February 13, 1925

ADDRESS IN REPLY


The House resumed from Thursday, February 12, consideration of the motion of Sir Eugene Fiset for an Address to His Excellency the Governor General in reply to his Speech at the opening of the session.


IND

William Findlay Maclean

Independent Conservative

Mr. W. F. MACLEAN (South York):

Mr. Speaker, I take it for granted that I have the floor. I will simply say this: My main

object in speaking yesterday was to prepare in substance, a brief for the motion I have on the order paper under Notices of Motion. I have got that brief; it is on Hansard today, and I will conclude my speech of yesterday by saying that I endorse all I said then and will endorse it on another occasion.

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CON

Thomas Edward Simpson

Conservative (1867-1942)

Mr. T. E. SIMPSON (Wesu Algoma):

Mr. Speaker, now that the motion has been properly restored to the order paper we can proceed with the discussion of the Speech from the Throne.

The Speech from the Throne is usually looked forward to with a great deal of interest, not only by the members of this House but by the country generally, because it is expected that it will forecast the principal

The Address-Mr. Simpson

items of legislation that the government purpose bringing before parliament for consideration during the session. I regret that in the Speech of this year no reference has been made to legislation that would tend to relieve the overburdened taxpayer or that would have a tendency to encourage the investment of capital in this country and thus provide employment for the many who are now out of work.

It is my intention, Mr. Speaker, to deal briefly with the general conditions in the iron and steel industry of this country. The Prime Minister (Mr. Mackenzie King) in his address a few days ago was pleased to cite the iron and steel industry as an index of business prosperity and general conditions prevailing in the country. I would first like to refer, however, to one or two statements contained in the Speech from the Throne.

There is a reference to the improved conditions and to the favourable balance of trade. Now, a favourable balance of trade is desirable, particularly if it has been obtained by the sale or export of the finished product of the farm, the forest, the mine or the sea; but not always so if it has been obtained by the sale of our raw materials to be manufactured in another country and subsequently returned to us in the form of finished products. You will find by a study of the trade returns for the calendar year 1924 that the exports of that year exceeded the exports of the calendar year 1923 by some $43,113,624, and that increase consisted entirely of raw material-or unfinished products-exported. A favourable balance of trade obtained in that way is not always a safe barometer of business conditions.

Reference is made in the Speech to the cost of living as the most important matter engaging the attention of the ministers at the present time. Well, it was the most important, next to winning the general election, that engaged the attention of the Prime Minister and the Minister of Labour (Mr. Murdock) in 1921. They were particularly concerned about the overburdened taxpayer at that time, and they referred to the leader of the government and the members of the government of that day as those who, in carrying on the affairs of the country during the period of the war, had become so accustomed to thinking in millions that it was difficult for them to get down to the consideration of matters on an ordinary basis, and that the only hope for the poor suffering man with a family was a change of government. Well, we had the change of government. Hon. gentlemen opposite have been in power now for over three years, but

still there is no relief. Let me quote from figures published in the supplement to the Labour Gazette of January, 1925. I find there the figures of a family budget, covering staple foods, fuel, lighting and rent, and being retail prices prevailing in sixty cities throughout the Dominion. We find that in April, 1922, a few months after this government came into office, and before they had an opportunity of affecting the prices one way or the other, the index price given for the weekly family budget was $20.66, whereas in December, 1924, the index price was $20.90, showing the cost of living still going higher, and the government still looking for the remedy.

We also find in the Speech from the Throne this statement:

The cost of production of raw materials and the necessaries of life has been lessened by the reductions in the tariff and the sales tax effected at the last session.

Well, Mr. Speaker, the chief reductions that I have been able to find are reductions in the national revenue, reductions in the output of our manufacturing establishments, and a reduction in the pay cheque of the average citizen. But let us compare this statement in the Speech with the figures provided by the Bureau of Statistics covering the wholesale prices of 238 commodities. The index price given for May, 1924, just at the time the budget was adopted, was 150-6, while for January, 1925, we find the index price is 165-2, an increase of almost 15 points, so that statement in the Speech from the Throne is effectually answered by the government's own figures and requires no further comment on my part.

