February 19, 1926

PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

If my hon. friend will permit me to continue with my argument I will refer to the situation of the farmers in the vicinity of Brandon a little later on. In the illustration I have mentioned, what you have to consider is whether it is better for that community to protect that particular 'business and ensure its workmen continuous employment, or whether you shall say, "No you cannot have protection." If you make the latter decision that concern will go to the wall and its workmen will join the ranks of the unemployed. Then what do they do? Having being deprived of work in that factory and needing employment, they start looking for it. They will probably go to another factory in the same line of business in that city if there is one available. But if the same policy obtains so far as that factory is concerned what 'will they find? Jobs there? No. On their way into the office of that other factory to ask for a job they will meet more men like themselves coming away and swelling the ranks of the unemployed. So industry languishes. You have the problem of unemployment, and in the final analysis you have the problem of emigration from this country.

Why the need of protection? For this purpose,, and it has no other justification: For the purpose of allowing a business, if it 'is a good thing for the country, to carry on, to pay the standard of wages necessary to be paid in Canada, to expand if possible and develop the resources of this country, and increase its pay rolls!. By so doing it will benefit not that manufacturer alone. Far and away above the benefit that will accrue to that manufacturer, benefit will result to the employees and to the people of this country as a whole. Firstly there are the employees and their families. They buy from the local shops. The shops will buy from the manufacturers and the agricultural producers throughout this country, and the money which is paid out through the payroll of that institution will

find its way through all the avenues of business, even into the pockets of the local agricultural producers. What is the 'history of this question since the war? Since 1921 sixty-three countries of the world have raised their tariffs. That should indicate something. What is the aim of a tariff? The aim of a tariff is to develop and work up our own resources by our own workmen; out of the proceeds of the wealth so created! to pay these workmen, who as consumers buy from Canadian shops, who in turn sell the goods, the products of these very men who are their customers, in order that they may build up the greatest of all markets, the home market.

What is the result of 'such a policy? We build up our industries. We create employment. We fill up the vacant houses and create a demand for new houses. We increase our population. We stop the emigration from this country of the unemployed and the sending out of money to buy the manufactured goods of foreign countries. We attract people to our shores. Having done that we enlarge the home market.

Now how does this home market affect the farmer? I come now to the question asked by the hon. member for Brandon (Mr. Forke). I refer to a statement made by that hon. gentleman relating to that very subject which appears in Hansard of February 10, 1925, When the hon. member said:

No amount of reasoning, no amount of argument can ever convince the people dwelling upon the prairies that a protective policy can be of any benefit to them.

I ask this House, is it reasonable for the leader of a party to take the attitude that no 'amount of reasoning can convince him? I submit that the hon, member for Brandon does not do entire justice to all those in the ranks of that party. I will concede this, that the results of a protective tariff do not flow directly to the grain growers of the west. I think 'there is scarcely any other class of people in this country who will not admit that the effect of a protective tariff which builds up industries is directly beneficial to them. The hon. member for Nelson (Mr. Bird) speaking the other night, referring to the matter of the tariff intimated that protection was good for the towns and cities and good for that rural class who were truck farmers in the vicinity of towns and cities, but he intimated it was of no value to the man who was strictly a grain-grower. I think perhaps that is what is in the mind of the hon. member for Brandon.

Admitting that the benefits do not flow to the grain growers directly, I ask the hon.

The Address-Mr. Kennedy (Winnipeg)

member to consider two things. My hon.

friend is a prosperous farmer in

4 p.m. 'Manitoba. His product is grain.

