June 10, 1924

CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

Thank you, Mr. Speaker. That is one of the things that we have to put up with. It is something at which my hon. friends across the way are adepts As I say, this is the production of a Canadian raw materal which, according to my hon. friend's own doctrine, ought to be encouraged. And my hon. friend's predecessors in office- not their immediate predecessors, but their more distant ones, those of the Liberal faith as understood perhaps at a time when the Liberal doctrine meant something and was at least the outcome of thinking along straight lines, a doctrine that led somewhere-my hon. friend's own party gave effect to it.

This condition of affairs was brought to the attention of the government of the Honourable Alexander Mackenzie then in power. The necessity of protection for our Canadian oil industry was recognized and that government placed an import duty on crude petroleum and its products. This import duty had a stabilizing

29%

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effect and our producers were able to carry on.

3. This import duty with some changes continued through the different governments down to the year 1904.

4. Consumption of the different manufactured products from petroleum was increasing enormously while the Canadian production was steadily declining. The tax upon the people through the tariff on oil was heavy and was the subject of constant attacks upon the hustings and in parliament.

I do not think my hon. friends will disagree with anything that this Liberal politician says, at least down to that point.

5. Introducing his budget at the session of 1904 the Hon. Mr. Fielding after investigation and consultation with our oil producers suggested the discontinuance of the duty on the large amounts of crude petroleum entering the country and substituting for it the present bounty of one and a half cents.

It will be observed that the condition of affairs in that section of country whose people had adapted their activities to oil production was brought about by a policy inaugurated by the Right Hon. Mr. Fielding himself in 1904. Mr. Fielding's reasons for the change are found in the House of Commons Debates, session of 1904, volume 3, pages 4359-00. I now quote Mr. Greenizen, who quotes from Mr. Fielding as follows-page 4359:

" The oil industry has a fair claim on our consideration." And further on he says: - "What we desire to do is to bring about a reduction in the duties on oil in such a way that the consumers shall have cheaper oil and that no injustice shall be done to the oil industry, but that it shall have as fair a chance as others."

Do my hon. friends take any exception to those statements of Mr. Fielding made in 1904? I do not think they can.

Again at .page 4360 he says his desire was " to deal fairly and generously with the people who have invested their money in the industry of producing crude oil."

6. The necessity of protecting the crude oil producing industry was recognized and the bounty was in substitution for the previous duty.

7. Since the introduction of the bounty in 1904 the oil producing industry has been free from attack. No individual or party in parliament has attacked it, nor is there any evidence that the public generally was demanding its repeal. The substitution of the bounty for a duty was a good business move, and resulted in the building up of a large oil refining industry employing several thousand men. The discontinuance of the bounty announced by Mr. Fielding when introducing his last budget came as a surprise to the oil producers. No investigation was made upon the ground here as to the effect this change would have upon the oil producers.

Let me again remind the House that I am but giving voice to the protests of the head of the local Liberal organization; it is he who says that this action was taken without the slightest investigation and without the slightest thought as to its effect upon the industry.

Investigation will show that our oil producers cannot carry on without a bounty or a protective tariff,

and large amounts of invested capital will be wiped out if the change goes into effect.

Again I pause to interpolate: As I understand it-and my hon. friend will correct me at once if I am wrong-an investigation into this question was asked for and was made by the Geological branch of the Mines department. A report was made, I think by Dr. Hume-if I have the names wrong my hon. friend will inform me. No one has yet seen the report; I have never seen it, but I am further told that it substantiates Mr. Greenizen's claim. That report would be in my hon. friend's hands now.

8. We operate about 3,500 wells with some 216 separate power plants. I have no means of accurately arriving at the capital investment, but it undoubtedly runs into several millions.

9. Delivering his budget speech, May 11th, 1923, in

dealing with this matter of the bounty on crude petroleum, Mr. Fielding said: "The total amount

paid in the form of bounty in 1922 was $93,636. The amount is not large, and if we had to consider only the condition which existed when the bounty was applied it might not be worth our while to make any change. But oil has been found in our western country. There is a widespread conviction that we are on the eve of great oil discoveries in the far west and north." And further on he said: "If there should be, as may very likely occur, great strikes of oil in the western country, the bounties we are called upon to pay would be a very serious charge upon the treasury." It is to be noted that the moving cause for the removal of the bounty was the fear of large production being found in the West, and I think it fair to conclude from Mr. Fielding's statement that he would not have discontinued the bounty if he had not such fear in his mind.

Hon. gentlemen will recall that Right Hon. Mr. Fielding found no fault whatever with a bounty policy. Why, he put on more bounties last year. He gave bounties last year, for example, in connection with some form of copper production in the West, at any rate, in relation to a large smelting company there. No objection was offered to the principle; no argument was made that a bounty was not required in order to keep the industry going. But there was the fear that large oil resources would be found in the West or in the north and that the country's treasury would be subjected to very heavy demands. Well, there Being nothing wrong with the principle, there being no room for debate as to the necessity-provided, of coursfe, that these farmers were to be looked after and the busines kept going-the suggestion came from the hon. member for West Lambton (Mr. LeSueur), if I remember rightly, that the bounty should be limited to five barrels a day per well. The whole idea of that was to apply the bounty only to the small production; it would be of no use to large commercial ooncems. Just

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imagine five barrels a day with a bonus of 52J cents a barrel, a total amount of $2.60 a day that each well could earn. The whole idea was to make it clear that the class of people we wanted to help were the small producers who could not otherwise carry on -that and that alone. Moreover, if a great gusher was found in the West or in the north, it would be entitled only to $2.60 a day, so that all fear was removed of any injury to the treasury had that proposal been adopted. Well, it was not, and my right hon. friend, although pressed for it, could not and did not give any reason why it should not be adopted. Now I come

back to Mr. Greenizen. He proceeds:

