protection for any industry and would stimulate the Importation of these Camel cigarettes and other lines as well and our government would get 100% duty on each invoice, whereas now the practically prohibitive duty keeps us from importing.

This is a particular phase of the customs tariff, as it exists to-day, which is worthy of attention, and I hope the Minister of Finance will give this question serious thought. I believe there are abuses of the customs tariff, in the direction I have indicated, in many lines of industry. For instance, I should like to know why the Eastman people of Toronto sell cameras

The Budget-Mr. McTaggart

in Ottawa or Quebec at $25 when they can be procured at Niagara Falls, New York, for $14.50.

I want to say a word in regard to what has been stated in the debate touching the alleged danger of reducing the tariff. It has been said in this House on several occasions that Canadian industry cannot compete with industries in the United States. W ell, in this connection I am going to quote again from this booklet issued by the Cana-' dian Manufacturers Association. At page 12 there is an article entitled "Preferential Tariff, Australia and Canada," from which I shall read a paragraph, because I believe it proves conclusively that Canadian industries generally can compete with the world:

The Customs appraisement laws of Australia now stimulate importations from the United States instead of from Canada. The Australian law applies ad valorem duties on values which are based upon the "home" market value of the goods in the country of export. The application of the Australian duty on values based upon the home market price in the country of export results, as a rule, in the Australian luties being greater on goods made in Canada than on the like goods made in the United States. Let us illustrate: Because of revenue duties on materials of a class or kind not obtainable in Canada, which must be imported by the Canadian automobile manufacturer, the "home" price on a Canadian-made car is higher than the United States "home" price on a similar car. But the Canadian manufacturer, under the Customs drawback regulations, can sell his car for export at prices which approximate to the United States price. Thus a United [DOT] States automobile, on importation into Australia, pays duty on the basis of the "home" selling price in the United States; and the same automobile made in Canada and shipped into Australia (although the export price based on drawback would compare favourably with the United States export price) would be valued for duty in Australia at the higher "home" selling price in Canada,-resulting in the payment of greater sums in duty than would be payable on the like car made in the United States.

I think that this admission on the part of the Canadian Manufacturers Association is an admission that Canadian industry can and does compete in the markets of the world, and does so favourably.

Now, when I began I said I would endeavour to be as brief as possible, and so I shall now conclude. Before doing so, however, I should like to say a word in regard to the speech of the hon. member for St. John (Mr. Baxter). I was very much surprised at the outburst of the hon. gentleman. He seems to think that in heaping ridicule upon the Progressive party he is rendering the public some service. He expresses the view that the Progres-

CMr. McTaggart.)

sive party would not be fair to the Government in supporting the amendment moved by the hon. member for West York (Sir Henry Drayton). Well, let me say that we do not want any morganatic alliance between the Progressive party and hon. members to my right in regard to that amendment.

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LIB

William Richard Motherwell (Minister of Agriculture)

Liberal

Hon. W. R. MOTHERWELL (Minister of Agriculture) :

I am sure it must have been very gratifying to the Minister of Finance (Mr. Fielding) during the past week or ten days, after listening to the battle of words and wits over this budget, to find that no substantial dint has been made in the fiscal armour with which he has surrounded his tariff proposals. While a few pinpricks may have been made in these proposals during the debate, they can easily be ironed out when the resolutions are before the committee. I observe, too, that the criticisms levelled against the Government during the debate have been chiefly of one character, that is, the making of allegations, charging dereliction of duty on the part of the Liberal party and this Government with respect to the non-fulfilment of pre-election promises, and the carrying out of pledges and platforms. We are familiar with these things, Mr. Speaker. Ever since I can recall anything of Canadian politics, particularly since 1896, I know we have always been charged with dereliction of duty in the matter of carrying out pledges, promises and platforms. If there is anything in this surely the people would not have trusted us anew last December. However, I am going to try once more to dispel the idea that there is anything in these allegations with respect to either the tariff platform of 1893 or the platform of 1919. On a hot evening like this, some hon. gentlemen opposite may think that this is a big contract, but I do not at all feel that way; I am perfectly confident that I can undertake and successfully carry out the proposition I have in hand.

I shall hurry along because I want to deal briefly with other matters of an agricultural nature, but there is one point in regard to the question of platforms that I desire to take up now. I have in my hand the platform of the Liberal party of the year 1893. Now, I do not desire to go back into ancient history, but this matter has been dealt with in the debate and I shall refer to two features of the platform which will serve our purpose. I will read the pledge, with regard to the tariff. It is as follows:

The Budget-Mr. Motherwell

That it should be so adjusted as to make free o'r to bear as_ lightly as possible upon the necessities of life, and should be so arranged as to permit freer trade with the whole world, more particularly with Great Britain and the United States.

