June 9, 1922

LIB

Lewis Herbert Martell

Liberal

Mr. MARTELL:

How far would you like to see the Government go at the present time in regard to the tariff? Do you want it wiped out entirely?

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

Oliver Robert Gould

Progressive

Mr. GOULD:

I would start specifically, as my honoured leader stated the other

day. It seems there has been no discussion whatever of the question why in the case of two implements made of steel, one should bear a duty of 15 per cent and the other 10 per cent in the tariff. It shows there has been no discussion in the caucus to ascertain the relationship, and it is a question that schoolboys might settle. One of the first things I would do would be to find out the relationship if protection was desired. I have never said I would sweep the slate clean, but I would spend a little time considering whether there should be this inequality when both implements are made of steel.

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LIB

Lewis Johnstone Lovett

Liberal

Mr. LOVETT:

Does, the hon. member not think the Minister of Finance (Mr. Fielding) gave this question great consideration?

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PRO

Oliver Robert Gould

Progressive

Mr. GOULD:

According to the statement made by the Minister of Finance, he does not believe in your platform. I am speaking of the planks in the platform and not of the individuals in the party, who were supposed to make the confession that they did not believe in the platform. That is the attitude which I wish to take. That is the expression of opinion which I wish to place before the House and the country to-night-that individuals who compose the so-called Liberal party have a platform and have not implemented it, and there are a number who have definitely stated in the House that they do not think they ever will; they do not approve the platform. It is on that declaration that the people of Canada will pronounce judgment.

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LIB

Lewis Herbert Martell

Liberal

Mr. MARTELL:

When did the Minister of Finance say that he did not believe in the Liberal policy or platform?

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PRO

Oliver Robert Gould

Progressive

Mr. GOULD:

He did not say the policy, but the day before yesterday the Minister of Finance made that statement. I do not know whether the hon. member was in the House or not.

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LIB

Lewis Herbert Martell

Liberal

Mr. MARTELL:

No. He referred to the tariff plank.

Topic:   THE BUDGET
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PRO

Oliver Robert Gould

Progressive

Mr. GOULD:

If you burst one wheel of a buggy, your whole machine is gone. I do not think anything is to be gained by my standing here answering questions that are being put to me by my hon. friends across the floor. As I have stated, the possibility at least exists that we shall go back to the country. When we go back to the country, we will have a right to say that the Liberal party had an opportunity of implementing their pledges, and they had not

The Budget-Mr. Steedsman

done so. Consequently, we stand upon good ground, as we stood upon good ground when we campaigned last fall and told the people that we did not believe that until a purification had taken place in the Liberal party they need ever expect to have their platform implemented by legislation. We have waited long, patiently and earnestly; we have given an opportunity to the great Liberal party of Canada ever since 1896 to implement pledges made in 1891 and 1893. We have waited and waited and waited almost in vain. Grey hairs are now over my head. When I was a boy going to school I believed in those promises; I believed in the Liberal party. My father told me that they would implement those pledges. I am as old a man to-day as my father was in those days, and those pledges are not implemented yet. I will tell my boys that the Liberal party will never implement their pledges. That is all I wish to say concerning the matter to-night. Without expressly stating how I am going to vote, I think indirectly I have stated that.

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PRO

James Steedsman

Progressive

Mr. JAMES STEEDSMAN (Souris) :

The Budget-Mr. Steedsman

turers immediately alongside of them, if it were not for the protective tariff. He told us the same thing applied to fruit. Well, if the manufacturers and fruit growers of British Columbia, or of Ontario for that matter, cannot compete with the manufacturers and fruit growers of the United States, then, as some one has said, they will have to get out of the business. That is the solution so far as I can see. How does the fruit question affect the agriculturists of the prairies? After all it is at the expense of the agriculturists of the prairies that the people of British Columbia are asking for protection for their manufacturers and their fruit growers.

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CON

James Dew Chaplin

Conservative (1867-1942)

Mr. CHAPLIN:

Does the >hon. member believe, then, in free trade in fruit of all kinds?

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PRO

James Steedsman

Progressive

Mr. STEEDSMAN:

The Budget-Mr. Coote

doing us a little. Now, what is the trouble? Raw material was not any cheaper then than it is now. Labour may have been a little cheaper, but surely not so much as to make that difference. In those days the shoemaker applied skilled labour to every part of his manufacture. My hon. friend says, that to-day he pays $11 and $12 for his boots; why the difference? The system under which we are working entails a maximum outlay of capital in connection with goods that are manufactured. Take the quantity of boots and shoes that are in warehouses, wholesale and retail stores, and so on throughout the country; undoubtedly there is a tremendous amount of capital involved. But who has ceased to wear shoes? Not anyone in the prairie provinces, especially if he is an agriculturist. I cannot see that there is any force in the arguments of my hon. friends on the other side.

I do not wish to detain the House any further. I will just say in conclusion that had the Government gone as far as I have suggested; had they taken these inconsistencies out of the tariff and placed agricultural implements on a level with binders and mowers so far as duties are concerned, we would have felt disposed to wait with some degree of patience. If the system that I have suggested were adopted I have no doubt that the Minister of Finance would be able to come before the House next year with proposals involving a great reduction of customs duties and to justify his position to this House and to Canada.