It is now nearly a year since Mr. Fielding delivered this speech. Hundreds of thousands of dollars have been spent in the search for oil in the West but without a favourable result. Investigation of the position of the crude oil produced would have shown a much diminished production as compared with 1904, and that owing to the increased cost of labour and supplies it was costing nearly three times as much to get this production as it cost in 1904, and such investigation would further have shown the impossibility of carrying on at a profit without the bounty. We believe that if Mr. Fielding had seen his way clear to protect the treasury against the possibility of large production, and at the same time protect our industry here, he would have continued the bounty. We suggest that the act passed last session be repealed and the bounty restored, with the proviso that such bounty shall only apply to wells and groups of wells producing an average per well of one barrel or less per day.

That is a most modest request, a far more modest request than the real legitimate claim of the district entitles them to. That cuts it down to a bounty of 52| cents per day. It seems too small altogether, but even that small consideration has been denied. It goes on:

This will enable producers here to carry on. The government cannot be charged with sectionalism in the legislation.

10. Our oil production for the year 1923 was 158,511 barrels. If the removal of the bounty results in closing down our wells this oil will have to be replaced by purchase from United States producers, at a cost of about {400,000 per year.

11. I am unable to state definitely the number of workmen employed in the industry, but I believe several hundred men derive their livelihood directly and indirectly from the business.

12. Our oil fields have been a training school for

oil well drillers. Many of these find employment in the oil fields in different foreign countries. Their drilling contracts are usually for a term of three years, and their families remain here and considerable sums of money are returned to this country from this source. _

13. Property owners in the town of Petrolia and in other producing districts in Ontario will suffer a serious loss if our wells are forced to close, as most of our workmen employed about the wells would be forced to leave, and no doubt most of them would secure employment in different fields in the United States.

Again, Mr. Speaker, I point out that this is not the opinion of a Conservative politician, but of a Liberal politician, who says, and says deliberately, that the direct effect of this legislation is to deny employment and to further assist in the process of expatriating the Canadian. I further point out, so clear from all doubt is the real situation here, that during the whole of his submissions to this government he has done only one thing, and that is to absolutely endorse the position taken by us in this section of the House when this legislation was proposed. The file I have does not show why or on what ground relief has not been extended to these people.

There were other documents also put before my hon. friend. We have a document here which further reinforces Mr. Greenizen's appeal. Before reading that I am going to read from a statement which shows the average price received per barrel of crude petroleum each year, but omitting the bounty, the cost of production, the net profit or loss per barrel. The statement goes back as far as the year 1905, and its effect is to show just where these small producers would be without the bounty:

Price ex - Cost per Loss per Profit perYear Bounty barrel barrel barrel1905.. .. .. 1.29 1.347 .057 1906.. .. .. 1.328 1.448 .12 1907.. .. .. 1.337 1.62 .283 1908.. .. .. 1.421 1.43 .009 1909.. .. .. 1.288 1.54 .252 1910.. .. .. 1.214 1.66 .446 1911.. .. .. 1.225 1.467 .242 1912.. .. .. 1.457 1.55 .093 1913.. .. .. 1.793 1.59 .2031914.. .. .. 1.505 1.612 .107 1915.. . .. 1.42 1.742 .322 1916.. . .. 1.99 1.691 .2991917.. . .. 2.335 2.20 .1351918.. . .. 2.675 2.60 .0751919.. . .. 2.81 2.322 .4881920.. . .. 4.097 3.51 .5871921.. . .. 2.662 2.736 .074 1922.. . .. 2.663 2.541 .122

Average for period 1.815.

Apart from the bounty, 11 years of the 18 produced crude at a loss and 7 years at a small profit.

The aggregate profits for the whole period, exclusive of bounty, amounted to 12 per cent on the capital invested, an average of 2-3 of one per cent per year. No charge has been made for depreciation or depletion of the properties and no large salaries paid.

During this period the bounty in the aggregate was 84 per cent of the whole profits and 29 per cent of the full price received by us from the purchasers.

Now that statement, which was filed with my hon. friend, was made by the Canada Crude Oil producers, Limited, signed by W. McIntosh, Secretary-Treasurer. It shows at least that there are no undue profits being made, and on its face it bears out what I

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have been saying, that without some continuance of this bounty system-let it be cut down as I suggest-the small producers must of necessity stop. My hon. friend had that information and it was reinforced by-

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LIB

Andrew Ross McMaster

Liberal

Mr. McMASTER:

As a matter of economics, and considering what would be the benefit of the whole nation, does the exMinister of Finance (Sir Henry Drayton) wish to suggest that an industry which can only earn two-thirds of one per cent a year over a period of eighteen years should be kept alive by bounties?

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

My hon. friend must not get an industry of this character confused with industries of the nature that he is so fond of describing, for example, endeavouring to raise oranges in the province of Quebec and bananas in the Yukon. This is an industry the product of which is obtained from the soil in Canada. It is an industry which may be made strong and substantial if properly assisted. At present millions of dollars are sent out of Canada every year to pay for imports of this material. Are we to abandon all possibility of putting Canada on the map as an oil producing country through the agency of this industry?

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LIB

Andrew Ross McMaster

Liberal

Mr. McMASTER:

How long would the

hon. member suggest that the bounty system should be maintained?

