June 13, 1922

LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN (Halifax) :

Before the

war the balance of trade was rather against the United States, but it was made up by her borrowings from abroad, because even in 1914 she was a heavy borrower from other countries of the world. The United States government did not borrow but the people of the United States borrowed from the people of other countries. To-day the United States is making investments abroad, placin0 heavy loans in almost every country in the world, and how can she receive payment of interest except in goods? There is no other way to receive payment of heavy amounts of interest. She must import.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

1 The hon. member knows so well, that is the reason I am asking. Will he not admit that C~nada

ii in precisely the opposite position to that in which the United States has been since 1892? Canada is a debtor nation with large payments of interest to make, and consequently not requiring to import on an equality with her exports.

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LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN (Halifax) :

In one

sense Canada's position is different from that of the United States, because she is not a loaning nation, but, nevertheless, it is just as true of us that we must grow as an exporting country if we are going to take care of our great public debt and continue to be able to raise the necessary annual revenue for our public requirements. It is also true that we cannot export unless we import. Our 5 p..m. exports, as I have said, must pay for our imports, of raw cotton for instance, rubber, wood, and many other things. I know what is in the hon. gentleman's mind. We perhaps cannot travel as fast, as the United States can, but, nevertheless, it can be said truthfully of this country as of all other countries, that if by mutual arrangement our commodities could be exchanged freely for those of other countries, it would be better for the countries concerned.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Will the hon. member permit one or two questions 'more, because I think it is worth while? Will he say that with Canada having to pay annually over $2,000,000 of interest to the outside world, we require in order to pay our debts to import as much as we export, or that we even can import as much as we export?

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LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN (Halifax) :

Canada's

exports, of course, should exceed her imports in commodities as much as possible, because we must remit abroad for services and for interest and we can only do this by exports.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Hear, hear.

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LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN (Halifax) :

But, after all, it matters little whether your imports are commodities, money or securities; they must balance your exports. International transactions are no different from private transactions in that respect; they must balance. It is either money or commodities which people deal in. That is all that business consists of; that is all that international commerce means, and all that domestic commerce means; and in the end the whole thing ultimately means merely exchange of commodities. I fail to see the distinction my right hon. friend has in mind. I think he is wrong, entirely wrong.

2874 COMMONS

The Budget-Mr. A. K. Maclean

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

The hon. gentleman

has argued that I was right.

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LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN (Halifax):

I was saying, when interrupted, that in this country the tariif question twill be an issue for years to come. There will be exponents of high tariffs and of moderate tariffs, and there will be those who believe in the application of the principle of free trade in our fiscal life; but one thing is clear, that with the diversified interests which we have, with the lack of community of interest which we have in the extremities of this country and as between different sections of the country, it is necessary that in working out the true policy to be applied to the whole country there must be a spirit of compromise on the part of all the provinces. I would say to hon. members of the Progressive party that the present budget presented by the Minister of Finance, whilst not presenting any radical reductions in the tariff, still moves in the direction in which they desire and would have him move. In my judgment, it is a little unreasonable to have expected any greater variations in the tariff at the present time. I do not think that they are justified in reaching the conclusion that the opinions, or principles of the Minister of Finance in the direction of lower tariffs have been absolutely exhausted upon this occasion, and that there is nothing more to be hoped from him in the future. I believe the tendency the world over is in the direction of lower tariffs. Certainly, Europe will never recover her economic strength unless the countries there cease their foolish policies of the last year or two in their efforts to prevent international trading, and the economic recuperation of the most of Europe. If I am correct in my judgment of the future of other countries, namely that the tendency is in the direction of lower tariffs, and greater freedom of trade, as between the peoples of different countries, then I am justified in saying that in this country the people who believe in 'lower taxation upon commodities will look to the future with hope that public policy will continue to move in that direction in the future, regardless of what government is in office in this country.

I did not intend that my remarks should run to such a length. I feel that I am in the position of a man who said he did not have time to write a short letter. Unfortunately, I did not have much time to make preparation for my remarks this afternoon, and I offer that as an apology for

the undue length of time I occupied addressing hon. members of this House.

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CON

Hugh Guthrie

Conservative (1867-1942)

Hon. HUGH GUTHRIE (South Wellington) :

Mr. Speaker, I rise at this late hour of the debate for the purpose of addressing the House for a few moments on some of the new features of the debate which have been placed before the House since last evening, by the amendments, or new proposals, which my hon. friend the Finance Minister (Mr. Fielding) has now laid on the Table of the House. The question, as originally presented to Parliament by the Finance Minister, has already been pretty fully discussed, and I will not attempt to add anything to that discussion, but will content myself with a few brief references to the matters which have arisen out of the remarks of my hon. friend last evening. The views of the official Opposition, who sit on your left, Mr. Speaker, in regard to the question of the budget in general, have been very fully and very ably placed before the House, and the line of action which it was proposed to take by those who constitute the official Opposition was clearly laid before the House in the speech of my right hon. friend and leader, the hon. member from Grenville (Mr. Meighen). The pronouncement of the leader of the Opposition that the Opposition felt it was its duty to oppose the budget was made after full consideration, after due deliberation, and after consultation with the members of the party sitting upon your left. However, I think we all realize that since the pronouncement was made some new and radical proposals have been made by my hon friend the Minister of Finance; and while my hon friend received many well-meant and well-deserved congratulations on the fact that he presented to this House his sixteenth budget, ![DOT] think, now, perhaps, he is entitled to ibe congratulated on having brought down his seventeenth budget. I do not say that the course of the Finance Minister in this respect is unprecedented. I cannot speak as to that, but I do say that it is very unusual, and never before do I remember a single occasion when a Finance Minister, in the course of the budget debate, has revised practically his whole tariff proposals, or a very large proportion of them, and some of the most imlportant questions which he originally submitted to Parliament by way of fresh resolutions.

