June 8, 1922

LIB

Lomer Gouin (Minister of Justice and Attorney General of Canada)

Liberal

Sir LOMER GOUIN:

He did not resign on the question of the tariff; I do not know that the Hon. Mr. Blake ever changed his views on the fiscal policy of this country. When we consider that in 1882 our national debt amounted to $153,000,000; that our (revenues totalled $35,000,000 and our expenditures $34,600,000; when we consider that our national debt to-day amounts to $2,500,000,000; that it increased by $92,000,000 in 1921 and by $86,000,000 in 1922; that the estimated expenditure for the current year is $466,000,000 and the estimated revenue $332,000,000, a difference of $134,-000,000-when we consider these things, and if the views of the Hon. Mr. Mackenzie and the Hon. Mr. Blake were sound; if the Laurier-Fielding tariff was sound, how can any one pretend that we in this country can do without a customs tariff? Do you know, Mr. Speaker, that to-day the percentage of customs revenues in proportion to the whole is less than 50 per cent of what it was in 1871, in 1881, in 1891, in 1901, and in 1911? In support of that statement let me quote the following figures:

Topic:   THE BUDGET
Subtopic:   CONTINUATION OP THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OP THE MINISTER OF FINANCE
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REVENUE.


Year Dutiable Duty Collected Total Receipts Per Cent.$ $ $ cts. 1871 60,094,362 11,807,590 19,375,036 79 60-941881 71,620,725 18,492,645 29,635,297 54 62-401891 74,536,036 23,416,266 38,579,310 88 60-791901 105,969,756 29,106,980 52,516,332 76 55-451911 282,723,812 73,312,368 117,884,328 36 621921 47,561,406 174,775,787 436,292,184 41 401922 105,500,000 381,271,000 00 28 The revenue from customs decreased last year by some $57,000,000, as was stated by the hon. Minister of Finance. The minister estimates that the current year will show another decrease of some two millions and a half. The estimated customs revenue for this year is $103,000,000. Compared with the total estimated revenue, and adding to the latter the probable increased revenue which we shall receive from the new taxes, the percentage of customs revenue for this year will be even less than it was last year; in other words, we shall receive this year from customs collections less than 28 per cent of our total revenue, whereas in 1871, 1881 and even as late as 1891 it amounted to 60 per cent of our total revenue. In the United Kingdom, to which reference has been made many times during this debate, and which is cited as a free trade country, we find that the revenue from customs and excise amounts to about 25 per cent of the total revenue. Mr. Speaker, to-day as last year, as in the first days of Confederation, we require the tariff revenue to meet our expenditures. Same hon. members have contended during this debate that the industrial establishments of the country have not been beneficial1 to Canada but have rather hindered its development. I must say that none of the speeches I have heard or have read have convinced me that such a contention is justified. On the contrary, I believe to-day, as I believed in the past, that the manufacturers have been a strong factor in the development of Canada. With the majority if not with all the members of this House, I am of opinion that the basic industry of Canada is agriculture. But I am of opinion also that without our 2658 COMMONS The Budget-Sir Lomer Gouin manufactures our country would not have reached the degree of development that it has attained to-day. Sir Wilfrid Laurier, whose authority we all like so much to cite in this House and outside, before he was entrusted with the administration of affairs in this country, long before, at the very commencement of his brilliant career declared in 1871 in a speech which he made before the House of Quebec that we should not think of remaining a farming country, and he declared in most emphatic terms that we should create national industries in this country. Here is the language used by Sir Wilfrid Laurier on that occasion: It is a humiliating confession to make that, after three centuries qf existence this country is still unahle to supply its own wants and that it is stiil obliged to have recourse to foreign markets, though nature has lavished upon it all the gifts necessary to render it a manufacturing country. . . . It is a duty, especially for us Canadians of French origin, to create. . . . Thus far it seems to me that the Government has been moving in the wrong direction. The Government has devoted itself to recruiting an exclusively agricultural immigration-its efforts will end in nothing. The agricultural population of this country will never be increased from outside. . . . We can, however, introduce here with good results, I think, an industrial immigration. I do not mean simple workmen, but master mechanics and small capitalists such as are to be found in all the cities of Europe. I remember the time when we had in this country very few manufacturing establishments, especially in the province of Quebec. I remember the days when many of our farmers had to abandon their farms, where they could no longer find subsistence for their families, and leave their native parish. The farms of Quebec at that time were just as fertile, just as productive, as they are to-day; our farmers of those days were just as robust, just as hard workers and as thrifty as the farmers of to-day. But they had no market in which to sell their products. They had to abandon their farms and leave their parish to seek work in the neighbouring republic where industry was properous. The same thing was happening in all the old provinces of the Confederation, and so we lost annually thousands and thousands of the best of our citizens, not immigrants who were only passing through Canada, but good Canadians whose families had lived for generations in our Canadian land. You are no doubt aware, Mr. Speaker, of the many compliments which have been paid to the province of Quebec during the last four or five years. I think I know the good old province of Quebec as well as any Canadian, and I say without any hesitation that what has contributed in a very large measure to make our province prosperous and our farmers satisfied with their lot is the fact that our manufactures have su'pplied our farmers with a market where they can sell their product, and what I say for Quebec must be true, and it is true, of every province of this Dominion where there are manufacturing establishments. If that industrial development is due in a measure, and I say it is in a measure due, to our fiscal policy, whether we call our tariff a tariff for revenue or designate it by any other name, it seems to me we have no reason to regret it.


CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Hear, hear. What

is the difference?

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LIB

Lomer Gouin (Minister of Justice and Attorney General of Canada)

Liberal

Sir LOMER GOUIN:

I have a table before me which shows the progress of our manufactures in Canada since 1870. I find that in that year the value of our manufactured products was $221,617,773; in 1890, $469,847,886; in 1905, $718,352,603; in 1910, $1,165,975,639; in 1917, $3,015,577,940; in 1918, $3,458,036,975 and in 1919, $3,520,724,039. No one can deny that our manufactures have been great contributors to the growth of our large cities. Through the establishment of industries we have prosperous towns, and villages to-day, where less than thirty years ago we could see but a very few houses.

One hon. member who spoke during the course of this debate said that between 1911 and 1921 we had lost over two million good citizens of this country, and we wonder why so many of our citizens who should have found space and place to build their homes in Canada have left us. I may be wrong, Mr. Speaker, but I am of the opinion that if we had had in this country more industries, we would'have kept with, us many of those who have left us to go elsewhere. Do you not think that those two million citizens we thus lost, if added to our population of nine millions, would have consumed that 27 per cent of exportation of our farm products? Statistics show that England has invested in our country two and a half billions of dollars, and that the United States have invested nearly two billions of dollars. We have, if our statistics are correct, some three billions of dollars invested in industrial establishments.

The Budget-Sir Lomer Gouin

Do you not think Mr. Speaker, that if the tariff were removed it would have a very bad effect on those investments and do you not think that capital, which is easily driven away, would seek in some other country the return ,which it could not find in our land? Listening to the members of the Progressive party I could not but conclude that the inhabitants of the prairie provinces are under the impression that the eastern provinces act selfishly towards them. Do our hon. friends suppose that without our manufacturers Canada would have progressed as it has done, even in their own provinces? We know and we regret to know, that the farmers of the West are going through days of difficulty. But this can Ibe only a temporary crisis, and I would ask them whether they think that by cutting down the revenue of approximately $103,000,000 that we receive from our customs, something like $12 per capita, that by dropping that revenue they would remedy the evils from which they suffer and of which they complain? Would they take upon themselves the responsibility of making radical reductions in our tariff and closing down many, if not the most of our manufactures, and throwing on the street the five or six hundred thousand workers who find in those manufactures a living and subsistence for their families? Moreover, Mr. Speaker, if we have to reduce our tariff to such a figure that we would not receive more than ten, or fifteen, or twenty million dollars, with the obligations we have to face we would necessarily have to find some other sources of revenue, and our friends of the prairie provinces would have to contribute their share of the new taxes. The remedy for the conditions under which we suffer, Mr. Speaker, is the increase of our population and strict economy. Abolish the tariff? ' No government would think of doing it, and no government could do it even if it tried. Strict economy is needed. Drastic economy is easy to preach but very difficult, and at times painful to practice. Nevertheless however painful and difficult the task may be, whatever government is entrusted with responsibilty for the administration of Canada for years to come, it will have to accept and fulfil that task if we look for the salvation of our country.

As to the increase of our population we can have it by a sane immigration

policy. We have already spent very large sums to induce immigrants from the older parts of the world to come and settle in our country. I understand that since 1900 we have spent over $20,000,000 upon immigration. Many of those who have come, invited as they were by our agents, have left our country; but we have kept some of them and I believe that in the future we should look for a good class of immigrants, who would come to our land to help us in Lie development of our natural resources.

With the Minister of Finance I understand the very serious position we are in, as are many countries in the world, as a result of the great conflict which brought mourning, misery, trouble and anxiety in its train, but a conflict which fortunately terminated in ihe triumph of right and justice. I realize the weight that rests upon the shoulders of our good citizens. I sympathize and fully sympathize with our good farmers whose service is so essential to the very life of our people and who are actually not equitably remunerated. I do not forget, I cannot forget, that we have in this country at this hour too many unemployed. Nevertheless when I consider our immense riches, wben I consider our innumerable possibilities, I am confident in the future. I believe that our good people will unite to surmount and to alleviate the sufferings and miseries of the day and that soon, with the help of Providence, we will see in this gojd land of ours the return of that era of prosperity, of unity, of harmony, of contentment and of hope which we enjoyed before 1914.