The Prime Minister in his address a few days ago quoted a mass of statistics in an endeavour to convince the House and the country that business conditions in Canada were more favourable than those in the United States. He stated:

I submit that if my right hon. friend (the leader of the opposition) takes the trouble to compare the statistics in this country with the statistics which I have just quoted from authentic sources in the United States he will find that, having regard to the tremendous influences which conditions in the country to the south have upon conditions in Canada, our showing is considerably the better.

If that is so, why is it that the government have found it necessary to spend no less a sum than $9,000,000 in the past three years in order to induce 322,000 immigrants to come to this country, while during the same period the United States had to rigorously enforce their quota law in order to keep out those who were clamouring for admittance at their door? Why was it necessary for

The Address-Mr. Simpson

upwards of 600.000 Canadians during the same period to cross the border to the United States, if it was not for the purpose of finding there employment which was denied them at home? Sir Wilfrid Laurier once stated that it was not necessary for him to quote statistics showing the amount of deposits

4 p.m. in the savings banks or a favourable balance of trade in order to convince the people of the prosperity of the country. All you have to do, he said, is to feel in your pocket, Mr. Speaker, you cannot camouflage the issue by a mass of statistics. Everybody knows that Canada today is not enjoying the prosperity that a country blessed with our natural resources should be enjoying. And what is the trouble? In my opinion the chief trouble is that we are exporting altogether too much of our natural resources in the raw or unfinished state, and we are importing altogether too much of the products that we could successfully produce at home. Why should it be necessary for a country like Canada, to import, as we did in 1924, over $25,000,000 worth of fruit, almost $5,000,000 worth of vegetables, large quantities of butter, meats, eggs and cheese, all of which with the possible exception of a few articles of fresh fruit, could have been produced equally as well at home and with material profit to the farmer?

Let me turn now to the iron and steel industry. The Prime Minister in his address the other day stated that the condition of this basic industry could be taken as a fair index of the prosperity of the country. He said:

I pointed out that in gauging the industrial situation, economists have always had particular regard to the basic industries, and that the iron and steel industry is usually regarded as the most significant. The figures that I gave the House indicated, I think, conclusively how very considerable had been the falling off in the production of the basic industries of the United States during the period I mention and in particular the falling off in the production of iron and steel.

Now let me quote from the monthly report on the production of iron and steel in Canada for December, 1924, as furnished by the Bureau of Statistics. That report shows that the total production of pig iron in Canada in 1924 was 593,024 gross tons, a decrease of 33 per cent from the 880,018 tons of 1923. In the United States the production of pig iron in 1924 was about 31,000,000 tons, or about 22 per cent less than in 1923. You will observe that the falling off in the production of pig iron was considerably greater in this country than in the United States. At the same time we imported upwards of $140,000,000 of steel and steel products into 10

this country, a great portion of which could have been successfully 'manufactured here. During the very same period our own steel industries were closed down from five to eight months in the year.

I am going to quote from an interview given by the vice-president of the British Empire Steel Corporation, an institution that received a very severe castigation at the hands of the hon. member for Saskatoon (Mr. Evans) who, I regret, is not in his seat at the moment. Just before quoting from that interview I want to say in connection with the figures given by the hon. member for Saskatoon, particularly those with reference to the bounty that had been paid to the iron and steel industry, that while I do not dispute his figures as to the amount of bounty paid, I think they leave a very unfair impression if other figures are not placed alongside of them. I propose to give other figures showing the amount that this country has received in customs duties and in taxes from some of these industries that received the bounty. The only figures I have available are those applying to 1916, 1917 and 1918, a three-year period, and they apply to four of the steel companies operating at that time, the Algoma Steel Corporation, the Steel Company of Canada, the Dominion Iron and Steel Company, and the Nova Scotia Steel Company, the latter two being now included in the British Empire Steel Corporation. They paid into the public treasury of this country in customs duties and war taxes in that three year period no less a sum than $7,793,000, half as much as the total amount that was paid to the steel industries by the way of bounty, and they have been operating for the last twenty years; so that it is only natural to assume that they returned by way of customs duties and taxes to the Dominion treasury very much more than they have received by way of bounty. That is not all. During the three-year period they paid out in freights no iess a sum than $25,890,000. They paid in wages during that three year period $71,775,000, employing on an average 20,000 men, and I think hon. members will agree at once that industries that are contributing in such large measure as that to help in the upkeep of our railways in this country and in the employment of labour should not be subjected to the castigation that my hon. friend gave the British Empire Steel Corporation the other day.