With respect to free trade with Great Britain, Mr. Speaker, surely there is not a single member, no matter how violent an opponent he may be of this Government, but must concede that we have carried out this pledge to the letter and the spirit. A preference of 331 per cent was granted on a large number of commodities from Great Britain. It is quite true that a part of that preference has been absorbed by the higher ocean rates, but that again will be picked up by the increased preference that the Minister of Finance now proposes. I do not think there is a single member but will concede that that pledge of the 1893 platform has been carried out in toto. The preference has not gone to 50 per cent yet. But give us a little while longer. We were in power fifteen years last time, and if you will give us another fifteen years, or a half or even a quarter of that term, see where we will be then.

As to the other plank of the platform, that in regard to reciprocity, I can recall as a boy about six years old when the original reciprocity treaty of 1854 was abrogated. From 1867 to 1911 all parties in this country had both hands up-had both feet up if it was necessary-for reciprocity. Then when it was brought down in 1911 an agitation, started by the Opposition in conjunction with certain manufacturers, the principal ones being in Toronto, was directed against reciprocity and carried to success by means that we are all familiar with. In a word, they defeated the reciprocity pact. Here is the pledge in regard to reciprocity:

That a fair and liberal reciprocity treaty would develop the great natural resources of Canada, would enormously increase trade and commerce between the two countries,-

and so on. That is pledge No. 2 of the 1893 platform. Did the Liberal party carry it out or die in their tracks? Of course, we all know that the party died in their tracks trying to carry reciprocity. Surely further proof is not necessary of their sincerity.

Let us see what the reciprocity pact meant. I have the draft here. You do not find very many people carrying this around nowadays-only the Liberals. On the first page I see a large number of articles, in fact all the natural products of Canada, on the free list, carrying out that pledge

of freer trade. I wonder if our farmer friends, when they taunt us with failure to fulfil our pledges, ever think that there are dozens of articles on the free list of the reciprocity pact. Did we try to carry out that arrangement? Why, did we not give up our political life in the attempt? And what more could be expected of any political party? Do you want to hold us responsible for our failure after we were defeated in 1911? I remember being at a political meeting on one occasion where two or three gentlemen actually took that ground. I draw attention to that to show the utter absurdity of the stand they took. What more could we do? What dereliction of duty has the Liberal party been guilty of in regard to that platform since the 1911 defeat? Well, then, if there has been no dereliction of duty, why cannot every one who supported us in respect to reciprocity at that time support us yet? Especially, why did they not support us at the last election? There must have been some reason. Well, if every hon. gentleman is prepared politically to die on behalf of the platform of his party, what greater sacrifice can you wish for in the carrying out of political pledges? No man can do more than that; that is the supreme sacrifice. Then if that be so, why are we charged with failure to fulfil those pledges at the present time? I was sorry to hear the hon. member for Brant (Mr. Good) actually suggest that we were pledged to free trade. That is not so. But even if we had been pledged to free trade there was a very large and substantial measure of free trade embodied in this reciprocity pact. Then we have the hon. gentlemen opposite finding fault. And I must say that in one respect I admire them, for you always know where they stand. I wish I could say as much for all groups in this House, /but we cannot have everything always our own way. However, I compliment my hon. friends upon that feature.

I am going to point out how differently the 21 per cent decrease in the tariff is regarded now compared with the reception which was accorded our proposal originally to make that reduction in connection with the reciprocity arrangement. At that time the Farmers and the Conservatives made a lot of this 21 to 5 per cent concession. On the first ten pages of the agreement I find fifteen articles on which the duty is reduced by 5 per cent-they are nearly all agricultural implements-and twenty articles on which the duty is reduced 21 per cent. We went to the country satisfied

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that that was a pretty good bargain. It will be remembered that included in the arrangement was free trade in natural products. To-day our Progressive friends make light of that 2J per cent cut in the tariff, but they thought it was all right in 1911-most of them at any rate, except those 'who opposed reciprocity and are now shouting because they cannot get it.

How did our Conservative friends take it? They talked as though we were going to the bow-wows-they told us that we would go to bed as Canadians and wake up next morning whistling Yankee Doodle if we entered into this reciprocity agreement. At meetings you would see the American flag on the one side and the Union Jack on the other, with the question: Under which flag are you going to live? I myself was turned topsy-turvy at one time, and have been mad with myself ever since. In 1891, when we proposed unrestricted reciprocity-reciprocity as wide as a barn door, everything free between us and the United States, I wonder how the farmers of Ontario voted when this country was nearly 80 per cent rural and the proposal was defeated. Well, we will forget it.