I have very few words to add in regard to the amendment proposed by the ex-Minister of Finance I am confident that the people, the electors of Canada, will not consider this amendment serious any more than did the Canadian press. No, Mr. Speaker, the electors of Canada were not deceived by the Liberal party during the last electoral campaign. Some of the electors were disappointed, bitterly disappointed, but the majority were perfectly satisfied. The electors of Canada voted in favour of the Libera! party because they had confidence in that party, and they voted against the government because they did not want any more of the National Liberal Conservative regime.

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LIB

Ernest Lapointe (Minister of Marine and Fisheries)

Liberal

Mr. LAPOINTE:

Cheer now.

Mr. MEIGHEN" I shall wait for the argument.

The Budget-Sir Lomer Gouin

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LIB

Lomer Gouin (Minister of Justice and Attorney General of Canada)

Liberal

Sir LOMER GOUIN:

As to our friends of the Progressive party, when I count the number of members who have come from the prairie provinces in support of the Liberal party, I cannot imagine how the electors of those provinces at all events could ever contend that they were deceived by the liberal promises of the last electoral campaign. As to the provinces where the Liberal party secured its majority, the hon. members who support the Government can confidently return to their constituents, rightfully conscious that they have fulfilled their mandate. For, Mr. Speaker, notwithstanding what was said by the hon. members of both oppositions, the budget submitted for our consideration by the hon. Minister of Finance (Mr. Fielding) is in perfect consistency with the promises made to the electors of Canada by the Liberal party during the last election. Speaking for myself, Mr. Speaker, I will go back to my good province of Quebec, to tell the people of Quebec, that they were right and that they were wise when they unanimously on the 6th December last voted confidence in the Liberal party. I will feel proud to tell them that the leader of this House, the right hon. Prime Minister of Canada (Mr. Mackenzie King) has shown by his eloquence, by his broadmindedness, by his courage, by his sincerity and his patriotism, that he is the worthy successor of our great late chief, Sir Wilfrid Laurier.

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PRO

Thomas Wakem Caldwell

Progressive

Mr. T. W. CALDWELL (Victoria and Carleton) :

Mr. Speaker, before proceeding to discuss the question before the House, I wish to join with the hon. members who have preceded me in this debate in extending sincere congratulations to the hon. Minister of Finance (Mr. Fielding) on having achieved the unequalled distinction of having delivered his sixteenth budget to the Parliament of Canada, as well as the contribution he has been able to make to the advancement of Canada in other respects, not the least of which was his effort in 1911 to bring about the reciprocity agreement between Canada and the United States and his recent efforts along that line.

Before proceeding to discuss the budget, I wish to refer to some remarks made by the hon. Minister of Justice (Sir Lomer Gouin). I noticed when he was expounding his tariff belief a very peculiar thing, that the applause came from the official Opposition, and not from his own supporters in the House, and I noticed that, when he began to speak of the result of

the election last fall, his own followers showed the first symptoms of cheering up a bit. Another statement he made was that the manufacturers of Canada had furnished a market for the products of the farm in Canada. I do not like to interrupt an hon. member when he is speaking, although I would have liked to have asked him if he would pretend to tell the House or this country that the wheat, or potatoes, or other farm products grown in Canada, can find a market here, notwithstanding the fact that we have had forty years or upwards of protection. Last year, in my province alone, there were thousands of barrels of potatoes dumped, because there were no markets in Canada for them. The price we could have received for potatoes would not have paid the freight to market. The same condition continues to prevail and the farmers in the present year have received less than 50 per cent of the cost of producing the potato crop in my province, which is the crop we grow for export.

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CON

William Garland McQuarrie

Conservative (1867-1942)

Mr. McQUARRIE:

Will the hon. member tell us if any potatoes came into his district from the United States?

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PRO

Thomas Wakem Caldwell

Progressive

Mr. CALDWELL:

No. I want to

digress a moment. I was willing when I came to this House to believe that the farmers and the people of British Columbia generally were as efficient and as able to take care of themselves, possibly, as the people of New Brunswick. I have been compelled, almost against my will, to reverse my judgment, because I find the people of British Columbia bewailing the fact that they cannot hold their own against the residents of the United States immediately opposite them.

In the province from which I come the farmers are very anxious to have a reciprocity agreement enacted between Canada and the United States. I live immediately next to that great potato belt in the state of Maine, with the imaginary line between us, and the people of the state of Maine are afraid of their lives that we will get reciprocity with United States. They are urging that barriers be placed against Canada. So that I cannot help thinking that we must certainly be far more efficient in New Brunswick than our farmer friends in British Columbia, because I do not think the farmers of either New Brunswick or the state of Maine will admit there are more efficient farmers in the United States, especially potato farmers, than can be found in the state of Maine. They are afraid of competition with the farmers of New Bruns-

The Budget-Mr. Caldwell

wick, while the farmer in British Columbia is afraid of the competition of his neighbour on the United States side. I can hardly understand this unless it be that the British Columbia farmers and the people generally are not on a par with the people in New Brunswick. It is the only way I can account for it.