In order to realize the value of that grain he must get it to market. The actual value of that grain on his farm is reduced by the amount of freight he has to pay on it to get it. to market. Then I say that any policy that has the effect of either raising or lowering the rate on his grain is of direct interest to him. Suppose we wipe out protection in this country and introduce a straight policy of free trade; I do not think anyone will deny that many, many industries would quickly go out of business, and what does that mean to the railways, the carriers of goods? They will carry less goods. I ask this House, from what source are railway rates paid? There are only two sources, passenger traffic and freight traffic. The more important of these two kinds of traffic is the freight, which is more than twice as remunerative to our railway systems as the passenger traffic. In the case of every plant that goes out of business those railways cease to carry the goods of that plant. Multiply one by a thousand or two thousand, and you are eating into the very heart of the life of the railways of this country. You are taking away from them their most remunerative source of revenue -far more remunerative, so far as the rate per ton mile is concerned, than the grain rate. The railways still have to run, still have to pay their wage bills and pay for their upkeep and endeavour to get a fair return at least on the moneys invested. Who will pay it? The people who are left to use the railways. Where is the burden going to come? It is going to fall on the freight that is left to produce the necessary money to keep the railways going. What is left? With the falling off of industry, with the cutting out of that tremendous freight traffic which depends upon industry for its revenue, you have left the grain traffic of the west as one of the most important sources of freight. Under those circumstances, I ask the hon. member for Brandon, will the rates that he pays for every bushel of wheat taken from his farm to world markets be higher or lower? If higher then he is paying that much more because of the fact that free trade has driven the industries out of the country.

I say to the hon. member for Brandon that if, by a reasonable measure of protection, you preserve and develop the industries of this country and create freight traffic for the railways, to that extent you directly assist the hon. member for Brandon and those in his class.

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PRO

Robert Forke

Progressive

Mr. FORKE:

I want to ask' the hon.

member a question, because he has repeated that statement so frequently, and I cannot, follow his reasoning closely. He speaks about, wiping out industries, and I ask him, doesa Winnipeg exist for the purpose of supporting; the prairies of the west to the Rocky mountains, or do the prairies exist to support Winnipeg?

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PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

I think the

difficulty in answering the question is that my hon. friend assumes it must be one or the other. I submit it is not a question of the prairies existing to support Winnipeg or Winnipeg existing to support the prairies, but their mutual interests interlock and one works for the benefit of the other.

Mr. FORKE; I do not want to interrupt my hon. friend, but that is the trouble with his argument. He is speaking altogether from the point of view of industry and he is forgetting the other side of the argument; he is arguing from the point of view of the producer and never giving a thought to the consumer.

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PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

I will go a step further and deal with the other point to which I refer. Let us assume that with free trade in this country industries languish and many are wiped out. Let us say that instead of half a million people going from Canada in the last four years, as the records show, a million emigrated. Supposing that drainage of man power continued: what would be the result? The aggregate debt of this country is not affected by the emigration of the people; the people go but the debt remains. When there are ten million people in the country it is easier for the individual to meet his share of the debt than when there are five million to bear the burden; fifteen million can more easily bear it than ten million. Well, then, if the effect of a policy of absolute free trade is to swell the ranks of the unemployed and to increase in consequence the stream of emigration of people who are obliged to seek work elsewhere because they cannot find it here, then every man who goes away leaves behind him his share of the taxation and it must be borne by those who remain. If the hon. member for Brandon (Mr. Forke) will follow that argument through he will find that if he intends to stay in this country he will be one of those who will have to bear the increased burden of taxation due to the exodus of our population. That is an important consideration.

1162 COMMONS

The Address-Mr. Kennedy (Winnipeg)

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CON

Charles-Philippe Beaubien

Conservative (1867-1942)

Mr. BEAUBIEN:

The hon. member said a few minutes ago that if the representatives of any industry came to this House and urged that they could not carry on under the existing tariff, or in the absence of a tariff, he would examine the books and, if their representations were correct, he would either provide them with a tariff or increase whatever tariff was then in force, as the case might be. Now suppose the grain grower or the cattle producer came here and declared that he could not under present conditions make ends meet. How would the hon. gentleman by means of the tariff make either of these people prosperous? I ask the question merely for information.

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PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

I shall try to answer the question as best I can but I want the hon. member to understand that I do not assume to have a remedy for all the ills of the country. There is supposed to be a government for that purpose.

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CON

Charles-Philippe Beaubien

Conservative (1867-1942)

Mr. BEAUBIEN:

I am merely asking for information.

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PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

So far as one branch at least of agriculture is concerned, it has been suggested that foreign competition be kept out; that is one proposal at any rate. As to the grain grower in the west, I do not see that a tariff will keep *out foreign grain. I will say this, however, that if the effect of such a tariff is to increase the home market, then by virtue of that improved market in this country the grain grower of the west will profit.

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?

An hon. MEMBER:

In what way?

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PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

An hon. member asks, in what way. I am familiar with the attitude taken by a number of members of the Progressive party in dealing * with this question. They say that so long as Canada is a wheat exporting country the price which the farmer receives for his wheat will not be affected, in any way by the home market but will be governed entirely by the foreign market.