I believe the House will agree with me that the chief criticism which has heretofore been levelled against the budget, as

The Budget-Mr. Guthrie

originally introduced, by the official Opposition, -was in respect of three particular items. Certainly there has been much general criticism and much detailed criticism, but the most pointed criticism and the main objections have been directed towards three particular items in the proposals of my hon. friend the Finance Minister. First, we criticised his proposal in regard to what is known as the question of depreciated currency of foreign nations. Secondly, we criticised the proposal of the minister in regard to the question which has been referred to as the " anti-dumping " clause. Thirdly, we criticised the proposal dealing with the question known as the " marking " clause, or the regulation which requires the marking of goods imported into Canada with the name of the country of origin. These formed the main subjects of discussion, of criticism, and of opposition by those who constitute the official Opposition of this House. In regard to one of those subjects the Finance Minister has made a further pronouncement of a novel and important nature. It will be remembered that this session opened on the 8th March last, and from that date till the 23rd May, when the Finance Minister made his budget speech in this House, he had abundant time fully to consider and weigh the whole situation before presenting his proposals to Parliament. I assume he did so. I assume he was advised by his friends, and by experts competent to advise him, as to what course should be adopted in each particular instance, and he came down to Parliament on the 23rd of May, and boldly announced, amidst the acclamation of his own supporters and the very strongest manifestations of approval by hon. members of the Progressive group in this House, that the Government had decided to wipe out the provisions of the act which was passed during the last session of this House, in 1921, viz., section 8 of the Customs and Excise Act, which provided against the admission into this country of goods from countries where there was a depreciated currency, except upon a special valuation as prescribed by that section. That announcement by the Finance Minister was, I think, ill-considered. I doubt if he had made himself fully familiar with the trade situation throughout European countries when he made the announcement. It was evident that the announcement pleased a great many hon. members on his own side of the House. It was more than evident that it also pleased the Progressive party

on this side of the House, indeed, I think, the hon. leader of the Progressive party, the hon. member for Marquette (Mr. Crerar), took special pains to congratulate the Finance Minister upon that aspect of his budget speech. Just how did he announce it? His language will be found at page 2188 of unrevised Hansard. He highly condemned the proposal of the former Government, contained in the statute of 1921, and then went on to say:

So, while you keep up the pretence of a duty of 35 per cent, you are actually taxing those goods 1,000 per cent. If you want to say that German goods shall be prohibited, say so; if you shrink from saying that in such a direct way, then put on the 1,000 per cent duty; but do not humbug the world at large by pretending that we have a duty of 35 per cent when the real duty is about 1,000 per cent.

What does the Minister of Finance (Mr. Fielding) propose to do now? Does he propose to humbug the world by letting the world believe that we have a duty of only 35 per cent, when his own proposal, as I hope to show in a moment, is that we impose a duty of about 200 per cent? Why, he asks, did the former government a year ago seek to humbug the world? Why, he says, did the government in 1921 not impose a duty of 1,000 per cent? To-day I put the same question to my hon. friend the Finance Minister; I ask him: Why seek to humbug the world? Why not impose a duty of 200 per cent? Because that is practically what the Finance Minister's new proposal means. The provision of last year to which I refer is section 8 of the Customs Act of 1921, which reads:

Notwithstanding any of the provisions of this section, in computing the value for duty of the currency of an invoice, no reduction shall be allowed in excess of 50 per cent of the value of the standard or proclaimed currency of the country from whence the goods are invoiced to Canada, irrespective of the rate of exchange existing between such country and Canada on date of the shipment of the goods; and in respect of goods shipped to Canada from a country where the rate of exchange is adverse to Canada, the value for duty of the currency of the invoice shall be computed at the rate of exchange existing between such country and Canada at the date of the shipment of the goods.

Such was the provision which Parliament passed last year. Such is the provision which the Minister of Finance in his budget of this year, proposes to annul and to repeal, and for which he last evening proposed to substitute the following- this is the resolution of which my hon. friend gave notice last night:

1. Resolved, That it is expedient to amend section forty of the Customs Act by providing

The Budget-Mr. Guthrie

that in the ease of importations from a foreign country, the value for duty shall not be less than the value that would be placed on similar goods produced in the United Kingdom and imported from that country, if such similar goods are produced there. If similar goods are not produced in the United Kingdom, the value for duty shall not be less than the value of similar goods imported from any European country in which the currency is not substantially depreciated.