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

Well, I would

say this, that now when the Ontario farmer is finding it hard to make ends meet is the worst possible time to remove this bounty. I have never been so much in favour of bounties ms'self; I support another kind of fiscal policy rather than the granting of bounties, as my hon. friend knows. But here is a system which was inaugurated by the present Minister of Finance (Right Hon. Mr. Fielding) and it is now proposed to strangle that gentleman's economic offspring.

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LIB
CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

No, the infant is not dead yet. Still infanticide is going on. It is a horrible thing to have a case of infanticide in one's family. As I was saying, it is all wrong.

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LIB
CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

It is all wrong that communities like Oil Springs, and Pet-rolia, which are living on this industry should be threatened in this manner.

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LIB

Andrew Ross McMaster

Liberal

Mr. McMASTER:

Living at the expense

of others who are paying the bounty.

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

I know what

my hon. friend's views are, but I think that very often we get along better by helping each other a little rather than by continually helping the foreigner. We are more likely by such a policy to make Canada the great, prosperous and self-contained country which it ought to be. After all, the

4. p.m. amount in question here is very small. It is so small that the Right Hon. Mr. Fielding himself stated that we need not bother about it; last year the whole amount of the bounty was only $84,000. So the cessation of the bounty was never proposed on the ground of the cost of the present commitments to the country; the present finance minister was never rash enough to make such an argument as that. The whole tenor of his argument rather was that there would be such a tremendous commercial development from the oil industry that it would rain the treasury to pay the bounty. At that time the minister had the statement in question from Mr. Greenizen; he also had a statement from the Canada Oil Producers Limited in connection with this question. I now read from that statement:

The production of crude petroleum in Canada dates from the year 1858, when oil was first struck in what is now the village of Oil Springs. The discovery of oil in Oil Springs was followed a short time later by the striking of oil in Petrolia. In the early days of these fields the wells produced very prolifically and for a considerable period there was an excess of production over consumption. As time went on production diminished and consumption increased. Extensive oil fields were developed in the United States and crude oil, owing to the extremely large production there, reached a price where our Canadian producers could not compete with these large producing wells in the United States.

I have already given the history of this industry from a statement by Mr. Greenizen who was a lawyer. I am now giving it from the point of view of the efforts for the preservation of the industry.

Tor the preservation of the business here a duty was placed on the importation of crude petroleum into this country. This duty saved the situation. Producers here were able to carry on and the field continued to expand and grow in extent for a great many years. A number of refineries were established nearly altogether in the town of Petrolia for the refining of our locally produced crude oil. This import duty on crude oil continued until the year 1904 when it was removed by the present Minister of Finance and a bounty of one and one-half cents per gallon was allowed Canadian producers. At the time of this abandonment of the duty and the introduction of the bounty the minister was in conference with our representatives from Petrolia who were able to convince him at that time that producers here could not carry on without this bounty. As

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matters turned out the wiping out of the duty and the substitution of the bounty resulted very beneficially for the country. At the time of the change the Imperial Oil Company were operating one refinery at Sarnia of small capacity as compared to what it has at present. There may have been one or two other small refining plants in the country at that time but as to this I am not able to speak with certainty. At the present time the Imperial Oil Company has seven large refineries scattered throughout the country and there are possibly half a dozen other refining plants, so that at present the refineries in the country are taking care of practically all our domestic consumption. Large quantities of the raw material are imported from the United States free of duty and manufactured in our Canadian plants by Canadian workmen.

The present move on the part of the Minister of Finance in announcing the discontinuance of the crude oil bounty came as a shock and surprise to Canadian producers. We had heard of no clamour on the part of the public for the removal of this bounty, in fact, ever since the establishment of the bounty the oil business has been practically free from public criticism while in the old days of the duty the producers were being continually called upon to meet a tax upon their business.

The total number of wells in opersftion in western Canada is 3,574. These figures are furnished by the official inspector of oil and gas wells. There are in operation 216 power plants for the operation of these wells and outside the value of the lands these wells and power plants represent an invested capital of upwards of $2,000,000. The following is a statement of a comparative production of the western Ontario oil fields for the different years from 1915 to 1922 both inclusive:

These details are of importance for the purpose of showing the total absence of any iarge drain on the treasury. This is a very small thing as regards the Dominion; it is a very vital thing to the people of Lambton and Kent:

Total production

Year in barrels

1915 214,440

1916 196,900

1917 203,000

1918 288,760

1919 220,110

1920 181,749

1921 172,858

1922 164,731

I again interpolate. 1 want hon. gentlemen to note that small production in comparison with the number of wells. The great number of wells gives some indication of the number of farmers that are interested. This is no large crushing corporation; this is something entirely removed from excess business profits taxes and all that sort of thing. This is very largely a side adjunct, a side activity of the Canadian farmer. We have 3,574 wells, producing chiefly at a loss if it were not for this bounty, and altogether producing in the yeaz 1922 only 164,731 barrels. The statement continues :

The above figures are furnished by the official supervisor of bounties on crude petroleum. There is a further small production in New Brunswick and a

trifling amount of oil is produced in Alberta. The total production for the whole of the Dominion of Canada at the present time is now about 180,000 barrels. The oil producers affected by this removal claim that it will result in the complete closing down of their wells and the cessation of production of oil in Ontario and in substantiation of their claim that this will be the result they submit signed statements from some twenty representative producers showing the cost of producing a barrel of oil from their properties. It is fair to assume that men are not going to continue to operate their wells at a loss and in some instances a serious loss so the result will be undoubtedly as stated above the wiping out of the business of oil production in Canada and the wiping out of millions of dollars invested in the business, leaving to the men with this amount of money invested nothing but a trifle they may be able to realize from the junk-dealer.

