examined the bulk of government reports on the subject. I have also taken the trouble of visiting the mixing centres in Buffalo and other parts, and I do not blame the fanners of the west for organizing to destroy the gigantic trust which to-diay has the mam who grows grain at such a disadvantage. I regret that lack of time will not enable me to go fully into this question, but the report which has been submitted by the commission that investigated this question is interesting in its way. We had a commission comprising a judge and two university professors looking into this subject, and I want to say that if you want to have anything impractical you have only to get university professors to report upon it. Instead of a commission of business men who know something about the matter, the government spent $200,000 on a commission consisting of a judge and two professors. I read the following from the report of the commission:
At the present time, the duty on Canadian wheat- entering the United States-is 42 cents per bushel. On wheat flour, semolina, crushed or cracked wheat, and similar wheat products, the duty is $1.04 per hundred ponuds. These duties are practically prohibitive, in their effect. They prevent Canadian wheat or wheat products having access to the American domestic market. On the other hand, under the provisions governing milling in bond and drawbacks, it is quite possible for the American millers to obtain Canadian wheat virtually free of duty to grind for export. Considerable quantities of Canadian wheat are ground in American mills and exported abroad under these conditions. This American flour ground in American mills, but the product of Canadian wheat, enters into competition with the output of the Canadian flour mills. The benefits of manufacture are lost to Canada, while at the same time, the general benefits of reciprocal free trade in wheat and wheat flour do not exist. It was suggested to us that in view of these conditions, an export duty should be levied at the same rate as in the American tariff, upon Canadian wheat and wheat products entering the United States. The American tariff having already closed effectively the domestic market to the Canadian farmers, the result of such a levy would be to eliminate the export of American flour ground from Canadian wheat, and to transfer this market to the Canadian millers. While, as a general thing, export duties are to be deprecated, the exceptional situation that arises in this instance might warrant such an import.
As I have said, during the recess I visited these mixing places, and I am one of the most surprised men in Canada that such a condition of affairs should be allowed to exist for one moment. I think that an export duty should be levied to prevent Canadian wheat from going into the United States. At present the port of Buffalo is being built up by means of Canadian wheat going there; our wheat is mixed in the United States and then shipped overseas from that country with the American certificate. There are twenty-eight elevators in Buffalo to-day, every one of which should be in Canada, and if we had an embargo not one of
these elevators would remain across the line. Buffalo to-day is taking the place of Minneapolis, so much so that the millers are building elevators. I was in conversation with a Mr. Barnes, a great transportation and elevator man, and he is spending millions of dollars in this connection. I was surprised to find in a pamphlet issued in Buffalo a statement to the effect that at the present time Ontario is being drained "to make a greater Buffalo." The House will note that statement, which is significant. Now then, the sky line has been rattling some since the embargo was proposed. This is the background of the huge structure. I may say that the Washington tariff buttress against Canadian wheat and flour is a most ingenious scheme, as I pointed out, to prevent these products competing with agriculture and milling on this side of the line, while at the same time encouraging Canadians to ship as much of their grain and dour for export through the states as possible, permitting Buffalo elevators and similar warehouses in New York, Baltimore and Philadelphia to exact a rich toU from the traffic, as well as the transportation companies to levy the maximum charges for their service.
As I explained in my plea for protection of Canada's vast grain and mill traffic against foreign aggression, Buffalo boadts in every piece of literature placed before the public of the value of this Canadian business as- a factor in contributing to the development of the port, and painful as this may be to the pride of Canadian people, Buffalo is guilty of no exaggeration in this boast. Buffalo publishes annually through its publicity bureau a text book of growth, industrial strength and reasons why big factories should be located here. In this volume of 224 pages there are innumerable references to what the port gets from Canada-how Ontario is being drained to make a greater Buffalo. Note this gem under the caption of "Centre of economic assembly," page 89, in the issue of March 21, 1924:
The second feature of Buffalo's market territory is the fact that Buffalo is strategically located with regard to the control of the Canadian trade. In fact, of all the American industrial centres Buffalo can claim this advantage as peculiarly her own. Canadian markets for American manufacturers is a certainty.