The minister may determine the value for duty of isuch goods, and the value so determined shall, until otherwise provided, be the value upon which the duty on such goods shall be computed and levied under regulation prescribed by the minister.

I am reading from the resolution as printed on page 2955 of unrevised Hansard. If the resolution has been correctly-printed in Hansard, it goes much further than any one supposed, because it applies to every country in the world, whether the currency is depreciated or not. I fancy there is an omission or a clerical error in the print, or the resolution will have to be amended. The question is: How would this proposal work out, if adopted? We are agreed, I believe, in this House that, at the present time, currency conditions in Germany are such that the mark which, in normal times, is worth 23 cents, is today worth approximately only one-third of one cent. Last year, when Parliament passed the amendment to the Customs Act which I have quoted to the House, it provided that, under conditions such as these, the value of foreign currency for customs purposes upon goods imported into Canada should be not less than 50 per cent of the normal value of such foreign currency. The normal value of the mark is about 23 cents, the 50 per cent value imposed by the statute would make the mark equal to Hi cents, whereas, to-day the mark, as I said, is actually of a value of about one-third of one cent. In order to give an illustration to the House of how the act of last session operates in regard to the duty upon imports from countries where the currency is depreciated and also how the proposal now made by the Minister of Finance will operate in regard to such duty, I am going to cite the case already cited so ably and so thoroughly by the hon. member for Centre Vancouver (Mr. Stevens) in regard to imported pocket-knives, and which will be found on the pages of Hansard. The facts given and the prices stated by the hon. member for Centre Vancouver are from reliable sources, and they represent actual transactions in the sale and purchase of pocket cutlery. I take the case of the pocket-

knife merely as a single example. The same principles and the same reasoning will apply with equal force to all the other hundreds, yes thousands, of articles which Germany is now exporting and will continue to export to the Dominion of Canada if the act of 1921 be repealed. The instance of the pocket-knife will serve my purpose. Pocket-knives are manufactured and sold in Germany to-'day, or they were six weeks ago, at 55 cents per dozen in Canadian money or 165 marks in German money, because 165 marks is equal to 55 cents at the present rate of exchange. The duty on such knives, before the act of 1921 came into operation, was 30 per cent. Thirty per cent on 55 cents is 16 cents, so that the duty and the cost added together would make the price of these knives 71 cents per dozen landed in the Dominion of Canada. This was the condition which Parliament had to face a year ago when it amended the Customs Act. What effect had the amendment, you ask? The amendment established a value of the German mark for customs purposes of 11 i cents. 165 German marks valued at lli cents are equal to $18.98 in Canadian money, and on that amount duty was calculated at the rate of SO per cent, so that the duty in that case would be $5.69. The price of the knives in Germany was 55 cents, so that if we add the duty, the total cost laid down in Canada, duty paid, would be $6.24 per dozen, and generally speaking, the Minister of Finance was about right when he said that this would prove to be a duty of about 1,000 per cent. Such is the law as it stands to-day. It was enacted to afford protection to the workmen and the industries of Canada. The minister proposes to repeal that law and to substitute the resolution which I have just read, whereby German goods shall be valued, not according to German values or standards, but according to the value of such goods in Great Britain. Let us proceed a step further in our inquiry. The value of that identical pocket knife in Great Britain at that date was $3.65 per dozen in Canadian money. If the present resolution passes, that price, the British price, will be the established value for customs purposes of German knives. Upon that valuation duty will be computed at the rate of 30 per cent amounting to about $1.09. The cost of the dozen knives is 55 cents and the duty $1.09, so that the total cost of the knives, with the duty added, would be but $1.64 per dozen, as against

The Budget-Mr. Guthrie

the former price, including cost and duty, of $6.24 per dozen. The cost of production alone in Great Britain is $3.65 per dozen. The cost of production in Germany is only 55 cents, and with duty the whole price of the German article will be only $1.65 per dozen, or less than one-half of the actual cost of producing the knife in Great Britain. What a tremendous advantage such a measure will give Germany over Great Britain! The cost of producing the knife in Canada, I am told by gentlemen who, I believe, are good authorities, is about $4 per dozen, and the knife is sold to wholesalers at $4.75 or thereabouts per dozen. If the proposal of the Finance Minister be adopted, the result will be that Germany can sell and deliver in Canada, duty paid, not only pocket knives, but almost every other line of manufacture at prices below half the actual cost of manufacture in Canada.

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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

The House will be interested to have an explanation from my hon. friend, if he can give it, as to how the Germans can produce knives at 55 cents per dozen that can be produced in Great Britain only at as low as $3.60 a dozen.

