February 12, 1926

U011-61


Now I come to the point I mentioned a moment ago, the rise in the market price of industrial and bank stocks, which the cabinet ministers and private members of this House have quoted. I am led, and I fancy the House is led, to ask: What significance, after all, is there in the rise of those stocks? It is true that certain bank stocks in this country-and1 goodness knows that if it were not true that some stocks in this country were of value we would be in a bad way indeed-have increased in price, but every hon. gentleman that I have listened to in this House seems to me to have confused the terms "market price" and "value." There is a mighty difference between the two. They do not mean the same thing at all, and the fact that we have some two or three or four or five stocks in this country rising in value is no indication at all that the country is prosperous. The *market price of a certain railway stock in the United States went up once to over $600. but the actual value of that stock based on .the earning power of the railway was only slightly over par. What then is the reason for the rise in the price 'of certain bank and leading industrial stocks in this country? Demand upon the part of the public is the reason for that increase in price, and why the demand? The answer to that is the word fear, fear on the part of capital to invest in that large body of Canadian industrial stocks because the risk was too excessive. That is the reason you have the demand for these bank stocks throughout the country. It is no evidence of prosperity. Hon. gentlemen in this House quote the speeches made by leaders of business in this country to their board of directors, but if you will examine those speeches you will find little else than this, that those leading business men express the hope that we have reached the bottom, that with the magnificent crop which has put gome millions of dollars into circulation we are on the up grade. But I submit to you, Mr. Speaker, that if you are at the very bottom of the pit and make the first step up, although you may legitimately say that you are on the up grade, you may still be a very long way from the top. Every business man in this country, everyone who has been concerned with the flotation of a new industry, knows how difficult it has been to secure capital in the last four or five years, even for re-financing businesses where the risk was far below normal. So while a rise in half a dozen stocks indicates confidence in them, it is by no means a conclusive evidence of prosperity, and in Canada, as I said before, it is no evi-



The Address-Mr. Foster



denoe at all. The same argument applies also to bonds, although there is a slight difference between the two. In the case of bonds, which are usually a mortgage on the enterprise, the risk is much less than in the case of stocks, but any increase in the market price of bonds may be accounted for by several reasons, the least of which may be the general prosperity of the industrial life of the country. During prosperous times, bonds are usually paid off rather than floated. The Speech from the Throne, in paragraph 4, has this to say upon the subject, of prosperity: Further evidence of industrial progress is reflected in the greatly .improved earnings of the railways. I desire to point out that if hon. gentlemen opposite are relying upon the figures in that regard for the last five years as a barometer for testing the prosperity of the country they are resting on what will prove to be a broken reed. In this connection I should like to submit a statement prepared by Mr. J. L. Payne, who is probably as able a railway statistician as we have in this country. An hon. gentleman sitting near me dissents from that opinion. Well, my hon. friend, perhaps, has known Mr. Payne longer than I have, but with all due deference to the hon. gentleman's views, if we deal with Mr. Payne's facts and leave out his conclusions we may act upon the information which he has compiled. In any case what does he say? That the gross earnings of the railways of Canada for the past six years were as follows' Year Amount 1920 $492,101,104 1921 458,000,000 1922 440,000,000 1923 478,000,000 1924 445,000,000 1925 (estimated for the twelve months).. 460,000,000 Let us examine these figures for a moment. If the argument of my hon. friends opposite were sound, namely that railway earnings indicate prosperity, then, Sir, the year of 1920 was the year of greatest prosperity in the last dozen years, since railway earnings in Canada in that year were only eight millions short of half a billion dollars, and thirty-two million dollars more than 1925 just closed. True, gross earnings declined in 1921, but in 1922 the first year hon. gentlemen opposite were in office the decline was over $50,000,000. In 1923 Providence smiled on us and gave us magnificent crops, and again the railway earnings rose to $478,338,447. But, Sir, all this time our industrial production had been steadily declining, and business stagnated. Confidence in the government was steadily waning, and in 1924 the gross earnings dropped again to $445,000,000 odd or $47,000,000 below that of 1920, while during the first six months of 1925 the conditions in the country were so bad that capital was seeking safety elsewhere and a feeling of grave alarm was again seizing the entire business and banking centres of this country. Fortunately Providence again came to our relief, and the last six months of the year showed a considerable improvement, increasing gradually as evidence of good crops grew stronger. But the gross earnings in 1925 were $460,000,000, or only $2,000,000 more than they were in 1921, when the amount was $458,000,000, and still $32,000,000 less than they were in 1920, the year my right hon. leader was Prime Minister of this country. Hon. gentlemen opposite also speak of a $30,000,000 surplus on Canadian National railways during the past year. How wTas this accomplished? The major part of it was accomplished by a reduction in operating cost, and the dismissal of thousands of employees.