Owing to the fact that a committee of which I am a member was sitting last night I had not the pleasure of hearing the speech of the (hon. member from Lincoln (Mr. Chaplin). However, When I came to read it this morning jl found I had not missed very much, because it was the same speech he delivered two years ago with a few variations. One of these had reference to the duty on potatoes; he said two years ago the farmer had 'benefitted to the extent of $10,000,000 due to the duty on potatoes. In his speech last night it was increased to $15,000,000, although jhe quoted from the same statistics. Another thing he said was that I had demolished the argument he made in this House in 1920, and that he had not had a chance to reply to my criticism. The hon. member for Lincoln sat in this House last session, and I think I am right in saying that you will not find his name in Hansard last year. One member of the Opposition last year was unkind enough to say that the reason he did not speak in favour of his government last year was that he had not received a further contract from them to supply goods in connection with the Roumanian loan. I do not know if that was the reason. But he said he had not had a chance to reply to my statement, although he was in the House all last session. Last night the hon member said:

I might say here that X gave some of these figures once before, and the hon. member for Victoria and Oarleton (Mr. .Caldwell) demolished my whole argument by saying that the member for Lincoln ought to know that there is no duty on potatoes.

This was in 1920, and he still insists there was a duty on potatoes at that time. He does not seem to realize the fact that the duty was removed from potatoes, either going from Canada to United States, or *coming from the United States to Canada during the session of 1918, two years previous to the time he made the statement in this House. He insisted in 1920 that the duty still remained on potatoes. It is just possible he does not know the war is over, although I would think he should know, because he helped supply the goods for the Roumanian loan made by the government, after the war was over.

In coming to a discussion of the budget, I wish first to quote a statement made in this House two days ago by the present Prime Minister (Mr. Mackenzie King). He said:

I submit as I have already intimated, that in the proposals which the Minister of Finance has brought down, he has succeeded in relieving taxation, as it bears upon the great mass of the people, and shifting the burden of taxation to a more considerable extent on to the shoulders of those who are best able to bear it.

I do not agree with that statement of the Prime Minister, and I hardly think he can be sincere in making it, because I am going to quote from his speech in 1920, when this tax was instituted by the party which is now the official Opposition, and I think this quotation will prove that I have a very good right to think that he has not, unlike the hon. member for Lincoln (Mr. Chaplin) given us the same

speech that he gave us two years ago, nor is he agreeing with the speech which he made two years ago; absolutely the contrary. I contend, as I did in 1920, that the sales tax imposes a burden on people least able to bear it. When that method of taxation was under discussion, I supported the idea of imposing a lpxury tax and also a business or excess profits tax, as did the present Prime Minister. I deplored the fact at that time that the government would put a sales tax on the necessaries of life, which tax, I stated I thought would tend to race suicide in this country. I was ridiculed for making that statement in the House, although I think I proved it very well before I sat down. Let us take the case of the workingman who is working for a small wage. He has a large family and he must find for them the necessaries of life, food, clothing, boots and shoes and so on. They are not all taxable; but many of them are, and I think, when I quote the Prime Minister's speech in 1920, I shall have good proof for the statement that I am making at the present time. I said that this would tend to race suicide because, I asked: How can a poor man provide for a family if this sales tax is imposed on all the necessaries of life? I think the House will agree with me that the tendency is for the poor man to raise the big family; and in the imposition of a sales tax, the revenue is collected, not according to a man's ability to pay, but on the necessities of himself and his family, no matter how poor he may be.

At six o'clock the House took recess.

The Budget-Mr. Caldwell

After Recess

The House resumed at eight o'clock.

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PRO

Thomas Wakem Caldwell

Progressive

Mr. CALDWELL:

Mr. Speaker, when

the House rose at six o'clock I was about to quote from a speech made by the right hon. Prime Minister in this House in 1920 in order that I might prove the inconsistency of the statement he made two days ago and of this budget with what he stated at that time. Two days ago he said:

The present budget would shift the burden at taxation to a more considerable extent upon the shoulders of those who are best able to bear it.