I was going on to read an interview of the vice-president of the British Empire Steel Company, Mr. J. E. McLurg, to show the condition in which these steel industries are

The Address-Mr. Simpson

at the present time. This was an interview given on June 27, at Sydney. He said:

Two batteries of coke ovens will be operating until July 15, after which one battery only will be operated. Blast furnaces No. 1 and No. 8 will operate on basic iron until July 15, when No. 1 furnace will be blown out and No. 8 will be operated on foundry pig iron from July 15 to July 21. All open-hearth furnaces will operate to capacity until July 15, when they will cease operations. The blooming mill, billet mill, rod, bar, wire and nail mills will operate until July 19, when all orders on hand and tonnage for stock will be completed. Ample stocks are being carried and adequate arrangements have been made to fill and ship any and all orders received while the plant is shut down.

The above programme means that after July 19 the entire plant will be closed down with the exception of one battery of coke ovens and No. 8 blast furnace for three months at least.

And as a matter of fact it was closed down for considerably longer. I see one of the members representing that constituency, the government whip (Mr. Kyte) is in his seat, and I am sure he will verify what I have said But the most unfortunate part of this interview is the following:

This protracted ehut down makes necessary the reduction of idle expense to the absolute minimum and for this reason only, we are forced to dispense with the services of a considerable number of valued salaried employees to whom notices are being sent, advising them that their services will be no longer required after July 31.

The conditions prevailing down in that section have been such that it was found necessary to send a very large and influential delegation-

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

May I ask a question? Does the hon. member suggest that the laying off a large number of salaried officials of the British Empire Steel Corporation was a result of the fact that they did not have as large orders as usual, or a result of the fact that the company had been overmanned in its official capacity for many years?

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CON

Thomas Edward Simpson

Conservative (1867-1942)

Mr. SIMPSON:

In reply lo my hon. friend the Minister of Labour, I may say it is quite evident they did not require the high-salaried officials when they were closing their plant. They did not have the orders and they did not have the business.

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

It was for one reason or the other, my hen. friend will admit. I have the personal word of Mi, McLurg as to what the reason was, and I would like to give it-

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?

Some hon. MEMBERS:

Order, ord'gr.

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

I would like to know what my hon. friend's opinion is.

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CON

Thomas Edward Simpson

Conservative (1867-1942)

Mr. SIMPSON:

I have given the facts as I received them. I do not live there. I am giving the interview of the vice-president of fMr. Simpson.]

the company. I was going to say that a very important delegation came up from that locality to lay the situation before members of the government, and I have no doubt the Minister of Labour was there to receive the delegation. I believe several members supporting the government were in the delegation, and' I only hope that before this debate concludes these hon. members will rise and tell the House and the country what they stated to the government at that time. The vice-president of the same company had occasion to be in Ottawa at the national conference on unemployment held in September, at which my hon. friend the Minister of Labour presided, and according to the report this is what he had to sav with respect to conditions in Sydney at that time:

Our plants are closed down; our blast furnaces ere idle; our open hearth furnaces are cold since fifth day of August, and instead of employing 3,200 men in our steel plant in Sydney we have to-day between six and seven hundred men employed.