At this time, in spite of an unfavourable tariff, 67 per cent of Canadian purchases are made in the United States. During 1923 imports to Canada from the United States increased from $501,445,464 to $615,205,580. Three-quarters of Canada's industrial population lies within Buffalo's market territory. In fact Buffalo can be said to be the gateway to Canada. The greater Canada becomes the greater will be Buffalo's advantage as the distributing centre for the markets of Canada.
The Budget-Mr. Church
I asked an officer of one of the largest flour milling companies in Buffalo what would happen in his city if the proposal became law to have Canada put an export duty on grain and flour entering the States equal to the import duty on those products imposed by Washington. He looked serious, and replied, "I don't like to contemplate such a thing. I am afraid it would not only deal Buffalo mills and elevators a serious blow, but would be felt in these industries all over the United States. Our customs laws, of course, are for the protection of American farmers, but they are framed to permit Canadian grain and flour for export passing through the States in bond with the least possible delay. Of course, American mills must have a very considerable percentage of Canadian hard wheat to blend with United States soft wheat to manufacture the best grades of flour. This is specially necessary for the export flour trade of the United States. Our flour could not compete in the world markets where the best grain is purchased, otherwise with the Canadian article. Then, too, where our flour is shipped through the torrid zone, the soft varieties will not stand the hot, humid atmosphere with which it comes in contact. That is the reason Washington exempts Canadian grain, milled here in bond, from the operation of the 45-cent duty. If our mills could not have this trade equality with Canadian flour, I am afraid some of them would have to establish plants on the Canadian side to take care of a considerable portion of their export trade."
For 1923 the United States total flour export was 14,882,000. a monthly average of 1,248,000 barrels, 149,000 barrels less than Canadian mills exported in the month of March, 1924, and the United States monthly average for 1924 does not show the proportionate increase as recorded by the Canadian trade. Buffalo has eight great mills with a total daily capacity of 61,000 barrels, while in Canada there are a total of 1,333 mills with a combined daily capacity of 128,225 barrels though 163 of the largest account for 110,000 barrels of this daily capacity for the Dominion.
What relation to the tremendous growth of Buffalo's flour milling has the suspicion that something is wrong here in the handling of Canadian grain in bond en route to the world markets, and the flour ground in bond here from Canadian wheat? Our royal grain commission went into this matter, but no definite proof of the evil was secured, although the suspicion was very strong. Here is the way Canadian grain gets into a bonded
warehouse, and the way it gets out. A vessel arrives from the Canadian lake head with grain; a customs officer is notified before it is unloaded; if it is going through in bond to the United States seaboard, after the customs officer examines the bill of lading he sees it unloaded into a bonded warehouse. The grain is in possession of the warehouse company until it is ready to continue to the seaboard. Then one of Smith's deputies is present as the grain is transferred to a freight car or Erie canal barge, or perhaps it is moving out via Montreal. The seals are broken only by a United States customs officer as it passes into the floating elevator or into the vessels at the seaboard. If one of the Buffalo mills receives a cargo to be ground into flour in bond to be shipped out of the country, a customs officer watches the transaction and sees that the quantity of flour, corresponding to the bonded grain handled, is moved on to the seaboard, and this in turn is still under the control of the United States customs until loaded into the ' ocean vessels. The United States government is not interested in determining the quantity of soft wheat flour "blended" with the Canadian hard wheat bonded flour, but only is seeking to prevent any of the flour from the Canadian bonded grain remaining in the United States unless the 45 cents a bushel duty has been paid.
But there have been repeated and persistent complaints from the buyers m the United Kingdom that somewhere between the time the Dominion government inspection at the head of the Canadian lakes is made and the arrival in Liverpool soft wheat is frequently mixed with these consignments. One notable case is still pending in the courts involving a claim of $35,000, the difference between the grade called for by the Dominion government certificate and what the buyers claimed was the quality of the shipment when it reached them. This cargo was sent via Baltimore and has been the subject of repeated United States investigations but if there was "bootlegging" the responsibility has not yet been determined. But the toll levied on the Canadian grain passing through the Buffalo elevators is but a fraction of the cash extracted from these products of the Canadian farmer by Amercian interests before it passes out of their hands.
You will find that the Erie barge canal is spending millions of dollars to take care of this export Canadian trade, and undoubtedly there is a big profit made by the elevators. For each bushel capacity an elevator costs from $1.50 to $2.50 per unit. This would
The Budget-Mr. Church