Mr. GEORGE G. COOTE (Macleod): Mr. Speaker, it would seem almost in order to apologize for taking part in the debate at this time. When the matter was mentioned in the House yesterday by the Prime Minister (Mr. Mackenzie King) and there was some suggestion of closing the debate last night, I sincerely hoped that that would be arranged, and for my part I was quite willing not to inflict on the House any speech on the budget. Seeing that that was not arranged and that the debate is continued, I want to say a few words in explanation of my position in regard to the amendment which is before the House.

The other night when the Prime Minister was speaking he quoted part of a parable from the sixth chapter of Luke, where it speaks of removing the mote from thy brother's eye. I could not help thinking

[Mr. Coote. I

that he had omitted the best part of the parable, which starts off with these words:

Shall the blind lead the blind? shall they not both fall into the ditch?

When it comes to a question of political morality, Mr. Speaker, which this amendment seems to raise, I feel that that verse is very applicable. I do not feel that it is my duty to charge the Government with being guilty of immorality in a political sense. When this amendment was first introduced I felt that I should support it, but after listening to the argument of hon. members to my right I came to the conclusion that I could not consistently vote for it, because it was proved to my satisfaction that many members who are supporting the present Government stated during the campaign that they were not in favour of any tariff such as was set forth in the tariff plank of the Liberal platform. The thing to me seems to be rather inconsistent. I think that individual members of the Liberal party will have to be judged by their own constituents. I was glad to hear Mr. Speaker remark the other day in this House that he did not recognize parties; that he recognized only individual members. I think that the individual members of this House are responsible to their constituents. Therefore Mr. Speaker, I feel at the present time, unless some argument is advanced which would change my mind, that I shall not support the amendment. I shall leave the Government to be judged by their constituents. I believe that no government and no party can rise any higher in a moral sense than the people, and if the people at home will judge them, and if they care to send them back, that is perfectly democratic, and I shall be satisfied with that.

I feel there has been far too much time taken over this budget debate. I believe that if party politics had been left out of it, if the washing out of party political linen had been avoided, the debate might Jiave ended before this. Speaking for myself, I did not come here to play politics. I came here to endeavour to represent the people who live in the constituency of Macleod to the very best of my ability. In fact, I think that party politics is the greatest curse from which this country is suffering to-day, and I do not think it is possible, or at all events probable, that that idea can be given too much prominence at the present time. I think it is the duty of every member of this House seriously to consider whether we could not evolve some

The Budget-Mr. Coote

better system of government in this country. I want to say frankly that the budget is to be a great disappointment. If we could have in this House an honest vote regardless of party affiliations and political reasons as to whether we should have in this country a lower tariff or the present one, I should be very glad and I should be willing to accept that vote as final for the next few years; but we are not able to have that honest expression of opinion on the tariff, for under our present system I realize quite well that many low tariff Liberals cannot give expression to their honest feelings in regard to the tariff. Therefore 1 say that party government is at least a hinderance to the development of this country. I had expected that the budget Would contain some jkind of a compromise on the tariff, a compromise between low tariff and high tariff views, but the budget as 'brought down shows that the Finance Minister has leaned a great deal too far towards high protection. It reminds me of a story I heard in my election campaign of an Irishman who had been predeceased by two wives. When his friends asked him before he died where he would like to be buried he said, "Well, bury me between Betty and Bridget, but incline (my head a little towards Bridget." I think the Prime Minister inclined his head too far towards those in his party who are desirous of having a high tariff, and that is the reason why the budget brought down is so much at variance with the tariff plank in the Liberal party platform.

The most striking thing in the annual financial statement presented to this House, I think, is the immense national debt. I believe that two billion dollars of this debt is the result of the great war, and in my humble opinion the greater part of it, at least, should never have been incurred. Had the government which was in power while the war was on been possessed of real patriotism, they would have collected from the people of this Country in the way of taxation a sufficient amount to have paid the larger part of the expenditure necessary to carry on the war. I think Sir Thomas White is reported to have said at the time of the flotation of our second last loan that Canada was then wealthier than when she entered the war. I maintain that he is condemned by his own words. Had he had the courage, he could have collected during that time from the people's increased earnings, through taxation or

173i

conscription, or whatever you wish to call it, sufficient to have paid the greater part of the cost of carrying on the war, and this would have served a double purpose; it would have kept down the high cost of living, or what became the high cost of living, and would at the same time have saved us from the financial plight in which we find our country to-day. The exemption from taxation of the income from Victory bonds was, to my mind, nothing less than a crime. These bonds have now very largely found their way into the hands of the wealthy class in this country, and when our fighting men returned they as well as the rest of the people are compelled to pay taxes On their cigarettes, their soda water, their chocolate bars, to raise the interest on this immense amount of tax-exempt bonds. I consider the action of the government at that time in conscripting the manhood of the country and exempting wealth was nothing less than a national sin. I believe that nations, as well as individuals, are punished for their sins and as the Good Book itself says, the sins will be visited on the children to the third and fourth generation, and I believe that will be true in the case of this country. We have a millstone of debt around our necks to-day which I doubt if we will ever get rid of.