I would ask my hon. friend when he speaks, to advise the committee whether the industry is to continue or not; what his honest view is; if his honest view is that these gentlemen who are in the business are all wrong, where they are wrong; how he expects their business to be carried on; whether he is indifferent to their business closing or not, as it will; whether he sees any reason why the small well should not be allowed to continue when it can continue without the slightest risk to the country; why the farmer should not be able to have the right to take one or two or three barrels a day from his well, resulting in a total which will be very much less than the total now paid, cutting it down in that way, and as regards which total the present Minister of Finance (Mr. Fielding) himself said that we need not bother about the amount and to let things stand as they were. The historical statement continues:

The Minister of Finance in announcing the removal of the bounty stated: The amount paid annually is about $92,000-

It is less than that now. If the information I have is correct, it is more like $85,660, but there is not very much difference anyway, only about $6,000.

-representing a per capita tax of one cent per year or thereabouts as the burden the people of this country are bearing for the maintenance of this industry. If the bounty is removed what will happen is this; With the removal of one-half the bounty in July of 1924 which is the proposal of the Minister of Finance a certain number of wells will close, possibly as much as 50 per cent, With the removal of the balance of the bounty in the following year 75 per cent or more of the balance will close down. The small balance remaining will attempt to carry on, possibly a few producers whose all is invested in the business and who do their own work may be able to make fair wages for a period. A couple of properties at Bothwell and perhaps one at Oil Springs can carry on until they reach the point where they will have to replace worn out equipment with new, and they also will be forced to close.

Bothwell, I may interpolate, is a point in Kent, and both Kent and Lambton are vitally affected.

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It is only a matter of three or four years until every property will be closed down. Another feature of the business, which might compel even properties which can operate at a profit for a time with the bounty removed, to close almost immediately on the removal of the bounty is this: the only market our Ontario producers have for their oil is the Imperial Oil Company at Sarnia. This company has receiving stations quartered throughout the territory where the oil is received. It is then collected in tanks in Petrolia and shipped by pipe line to Sarnia. With such a limited production as will immediately follow the wiping out of the bounty the Imperial Oil Company cannot maintain the staff of employees and equipment necessary for handling this oil and this will mean that any producers with oil for sale would have to make delivery themselves at Sarnia. The cost of handling oil in this way would so cut the producers profit that even the few large producers remaining would be forced out of business.

This is something that will .be apparent to every hon. member. The economies that are effected in oil production consist in the pipe lines, the getting rid of transportation, and so on. The business can only be carried on if there is a certain volume, and unless this is assured the wells will not be operated. The statement proceeds:

The 180,000 barrels per year produced by these Canadian wells is refined in our Canadian refining plants and to that extent, small though it may be as compared to total consumption, goes to satisfy the demand in this country. If this 180,000 barrels per year is cut off the source from which the shortage will be made up is the United States and it means that we will have to send out of the country somewhere about one half a million dollars a year for oil to replace what is now produced here. On the one hand, the country is contributing to the maintenance of this oil business one cent per year per head of our population and is saving to the country an industry which is adding to the wealth of the country as a natural resource half a million dollars per year. Wipe out the bounty and we pay the Americans this half million dollars in addition to the millions we are already paying them for oil. There is a little more to this question than simply closing down of the oil wells and the scrapping of the equipment of these oil operators and the wiping out of the two million dollars or more that these men have invested in the business. Take the town of Petrolia. This town has always been the centre of the oil producing busines. This is now a town of some three thousand inhabitants and dates back some sixty years. During all this time the town has continued to progress and to-day it is one of the most liveable small towns in the country. It has good business blocks, numerous comfortable homes, paved streets, a good sewerage system, water system taking water from lake Huron some eleven miles away and in every way a town and community that should be preserved rather than killed.

I wonder what my hon. friend will say to that. Petrolia is a town that should be "preserved rather than killedand if this industry is killed, what will take its place? Or does my hon. friend expect that the expatriation will continue in the case of this town as it has done in so many others?

The oil busines puts in circulation in Petrolia somewhere about $200,000 per year and every person in this

community no matter whether he is an oil producer himself or engaged in any line of business is largely dependent upon this business and if the business is wiped out it will undoubtedly have a serious effect upon a great many people who are not directly connected with the business. We cannot carry on as a place with our present population if the oil business is wiped out. People gradually drift away, those connected with the oil business will likely go to the United States and others will likely follow adding our few hundreds to the tide of emigration to that country which is even now serious.

According to the figures given above, the closing down of our oil business here will result in an immediate loss to the country of upwards of $400,000 a year or the difference between the bounty paid and the amount we will have to send out of the country to replace the oil now produced here.

Another considerable loss will result. The oil regions of Western Ontario for years have been a training school for oil well drillers and these oil well drillers find employment in other oil fields in the British Empire and in a great many foreign fields. We have hundreds of Canadian drillers in the fields in Asia, Africa and South America. These men usually enter into a three-year contract and they invariably arrange to have their earnings over and above their trifling expenses in the field transmitted to our Canadian banks. Two banks in Petrolia report average deposits of upwards of $100,000 a year by these drillers and considerable sums are deposited in the home towns of other drillers. It is estimated that at least one-half million dollars a year comes into the country from our Canadian drillers in foreign fields. These men return to this country when finished with their foreign drilling and the money they have returned is spent here. Of the proceeds received from the sale of oil produced in this country practically every dollar is expended for wages, oil well equipment and otherwise in the country.

My hon. friend has said in his budget that he is in favour of primary production, and when assistance is taken away from an industry and that industry is left without the protection which enabled it to exist, it must certainly be looked after by some method such as the remission of the sales tax or the remission of certain customs duties.