To-day he claims that increasing this tax by 50 per cent will shift the burden of taxation to a more considerable extent upon the shoulders of those best able to bear it. Now I am going to quote what the right hon. gentleman said two years ago about the shoulders best able to bear the burden of taxation. While approving the luxury tax, he criticized the government for introducing this sales tax, and he said:

But what have they done? Instead of alleviating the high coat of living as it affects the great mass of consumers they have added to it. They have increased the cost of living and made it more difficult for the people of Canada to live than it has been heretofore. To an invisible tariff they have added a visible tariff on a great multitude of commodities, thereby increasing the coat of living to the vast body of consumers. From one end of Canada to the other, in every home, there has been considerable difficulty in ooping with the situation. Go where you will, you will find this the batfling problem that taxes the ingenuity of the great majority of the people. As I say, Mr. Speaker, instead of meeting the high cost of living as it was obviously the duty of the government to have met it, by reducing the tariff on the necessaries of life, they have added this visible tariff in the nature of an excise to the invisible tariff which already exacts its toll from the people in regard to commodities in general use.

But they have done more than that. They have not been satisfied with merely adding one tax but they have heaped tax upon tax on many of the necessaries of life that enter into daily consumption.

So far as this budget affects luxuries we can heartily endorse all that the government proposes. It is proper that luxuries should be taxed, and taxed just as much as they will stand, but, as has been pointed out by one hon. member after another on this side of the House, there are many articles, such as boots and shoes, Clothing, the different articles required in the daily food of poor people, canned goods for example, which are taxed and overtaxed. Consider this excise tax in relation to the cost of living.

Still the right hon. gentleman says that increasing the sales tax by 50 per cent- the tax that he denounced in such round

fMr. Caldwell. 1

terms two years ago-will ease the cost of living! Well, Mr. Speaker, I am not able to follow his reasoning.

But digressing for the moment from the sales tax, I find a reduction in the duty on clothing, such as ready-made clothing and underwear, of 2i per cent, while the duty on silk goods is reduced 7i per qent. Now, this is evidently in the interests of the poor people, because of course all the poor people wear silk clothes!

I desire to point out a few discrepancies in the statements made by the right hon. Prime Minister, and the absolute failure in the budget of to-day to carry out his ideas of two years ago. Speaking aoout the tax on goods sent out of the country>

the right hon. gentleman on June 1, 1920, used thp fo'lowing language, which will be found at pare 2973 of ILirsctrd for that year:

Instead of caring for and protecting the consumers, the government have left them to their fate. One thing I was surprised to see in regard to this matter was that while a tax is put upon the goods obtained by the consumer, there is no tax upon the goods that are being sent out of the country.

The present budget contains the following provision:

Provided further that the excise taxes specified in this section shall not be payable on goods exported,-

That is in absolute contradiction to the statement made by the right hon. Prime Minister two years ago. And a little further down, in fact in the next paragraph of the budget, we find the following:

A drawback may be granted of ninety-nine per cent of the said taxes paid on the materials used, wrought into or attached to articles exported-

So they not only do not levy this tax that he thought was so necessary two years ago on articles exported, but they give a rebate of ninety-nine per cent of the tax on raw materials that go into the manufacture of those articles so exported. I want to show why he said at that time that the government did not levy taxes on goods exported. I have already quoted his remarks where he expresses surprise that while a tax was put upon the goods obtained by the consumer there was no tax upon the goods that were being sent out of the country. Then he continued:

Why?

With a big question mark after it.

Because in that instance it helps the manufacturer. He, not the consumer, is the chief

The Budget-Mr. Caldwell

2G63

consideration with the government. Again, the more you export out of the country, the less there is for the consumer. Look it all over and you see all along the line the interests of the privileged classes carefully taken care of while the interests of the great bulk of the people have not been safeguarded.

In this connection, Mr. Speaker, I submit there is-I was going to say absolutely no difference between this budget and the budget he was then discussing; there is, however, this difference: In the budget of 1920 there was a tax on luxuries and on excess profits, while in this budget there is no hint of similar taxes. So if you are to compare the two, this is a more protectionist budget from that point of view.

And this is what the right hon. gentleman stated in regard to the duty on the tools of production in the course of the same speech which I have already quoted from. This will be found at page 2979 of Hansard for 1920:

I can imagine my hon. friend, the Minister of Finance, saying when I suggest that some of the wartime wealth might be taxed, "It is poor policy to tax capital, because capital is the goose that lays the golden eggs." Well, I can appreciate his not wishing to tax capital, but I wonder if it has occurred to hon. gentlemen opposite that if there is one form of capital that is most essentially capital it is the instruments of production that are used for carrying on further production. Instruments of production for the basic industries are the real capital that is necessary, along with labour, to create further wealth; and as long as customs duties are kept on the implements of production of the basic industries so long you are simply taxing the capital that is necessary to produce further wealth.

I will admit, as the member for Brome (Mr. McMaster) so well put it, that they have made a shuffle in the direction of reducing the duty on the implements of production. Some hon. members have called it a short step, I agree with the member for Brome that it is not a step but merely a shuffle, and I think the consumer is getting much the worst of even that shuffle.