I should like to see placed on the statute books of this country a law which would compel any government which might happen to be in power to conscript the wealth of this country in any future wars in which this country might engage, if we ever do, and I pray we may not. Our debt now is approximately seven times as great as it was in the year 1914, and I maintain that a policy which might have been adequate to enable us to carry our debt in 1914 is not adequate to meet the needs of the country to-day. Our interest charges have increased since 1914 by 1,300 per cent, while the value of our export of wheat, which is the greatest single item in our export trade, has increased in that time only 55 per cent. This will surely bring home to hon. members what an awful interest charge we are carrying. We are so used to talking in millions that I do not believe our people realize the full extent of our national debt and of our interest charges. I am told that our interest charges to-day are more than the people of Canada spend for bread, which is the staff of life. If this terrible amount of interest is ever to be paid, it can only

The Budget-Mr. Coote

be done by all the people of this country who are able to work being put to work, and we must also give them the very best machinery and tools available. The only way in which we can create new wealth, as a basis for taxation to meet our annual expenditure, is to put to work every man in this country who is willing to work, giving him the most modern and up to date tools and machinery which can be had and making his tools and machinery as cheap as possible. We have in this country great natural resources. Why should we place in the way of any man who is willing to work at these resources in developing them, any hindrance in the shape of a tariff duty on tools and machinery. Fcr my part I never could see the sense of making any man who was willing to work a bucksaw pay a tariff tax on that saw. If that be true in respect to a bucksaw it will also apply to any other of our tools.

I just want to give one instance of what this would mean to the development of wealth in Canada. Take in my own constituency; we are told by our geologists that we have there a large oil area. Now, there is nothing which western Canada is more in need of than a larger supply of oil, kerosene and gasoline. To-day in my constituency gasoline is retailing at from 60 to 65 cents a gallon, yet we persist in maintaining a duty of 27i per cent on oil drilling machinery of the kind made in Canada, as well as a duty on casing and practically everything required for the drilling of a well. When I was in the Black Diamond oil field in Alberta last year one of the drillers there told me that he was fully convinced that if the tariff was taken off their tools, machinery and supplies they could drill three wells for what it now costs them to put down two. Surely it would be in the interests of Canada to promote this oil industry. If we can drill more wells we can get a larger supply of oil; that would cut down our importations from the United States- practically all cur oil is coming from there at the present time-and it would help to diminish the adverse balance of trade which some hon. members to my right are so much concerned about.

The present budget proposes to put small farm tractors on the free list for the purpose, we are told, of encouraging production on our farms. Surely the Minister of Finance knows that it takes either gasoline or kerosene to run those tractors; they will not run of their own accord. And [Mr. Coote. |

yet tractors are put on the free list, and a prohibitive duty is maintained on oil well drilling machinery. To put it mildly I think that is absurd. What I said about oil well drilling machinery will apply equally to all well drilling machinery. The Minister of Agriculture has told us in very strong language that mixed farming is the salvation of that part of western Canada. Now the Minister of Agriculture, who should back me up in this, knows that there is one kind of stock which must be well watered, and that is the kind of stock which we have out there. It cannot be watered on a great many of our farms at the present time because we have not sufficient water. Drilling for water is a very expensive proposition. On my own farm, I think, the well cost me $500, and it takes every drop of water we can get to water our work horses and mi ch cows. Under these circumstances how are we going into mixed farming, and into stock raising? I have a neighbour that drilled two dry holes, each 200 feet deep which cost him $800 and then he had no water. If there is one kind of machinery which should be put on the free list it is the machinery for drilling wells. I remember a few years ago reading an article in the Grain Growers' Guide by a city man who was trying to point out to the farmers that they could live so much cheaper than men in the cities. One of his arguments was that it did not cost us anything for water, whereas the city man had to pay water rates. Sir, the interest on my investment in that particular well and pump cost me far more than the water rates that that man paid in Winnipeg. If I have to pull that pump out of a 200-foot well for repairs that operation of itself will cost almost as much as it costs that city man for his year's supply of water. The trouble in this country is that we do not know each other's problems. I can assure you, Mr. Speaker, that from the remarks I have heard in this House there are many men here who do not understand the problems of the farmer in western Canada. I only hope those men who feel that they do not know these problems will come out and see them. I hope they will not think they have seen them from the window of a pullman car, but that they will come out to where I live and we will be very glad to take them out and introduce them to some of those problems. One of them, by the way, is grasshoppers. I have had three letters from that district in the last

The Budget-Mr. Coote

two days and this statement, or something very similar, was in each of the letters:

It is hot and dry and the grasshoppers are hatching by millions.

The other statement is:

We are having a dry time and fighting grasshoppers as hard as we know how to.