What I have said with respect to conditions at Sydney can be said with respect to conditions at Sault Ste. Marie, where the Algoma Steel Corporation operate. The greater portion of their plant was closed' down in June last year and they have not resumed operations. When they are operating to full capacity they employ 3,500 men. During the past eight months they have been employing in the neighbourhood of 800 men and' the period of this shut down is the longest that they have experienced in the last twenty years. There are, Mr. Speaker, twenty blast furnaces in the Dominion of Canada, and at the present time only three of these blast furnaces are blown in, or in operation; and up until a few weeks ago, there were only two. The one in Sydney was blown in a few weeks ago, if my information is correct.

Now what is the cause of this depression? It is largely due to the fiscal policy of the government.

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

The same comparative

condition is in effect in the United States.

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?

Some hon. MEMBERS:

No.

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

That is why all our people are running over there for work.

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

Not on your life.

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CON

Thomas Edward Simpson

Conservative (1867-1942)

Mr. SIMPSON:

I gave the figures a short time ago showing the production of steel in the United States last year as compared with the year before, and I also gave the figures showing the production in Canada as compared with the year before. The reduction in the production in Canada was 33 per cent, whereas in the United States it was 22 per

The Address-Mr. Simpson

cent. Before I finish my remarks I shall give some more figures that will be interesting to

the minister.

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

The hon. member will

hear some, too.

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CON

Thomas Edward Simpson

Conservative (1867-1942)

Mr. SIMPSON:

The trouble is that so

many articles of iron and steel are on the free list, or subject to a drawback of duty, and that several more articles were added to the list by the tariff changes made by the government in the budget of last session. These are exposing our industries to unfair competition from the more highly specialized industries of the United States and to the industries of Europe where labour conditions are very different from what they are in Canada. Let me quote some figures to the minister to show him what effect the last tariff changes had on the production of pig iron and steel ingot and castings in this country. I will have to quote a number of figures in order to get the matter properly placed on Hansard, because I have to give the figures month by month during the last year in order to show the proper camparison.

Production of Pig Iron in Canada, 1923 and 1924, by Months

1923 1924

Long Long

Month tons tons

January 64,000

February 60,000

March 77,000

April 84,000

May 85,000

June 57,000

The budget changes were beginning their effects: to have

Month 1923 1924

July 45,000

August 23,000

September 23,000

October 29,000

November 23,000

December .. .. 60,000 23,000

The production of steel ingots and castings

in long tons was as follows. The minister will have an opportunity of reading these in the monthly report of the Production of Iron and Steel in Canada for December, 1924, published by the Department of Trade and Commerce: Production of Steel Ingots and Castings, in Canada, 1923 and 1924, by Months

1923 1924

Long Long

Month tons tonsJanuary .. .. 48,000 41,000February .. .. 46,000 71,000March 95,000April 104,000May 108,000June 69,000July 52,000

10i

You see the effect coming right along. of the tariff changesMonth 1923 1924August 23,000September 18.000October 20,000November .. .. 55.000 23.000December 26,000

That should be conclusive evidence of what effect the tariff changes of last session have had on the production of iron and steel in this country. The Prime Minister was very strong in quoting from the Iron Age in the statistics that he presented to the House the other day. I desire to place on Hansard one quotation from the Iron Age, from the issue of 29th January, 1925:

Why does the iron and steel industry in Canada languish? This is a question of importance and the Toronto representative of the Iron Age was requested to make an investigation and report, especially as to whether the frequent reductions in tariff rates had had any effect on the prosperity of the industries in the Dominion.

Mr. Sanderson's investigations and report show that the tariff, or rather lack of it, has had a very important effect, not only in reducing production but in causing many workmen to leave Canada for the United States, where employment conditions have been more satisfactory. Canadian iron and steel industry is experiencing severe competition from many directions. The action of the government in connection with its budget for 1925 is awaited with interest.

The answer, I presume, they will get from the government in that connection is that the government is pausing just now before giving any further consideration to tariff reductions.