In his budget -the Finance Minister estimates that there will be a reduction of revenue on account of the reduction of duties of one and one-half millions; I think that is the figure. He does not tell us what increased revenue he expects to collect by reason of the 50 per cent increase in the sales tax, but anyone who examines the figures as to the revenue derived from the sales tax last year can work that out for himself. Last year the amount collected under this head was $60,000,000; an increase of 50 per cent would result

in the collection of $90,000,000, provided that the same amount of business was done, and I think it is fair to suppose that would be the case. So that in this shuffle we get relief to the extent of $1,500,000 in one direction, and we get $30,000,000 shuffled on in the other, which means an increased burden to the consuming public of $28,500,000. I thoroughly agreed with the Prime Minister's attitude on the matter of sales tax and luxury taxes two years ago; I am very sorry that he does not take the same attitude to-day. If he did- and I am speaking for myself only-I would have no hesitation in supporting a budget such as he advocated at that time. It would mean relief to the consuming public by elimination of the sales tax, and the taxing of luxuries, if you will, to take its place-because we all realize that we must have revenue.

I wish to quote further from the remarks of the right hon. Prime Minister with regard to a matter that has not been referred * to in the present budget, and it is an item which affects most seriously the interests of the constituents whom I represent. Quoting from the Liberal platform, he said, as reported on page 2982 of Hansard, June 1, 1920:

That, In the interests of agriculture, in aid of greater production on the land, and for the conservation of the soil in Canada, it is expedient for the Government to arrange for the distribution of fertilizers at the lowest possible cost.

By the way, in the Liberal platform- and I do not need to read it; I think we all know what it says, though unfortunately we are not going to see any of its terms put into operation this year-in that platform it is proposed to put fertilizer on the free list, yet my hon. friends have not given it the miserable little 2h per cent reduction that they have seen fit to extend to some other items. Before I have finished I shall give to the House some facts as to how the duty on fertilizers affects the producers of eastern Canada- because I believe you do not use them in the West; and as to how very slight the loss of revenue would be if the customs duty on this article were abolished. But before I come to that I wish to deal with the matter of how the duty affects the price of farm implements.

The hon. member for St. John (Mr. Baxter) early in the session censured my honoured leader for stating that the price of machinery and other commodities was enhanced as the result of the imposition

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LIB
PRO

Thomas Wakem Caldwell

Progressive

Mr. CALDWELL:

I am glad my hon. friend has asked that question. This fertilizer is mixed in New Brunswick. They call themselves manufacturers, but they manufacture nothing. They buy their chemicals and import them, put them into a hopper, stir them up, bag them, and put them out. They are not manufacturers at all. They simply mix the ingredients. Our farmers, for the reasons I am going to give, are now importing their own chemicals in large quantities and I want to give the House the price at which they buy their chemicals and the price at which these manufacturers, as they call themselves, sell the stuff. Last year the difference between the Maine and New Brunswick price for fertilizer from this same factory was $15. Of course, there was the exchange rate in their favour last year; American money was worth so much more. That was legitimate, but I do not think it is legitimate for them to take advantage of the tariff.

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LIB
PRO

Thomas Wakem Caldwell

Progressive

Mr. CALDWELL:

I stated in this House two years ago that I thought the manufacturers of this country should hail the exchange rate at that time as a godsend, because it furnished them just the same kind of protection that a tariff does.

In 1916 we imported duty free fertilizers into Canada to the amount of $1,622,998. That would amount to 40,824 tons. I have estimated that in the last six years the average difference between the Maine and New Brunswick price of mixed fertilizer is $10. The difference was $9 this year, $15 last year, and it has never been less than $9, I think, in the last six years. So the Canadian manufacturer of fertilizer, as he calls himself, the Canadian mixer, as I call him, was able to exact $10 per ton more from the farmers of Canada on account of this duty, and in 1916 he exacted $408,240 of an extra profit on that 40,824 tons. That same year we imported

dutiable fertilizer to the amount of $586,751, and we collected in duty on that fertilizer $58,675. In other words, the customs tariff enabled the Canadian mixer of fertilizer to put into his pocket $408,240 of an extra profit, while it produced in revenue for the country only $58,675. I shall not weary the House by giving the whole list, but the figures for the five succeeding years correspond with those I have given. In the past six years we imported duty free fertilizers to the amount of $13,520,575, and that gave an extra profit to the manufacturers on account of their taking advantage of the tariff of $3,380,170. We collected in duties in those six years on dutiable fertilizer the sum of $587,134. In other words, in order to collect a little over half a million dollars on dutiable fertilizer brought into Canada, we had a tariff that enabled the Canadian mixer to extract from the pockets of the farmers $3,380,170 in extra profits on the duty free fertilizer chemicals that they brought in. Still they will tell you they do not take advantage of the tariff!