The reason I speak of these grasshoppers is that our Department of Agriculture assures us that the only way we can combat them is to poison them. Yet paris green, which is necessary for this purpose, is subject to a tariff duty. Last year I spent three of the worst weeks in my life fighting grasshoppers, and I assure hon. gentlemen that if they have never done this they have a treat in store for them should they ever be required to do so. I have seen grasshoppers so thick where they hatched that there was not room enough on the ground for all of them to hatch-they were three deep. They would eat off the wheat and make the land as bare as the floor of this House. The only way in which you can stop them is by poison, and yet poison is subject to a tariff tax, to maintain some manufacturer in eastern Canada. The farmer when he has to fight grasshoppers must fight with his back to the wall; if he does not poison them they will surely eat his crop.

Now, Mr. Speaker, I am going to try and get away from the tariff; I want to say just a few words in regard to the cattle industry. First of all I wish to commend the Minister of Finance for endeavouring to secure reciprocity with the United States. If it can be secured it will be the salvation of the cattle industry in western Canada; if it is not secured I do not know what is going to happen to the industry. Chicago is the natural market for the cattle of western Canada. When the Emergency Tariff was put into force by the United States it made it very difficult for our cattle men to ship to Chicago, or at least it left them very little profit after the cattle were shipped. At the same time that is where most of our cattle had to go last year. In the summer of 1919 and even 1920, some of the banks in western Canada were urging the ranchers to buy more cattle and even to buy grazing lands and leases. The winter of 1919 was one of the worst, from the ranchers point of view, which we have experienced in a great many years, and practically all these men were compelled to buy great quantities of feed it prices ranging from $20 to $60 per ton. Tn the summer of 1920 our hay crop was

very short again, and although this winter was not quite so hard, they were again forced to buy great quantities of feed at fairly stiff prices. In 1921 the United States put on their Emergency Tariff against our cattle, thus almost closing the Chicago market to our ranchers. This fact was pointed out to the government which was then in office, and the announcement was made through the papers that they had concluded arrangements with the banks that the banks should carry the cattle men over until this year so that they would not be forced to sell at the extremely low price prevailing last fall. In spite of all that appeared in the papers in this regard, it is an actual fact that many of these ranchers were forced last fall to sell many of their cattle which were not properly finished. In some cases they were forced to sell cattle which had cost them at least $90 per head to raise, for from $30 to $40 per head. I have a letter here from one rancher, and I know of the case personally, stating that he was forced by the bank to sell over a hundred head of cattle, three year old steers, at a little over $30 per head, although he had sufficient hay to carry them over the winter. These cattle had cost him $40 the year before, and he had fed them for a full year. If he had been allowed to carry these cattle over another season, there is absolutely no question that he would have made another $25 per head and I think the bank should have helped him. The bank which forced him to sell the cattle was the Merchants Bank of Canada, and within a couple of weeks after this forced sale was made, it was stated in the press, that this bank had lost in one bad loan approximately $4,000,000. That loan was made to a firm of stock brokers for what might be termed gambling purposes. The banks are forcing the real producer out of business, but will furnish money to stock brokers to gamble with.

I think it is a matter of regret that the Finance Minister should have considered it necessary to give his approval to the amalgamation of the Merchants Bank with the Bank of Montreal. This Parliament should have ordered a parliamentary inquiry into the Merchants Bank case. We might have secured very valuable information which would help us to make a proper revision of the Bank Act next year. This banking question is getting to be rather a burning one in western Canada. As a rule a three months' loan is no good to an agriculturalist. He would be better if he

The Budget-Mr. Coote

never got it. I think perhaps it would not be out of place if I should put before this House a few facts in connection with the banking business in this country. During the last eleven years, the number of banks in Canada decreased from twenty-nine to seventeen. Practically speaking, the directors of seventeen banks have the power to say whether any individual or group of individuals in Canada can secure any credit for carrying on their legitimate business enterprises. If the same decrease in number of banks through failures or amalgamation is continued for the next eleven years, we shall then have five banks in complete control of the credit of this country. The paid up capital stock of all Canadian banks has increased in the last ten years by only 32 per cent. Since the amalgamation of the Merchants Bank with the Bank of Montreal, this capital has decreased until it is now only 28 per cent greater than in 1911. During the ten year period from 1911 to 1921 the savings bank deposits increased by 109 per cent. This is one of the alarming features of the banking situation as the Toronto Globe recently said:

The most disquieting feature of banking in Canada is the continually decreasing ratio of capital to deposits. Twenty years ago capital constituted over 31 per cent of the funds in the chartered banks of Canada. At the close of 1921 capital represented less than 15 per cent of these funds, while six-sevenths of all the credit used in doing the country's business was based on the deposits of the general public. It is doubtful if this change is for the better. The investor in bank stock cannot withdraw his money at will. His capital provides a fairly solid foundation for the structure of bank credit. This cannot be said with assurance of deposits which may be, and usually are, withdrawn. The billion and three quarters of deposits in Canadian banks are of what is known as "time" deposits, and could be held in the vaults during any sudden gust of panic, but if the ratio between capital and deposits in 1901 was reasonable and secure, then capital to-day needs a very considerable re-enforcement. Is Canadian credit as solidly based on six-sevenths public deposits and one-seventh private capital and reserves as it should be?