I do not know whether my hon. friend has ever had time to read these representations. I am inclined to think that he has never done so; I do not think that Mr. Greenizen sufficiently impressed him with the great importance of this matter to western Ontario, because if he had, the minister would have extended to the people who are engaged in the oil producing business at least as good treatment as he gave the manufacturers of agricultural implements and other things. These people are directly engaged in a primitive industry, and the minister should certainly give them at least as good a chance as he would those who are employed in any other primitive production. But they are overlooked; I do not think he has considered their position at all, because there is no duty whatever in this case. As I have just received the information I have not been able to

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check the accuracy of what I will now give my non. friend, but he will have the facts, for he knows what he did. My recollection however is that this is correct, that the exemptions from duty, the reductions of duty, and the rebate:', in his general bill are all in connection with raw materials to be used in the production of articles classified under certain customs items. In other words, it does not

make, let us say, brass or steel free, or give a rebate on brass or steel, unless these materials are used in the manufacture of agricultural implements or something of that kind; it is not general. This is what these people say and the list is in my hon. friend's hands. It is a list of articles used in operating and drilling for crude petroleum. These are the articles and the rates of duties:

Commodity

1. Brass tubing

Item Rate of Duty

348c 10 per cent when in lengths of over six feet

(plus 5 per cent sales tax).

2. Well-drilling machinery and apparatus and

parts thereof, of a class not made in Canada, drawn or seamless iron or steel tubing over 4 inches in diameter, for drilling for water, natural gas and oil, and for prospecting for minerals, not to include motive power

3. Wire rope lines to be used as cables

4. Lapwelded tubing of iron or steel, not less than

4 inches in diameter, threaded and coupled or not

469 Free of duty (this would not apply to 4f casing as it is only 4 inches in diameter).

408 25 per cent plus 5 per cent sales tax.

30 per cent but subject to a drawback of 50 per cent of duty in casing oil and natural gas wells also exempt from sales tax (not over 4 inches in diameter).

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PRO

Thomas George McBride

Progressive

Mr. McBRIDE:

Mr. Speaker, in this corner Sir HENRY DRAYTON: I am giving

of the House we cannot hear what the hon. the customs items, and unless my hon. friend gentleman is reading. has the schedules before him he would not

be a bit interested. Then:

Commodity Item Rate of Duty

412 399 454 588 75 cents per 100 pounds, and 25 per cent plus 5 per cent sales tax. 30 per cent plus 5 per cent sales tax. 30 per cent plus 5 per cent sales tax. 53c cents per ton. 27| per cent plus 5 per cent.

6. Wrought or seamless tubing, iron or steel, plain or galvanized, threaded and coupled or not.

.

My hon. friend knows a good deal of coal has to be used in this business; he has not looked after that feature at all. I point out to my hon. friend, Mr. Speaker, that the withdrawal of the bounty is a very real injury to that part of the country. The objection to its withdrawal is not political; everybody in the district knows what the discontinuance of the bounty means to the farmers and the community, and they are united in their protest irrespective of politics.

Now, what have those people done that their interests should be wiped out? They made their investments on their faith in the policy of my hon. friends opposite, their policy of 1904, but those people have been

able to carry on only with the most beggarly profits. I wonder if my hon. friend thinks that the farmers generally are making very big profits at the present time.

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LIB

James Alexander Robb (Minister of Immigration and Colonization)

Liberal

Mr. ROBB:

No, I do not think so.

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

Very good. It means something to the farmers of Lambton and Kent to be able to carry on even with such small returns. The continuance of the industry is absolutely vital to the little community centres which I have been describing. The bounty was not removed last year because the principle was wrong, and my right hon. friend Mr. Fielding wanted to swallow himself, for he has never said that the bounty

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principle is wrong. On the contrary, in the very same speech in which he announced the withdrawal of this oil bounty he reaffirmed the principle of bounties by adopting this method to stimulate Reproduction of copper in the West. The people of Lambton and Kent were not getting something which the right hon. gentleman thought they should not get, that was not the trouble at all; he said in effect, "I am afraid for my balances, I am afraid that big discoveries of oil in the North and in the West will create an undue strain on the treasury if the bounty on oil is continued." But the threatened danger has never materialized. Still, these people know they are to be injured because of the prospect of big oil discoveries in other parts of the Dominion. They also know that if we merely adopt the simple provision of limiting the bounty to a small number of barrels per day per well-the suggestion last year was five barrels-the total charge on the treasury per well would only be $2.60. We often hear it said that the farmers never get any benefit from our fiscal policy. Here is a case where they do get a benefit. I do not know what the idea of the government is. Last year there was to be a differential duty put upon sugar beets so that our farmers producing them would not be in as good a position to compete with the producers of raw cane sugar. My right hon. friend realized the mistake he had made and stayed his hand. He has made just exactly the same mistake here. I think if he were to stay his hand here also it would be equally to the purpose. Honestly, what else could he do? His whole reason for proposing the withdrawal of the bounty was these large anticipated oil finds which, as I have shown, have not yet materialized. I am confident that the right hon. gentleman would have stayed his hand in this case were he now at his desk. What did he do in connection with sugar beets? His idea was that having regard to the duties on raw and refined Cuban sugar the sugar beet producers were getting too great protection, and he cut the duty of 48 cents in half. We prevailed upon him to let it stand for a year. He did so because the refining company at Walkerville showed that they had made their contracts with the farmers and would be out the 24 cents if the duty was so reduced. After the right hon. gentleman allowed it to stand, it was pointed out that having done so for the reason stated, it was quite Obvious to everybody that he was taking the money from the farmer and not from the refiner. Thereupon he very properly allowed the duty to stand. I am quite con-

vinced that the same sense of fair play so characteristic of my right hon. friend would influence him to take the same action in this case if he were here to-day.