I want to give another illustration, and I shall give last year's prices as I have not the figures on chemicals for this year. Last year the New Brunswick farmer paid $76.03 in cash by the carload for 4-8-6 brand of fertilizer in bags, 4-8-6 representing 4 per cent ammonia, 8 per cent phosphoric acid, and 6 per cent potash. That is the price we had to pay, but our farmers' organizations, knowing that these fertilizer mixers were taking advantage of the tariff, imported their own chemicals, and got them laid down at the station freight paid, the very same materials, mind you, for $50.62, or a difference of $25.41 between the cost of the chemicals brought freight paid to our station, and the cost we had to pay when buying the very same article from the factory freight paid to our station. I will now give the ingredients in that brand:

200 lbs. NitraJte Soda at $81 per ton. . $ 8 10

100 lbs. Sulphate of Ammonia at $92

per ton 4 60

200 lbs. Tankage at $62 per ton.. .. 6 20

800 lbs. Acid Phosphate at $46 18 40

240 lbs. Potash (50%) at $111 13 32

You will notice that this does not make a ton. The mixer puts in according to the grade of his fertilizer, and the lower the grade the more it takes, sand or road dust to make it dry enough to go through the machine.

The Budget-Mr. Caldwell

Topic:   REVENUE.
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LIB
PRO

Thomas Wakem Caldwell

Progressive

Mr. CALDWELL:

I am glad the hon. member asked that question. I spoke of the fact that the Canadian mixer of fertilizer was able to collect that vast extra profit of $3,000,000 from the potato growers, chiefly of New Brunswick, because very little fertilizer is used elsewhere, solely on account of the tariff. These people who mix this stuff are not New Brunswick people, or Canadians, so far as I know. They are a Canadian branch of an American firm that has built a little plant down there where they stir up these ingredients, and collect this extra $10 from the farmers of New Brunswick, and then send it back to their American bank. I said in this House two years ago that if we were making Canadian millionaires by the operation of the tariff it would be bad enough, but in this case we are making American millionaires with Canadian money. That is my contention. I do not wish to weary the House by reading any more figures.

Some one may say: The hon. member for Carleton is just like a lot of other men, pointing out a lot of difficulties and not suggesting any remedy, but before I come to that I just wish to show how many barrels of potatoes are necessary to buy a ton of fertilizer from the fertilizer mixers of New Brunswick at the present time. The hon. member for Saltcoats (Mr. Sales) told us the other evening how many bushels of wheat it cost him to buy a box of apples, and I shall give a like illustration with regard to potatoes and fertilizer. At the present time-and this was given in sworn evidence before the Freight Rates Committee the other day by Mr. Porter, who, by the way, is one of the largest potato exporters we have in eastern Canada, as well as one of its most reliable men-the farmers are getting for a barrel of potatoes less than 50 per cent of the cost of production. For the last two months or the last month and a half, and that is the time when a great many potatoes are sold in our section of the country, our farmers have been getting, not 50 per cent, but only 25 per cent of the cost of production. In New Brunswick last year it cost $2 a barrel to grow potatoes. What price are we getting at the present time? Only 50 cents for a barrel of 165 pounds, and it cost us $2 a barrel to raise those potatoes. That is the sworn evidence of Mr. Porter before the

Freight Rates Committee. Since the 1st of February our potatoes have not been above 80 cents a barrel, and most of our crop has been marketed since then. At the rate we are getting for our potatoes to-day, it will take 135 barrels of potatoes to pay for one ton of fertilizer, for the price the mixers are asking is $67.50. The average yield of potatoes in New Brunswick is 80 barrels to the acre, so you will realize what a position the farmer is in who has to buy fertilizer, and the necessity for granting him some relief, especially as that could be done without any material loss in revenue for in the last six years we have only collected about half a million dollars in duty on fertilizer. Yet this item is not mentioned at all in the present budget; no relief is granted. I am convinced that it was an oversight on the part of the Minister of Finance, and I earnestly hope-I was going to say, I firmly believe, but I am not so ready to believe as I was two years ago that legislation needed will be passed-but I sincerely hope that relief will be granted on this very necessary article to our farmers before the budget resolutions are approved.

I said I was going to make some constructive suggestions, because I do not think that a speech which is entirely destitute of constructive criticism is any help either to the House or to the country. However, before I come to that, I had better deal a little more fully with the decrease in the customs duty on farm machines. I am not feeling quite so blue over the fact that there have not been more reductions made in the customs duty on farm implements as I am at the increase in the sales tax. I do not think the decrease in the duty on farm implements has been at all sufficient, but the little shuffle that was made in that matter was made in the right direction, while the move made in regard to the increase in the sales tax is absolutely in the wrong direction-that is my belief. However, I think after listening to the speech of the Minister of Justice (Sir Lomer Gouin) this afternoon, and the statement made by the Finance Minister two days ago I have not quite as much hope as I had at the beginning of the session that the Liberal party ever meant to put the tariff planks in their platform into execution; and in that regard I just want to quote a statement made by the Minister of Finance two days ago in reply to the leader of the Opposition. He said:

The Budget-Mr. Caldivell

I have never voted for the tariff items of the Liberal platform, and never concealed the fact that I did not approve of the platform in that respect.