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CON

Hugh Guthrie

Conservative (1867-1942)

Mr. GUTHRIE:

I am afraid I must ask my hon. friend to put that question to the Germans themselves, but I think it is by reason of the fact that the German mark is depreciated to the extent I mentioned,- and I got the figure which I have given from the Minister of Finance's statement *-of one-third of one cent per mark; and the German mark has been stabilized within Germany by artificial means through legislation of their own. But I am not so much concerned about the causes; I am concerned now with the result. I believe, in regard to this question, in the force of the statement of the late Grover Cleveland in another connection, namely that it is a condition which confronts us and not a theory. There is an abnormal condition and we know it; and must deal with. Britain knows it; Australia knows it. They are dealing with it. How are we to meet it, or are we to meet it at all? That is the question we have to solve in this House. The former government applied a remedy by the act of 1921. But under this proposed amendment these knives will be landed here at $1.64 or $1.65 a dozen, duty paid, British knives being $3.65 without the duty added. You must add two-thirds of the duty in the case of British knives to the price I have just quoted. The British knives are identically the same. And in Canada the

very same knives are manufactured at $4. They also come in from the United States at about $4.75, duty paid, as I am informed. It is the standard pocket-knife and precisely the same principle as applied to knives will apply to all other goods.

Now, how can we expect goods to be made in Canada if Germany is permitted to utilize our market under abnormal and ruinous conditions? We realized this condition as it existed last year and we promptly provided against it. It was pointed out at that time more forcibly and completely than I can point it out, and Parliament took prompt action, with little discussion. There was some objection, but I do not think the House even divided upon the question. We are still confronted with this abnormal condition, and how are we to remedy it? My hon. friend, the Finance Minister, proposes to wipe out the act of 1921 and substitute merely a half measure which will not stop the inroads of these German goods. In his first budget speech when he made the announcement that he was going to repeal the act of 1921, an announcement that was received with so much acclaim by his supporters and also by the Progressives, the Finance Minister said that these goods will come to Canada through Holland, through the United States, through Great Britain and other places. That may be; but we must try, if we can, to find the real country of origin and stop them in the way provided by the act of 1921 and by the Marking Act both of which it is proposed to repeal. As an auxiliary to our depreciated currency legislation we passed the Marking Act, the one to help the other, so that we might successfully keep track of these goods if we possibly could. Examine for a moment the effect the repeal of these acts will have upon the workmen of Canada. A telegram was shown me a short while ago in connection with the importation of aluminium goods. Germany is turning out and shipping to Canada to-day aluminium goods produced in that country at one-tenth of the cost of production in Canada. Can our factories go on in the face of such facts? What will become of our workmen? My hon. friend from Halifax (Mr. Maclean) in his able address this afternoon intimated that even free traders were generally fair traders, and that in cases of abnormal trade conditions he would see that such conditions were remedied. Well, if we are to remedy the present adverse condition which faces us we shall do it not by any half measure such as that proposed

The Budget-Mr. Guthrie

last night by the Finance Minister. A half measure is utterly worthless in such a case. The stream is flowing, these goods are coming in in great volume, and the volume will increase day by day. Last year we tried to stop it by damming the stream and raising the dam to a certain height. My hon. friend, however, proposes to destroy the dam which we erected and to build a dam only half way across the stream. What good will that do? You cannot stop the stream by building the dam half way across the channel; you must go all the way across as we did by the act of 1921. The hon. member for Vancouver Centre (Mr. Stevens) in his speech the other day suggested that if the 50 per cent valuation of foreign currency was too high it might be reduced to 85 per cent, and I thought that the Minister of Finance (Mr. Fielding) would favourably receive that suggestion. And, indeed, twice last night he rather commended the idea. But he did not adopt it. Instead, he has adopted a measure which 1 am afraid will give no relief at all, but which will allow German goods to come into Canada in the future at these ridiculously low prices, and Canadian factories Which now manufacture any one of the thousand and one lines that will pour into this country from Germany at these absurd rates will eventually have to close down. Take the textile trades; the encroachment of the German goods in this line is increasing. Take the metal trades, in these also there is strong evidence that Germany is making a most determined effort. Last week a deputation of cigar manufacturers were in the city and interviewed my hon. friend the Finance Minister with regard to the cigar duties. Incidentally, I may remark, they saw me and some friends. They told me that many German agents are in Canada to-day seeking orders in almost every trade. They approached the cigar men and said: "Tell us the lowest prices, you pay for labels, bands, etc., and we will cut those prices by at least 25 per cent if you will give us your order."

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PRO

Robert Milton Johnson

Progressive

Mr. JOHNSON (Moosejaw) :

Has the hon. member any information as to whether the German manufacturers import their raw material, or is it produced in Germany?

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CON

Hugh Guthrie

Conservative (1867-1942)

Mr. GUTHRIE:

I suppose that some of the raw material they use must be imported, but I think a large part of it is produced in Germany.

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PRO

Robert Milton Johnson

Progressive

Mr. JOHNSON (Moosejaw):

For the

raw material they import, would they not

have to pay prices comparable with the valuation of the mark in the country from which they get that material?