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An hon. MEMBER:

Whoa!

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LIB
CON

George Eulas Foster

Conservative (1867-1942)

Mr. FOSTER:

Mr. Speaker, I quite appreciate the significance of that echo, and I may say to you that I have listened to the braying of an ass many times in my life, and I recognize the animal. I ask this House how the result referred to was accomplished? It was accomplished, as I said, by the laying off of hundreds of employees, perhaps thousands. I ask the very important question: Where have these men gone who have been laid off by the railway companies? Have they been absorbed into the industrial life of this country? The answer is no. When you go to the consular offices of the United States you find that they are being kept busy every day issuing passports to our Canadian people to permit them to cross to the country to the south and enter the industrial life of that nation.

Some hon. members talk about having Canada a cheap country where people can buy their products and the necessities of life cheaply. I ask hon. gentlemen to think of any country in the world that is a so-called cheap country where there is any progress. I think it will puzzle any hon. member to find one. I ask, what good is it to the people who are out of work if they can get their woollen socks, their shirts or other necessities a few cents cheaper? What we want for the people of this country is the opportunity to work, and I submit that a place in which to work at a living wage or better is a far more important thing than a place in which to live. If you have a place in which to work you can always get a place in which to live.

The Address-Mr. Foster

The hon. member for Lunenburg (Mr. Duff) as reported at page 448 of Hansard says:

I do say that-

Speaking of the hon. member for Victoria-Carleton (Mr. Flemming).

-no hon. member should come here and try to make out that these railways have gone to the bad to the extent of $572,000,000 in the last five years. What are the real facts?

He then proceeds to give the figures for the last six years as $674,975,272.45 and for the first year of 'the six-year period as $102,149,778. By subtracting the one from the other we get $572,000,000, the exact figure used by the Deputy Minister of Railways and quoted by the hon. member for Victoria-Carleton. May I point out that the figures for 1925 have not been added'. On two or three occasions I endeavoured to obtain from the Department of Railways and Canals a statement of that amount but up to the time I arrived here for this session I was unable to obtain it. In saying that I have no desire to find any fault with the Railway department; the fault was very largely my own. I found no disposition there not to give me the information, but up to the moment it had not arrived. What the figures are for 1925 we do not know, but it is safe to assume that they are in the neighbourhood of another hundred million dollars, which will bring the amount in the last seven years up to 775 or 800 million dollars. It has been pointed out that half of that amoimt was spent under the previous administration and probably a little better than half by hon. members opposite.

' I submit there may be much in that contention, but I want to point out to the House and to those in the country who may be privileged to read my remarks, plus the interjection, that the 340 million dollars that was spent by the preceding administration on the amalgamation was a necessary expenditure; and secondly, that it was not only necessary but was wisely expended. Now who says so? Not the Minister of National Defence (Mr. Macdonald), although I would accept his word1; not an hon. member on this side of the House, but the man who made an inspection of the Canadian National Railways in 1922 directly after assuming charge of the road, 'Sir Henry Thornton. He took with him the beSt experts in the country and made a minute examination from the standpoint of operation and of construction and1 of keeping the railway up to the standard So that it would be prepared to go ahead and do business. I refer to the very firht report he made to this government, who, by the way, employed him;

[DOT] and who certainly are as he is, the servant of 14011-611

the Dominion of Canada, the people of this country.