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CON

Murray MacLaren

Conservative (1867-1942)

Mr. MURRAY MacLAREN ((St. John and Counties of St. John and Albert):

Mr. Speaker, I would take this opportunity of bringing to the attention of the House the condition of the oil fields in the county of Albert. This matter was referred to a year or two ago. In the county of Albert the oil fields are in the early or development stage; there has as yet been no large development. Up to the present I understand that between a million and a million and a half dollars of British capital have been invested in this work. The amount of production, I say, is not large; the work is in its initial stages. The bounty that has been paid is something about $5,000 a year. If the bounty is to be abolished, as is now threatened, then this industry in Albert will lose that sum-a small sum, it is true, but it is something that would help. The profits are very small, or nil; therefore a bounty, even if a small one, is of first importance.

Two years ago the Minister of Finance of that day was very cautious about continuing the bounty, because he said there might be an outpouring of oil in the northern and western parts of this country. It was pointed out to him that that was a remote possibility; that it might happen within a year or perhaps not for fifty years; that he was legislating on something that might occur, to the great loss and disadvantage of industries that were being earned on to-day. It is important that this industry should not be subject to loss, because surely we will all agree that we should encourage the investment of money from without the country. The development of the oil area in Albert is a case in point, because it is largely British capital that has been invested in this work. The abolition of the bounty would unquestionably be a severe blow at the investment of British money in this part of the country. The work has not been put on a profitable basis, therefore those who have invested their funds in the work and are not yet receiving a fair reward cannot help considering that they are not being treated fairly. Surely there can be a means of providing that any such wonderful development of oil as has been predicted will not plunge the country into an enormous expenditure; surely the bounty can be limited to a certain point of production. I place this matter again before the minister in the hope that it may make some little impression on him. I sincerely believe that to abolish the bounty will not

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benefit the country. You are proposing to make a small immediate direct saving, but the ultimate loss will be very great in injury to or the closing of these industries and in shaking the confidence of outside investors in this country.

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CON

Edmund James Bristol

Conservative (1867-1942)

Hon. EDMUND BRISTOL (Centre Toronto):

Mr. Speaker, it is obvious that we are anxious to keep in Canada all the people we have here, if for no other reason than that they may help in the payment of our national taxes. It is equally obvious that we would like to bring back from the United States the hundreds of thousands of those who have been going there for a long time past, and particularly during the last two years. It is of much more importance that we should solve these two problems than that we should bring in immigrants from different parts of Europe who apparently spend one year in Canada and then go over to the States as fast as they can. In anything I have to say to-day I have no desire to find fault with this government or with any government; I shall simply try in a fair fashion to examine the difficulties which beset us and to see whether there is not something that we as a nation should do to help the situation.

Unquestionably we have a difficult situation to face. We have a national debt as a result of the war, which is costing us $200,000,000 a year. We have the National Railways, which, unfortunately, largely on account of the ambition of our friends opposite, are now costing us about $75,000,000 a year, and we have to pay our debts as we go along. We are subject to taxation which is greater than that of any other country. We cannot meet our yearly obligations unless we get people into Canada and keep them here, and unless we get money into Canada. I do not think that even my farmer friends, who may differ from us on many other points, wall deny that it is a national necessity that we should keep our people here. We must first of all make our farmers prosperous; we must get more people into the country, and we must get- I hope-our own people back from the United States. In order to do all these things we must have additional capital, and if we are to get additional capital we must make the conditions just as favourable here as they are in the United States, which naturally is our greatest competitor, and which has more capital than we have.

Looking over the Ottawa Journal to-day I noticed an article on the subject of the Canadian and United' States income tax, and a few of the figures given in that article are

illuminating. For instance, on an income of $3,000 the Canadian tax is $40 where the United States tax is $7.50. Is it any wonder that our young men think of going to the United States to earn an income of about that amount when they are taxed only $7.50 upon it? Then, on an income of $4,000 the tax in Canada is $80 where in the United States it is $22.50. Is it any wonder that our men are going to the States? On an income of $5,000 the tax in Canada is $126 and in the United States $37.50. Then, when you come to the higher incomes, which many people think should be dumped over to the government: On an income of $1,000,000 the tax in Canada upon a man who has worked hard enough to get that amount is $696,000 while in the United States it is $429,000. Take even an income of $10,000, which is an average income in this country for a great many people: the tax in Canada

is $619 while in the United States it is $207.50. Then take the wages that are earned in their respective countries: Young

ladies who work in the stores, for example, get $13 in Ottawa and $30 in Detroit.

I do not think that the tariff changes which my hon. friend has suggested will have the effect at all of assisting the country in overcoming the difficulties we are discussing. On the contrary, we scared the life out of the manufacturing interests of this country that we were going to have eventual free trade, and that did more harm to this country than any tariff changes he made, because the tariff changes he has made have not been for the benefit of the farmer, but for the benefit of the manufacturer of agricultural implements. A short analysis will show my hon. friends that the manufacturer of implements is making more and the farmer making less. Iron, steel and other materials going into the manufacture of these implements come in free from the United States, and the manufacturer of agricultural implements is making just as much to-day as anybody in the United States. The farmers may think they are being materially aided by the tariff changes; I hope they are, but I am satisfied they will find on closer examination that the manufacturer of implements is the one man who is better off, and every other manufacturer connected with that industry, and the great mass of people in this country who are interested in manufacturing, have been injured by certain statements made by a couple of the ministers that the Liberal party is now headed on its journey towards complete free trade.