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CON

Hugh Guthrie

Conservative (1867-1942)

Mr. GUTHRIE:

Yes, I think they would have to, in the case of articles imported. I am free to confess that I cannot fathom their methods but the fact is that they are doing it, and I know what Australia did to meet the unfair competition. My hon. friend from Vancouver gave instances of goods, made in Germany, selling in Australia at ridiculously low prices, and the Australian government took prompt steps, deciding to admit those goods but to value them for customs purposes according to the Australian standard of values. Why should we not adopt the Canadian valuation in this instance? I ask my hon. friend that question. Why take the British standard? Why not take the Canadian standard? There is a bill now before Congress st Washington- it has not yet passed, but it is a part of the tariff proposals, or at least it is proposed by somebody-to adopt the American valuation for customs purposes in the United States. I repeat, why should we take the English valuation in this case and not the Canadian? Or why not simply readjust, if you like, the act of last session, which was absolutely fair in principle? It might possibly have been too high, but if 50 per cent is considered unreasonable it might be reduced to 35 or 30 per cent, or whatever might be thought proper. Why not amend the Act of 1921. By doing so you would absolutely control abnormal trade conditions and give industries of this country a fair chance to compete. This danger is only incipient. The tide has only just started to flow. The year before last our imports from Germany were about $1,500,000, and last year up to the 31st of March last, I see by the trade reports, they passed the $2,000,000 mark. This is the year they are expected to climb, and I believe that under the halfway measure proposed by the Minister of Finance they certainly will climb to a very large amount. I douibt very much whether German goods are coming in to Canada from Holland. The most recent trade figures would not warrant that assumption. The year before the Act of 1921 came into operation our importations from Holland were larger than they were last year. I am informed that German goods may and do come into Canada from Great Britain, and they come also from the United States. Let us consider for a moment the exceptionally favourable position the German mnaufacturer is in. If my hon.

The Budget-Mr. Guthrie

friend's proposal should pass this House, these pocket-knives to which I have referred can be landed in Canada, in round figures, at $1.65 a dozen, as against $3.65 a dozen, with duty added, for British knives, and $4 a dozen for Canadian-made knives. Why, the German can undersell us by $1 or $1.50 a dozen and still make 100 per cent to 200 per cent profit clear and aboveboard for himself.

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LIB

Lucien Cannon

Liberal

Mr. CANNON:

Is the value of the German mark fixed by any Canadian authority? If not, by whom is it fixed at one-third of one-cent?

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CON

Hugh Guthrie

Conservative (1867-1942)

Mr. GUTHRIE:

I believe that is the international scale, but I have taken the values which I have given from the statement given to the House by the Minister of Finance, and it is the value accepted by all banks. Now, I have enlarged somewhat upon this point, in the hope that I might explain it as fully as possible, and I leave the House to deal with a feeling in my own mind that a very grave trade situation may arise in the near future in Canada if the Government persists in repealing the Act of 1921 without providing other adequate means for dealing with the situation. The resolution proposed by the Finance Minister last night in my judgment utterly fails to meet the situation. It is not even a partial remedy. Under its operation German goods will flow into Canada, Canadian industry will suffer, and Canadian workmen will be thrown more and more out of employment. I have indicated as clearly as I can a way out of the trouble. The way suggested by my hon. friend in his amended resolution does not meet the difficulty. Certain it is that the Finance Minister was entirely wrong when he came to the House on the 23rd May last with his original proposal. Certain it is that when he announced with so much acclaim that the late government were humbugging the people by the legislation of 1921 and suggested that we should have put on a duty of 1000 per cent if we had been candid, surely at that time he did not understand the situation himself. The Finance Minister now proposes what is equivalent to a duty of about 200 per cent against German goods. I would not ask him if in so doing he merely intends to humbug the people, but I do ask him most sincerely to adopt the present law as the best method of dealing with the situation and, if 50 per cent is too high, reduce it and put on what percentage is considerd proper.

Let me pass to the next point namely the anti-dumping clause. That particular law was originally introduced by my hon. friend the Minister of Finance in the year 1907. I well remember the occasion. I thought at the time, and I still think, that the principle embodied therein was a wise' one; but the difficulty was to apply the law. It is the same difficulty which confronts my hon. friend in regard to Germany's depreciated currency. He admits that the principle of last year's legislation was good; that he realizes that a difficult and abnormal trade condition exists but he fails to apply a proper remedy. That was the trouble with the anti-dumping clause of 1907. The object of the law was good but the machinery for its enforcement was defective. The act provided that goods entering Canada were to be valued at the fair market value in the country of origin; but the difficulty was to get at that fair market value. I do not know how many cases were actually traced and tested of goods imported from the United States or any other country into Canada but I am informed that they were very few and very far between, and the reason given was the difficulty of ascertaining the correct value of the goods in the foreign markets. Men would make a few wash or fictitious sales of their goods, one, two, or three sales at ridiculously low prices, and by such means establish the market value. Then they would ship tremendous quantities of the goods into Canada invoiced at those ridiculous and fictitious prices and ask to pay duty on such prices, and when investigators were sent out to ascertain the fair market value, those fictitious sales would be pointed to as establishing it. That was where the law was defective.