I submit to this House that if one mentions the president of the Canadian National Railways above his breath he is criticized, because forsooth we are supposed not to say anything regarding this man. But if any question is raised here about him, he is privileged to go to the four corners of the country and say " The hunting season has commenced." The House of Commons has opened, and hon. members in pursuance of their duties in this House are making some inquiries into what has been done with the people's money. They are examining into the situation, and their interest in the matter is characterized as the "opening of the hunting season," when the Canadian National Railway is being hunted by members of this House. I submit that a little more hunting would not be amiss in a certain quarter but I want to read what the president of the Canadian National Railways said after making that extensive examination of the railway:

The report of the previous board of directors for the year 1921 was in the nature of a three-year survey of the operations and development of these lines as a government-owned system. The year 1922 completes the four-year period of united management of the former Canadian Government railways and the Canadian Northern railway system.

And I may say that the amalgamation was for the purpose of administration. The report continues:

The operations of the Grand Trunk Pacific, while only under complete coordination since October, 1920, or two and a quarter years, have been included for the full period for comparative purposes.

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LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

Will the hon. member tell me what relation, exists between the Canadian National railways and the Australian treaty?

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CON

George Eulas Foster

Conservative (1867-1942)

Mr. FOSTER:

I will leave that to the

intelligence of my hon. friend. I believe he has more intelligence than his question would indicate to the House. The report continues:

During the period the government has provided large sums of money for the physical improvement of these properties, for coordination facilities for additional rolling stock and for branch line construction.

On behalf of the board, I would like to state that after inspection of the main artenes of the system, we find that the work undertaken has been well performed, and that the expenditures on a system of such extent in a growing country, as the former board stated, are never ending, yet it may be said that the three groups of lines, until recently the Canadian National railways, enter the consolidation in excellent physical condition and operating at a high mark of efficiency as regards actual performance or movement of traffic and other factors controllable bv management.

I submit there is justification out of the mouth of the servant of this corporation the

The Address-Mr. Foster

Canadian National Railway and the servant of the people for the expenditure which this country was called1 upon to make during that time. I shall be pleased to see submitted to this House a report justifying in the same degree the expenditures which have been made since. I am of the opinion, and I believe the country shares in that opinion, that at least some of the items in the report will be smoothed over or left out altogether.

I desire to refer to another item in the Speech from the Throne which says:

In the opinion of my miimilsters tlie improved conditions warrant further substantial reductions in taxation.

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LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

I rise to a point of order. We are discussing an amendment proposed1 by an hon. member which has reference to the Australian treaty. What my hon. friend says has no relation to that subject, and I ask you, Mr. Speaker, to decide the point of order.

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LIB

Hewitt Bostock (Speaker of the Senate)

Liberal

Mr. SPEAKER:

I gave a ruling last night on the very same point and I maintain that ruling now. The hon. member may proceed with his remarks.

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CON

George Eulas Foster

Conservative (1867-1942)

Mr. FOSTER:

In that connection we had some discussion in this House as to reduction of the sales tax and increase of the sales tax. As I was interested in that subject I went to the records and I found the following: The

Conservatives collected sales tax as follows:

1920- 1021

$38,131,448 201921- 1922

61,518,731 13Total

$99,650,199 33

Or an average of $49,825,099.66 per year, whereas the Liberals collected sales tax as follows:

1922- 1923 $ 91,262,254 13

1923- 1924

100,990,076 801924- 1925

66,707,369 96Total $258,959,700 89

Or an average of $S6,319,900.29. Since everybody knows that the total sales for the three years above mentioned have been far below normal, the whole figures prove conclusively that the sales tax of about per cent introduced by the Conservatives was raised to six per cent and subsequently reduced to about five per cent. Had there been any serious attempt during the past years at economy, as I pointed out in the early part of my speech, the taxation in the country would not have had to be raised. The sales tax-instead of being increased to six per cent, double what it was under the last government, and then reduced to five per cent, so that hon. gentlemen could go to the

country and say: We reduced taxation, pointing to that as a great achievement-could have been wiped out altogether with proper economy. With it could have gone the revenue stamps on many items; and the postage rate, which was necessarily increased during the war, could have been reduced from three cents to two, as was done in the United States.