I say to my farmer friends, to start with, that I do not know any stage in the history

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of our country when the Conservative party had not full appreciation of the fact that the prosperity of the farmers was absolutely Jssential to have progress in this country. Canada cannot get ahead unless the farmers are prosperous. They are certainly not prosperous in Ontario to-day. As far as western Canada is concerned, I think perhaps they are more prosperous than the farmers of North and South Dakota and of one or two other states bordering on this country, from the fact that our farmers in the West grow the best wheat in the world. They are good farmers, they work hard, and do the best they possibly can, but they have a heavy railway rate against them. It is less than in the United States, because in this country the farmers have been given the benefit of a railway rate to the head of the lakes which is 9 cents a bushel less than the American farmer gets; and I am glad of that because it gives the Canadian farmer a chance. But, coming as I do from one of the largest manufacturing cities in Canada, Toronto, I want my farmer friends to understand first and last that we believe we can have no real or great prosperity in any country unless the farmers of that country are prosperous. I do not think that what the government has done for the farmers this session is going to help very much in making them prosperous. I do not see how the five or ten dollars apiece will bring them prosperity. However, the western farmers are well able to look after themselves. They send a spiendid lot of representatives to this parliament, men of great ability and intelligence, well able to look after themselves, so I am not proposing to give them any advice as to how they should conduct their own affairs. But I want this made plain: As far

as the manufacturing interests of this country and the Conservative party are concerned, no sane man believes that this country can become great and prosperous until our farmers are made prosperous, and kept prosperous, and are treated fairly and squarely. It is clear they are men of great intelligence, and how they can go back seventy or eighty years and advocate free trade I do not understand. It is all very well in theory, and if we had free trade all over the world, and every country was free to import the natural products of the rest, we would have a lovely time; but when the other countries of the world have adopted a different policy and each has said, in effect, "We will keep all our business for our own country," there is not going to be any great prosperity in those other countries where free trade is adopted as compared with

those countries that are looking after their own interests, and where manufacturers, farmers and the working people are in unanimous agreement for the good of the whole country.

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PRO

John Evans

Progressive

Mr. EVANS:

What is the matter with

the farmers of Dakota? Have they not got protection?

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CON

Edmund James Bristol

Conservative (1867-1942)

Mr. BRISTOL:

If my hon. friend will

excuse me-I am speaking with very considerable difficulty-I ean mention an article on the subject which appeared in a recent issue of the Saturday Evening Post, April 14, 1924, in which he will find the whole subject dealt with,-what the government of the United' States is doing for the western farmer of that country who has not been intelligent enough to keep Mr. Pig and Mrs. Cow and these other accessories which our farmers go in for and which help to tide them over bad periods, bad crops and bad weather. That article deals with the subject much better than I could. I am trying to deal with the problem on a broad basis, and I say that in no country can you have prosperity unless the farmers are prosperous, and the idea of many farmers that the manufacturers are a body of gentlemen with their mouths wide open, wanting to eat up everybody else, is a great mistake. I know many distinguished manufacturers of Ontario whose fathers are farmers in the province of Ontario. Why? Because the farmer on the farm in Ontario produces the best breed of men and women anywhere in the world. They grow up in the fresh air amid healthy surroundings, and come to our great universities. They are splendid men, and they take possession of our cities and manufacturing just as my hon. friends to my left are taking possession of this government to-day.

I want to come back for a moment to what I think might help the situation in this country. I am quite satisfied that the five or ten dollars apiece that the farmers will get out of these tariff changes will not help them very much. There is another question. How are we going to get back into this country almost the one million French Canadians who are in the United States to-day? We want them back in Canada, because there are no better people in the world than these French Canadians, men and women, and there is no more prosperous province than Quebec, and no province that is belter run. We would like to see these people back in this country. What has my hon. friend done in his tariff changes to get them back? He has had three or four members from the province of Quebec get up and tell him what a rotten tariff it is, -and they have not done full justice to it,

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because they were very diffident, not wishing to hurt his feelings. The whole point, so far as the great provinces of Ontario and Quebec are concerned, is that the farmers are not prospering any more than is the western farmer, but they do not come here in a body and ask us all to get up and work for them, they are trying to do what they can with their farms to make themselves as prosperous as they can. If the western farmer got his free trade policy, it might help him get cheaper products in his home, perhaps, but the farmers of Ontario are perfectly well aware that if the manufacturing industries of this great province are injured, and if our population, and particularly our working men, leave this country for the United States, instead of staying in Canada, there is going to be no prosperity for them. Take the situation in the province of Quebec. You have not heard any of the members from Quebec agitate for free trade. Far from it; they would not dare to go back to their constituencies if they did so.

The policy of the present government seems rather to be one of trying to make friends of the farmers of .the West and retaining power for the time being, rather than of considering the inauguration of a policy that would be of real value to the people of this country. Why, sir, will anybody tell me that the farmers in the provinces of Ontario and Quebec do not need protection on everything they produce? Take eggs for instance. The duty on eggs entering the United States is eight cents a dozen, whereas the Canadian duty on eggs coming in from the United States is three cents a dozen. The disparity there is quite marked, but protection for the farmers of the United States is a marked feature of their tariff. Now, it is vitally important, to my mind, that .the farmers of Ontario and Quebec, in fact the agriculturists of the country generally, should have the same protection, if not more, in the case of products entering Canada from the United States as in the case of products going into the United States from .this country. If that policy were adopted our producers of fruit and vegetables, for example, would be able to sell their products when prices were firm and the demand good; they would not, as at present, have to content themselves with the tail end of the market when most of the demand had been satisfied by the Americans.