A critical situation arose in Canada last year, more critical, I think, in regard to the fruit trade than to any other industry. It was found by the fruit men and the vegetable men all along the shores of lake Ontario and lake Erie from Toronto to Windsor-probably also by the fruit men of British Columbia, although I do not know very much about the situation out there- that by reason of the fact that the American crop ripens two or three weeks ahead of the Canadian crop tremendous quantities of fruit and vegetables became piled up at the peak load period in the United States markets-at Buffalo and other fruit points the express company's stations, sheds and warehouses were full and overflowing, and the question was to find a market. The price had dropped to next to nothing, there

The Budget-Mr. Guthrie

was a great slump, and the fruit was shipped into Canada just at a period when the Canadian crop was at its best and should command the highest price. As it. was in fruit, so it was in vegetables. Under all the circumstances the government thought well to introduce an amendment, which is known as Section 7 of the Customs Act of 1921, and which provides as follows:

Provided that the value for duty of used or unused goods shall in no case he less than the actual cost of production of similar goods at the date of shipment direct to Canada, plus a reasonable profit thereon; and the Minister of Customs and Excise shall be the sole judge of what shall constitute a reasonable profit in the circumstances.

Instead of the anti-dumping clause contained in the act of 1907, which provided that the value for customs purposes should be the fair market value, the new act of 1921 provided that it should be the cost of production plus a fair margin of profit. I had never heard any complaint as to the efficacy of that act until the Minister of Finance on the 23rd May last complained that it was unworkable. I had never heard it charged that the act was unworkable or not working; in fact, I had always heard it commended by fruit men as having been of enormous benefit to them, for it stopped the shipment of fruit into this country from the United States at slump prices at a time when the market in the United States was glutted. When the United States growers find themselves with large quantities of fruit on hand at the middle or end of their season and prices have gone down to rock bottom, they ship it over to Canada just when our new fruit is coming on to the market. Is it a great hardship that such fruit shall be valued at its real cost of production in the United States rather than at slump prices? Is not that a reasonable basis for customs valuation in this country? That is all which the law of last session provided. That is all we ask to have maintained in the present law. But my hon. friend the Finance Minister has disregarded our plea; he has 'brushed it aside merely stating that the enactment was unworkable and that the Minister of Customs cannot apply it. I feel sure that the Customs officials will find a satisfactory way to apply this law if they are permitted to do so. Therefore we ask that this act be not repealed. But in his amended resolutions given to the House last night I am sorry to see that the Finance Minister has given no indication that the anti-dumping clause is to be continued.

My third point is practically in conjunction with the first point. The law of 1921 which provides for the marking of goods with the country of origin must be read and taken in connection with the other questions of importation from countries where a depreciated currency prevails. I do not contend, neither did the Minister of Finance (Sir Henry Drayton) contend last year, nor will anyone else on this side of the House contend that all goods imported can be so marked. It is impossible to do so in some instances. But in the vast majority of cases these goods can be marked with the country of origin. This was just an additional safeguard to the workmen and to the industries of this country. Now my hon. friend the Minister of Finance seeks with a wave of the hand to remove this safeguard. I thought he was going to reconsider his decision on this point after the matter had been so ably discussed during the debate, but evidently he is not inclined to do so. We look upon the Marking Act as a most important factor in regard to the regulation of trade from these countries of Central Europe where on account of depreciation of currency ruinous competition can be set up against the Dominion. It would help Canada very much if all our citizens could know the country of origin of the goods which they buy. Who objects? Only the importer, only the wholesaler, only the jobber, only the shopkeeper. The purchaser does not object; he would like to know. Why not let him know in all cases where it is practicable? But my hon. friend brushes this provision aside also. It would not perhaps be so bad if he proposed to repeal the whole enactment. But what has he done? Virtually he says, " No, this is not a matter upon which Parliament should deliberate. The Government will keep a string on this marking requirement, and do it by Order in Council. The Government will retain power to act by Order in Council and require the marking of goods as the government may see fit. The Government will now do the very thing which we have condemned during the last five years in Parliament and out of Parliament on the part of the former government. The government will govern by Order in Council. Why should not Parliament decide that, and not the Government? Parliament is perfectly competent to do so-the only competent body, in fact. Look at the opportunity which the Order in Council method offers for wrong-doing

The Budget-Mr. Speakman

No one suggests that the Government would do wrong. Far it be from me to make such a suggestion. But governments and members of governments are only human; under the proposed Order in Council system there will be an opportunity to favour your friends and to penalize your opponents. Should any government have that power, that privilege, or that right? I submit that is a matter upon which Parliament alone should exercise control, and it would be far better and far more in the interests of the country, if my hon. friend is determined to repeal the Marking Act, to wipe out the whole of it and not to retain in the hands of the Government the power to put the provisions of the act into operation by Order in Council.

These are the only three points which I desire to discuss. Having given these three proposals the very best consideration which I can give to them, and having discussed them and considered them with my friends, and particularly with my leader, I can only say-and I think I can speak for those who sit in the official Opposition in this House- that these budget proposals are not satisfactory; that they are thoroughly unsatisfactory, and also unbusinesslike. In my judgment the Government proposals cannot be viewed as measures either for the general or particular advantage of Canada, if carried into effect these proposals will result in a direct discrimination against the trade of Canada, against the workingmen in the shops of Canada and likewise against the established industries of Canada. For these and other reasons, I cannot support the budget.