Let me point out another very important aspect of this decreasing ratio of capital stock to deposits, which is that the double liability clause attached to the capital stock of our banks is supposed to give ample security to depositors. This security is seriously impaired, if the proper ratio between capital stock and deposits is not maintained. Another disquieting feature of the situation is the fact that one bank now controls approximately one-quarter of the savings bank deposits in Canada, and this bank in addition, controls one of the larg-

[Mr. Coote. |

est trust companies in this country. There are many other features which are of national concern but which I will not take time to mention now.

Surveying the whole situation, I think it shows the need of some new system of credit in this country. I would like very much to see the Government give consideration to the proposal of the hon. member for East Calgary (Mr. Irvine) for the appointment of a committee of the House to study every phase of this credit system. We have been told repeatedly during the last two days how Germany had put her people to work, and had produced goods so cheaply, and I have been told-I cannot guarantee this fact-that the reason Germany has been able to do it is that she has issued so much currency. I think the fact that Germany has done that, and has probably made it hard for this country and other countries to compete with her, makes it imperative that we must study this question to see if we cannot secure some better system of credit.

In addition to a better system of credit, we need a new system of distribution. I only desire to mention the question of distribution in connection with wheat. The farmers of western Canada, as hon. members know, or should know, are asking for a wheat board to distribute their wheat. I have been a little bit vexed sometimes at the comments which have appeared in the press in this part of the country regarding our demand for a wheat board. I just want to give you one sample which reads:

One aspect of the case is not an impressive indication of consistency. Ottawa finds it strange that they who most vigorously preach free trade or something near it, in things they have to buy are so insistent upon protection against possible loss or reduced profits in things they have to sell.

I presume that a great many people who read that article will nod their heads in approval of this little paragraph, without, even, a thought of the causes which brought the farmers of the West to their present financial condition, and which have driven them to ask for what this writer calls protection, although I do not for one moment admit there is any protection in it. These men have been brought to their present plight largely by means of protection for somebody else and at their expense- protection for the manufacturer of the farmer's implements, the manufacturer of the clothes he must wear, and the manufacturer of much of the food that he eats, of the furniture which is in his home, of the materials used in the buildings which he

The Budget-Mr. Campbell

must have to shelter him in that cold climate, and protection for the railway company so that they may be enabled to pay their usual dividends and maintain their reserve unimpaired regardless of whether the farmer himself can buy clothes and shoes for his own family. I think it ill becomes any journalist in this part of Canada to hand out such comments as those after the way in which the great majority of them have consistently supported our manufacturing friends in their demands for protection. This Parliament cannot escape responsibility in this matter, as they are responsible for the economic policy of this country Which has been maintained by them, in spite of very strong protests from the farmers on the prairies who are now asking for this measure to help in some degree to solve their marketing problem.

Possibly, Mr. Speaker, my remarks have been a little bit disjointed, because I have tried to cut out most of what has been previously referred to in this debate. So as not to weary hon. members and, I want to mention only one more matter, namely, the remarks made by the hon. member for Comox-Alberni (Mr. Neill), whose candour I certainly admire. In speaking of the tariff, he said something to the effect- I do not think I can quote his exact words -that the tariff was a geographical matter; that a man's view on the tariff was determined according to the province in which he lived, that as a citizen living in Brittish Columbia he was perfectly justified in advocating a protective tariff; that if he lived in Manitoba he would be justified in asking for free trade or something approaching it. If that be correct, I think I am "safe in saying that the people of my province would be quite agreeable to British Columbia or Ontario or any other province having a protective tariff, if they so wished, provided that they would give to our province the same privilege of having a tariff that would satisfy us. If they are not prepared to grant that, the only alternative is a compromise; but it is a great stretch of the imagination to say that the compromise offered by this budget is anything like a fair one.

I am not sure whether I should say these last few words which I have on this note or not.

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?

Some hon. MEMBERS:

Go ahead.

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PRO

George Gibson Coote

Progressive

Mr. COOTE:

I have the backing of some hon. members behind me, and I will say them. I wish to say in plain language,

that western Canada has been unfairly treated by this House for many years, and that unless this Parliament recognizes that fact and makes a real effort to placate the growing feeling of resentment which this treatment has created, there may arise a situation with which Parliament will find it hard to deal.

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PRO

Milton Neil Campbell

Progressive

Mr. M. N. CAMPBELL (Mackenzie):

Mr. Speaker, it is not my purpose to enter into what some hon. members have been pleased to term a political inquest; but I feel that I would be failing in my duty to my constituents if I did not at this time draw to the attention of the House some of the definite promises and pledges made by the Liberal party prior to the last election. I have in my hand a copy of the platform drawn up at the 1919 liberal convention, and while this has already been frequently referred to, I think it is of sufficient importance for further reference. Under the heading of tariff, the second resolution reads:

Reducing the cost of the instruments of production in the industries based on the natural resources of the Dominion, the vigorous development of which is essential to the progress and prosperity of our country.

That to these ends, wheat, wheat flour and all products of wheat; the principal articles of food; farm implements and machinery; farm tractors; mining, flour and saw mill machinery and repair parts thereof; rough and partly dressed lumber; gasoline, illuminating, lubricating and fuel oils; nets, net twines, and fishermen's equipments ; cements, and fertilizers, should be free from customs duties, as well as the raw material entering into the same.