But I nearly went wrong myself in 1891. I was very much disturbed about what I had heard regarding the evil effects of reciprocity with the United States. I remember I went to a meeting-and if Senator Turriff is anywhere within hearing he will recall the occasion-in a little school house at Kenilworth, which he was conducting. Of course, he was Mr. Turriff in those days. I was reading reasonably good papers, for instance, the Montreal Witness, but I had missed it for two or three weeks, and I very nearly lapsed during that interval. I was told that reciprocity meant annexation, and that was dinned into me so frequently that I was actually beginning to believe there was something in it. Of course, I was young in those days and believed a good many things that our Conservative friends used to tell us as facts. I found at the sehoolhouse every blank space plastered with great big posters indicating annexation to the United States. Here you saw doleful scenes depicted, the men were signing mortgages, the hens were flying in the direction of the 49th parallel, and even the cats had their tails in the air. When the meeting was opened I was visibly impressed, and I remember in my innocence when Mr. Turriff finished speaking on behalf of the Liberal cause and Mr.

afterwards Senator Perley-an old war horse from the maritime provinces who knew nearly as much regarding politics as my innocent Progressive friends over the way- I asked Mr. Turriff in open meeting-what a foolish thing!-It showed how little I knew of politics in those days; and I am told I know less now-I asked him if there was anything in this allegation that reciprocity meant annexation. I actually embarrassed him with my question. I have not done it since; I try not to commit the same offence twice. But that kind of campaign, Mr. Speaker, has been continued from that day to this; in fact, that is what defeated reciprocity in 1911. It may be said that the people should, in the ordinary course of events, get wise to these things, but you must remember that every ten years we have a new bunch of people ready to be deceived; and that is the hope of the Conservative party-the deceiving of the new elector. If it were not for that, they would not be in power in this country. I do not know when they are going to get in again, because the campaign of education that has been conducted by the Progressives during the last three or four years has educated the people in these matters as nothing else has ever done; and I will give them credit for it. I want to make some candid admissions; I do not find myself very far from their ideals, their hopes and their ambitions with respect to tariff matters, though I do differ with them very seriously on the question jhow to bring these ideals and reforms into effect by legislation. But that is about the only place where I do differ.

Now, let us see what else was involved in this reciprocity bargain. Why did the manufacturing interests so strongly oppose it? It was not, surely, because 2J per cent or 5 per cent was taken off agricultural implements. It was not, surely, because the farmers were going to have a better market, were going to realize more on their goods and be able to buy more manufactured articles-and not only to buy them, but to pay for them, which also is an important thing. I have never been able to understand the reason for the opposition of the manufacturers to the proposal; I have not been able to see what species of absolute madness could have tempted them to oppose it-because I want to say that they will never get as good a bargain again, any more than the farmer will. Under this proposal the farmers would have got the benefit of a market consisting then of 100,-

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000,000 people-it is more now. Some of my hon. friends say that even if the reciprocity agreement had been adopted, it would in time have been abrogated. But suppose it had been adopted and had remained in force for ten years from 1911 until 1921, surely ten years of a market at our doors of the wealthiest people on earth, wanting our goods and prepared to pay for them, would have been worth while. Ten years is at least one-fifth of a man's active lifetime; fifty years is a long period for any one to engage in active business or farming. Well, we would have had one-fifth of that business or agricultural career under the conditions laid diown by reciprocity; would not that have been worth while? Moreover, we would now be in a better position to push on under the conditions of hard sledding which prevail. Why, when reciprocity was formerly in force, we had it for only twelve years, from 1854 to 1866, aijd we all know bow Canada prospered, how the maritime provinces prospered, how we all prospered during those years. Would it not have been worth while to have another ten years like that?' Taking it, therefore, at the discount suggested by my hon. friends, it would have been well worth while.

But there is one thing which I myself overlooked when this campaign was on. I have before me a long list of articles included in the reciprocity agreement as arranged for by my hon. friend the Minister of Finance and his colleague the late Mr. Paterson. Under this provision access was to be obtained to the large market of the United States, not only by the farmers, but by the manufacturers of Canada for their manufactured wares. But they did not know enough to take advantage of it. In this list thirteen articles are included, with various reductions, ranging from 25 to 50 per cent, and nearly all on agricultural implements. The farmers were not interested in this; it was an oppor-unity for the manufacturers to get the very thing they wanted, an opening for their products. The arrangement was, therefore, fair to all concerned. I say it was the most tragic mistake ever committed by any country when Canada turned down that offer. The Finance Minister made the prediction at that time that if the reciprocity agreement were turned down Canada would see the day she regretted it, and we have been regretting it, Mr. Speaker, ever since. As a matter of fact, the cause of reciprocity has gained

tens of thousands of friends since that day.