At six o'clock the House took recess.

After Recess

The House resumed at eight o'clock.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE OP THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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UFA

Alfred Speakman

United Farmers of Alberta

Mr. ALFRED SPEAKMAN (Red Deer) :

Mr. Speaker, I do not know whether it is altogether incumbent upon me or any other member of the House to speak now on the budget as the subject has been so thoroughly covered, and viewed from almost every angle; yet there is always some point which may have escaped notice, perhaps always some slightly different slant which may be taken at some of the proposals presented.

I come here, as you all know, a man from the prairies. I am not ashamed of that fact. In fact, I am rather proud to say that I come from the province known as Sunny Alberta. It is natural that I should

to a large extent express the sentiments of the people of that province and of the people living in the constituency which sent me here, but, Sir, since coming here , I have endeavoured to learn a little more of the country in which I live. I have endeavoured to take as broad a view as possible of the country, so that I may not only serve the interests of my own constituents, those whose interests I know, but that I may as far as I can take part in the government of a great and united Canada. I have endeavoured in my own mind to understand the problems of other sections of the country, so that I might take a comprehensive view of the country as a whole and speak or work, or both, for the interests of the country as a whole.

For some time, from different sides of the House, we have heard the accusation hurled at us that the prairies are somewhat selfish. I am frank to admit that perhaps that accusation has some foundation in truth. I am less ashamed of that fact because I have not found an absolutely unselfish feeling pervading the rest of the House from other parts of Canada. I have not noticed when matters relating, say, to the maritime provinces, are under discussion, that members from that part of the country are inclined to take an absolutely unprejudiced view of those things, and so with British Columbia and the other provinces. As a matter of right, hon. members think in the terms of the country which they understand. Why, on hearing from the city of Toronto, you might almost say that the atmosphere was slightly Torontonian. So I am beginning to think it is not a matter to be ashamed of, not a matter for regret, that any one should express first, and perhaps most firmly, the opinions and the attitude of the people whom he represents. He can, besides, I think, speak with more authority, with more knowledge, and with more intelligence, when he confines himself to some extent to the interests of the country in which he lives and the pursuit which he follows.

I must, of course, discuss this budget somewhat from the point of view of how it affects the prairie provinces. I shall try, however, not to confine my ideas entirely to the prairie provinces, and shall do my best to be fair in my own mind to the interests of other parts of Canada. In the prairie provinces we feel that any budget which is based upon the principle of protection, or which largely involves that principle, is bad for us. Perhaps that is a selfish view, but it is an absolute fact.

The Budget-Mr. Speakman

More than that, I think this House recognizes that it is a fact which should be taken into consideration, because I believe that on the development and prosperity of those prairie provinces depends to quite an extent the future of this fair Dominion. I think that is a fact which will bear repetition. It is a fact which has not been contradicted. It is a fact which has been stated from all parts of the House that at some time in the future the majority of the population of this country will lie in the West, and that the future of this country will lie in the hands of the West. That being the case, there are two aspects which must be considered in dealing with the West.

The first is that, compatible with the interests of Canada as a whole, the prairie provinces should be given the opportunity of the fullest possible development. They should be given the opportunity of becoming prosperous, of attracting the best class of population, and of securing so far as possible the success and prosperity of that population when it gets there. Secondly, I believe that in the interests of Canada it would be a fatal mistake in any way to antagonize that western country by unthinking, unfair treatment.

How does the protective tariff affect the province in which I live? In the first place -I am not going into this argument at any length, but shall only give a resume-the protective tariff does without a doubt, even in the opinion of those who most favour that policy, increase to some extent the cost of living. It increases, also, to a large extent the cost of production. Now, that is an undoubted fact. The only question is whether that is balanced by benefits accruing to the country from that system. Why does it increase the cost of living? Simply because, whenever a tariff is put on any article entering into any country, it is put on for the purpose of allowing the manufacturers of the same article within that country to increase their price. It seems to me that is the object of protection. I was somewhat interested by a statement made by an hon. member on the opposite side of the House, that in one branch of the textile industry, I think it was, the manufacturers of the particular article did not take advantage of the tariff: that is, they sold on an average, due to internal competition, at about the same level of prices as obtained in the great country to the south of us. That statement interested me very much. I am not going to challenge the truth of it, because, no doubt, he is in a position to

know much better than I whether it is true or not, and, in all likelihood, he made the statement in good faith. But, if the manufacturers of those articles at the present time are not taking advantage of the tariff, are not raising their prices to the level of the tariff, and are not depending upon that protection, why, in the name of common sense, do they raise this cry that the removal of a part of the protection which they are not using, according to their statement, would ruin their industry? I cannot understand that. Looking at it from the point of view of common sense and ordinary logic, if the one statement is correct, the other cannot he; and if the statement that it would ruin their industry is correct, then they must be taking advantage of it, in order to get high prices. As a matter of fact, I believe that great apostle of protection, that fine man and eminent public statesman-although I do not agree with all his opinions-Sir George Foster, made that statement in the House. When the statement that the manufacturers raised the prices of their goods because the tariff was discussed, he said "Why, of course, they do. The protective tariff is for the purpose of raising the price, and that is what they have it there for." It goes without saying that that protection raises the cost of living.