Let me turn to another phase of this question, and that is the development of iron ore. That is one way in which some encouragement and assistance might be given to the steel industry of this country, not so much affecting the British Empire Steel Corporation as the other steel industries of Canada. Such a great basic industry as the iron and steel industry of this country should not be dependent upon foreign countries for its raw material. We have in Canada vast deposits of iron ore, millions and millions of tons. These have been actually proven up and are known to exist. They have been proven to exist by diamond drilling through the enterprise and ingenuity of private capital. It is a well known fact that these bodies of ore are of low grade and that they require certain treatments before they are merchantable or fit for blast furnace use. Here again private capital has entered in and after the expenditure of large sums of money it has been discovered that these ores can be successfully treated, impurities removed, the iron content increased, and an ore produced that will produce as good steel as is being manufactured

The Address-Mr. Simpson

to-day. A few years ago the Ontario government, then the Drury government, appointed a committee of practical men to study and investigate the whole situation and to make a report to the government as to what, in their opinion, should be done. This committee made an exhaustive study of the whole situation both in Canada and the United States, and I am going to read just a few sentences from their report:

That whereas there is a gap between the cost at which Canadian iron ore can be mined under present conditions and the price that Canadian smelters can afford to pay and market their product, and this condition will continue to exist unless assurance is given that aid will be available to an extent that will warrant the erection of the necessary beneficiation plants, and that such aid will be received and when earned during the years these mines are developing tonnage in sufficient quantities to carry their overhead and operate economically. They recommend that the provincial and Dominion governments aid to the extent of one cent per unit of iron, on each long ton of merchantable iron ore, natural or beneficiated, produced and actually marketed from Ontario deposits, and that such bounty be available to producers of merchantable iron ore for a period of ten years.

They state further:

We are of the unanimous opinion that one-half of the bonus recommended should be provided by the Dominion government.

And they cite the following reasons:

(1) The active development of our iron ore resources and the enlarging of our steel industry will be very effective in maintaining a favourable international trade balance.

(2) The colonization of northern Ontario is largely dependent upon the mining industry, and that portion bordering the non-productive sections of our National Railways is dependent largely upon our iron resources.

(3) Largely increased traffic may be obtained for the National Railways from domestic productions of iron ore, and perhaps it would not be unreasonable to suggest that the profit to be made by our publicly-owned railway would, in the gross, equal, and in time exceed the proposed Dominion share of the bounty.

This is the recommendation of a committee of experts. Following their report, the present government of Ontario at their last session passed the necessary legislation to provide their portion of the bounty. This government was asked to take similar action but has not yet done so. I would strongly urge upon the ministry the necessity of dealing with this important matter during the present session. Surely if we have money to spend in subsidizing a large steamship line to operate in competition with the merchant marine we should be able at least to consider this proposal for the development of our own resources.

One other matter which I desire to touch upon is the question of our pulpwood resources. I expect that an opportunity will be given later in the session to go into this matter fully and therefore I shall be brief on

this occasion. Last year there was exported from this country some 1,330,250 cords of pulpwood for which we received $13,536,038, a little over $10 per cord. If that quantity of pulpwood had been manufactured into newsprint before it was exported we should have received, at the rate of $70 per ton for that product, approximately $65,000,000, or over $50,000,000 in excess of what we received for the raw wood.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

What proportion of that $13,000,000 did the actual producer receive?

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CON

Thomas Edward Simpson

Conservative (1867-1942)

Mr. SIMPSON:

A considerable portion of that money was taken up in freights, transportation charges and so on, and the actual producer would not receive, I suppose, more than $3.50 to $5.50 a cord, net.

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LIB

Henri Sévérin Béland (Minister of Soldiers' Civil Re-establishment; Minister presiding over the Department of Health)

Liberal

Mr. BELAND:

Do I understand the hon. member to say that the farmer who produces the wood received last year only some $3 per cord for his pulpwood? My information is far different.

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February 13, 1925