That a revision downwards of the tariff should be made whereby substantial reductions should be effected in the cost of wearing apparel, footwear and other articles of general consumption, other than luxuries, as well as on the raw materials entering into the manufacture of the same.

That the British preference be increased to 50 per cent of the general tariff.

And I wish hon. gentlemen to pay particular attention to the next clause:

And the Liberal party hereby pledges itself to implement by legislation the provisions of this resolution, when returned to power.

Under the heading of "Finance and Taxation" I find the following resolution:

Whereas, national disaster will overtake this country should the present method of financing the country's affairs be continued; and,

Whereas, both Great Britain and the United States at present raise more than 80 per cent of their revenue by direct taxation, while Canada raises not more than 20 per cent;

Be it and it is hereby resolved:

1. That the serious nature of the country's financial situation calls for the profoundes consideration of all patriotic citizens, and tht exercise of the severest economy by the Government ;

The Budget-Mr. Campbell

2. That increase of revenue must be sought from an equitable and effective im-position and collection of graduated taxes, on business profits and income, applicable to all incomes above reasonable exemptions;

3. Taxes on luxuries.

The Prime Minister, speaking in my constituency, in the town hall at Yorkton, Saskatchewan, on November 8, 1920, is quoted by the Enterprise as speaking as follows:

The tariff is too high and must be revised downward. The cost of living must be reduced. Why put a tax on the necessities of life, on food, clothing, boots and shoes and building material? Duties should be reduced. They were nothing but a tax put on the people. The sales tax is a tariff-a visible tariff.

He advocated the doing away with these taxes.

There is no doubt where the Liberal party stands on the question of tariff. Taxes have to be raised, but it is not necessary to do it all by direct taxation. I would tax incomes, business profits and luxuries. All could be raised in this way. A tariff should exist for revenue, and only to supplement those taxes. I think there are certain classes that should be exempt

the large body of consumers and the large body of producers in regard to instruments of production. All agricultural implements should be placed absolutely on the free list. Gasoline, fuel, oils, cement and fertilizers were some of the commodities that he would also exempt.

Further on, he said:

Our platform is the same as the farmers, with one or two differences.

It seems to me that the budget before the House to-day constitutes a very serious repudiation of those promises and pledges. It is not my purpose to enter into a criticism of the action of the Prime Minister; in fact, I believe he deserves more sympathy than censure at our hands. Let me say that, in my opinion, if the Prime Minister were surrounded by men as advanced thinkers and as liberal-minded as himself, we would to-day be considering a budget of an entirely different nature. Some hon. members opposite have reminded us that the budget is a step in the right direction, and that the platform cannot be put into effect immediately. I should like to ask them how long, at the present rate, it will take to have it in effect. This reminds me of the mathematical problem of the frog that fell into the thirty-foot well and tried to climb out. The first day he made four feet, but after that he got tired and lazy and crawled up twelve inches each day and slid back eighteen inches each night. How long would it take him to get to the top? The Minister of Finance (Mr. Fielding),

in presenting his budget, drew attention to the serious financial condition of the country and to the necessity of producing a revenue to meet those conditions. But, Sir, I submit that the budget before the House to-day is not one based on the principles of producing a revenue, but rather on the principle of protecting oui manufacturers. We are not complaining particularly of the duty in so far as it produces a revenue; hut when we are obliged to pay that duty not into the Dominion treasury, but into the pockets of Canadian manufacturers, we have a legitimate cause for complaint.

I wish to deal very briefly with some items of the tariff and like the last hon. gentleman who spoke, I find it necessary to cut out a good deal of what I intended to say on account of the lateness of the hour and the length of time that this debate has dragged out. I will deal first with the automobile industry. Automobiles and automobile parts are protected by a tariff duty of 35 per cent. In fact, with the alteration in the sales tax, the duty is a little more than that. There is a sales tax of 6 per cent on imported goods and 4i per cent on home made goods, which gives the manufacturer an additional protection of li per cent. So that the actual protection enjoyed by the automobile manufacturer is 371 per cent. Now, I do not wish to take an extreme stand in this matter, but I suggest to the minister that if his budget is really based on the principle of producing revenue he should reduce the protection on automobiles at least to the very reasonable figure of 20 per cent. Surely there is no hon.'gentleman in this House who will contend that 20 per cent is not a good and sufficient protection for the automobile industry. I would suggest further to the minister that he increase the present excise tax by 15 per cent. That system would have this virtue: it would still leave the manufacturers a very substantial protection; it would turn in a very considerable revenue to the Dominion treasury; and it would not increase the price of the product to the purchaser. I find that in the year 1920 there were manufactured in Canada automobiles and automobile parts tc the value of $137,420,531. Wages paid in the manufacture of these goods amounted to $19,368,009. Of these automobiles there were exported $20,911,262 worth. So that the amount sold at home totalled $116,509,089. On this basis the wages chargeable to the goods sold at home would he

The Budget-Mr. Campbell

$16,376,852. These automobiles, on the import basis,-that is, taking the prices that would he paid for them in the United States, apart from the duty-would amount to $101,792,852.