What corresponding benefit accrues to us, to offset these disadvantages? It is well known the price of everything we sell is set by the export market. It is not assisted, or altered in any form whatever, by that tariff. Therefore it follows-and I think it has been admitted by some of the previous speakers-that, in the prairie provinces, at least, protection is practically an unmixed evil-that we suffer under the disadvantages of protection, and also under the disadvantages of free trade. That, Mr. Speaker, is our point of view. But since coming here-and I will say to some extent before coming here-I have recognized that, in a country of this great extent, containing as it does, such a diversity of interests and such a diversity of opinions, any government must be a government of compromise. I do not mean a compromise of principle. I do not suggest that any individual must compromise his principles, or his feelings of what is right or wrong, but I say if people come together from all parts, with different opinions, the only way they can get on any common ground, and the only way they can arrive at any sane method of government, is by

The Budget-Mr. Speakman

softie policy of give and take-some compromise. I intend to go into that a little further a little later on.

I want to speak, for a moment, upon the principle of the tariff, as a means of taxation. I have begun to think that 1 must be one of those cranks who believe that a tariff, as a means of raising taxes any further than is necessary-for instance, the sales tax as a means of raising revenue, if you carry it further than absolutely necessary,-is a wrong system. T believe a commodity taxation of any kind is founded essentially and fundamentally upon a wrong conception of taxation altogether. I know that that is a very broad statement to be made by a man as inexperienced as I am, but I have looked upon it from, perhaps, only one point of view,-the point of view of the poor man in this country. I have looked upon it, not only from the point of view of the struggling farmer, but, since coming east, I have been in some of the great factories of the country, and have seen the women and girls working steadily in the factories on a very uninteresting job-for what? The means of a poor living. That is what it amounts to, and it is because of having seen those people, and the fact that the protection of, the commodity means that they are compelled to pay more for the means of subsistence, more for their clothing and boots and shoes to keep the wet from their feet, that I have come to the conclusion it is wrong. I believe I touched once before upon the commodity tax, as it affected the population of this country-the immigration to this country, if you like to call it that. I believe I said that, in my opinion, and in the opinion of most people in the House, the most desirable class of population in this country, or in any country, was the native born population; that, in fact, we should follow, as far as we could, our friends of the fair province of Quebec, and build up a vigorous and numerous population by our own efforts, and any fiscal policy to my mind should be framed with the idea of encouraging the creation of such population.

But does a commodity tax do that? Why, Mr. Speaker, the commodity tax acts as a great deterrent against such increase of population. It places an absolute

premium upon bachelors and old maids, for the very obvious reason that people are taxed as a penalty for having children. That sounds like a strong statement, but I believe it is absolutely true. I

do not think it is intentional, but it is absolutely incidental to any commodity tax. As I said before, the father and mother of a family know that from the moment the baby is born they have to buy boots and shoes, clothes and everything else for it. Under our system of commodity taxation they are taxed on those articles, and that, simply, means that, for every additional child in the family, they have to pay an additional tax, and, if that is not a baby tax, what is it? I am not a protectionist, and, I think, perhaps hon. members have gathered that fact already; but there is one industry in this country that deserves protection and should receive it, and that is our own infant industry. I shall stand-and I hope I always shall-for the protection of that industry, and for the encouragement of large families.

There is another point of view from which the farmers at least look upon the tariff as possibly an unmixed evil. The hon. member from Halifax (Mr. Maclean) made one of the finest and most statesmanlike speeches for three quarters of the time during which he spoke that has been heard since the House met, and in the course of his remarks he made the absolutely true statement that, in regard to international commerce between countries, goods must be paid for with goods; in other words, we must import in order that we can export. We, in our market, depend absolutely upon our export market. We know that a protective tariff, by restricting the importation of goods from the countries to which we would sell our produce, restricts our possibility of selling. So, not only does a protective tariff increase the cost of our production, but it restricts our market and reduces our price for what we have produced. That is another reason why we object to it from the point of view of the prairie. I have noticed with some interest, a disposition from different parts of this House to look upon the West as a market placed there by Divine Providence for their goods. We are willing to buy their goods; we need their goods; the mutual trade and commerce between provinces is just as beneficial as that between nations; but we cannot see that that is the only reason Why we were placed in the world. We cannot see that our only object in life is to provide a carefully conserved market for any of our friends, however pleasant gentlemen they may be and however unselfish may be their views,

The Budget-Mr. Speakman

and we rather protest against being looked upon from that point of view.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE OP THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

An hon. MEMBER:

Louder.

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF THE DEBATE OP THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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June 13, 1922