The agitation for a lower tariff practically has arisen almost entirely in the West where great delight is felt because there has been a reduction in the duty on agricultural implements. This in itself is unimportant even when taken in the aggregate. Apparently 190

however the western farmer is highly pleased because he has been able to force the government to take a step in the direction of free trade.

What we want in this country is a policy which will not only increase our industrial development but will augment our population. What we should strive to do is to retain our present population and bring back all those Canadians who have gone to the United States. A proper tariff policy would have these results. With all respect, I say that our tariff should be raised and not lowered, so that instead of importing nine million dollars' worth of agricultural implements from the United States, and seventeen million dollars' worth of woollen goods, we shall not import any. My advice to Canadians is: Do not import any of these goods; raise your tariff just as the United States has done. I do not mean to say that we should imitate the tariff policy of the United States in its entirety, but adopt such a policy as will cause to be made in Canada everything that can be produced or manufactured here. By doing this you will be giving real protection to our people.

A great many of our western friends, and other people also, are of the opinion that the manufacturers and the working men will be the only classes to benefit if that is done. Well, I am not in favour of allowing the manufacturers to milk, so to speak, the farmers or any other class of the community. But what I do say is, that any work required to be done in Canada should be done by Canadian workmen, who, in turn, will buy the products of the farmers. So far as the manufacturers are concerned, I am quite satisfied that my hon. friend the Acting Minister of Finance (Mr. Robb) will see to it that they pay their proper share of taxation; he can be depended upon to see that the manufacturers do not get unduly rich. If all the work needed by Canada is done by Canadians it will mean that the home market will grow and expand. There will be more people for the agriculturists to sell to, and the farmer of the West will get his share in common with the rest. I believe there are about two and a half million Canadians in the United States at the present time, and one of our objects should be to get them to return to their own country. We can get our own people back by increasing the demand for manufactured products, and the best way to do that is by making a judicious use of the tariff, just as the United States has done, and giving the first preference in our markets to Canadian manufacturers.

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When Sir Wilfrid Laurier came into power in 1896, what happened? A tariff policy was framed which it was thought would work favourably for Canada. In the great constituency which I have the honour to represent a Liberal protectionist was elected at that time, and he was a very 5 p.m. good man. He came down to Ottawa, in company with the Hon. Lyman Jones, at that time head of the Massey-Harris Company, and what did they do? They did not suggest that the tariff on agricultural implements should be lowered -not at all. In the new tariff regard was had to imported materials when used in the manufacture of agricultural implements exported abroad. That provided work for our own people and helped our manufacturers to successfully compete in European and other markets, with the manufacturers of the United States. That was a good thing for Canada, and our people prospered. Any one who examines the Laurier-Fielding tariff of 1897 will have difficulty in finding it to be other than a protectionist tariff under which the country prospered.

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LIB

James Joseph Hughes

Liberal

Mr. HUGHES:

It. was roundly condemned by hon. gentlemen opposite at the time.

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CON

Edmund James Bristol

Conservative (1867-1942)

Mr. BRISTOL:

It is possible that mistakes were made. The present government is making mistakes, and I am showing hon. gentlemen opposite how to correct them. The best thing they can do is to go back to the tariff of 1897. True that tariff underwent changes, but in the main it was a reasonably protective tariff and made provision for the necessities of the country. Not only did industries flourish under that tariff but there was a large influx of population. On the other hand, between 1874 and 1878 the Liberal policy was very much as it is to-day. It was upheld by gentlemen who professed to believe in free trade rather than protection-in a word they were gentlemen who professed what they thought would get them into office. The acting finance minister of to-day is a very able and very fair man, and I have great respect for him personally. It is for that reason I am pointing out these facts to him. When Sir Wilfrid Laurier and the great Liberals of that day succeeded to office they gave the country a somewhat better protective policy than the Conservatives had done. Today we on this side are endeavouring to secure for the country a real protective policy such as the United States has framed for its people. A policy of that kind is absolutely essential at the present time if we are going to pay the interest on our national debt, keep our [Mr. Bristol.!

railways in successful operation, repatriate our people who have left the Dominion, and get more population from other sources.

The province of Nova Scotia has never had fair treatment in the matter of coal. It has an abundant supply. So also has western Canada. There is no reason in the world why we should send out of Canada to the United States every year the enormous sum of from eighty to one hundred millions of dollars for the purchase of coal. Ontario is producing its own electric power. That is what has kept that province alive, as well as the province of Quebec. But Canadian coal, rather than American coal, should be used in this country; there is no reason for spending the large sum I have mentioned in buying American coal when western Canada and the province of Nova Scotia can meet our demands in this respect.

There is one other matter to which I should like to refer. In Canada we have wonderful timber resources, and according to engineers we have also the greatest mineral resources in the world. That is a matter of absolute importance to this country. Fortunately we cannot take our mines and give them away to the United States. For that reason the mining is going on in this country, Canadians are being employed in the development work, and the money is spent in Canada instead of being spent in the country to the south. I advise the Acting Minister of Finance to give this country a real protection, a policy such as will protect the farmers of Canada, give our workmen a chance to earn good wages instead of going to the United States, and retain our population in all parts of Canada at home. If my hon. friend will inaugurate a policy of that kind he will do something which will be of real benefit to the people. I submit that the present tariff is not helping Canadian industries in any way whatever. It seems to be designed chiefly for the purpose of keeping the government in power, which to them is of great importance, of course. Furthermore the government's tariff policy has frightened the industries of Canada to such an extent that they are apprehensive of disaster and do not know what is going to happen from one minute to another. Finally it has put a damper on the country's prosperity.

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June 10, 1924