Had these goods been manufactured in a foreign country and been imported into Canada and the duty paid, it would have turned into the treasury that year the substantial sum of $35,627,498, or nearly enough to have retired the deficit on the Canadian National Railways for that particular year. Hon. gentlemen will say, however, that if they were imported, while there would no doubt have been a substantial increase in the revenue, the workmen would not have had employment.

Hon. gentlemen will probably ask, what about the wages and the employment of the men? Well, I will go a little further. The Dominion treasury could very well have afforded to pay all the wages of these men, allowing them to do nothing, and would still have had left the substantial balance of $19,250,648. Had the excise tax I have suggested been in effect that year, it would have brought in, to enrich the budget of that .time, the sum of $17,924,393, which otherwise went into the pockets of the Canadian automobile manufacturers. We imported in the year 1920 goods of this nature to the value of $25,548,348, on which there was collected duty amounting to $8,059,895. Taking these figures, the actual amount of duty paid by the people of Canada-because it is a duty regardless of whether it is paid to the manufacturer here or to the customs collecter-was $43,787,393; but of that amount only a little over $8,000,000, or less than 25 per cent, went into the Dominion treasury. So that on this basis it took over a dollar of taxation to turn 25 cents into the treasury. I would draw attention again to the fact that there was nearly $21,000,000 worth of these manufactured goods exported in the year in question. That shows that our Canadian manufacturers were able to ship goods out of this country and compete [DOT] in foreign markets with the manufacturers of the world, proving thereby most conclusively that they did not need protection.

When Sir John Macdonald introduced his National Policy in the House in March, 1878, he stated at the time that it was only a temporary measure, intended merely to give the manufacturers a leg-up, so to speak, and in that time, as they got on their feet, it would be abandoned. He was asked rather ironically from the Opposition benches as to just when he would regard the manufacturers as being no longer in a position that called for protection. Sir John was equal to the occasion and his answer was both sensible and logical. He replied that just so soon as these protected manufacturers began to ship goods out of the country in competition with foreign manufacturers in the world's markets, they would thereby prove beyond question that they no longer needed protection. That was the basis on which the National Policy was instituted in Canada. But let me come tc a period somewhat nearer our own time;

I will quote a more recent authority. On January 18, 1911, the right hon. the present leader of the Opposition (Mr. Meighen) moved, in the House of Commons, the following resolution:

That in the opinion of this House a substantial reduction in the import duties on agricultural implements is now due the agriculturists of Canada, and is in just a.ccord with the true ends of a protective tariff.

I observe that in his speech he quotes Sir John Macdonald and quite a number of the other leaders of the Conservative party, citing these very facts to prove that the policy of that party was to retain this duty only until such time as it was clearly demonstrated to them that the manufacturers were no longer under the necessity of protection. Let me quote briefly from one section of his speech. I should like very much to place the whole of the right hon. gentleman's remarks on record in Hansard, Mr. Speaker, because they are interesting. Howe/er, I do not wish to weary the House and fo I shall quote just one part of his speech.

But the charge I have to make, and which I hope to bring home to the Government this afternoon, is not that one, though it is the most serious;

He was referring at that time to the question of broken pledges, as he is doing at the present time.

-it as this, that in their attempts to continue the National Policy which had obtained for years before, they have overlooked, they have neglected one essential feature of that policy, they have quite forgotten its guiding principle-

I want the House to note what the right hon. gentleman here refers to as the guiding principle of the National Policy.

-namely, the principle that as our industrial institutions advanced in strength and as they were able with every advance to acquire a hold on the home market, the import duties were to be diminished and adjusted in order to meet the evolving and changing conditions. It is that restraining, guiding principle, which I claim this government has entirely overlooked, and as a consequence they have allowed, in the respect which I am discussing this afternoon, protection to run rampant.

.COMMONS

The Budget-Mr. Campbell

Now, I am not one of those who take an extreme stand. I do not advocate that we should do away with the industries we have and import all our goods, even though that might increase the revenue. There is no one who is more anxious than I am to see industries in this country and to see them prosperous and flourish-10 p.m. ing. I submit, however, that the contention that the automobile industry requires a protection of 35 per cent in order to carry on is not only a fallacy, but an absolute absurdity. I note that the Minister of Finance (Mr. Fielding) has allowed farm tractors to remain on the free list, and I am not complaining in that respect, for I would not suggest that a nuty be placed on these tractors. But at the same time I would call his attention to the fact that the farm tractor is not the most essential requisite; the important things are binders, mowers, rakes, drills, ploughs and waggons; and if the minister feels that he must retain a certain amount of duty on agricultural implements, then 1 would ask him, in all fairness to the poor farmer, and particularly to the new settler whom we are trying to induce to come to Canada, and who will not have sufficient funds to purchase tractors, to place a small duty on farm tractors and reduce by a corresponding amount the duties on the essential implements.