But the hon. member for Red Deer (Mr. Speakman), in whose remarks I was interested, said in the course of his speech that, after all, certain portions of the Speech from the Throne were only a gesture on the part of the government. I think those were the words he used; I do not desire to misquote him. In view of the Speech from the Throne; in view of a supplementary speech which was addressed to the leader of the Progressive party (Mr. Forke), and in view of a still further supplementary speech which was addressed to the hon. member for Winnipeg North Centre (Mr. Woodsworth), I think that deep down in his heart the hon. member for Red Deer believes the present government will not go very far along the lines of economy if, forsooth, they remain in power any considerable length of time.

The leader of the Progressive party says he does not believe we will get economy, yet that was a plank-one of the main planks, I understand-in his platform. Why then does he support hon. gentlemen who at present occupy the treasury benches?

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George Eulas Foster

Conservative (1867-1942)

Mr. FOSTER:

I believe that is true. I

am reminded of a conversation which I had with an hon. gentleman high in the councils of the other side of the House-he is not in the House at the moment. In the course of a casual conversation, which I do not regard as private at all, he made the remark that the leader of the Progressive party had been a good Liberal before he was a Progressive. Whether or not that is true I do not know; but I have strong suspicions that he might have leaned that way. He says he does not think we shall get any edonomy -from this government, so we may expect at any rate that the economy plank will be dropped from their party platform when they next appeal to the country.

But we have a very important piece of legislation foreshadowed in the Speech from the Throne. A very important speech on the subject of rural credits was made in this parliament-and I include both houses-by an hon. member of the Senate away back in

The Address-Mr. Foster

1911, who put his finger upon the weak spot of our banking system as regards rural communities and suggested certain broad lines of remedy. I take up the question of rural credits very briefly with some hesitation, because I have under my hand an attempt made by the government of hon. gentlemen opposite in the last session of this House to translate this matter into legislation by Bill No. 237, an act to authorize advances to assist agriculture by providing long term farm loans. I do not intend to discuss that measure other than to point out that if I recollect aright, it was the government leader of the Senate, the Hon. Mr. Dandurand, who refused to allow its consideration in the Senate last session- if anyone may be said to have refused it consideration-and not the Conservative party, as the country was given to understand in the speech of the Minister of Agriculture (Mr. Motherwell) a few days ago. If a full cabinet of hon. gentlemen opposite were able to produce such a sample of rural credits as this Bill No. 237, I ask hon. gentlemen to my left: What can they expect from half a government now? Is half greater than the whole? But in this regard I understand the government has abrogated its functions and has passed over to hon. gentlemen to my left the responsibility of framing this very important piece of legislation. If that be so-and I hope it is, for the benefit of the country at least-from my association with hon. gentlemen to my left, I believe I can say this much for them, that they will bring to the consideration of that problem studious care and some ability, because I recognize the fact that there is great ability in that group to the left of hon. members on this side of the House. I shall await with a great deal more pleasure any rural credits bill which may emanate from hon. gentlemen to my left. From this standpoint at least I could' not find it possible to have any confidence at all in a rural credits measure that would be the product of half a government in the face of Bill No. 237 the product of a full government sitting in council. I am in favour of rural credits, but I want rural credits for not only the farmer but the fisherman, the fruit grower and the lumberman as well. To get a rural credits bill that will include all those without doing serious damage to the financial structure of this country and without undermining our great industrial institutions, not only close study but great ability will be required of hon. members of this House.

At six o'clock the House took recess.

After Recess

The House resumed at eight o'clock.