I think, Mr. Speaker, possibly it is becoming increasingly clear to the members of this House just where the pressure is coming from that is preventing the Liberal party from putting their platform, or moving in the direction to put their platform, into active legislation. I want to say further, Mr. Speaker, that I am not criticizing the Government in any particular because they have not put into effect at once their platform in regard to the duty on farm machinery. I do not think any sane man in this country would advocate taking the duty off any one article all at once, especially when it is as high as it is on some articles of farm machinery, but I think a substantial step should be taken in that direction and not a shuffle. I also think the manufacturers should be warned that the Government did mean to implement their platform by legislation if they continued in power, and for them to put their house in order and get ready for that eventuality which should come by stages so that they will be able to accommodate themselves to the situation.

I want to say right here, Mr. Speaker, that I deplore the fact that different speakers in this House have attempted to attribute the statement to us that we desire free trade right away, that we want to wipe out the tariff over night, and that we want to get rid of the manufacturers of Canada. That is not the fact. I do not think there is an absolute free trader in any group in this House. But we of the Progressives want freer trade, and we want reductions of duty on the tools of production and the necessaries of life. The reason why I am not so concerned about the duty on farm implements as I am about the increase in the sales tax is, that the reduction in the duty on farm implements would, possibly, only affect 50 per cent of the people of Canada, whereas the increase in the sales tax affects 100 per cent of our people. And no party i.i this House or in this country should take a selfish, or a narrow view even, of the tariff. We must have a tariff for the whole of Canada; we must be willing to give and take; but I do not consider the Government have even taken one short step towards putting their platform into effect. I sincerely hope, therefore, that

the statement the Finance Minister is going to make later in regard to the budget, according to the announcement of the Prime Minister this afternoon, will carry out some of the changes to which I have alluded.

I said that I wanted to make some constructive suggestions. Now, I have made a suggestion on more than one occasion in this House that an export duty should be put on pulp wood and on round logs going out of Canada, and I will tell you why. I see the hon. member for Brome (Mr. McMaster) shaking his head.

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LIB
PRO

Thomas Wakem Caldwell

Progressive

Mr. CALDWELL:

We all agree that manufactures are necessary in any country in order to build the nation up. All we ask is that the manufacturer get off our backs and stand on his own feet. However, I want to make a suggestion to the Government in the matter of establishing factories in this country; and I do not need to go outside of Canada to demonstrate the truth of what I am saying as to the necessity of offering some inducement to manufacture pulp and paper in Canada. I want to show why I am advocating an export duty on pulp wood. I hold in my hand a copy of a prospectus issued by the Oxford Paper Company of Rumford Falls, Maine. They are getting out this prospectus in order to sell $300,000 worth of stock to develop a water power and an electric plant at Rumford Falls, and I want tc show you what they are presenting as their assets, the justification they are giving to induce the people to put money into their enterprise in order to develop that industry in the United States. They say in this prospectus:

The Company's available supply of pulp-wood is ample. It holds under lease from the Crown the right to cut and remove pulp-wood and all forest growth from a tract of about 1,015 square miles (approximately 650,000 acres) in Cape Breton, Nova Scotia. This lease runs for a long terms of years in 20 year renewable periods, the last maturity June 19, 1998, at an annual rental of $6,000. This rental is a fixed sum regardless of the amount of wood cut from these lands. The hoUd'ings are virgin forests and contain, according to conservative estimates by experts, at least 6,000,000 cords of high grade pulp-wood, sufficient to supply Oxford Paper Co. for more than 100 years at its present rate of consumption of spruce and fir.

In addition, the company owns the right for 12 years to cut spruce and fir from a tract of 55,000 acres in ^Canada, near the city of Quebec, and also has the right to cut spruce and fir from 125,000 acres additional Crown lands in Canada.

The Budget-Mr. Caldwell

The company has a further large available supply of spruce and fir and pulp through Its one-half ownership of Nashwaak Pulp and Paper Co., Ltd. which owns, in New Brunswick, a pulp mill and owns or controls about 359,000 acres of land containing about 1,000,000 cords of spruce and fir timber.

Besides spruce and fir the company uses a large amount of poplar wood, which It is able to buy at reasonable prices in Maine, New Hampshire and New Brunswick. As poplar growth is very rapid a sufficient supply of this wood will, it is believed, always be available.

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LIB

Andrew Ross McMaster

Liberal

Mr. McMASTDR:

May I interject a question here? Would the hon. member consider it wise to have an export duty on potatoes in order that a man who was running a (mill in which potato flour was manufactured might get the potatoes and make them up into flour?

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June 8, 1922