Now, I pass on to something else, which is perhaps even more important, namely, the matter of cotton and woollen clothing. I would just like to say here that while farming implements are used by only one section of the people, cotton and woollen clothing are required by people of all vocations, regardless of their station in life. I suggest still further to the hon. Minister of Finance that if he must retain a certain amount of duty, we would prefer that he apply it to the farm tractor rather than to cotton and woollen clothing. There were manufactured in Canada in 1920 cotton and woollen clothing to the value of $186,711,174. The wages paid in the manufacture of those goods amounted to $31,267,601. Of the amount manufactured $13,809,576 worth were exported, so that the total amount sold at home was valued at $172,901,598. I find that the average duty paid on dutiable cotton and woollen clothing amounted to 30.7 per cent. I mention dutiable cotton and woollen clothing, because a large amount of woollen goods come in free-what are known in the customs tariff as worsted tops, very largely the coarsely spun yarn used by the wool factories. Goods

of this nature to the value of $11,913,824 were allowed in free. I may say incidentally that while wool and hides are allowed in free, wool blankets and clothing are protected to the extent of 35 per cent, so that you will see just how this protective tariff protects the farmer. Reducing these figures again to import value, as I did in the case of automobiles, we get the sum of $142,854,762. On the basis of the average duty, had these goods been manufactured in a foreign country and imported in the year 1920 they would have turned into the national treasury the very substantial sum of $43,856,411. Again with this item I do not wish to take an extreme stand, but I would suggest to the minister that he at least make a reduction of 10 per cent, thus saving the working people, the poorer people of Canada, the large sum of $18,000,000.

Let me deal just briefly with the protection that is afforded to the farmer. Cheap corn comes in in competition with his oats; raw hides, wool-all these things are imported free, but when the farmer comes to buy manufactured goods he has to pay this very substantial duty. The farmer is not particularly seeking protection; the farmer considers that a protective tariff is vicious in principle and destructive in its application. The farmer has never asked for protection and he is not asking for it now. But I submit that the men who framed this customs tariff, had they themselves firmly and honestly believed in the principle of protection, would have protected all industries alike, and would have imposed duties on these articles the same as on manufactured goods. And, Sir, what is the reason for this? Is it because the farmer has not done the usual amount of lobbying? He has not done any lobbying, but I do not think that is the reason; there is a deeper and more vital reason than that. It is simply that all these years the highly protected manufacturing concerns have been contributing very liberally to the campaign funds of both the old political parties. All down the ages, from the day of Judas Iscariot, men have been ready to sell their principles, their honour-yes, their country and their countrymen-for financial gain and for political power. Judas, when he took the thirty pieces of silver for the betrayal of his Master, committed no greater crime than scores of men who, during the course of our political history, have betrayed the confidence reposed in them by the people of Canada and have sold their own countrymen into the bondage

Canada Temperance Act

of a group of manufacturers and financiers in exchange for the campaign funds with which to win their election.

I would carry you hack to a red letter day in the history of Canada, a day to which the hon. member for Brome (Mr. McMas-ter) in his speech a few days ago, so ably and eloquently-yes, I wild say almost

pleading and tearfully-referred, that of 1893, when those great Liberal principles were laid down as the Magna Charta of liberty and progress and as the guiding star of Liberalism in Canada. But I will pass on for four years to what Porrit calls the great betrayal of 1897, and I will pass further on for nearly a quarter of a century until we come to another red letter day in the history of Canada, to what we at that time hoped was a brighter and happier day, that of 1919, when the same old platform and the same old principles were once more laid down as the foundation rock of the grand old Liberal party of Canada. But to-day we are in another period, a period that marks another milestone, a period to which the future Canadian historian may well and rightfully refer as the greater betrayal of 1922.

On motion of Mr. McKay, the debate was adjourned.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CANADA TEMPERANCE ACT AMENDMENT


On the Order being callfed: Second reading of Bill No. 51, to amend the Canada Temperance Act-The Solicitor General.


LIB

Daniel Duncan McKenzie (Solicitor General of Canada)

Liberal

Hon. D. D. McKENZIE (Solicitor General) :

Mr. Speaker, 'I move that this order be discharged. My purpose is to introduce another bill of somewhat the same character.

Topic:   CANADA TEMPERANCE ACT AMENDMENT
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Motion agreed to. Mr. McKENZIE moved for leave to introduce Bill No. 132, to amend the Canada Temperance Act.


CON
LIB

Daniel Duncan McKenzie (Solicitor General of Canada)

Liberal

Mr. McKENZIE:

When I introduced the former bill I explained that it was called for more particularly by British Columbia, though it had general application to the whole country. In British Columbia they have to some extent control of the sale of intoxicating liquors, and under the proposed legislation any liquors imported into that province must be imported by the local government and by nobody else, with the possible exception of liquors imported by parties who are licensed to take them in for purposes of export. After the former

bill had been introduced into this House, representations came from the government of Quebec to the effect that they have control of the sale of liquor to some extent in that province and that the provisions of the bill which I had introduced might interfere with them. And some slight change, therefore, was necessary in that respect.

Topic:   CANADA TEMPERANCE ACT AMENDMENT
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June 9, 1922