I will not deal longer with that phase of the question, Mr. Speaker; I think I have shown with respect to the platform of 1893, or the two outstanding features of it, that we have kept to the one-that is, preferential trade with Great Britain-and we went down with our flag nailed to the masthead in the attempt to cafry out the other. If anybody is prepared to do more than that, he should not be in politics; he should be on the other side of Jordan.

So much for that. I want to say a word about protection, and I would like the attention of the leader of the Progressives so that he can see how near I come to him on that subject. The hon. member for Last Mountain (Mr. Johnston) made a statement something like this: that protection could not last indefinitely, especially on the prime necessities of life. With regard to the kind of protection that we have now, I am opposed to it. I do not say that we should not help new industries-I will deal with that in a minute. I do say that we should help new industries in some ways, but there are many ways of doing it besides the protective system under an import tax. The trouble with the customs tariff as a means of assisting infant industries is that these industries insist upon being infants for all time; at any rate, they have done so ever since this policy was inaugurated. They are now forty-four years old-whiskers on them as long as your arm, and still insisting that they are infants.

Now, that is the objection I have to it. If we are to apply the principle of protection, particularly to the implements of production, then it could well be argued that we should pass protection all around, if it is so good. Now, what would that mean? I do not advocate that course, which would involve a second mistake to correct the first; for you cannot correct one wrong by committing another. The way to correct the evils of protection is to remove them; remove the cause of your difficulty; do not substitute a fresh cause as a corrective, or counter-irritant, if you like. But what would it mean if we invoked the remedy that the farmers of the United States are invoking? They have ceased the fight against protection: they are tired of fighting it, and they have said in the agricultural bloc: Pass it all around.

What would that mean in Canada? There is no doubt about it-you can philosophize as much as you like about the percentage

The Budget-Mr. Motherwell

of our farm products that we consume in our own country, but so far as western grain is concerned we have to rely upon a foreign market for 90 per cent of our output. So that protection so far as it affects us in providing a home market is a minus quantity. That being the case, how are you going to protect these articles? How are you going 'to proteci the farmer if we decide, like they did in the United States, to pass it around? Now, I am just giving this as a hypothetical case, but there is no way to protect your grain, which seeks an open market in competition with the world, except by putting a bounty on it of 10 or 15 cents. We have many precedents for that in Canada, in respect to steel and other articles. Imagine what it would be like-taking out of this pocket the protection on the article and putting in the other pocket a bounty on our grain. Yet that is the only way that you could protect the farmer in the growing of grain.

Who would be so mad as to propose such an awful nostrum as that? But I have met people who have actually proposed it. I was in Toronto after the defeat of reciprocity, and they had some slight contrition even there, and they asked me if something could not be done for the farmer along that line. There are other products, like butter. Yes, we could put butter up another six cents, equal to the Fordney bill rate. How would you like that? We could do the same thing with eggs, and all along the line. But would that reduce the cost of living? Is that the solution? Yes, Mr. Speaker, it is the logical solution unless we remove the element of protection, especially from implements of production, just as soon as it is possible to do it. I do not know when that will be, but we have taken a step in that direction, and a substantial one. If I were five steps from the edge of a precipice, and I took one step towards it, I would be substantially nearer the edge of the precipice than before. Some hon. gentlemen over here, the hon. member for Brantford (Mr. Raymond), for instance, think it is a substantial step. He thinks so because he does not like it. It is a substantial step. It is 20 per cent off the protection that was on there.

It is not fair of the hon. member for Marquette (Mr. Crerar) to say that this is a protectionist budget. It has protectionist features, but every change the Minister of Finance has made was a direct

and deliberate step away from protection. Is there not hope in that? Rome was not built in a day. We have had the tariff a long while, running away back to 1878, but I see evidences on the horizon to-day that the movement in the right direction is going to be accelerated in the very near future so far as the implements of production are concerned. How can we develop the natural resources of this country without cheaper implements? How are we going to pay the national debt unless we develop our natural resources? Surely that is evident, and requires no demonstration on my part.

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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

Would the hon. member inform us whether he is arguing for or against the budget?

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June 6, 1922