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CON

George Eulas Foster

Conservative (1867-1942)

Mr. FOSTER:

When the House rose at

six o'clock I was about to direct attention to the following paragraph in the Speech from the Throne:

With a view to affording such remedies as may appear to be practical and appropriate, the government also propose to appoint a royal commission to inquire fully into the claims that the rights of the Maritime provinces in regard to the operation of the Intercolonial Itailway have not been observed, and that in regard to transportation, immigration and other economic factors these provinces have suffered prejudicially, in their position under confederation.

I shall not attempt to deal with all the phases contained in the four comers of that paragraph, but shall content myself on the present occasion with just a few observations generally on what it implies. Reading it, it appeared to me that whoever in the present government, or what is left of the government, was responsible for this particular paragraph in the Speech from the Throne, it certainly could not have been the Minister of National Defence, the member for Anti-gonish-Guysborough (Mr. Macdonald). Had he 'been in the cabinet, or that portion of the cabinet which was responsible for the Speech, there would have been indeed a lively time, for no one knows better than that hon. gentleman the temper of the people of the Maritime provinces and especially df the province of Nova Scotia. In a very peculiar way, known to this House and to the Maritime provinces, the hon. gentleman had occasion to test the temper of those people on the subject of their grievances under confederation and I am sure he realizes that they will no longer be put off with royal commissions or commissions of any other kind.

We have had a great many commissions, royal and otherwise, one of which a year or two ago investigated the fishing industry of the Dominion. I have under my hand a copy of the report of that commission which travelled all over the country from the Atlantic to the Pacific and which consisted of the following members: William Duff, Chairman, the hon.

member for Queens-Lunenburg; C. H. Dickie; L. H. Martel!, now a judge; W. G. Mc-Quarrie; A. W. Neill, and Alfred Stork. I do not propose to go into the details of that report but I would ask this simple question: What if anything has been done in the interests of this Dominion as a result of the labours of that commission? Has there been any important development in the fishing industry as a result of the expenditure of time and money in this particular inquiry? What

The Address-Mr. Foster

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OOMMONS


was the object of it? If I understand it rightly, the object was to impress upon the country the necessity for at least a Deputy Minister of Fisheries apart from the Deputy Minister of Marine and Fisheries, possibly looking at the same time to the establishment of a separate ministry in charge of the Canadian fisheries. I shall not offer any comment at the present time on the desirability or otherwise of such a departure, although- perhaps :t might be a good thing in view of the fact that the industry has been neglected. But the report having been brought down, have we any minister of fisheries apart from the minister in charge of the combined branches of Marine and Fisheries? If we have we do not know anything about it. Rumour has it that a portfolio has been promised the hon. member for Queens-Lunenburg (Mr. Duff), but whether it will be the portfolio of Marine and Fisheries or simply Fisheries, or whether another portfolio is to be carved out for the hon. gentleman, this House hgs not been advised. There is I admit, a good deal of pleasant reading in the report, and some noteworthy facts are brought out; but nothing has been done. Inactivity marks the result of the investigation made by that commission. A session or two ago also a committee of this House was appointed to look into the coal situation with a view to formulating some sort of national fuel policy. Where is that policy? Was the country advised of it in the last campaign? Has the government in mind at present any solid fundamentals upon which a national fuel policy could be framed? If so, why is it not presented to the House and to the country? Moreover, only a diort time ago a royal commission sat in Nova Scotia to examine into the coal industry, and the eminent men composing that commission brought in a report, which I understand both the miners and the company seem disposed to accept. Now, what is the major point in their finding? It is that the coal industry of Nova Scotia cannot possibly exist unless it is granted greater protection. Well, in what position are hon. gentlemen opposite to carry out that finding? Why, they pledge themselves in the Speech from the Throne not to raise t'he tariff, and they are sustained in office by hon. gentlemen to my left, whose policy is "No increase in the tariff. If any changes are made in the tariff they must be downward."


LAB

Abraham Albert Heaps

Labour

Mr. HEAPS:

Would the hon. gentleman inform the House in what particular paragraph of their report the royal commission he refers to found that increased protection is required for the coal industry of Nova Scotia?

IMr. Foster.]

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An hon. MEMBER:

Everybody says that.

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February 12, 1926