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CON

Charles-Philippe Beaubien

Conservative (1867-1942)

Mr. BEAUBIEN:

May I ask the hon.

member a further question? How is it that the grain growers of the United States, with high protection, are in a worse position than the grain growers of Canada?

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PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

The hon. member for Provencher will be fair enough to let me answer his first question first. Perhaps he already sees the answer to his previous question. As I say, it is suggested in

regard to the grain trade of the west that an improved home market does not affect the price received- by the wheat growers so long as we are on an exporting basis. Well, let us assume that the wheat production in Canada in a given year is 400,000,000 bushels. The home consumption at the present time is probably 50,000,000 bushels and if you allow another 50,000,000 bushels for seeding purposes you have for export 300,000,000 bushels. - Suppose, the population of the country should increase until the home consumption amounts to 300,000,000 bushels and the exportable surplus is reduced to 100,000,000 bushels.

What about the argument that so long as we are on an exporting basis an increase in the home market does not affect the price? Will hon. gentlemen contend that an increase from 50,000,000 bushels to 300.000,000 bushels in the home consumption would- have no effect on the price to the farmer? Every million of bushels cut off from exports would represent that much less wheat in the markets of the world to fill the world demand. Let us push that argument to its logical conclusion ; suppose none of the countries producing wheat were on an export basis, then what -would be the price of wheat in the markets of the world where wheat must be had? I contend that with every million of bushels by which you reduce the visible supply of wheat in the world's markets you make for an increase in the world price of wheat.

A good deal has been said at times about the operation of the Winnipeg Grain Exchange and if it serves no other purpose, at least it furnishes an illustration. This argument will appeal to many of the farmers of the west because, although they do not go to the Winnipeg Grain Exchange, I understand that they frequently take a little flier in grain, so that they know how the markets operate.

If you go into any grain broker's shop where the prices of grain are tabulated you will find quoted at the beginning of each month the world's visible supply of wheat; and if a report comes from the Argentine or the United States or Russia or India or any other grain growing country that, by reason of the drought or a plague or something of that sort, the visible supply is cut down, immediately wheat jumps in price. So that when you reduce the exportable surplus of wheat of any given country you to that extent diminish the visible world supply, and that reacts on the price. If therefore you reduce the exportable surplus of wheat in Canada as a result of increasing the home consumption from 50,000,000 to

The Address-Mr. Kennedy (Winnipeg)

300,000,000, then you directly affect the world price of wheat and the result will be to raise the price in Canada to the advantage of the farmer.

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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

Would not the

hon. member's argument apply irrespective of where the people lived so long as they consumed the wheat? Whether they lived in Australia or in England or anywhere else, so long as they consumed the wheat would not the argument be the same?

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PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

I appreciate the significance of the question; I have heard discussed in the prairies the theory implied in it. It is this. The farmer says, "There are only so many people in the world and I am not concerned with where they live, because they must buy our wheat." I submit this simple illustration. [DOT] There is, say, a family of ten living in France and the wheat from a specific farm finds its way to that family. Suppose we transplant that family from France into Brandon; instead of the wheat being carried overseas it is taken by a much shorter haul to Brandon. Would not the price of the wheat be greater to the farmer under these conditions? Even if you do not admit that in such a case the value of wheat per bushel would be enhanced, even if you do not get a cent more, you certainly will not get any less.

Will it not be better eventually for this country that that family instead of living in Paris lives in the city of Brandon, and is there helping to build up the city and to create business for the local stores.

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LIB
PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

I am not

undertaking to produce people to eat up the three hundred million bushels of surplus wheat. I am trying to pursue a line of argument which I see does appeal to hon. members of the group to my left, and also to some staunch Liberals from the prairies. Perhaps I have devoted sufficient attention to that phase of the argument.

I wish now to refer to where labour comes into this scheme of things, particularly as labour is ostensibly represented in this House by the hon. member for Winnipeg North Centre (Mr. Woodsworth) and the hon. member for North Winnipeg (Mr. Heaps). I take it that those who are interested in the problems of labour are also interested in the problems of the unemployed. I ask the

farmers of the west to forget for a few moments that they are farmers and to come and live with us in the cities. If they will do this and examine the conditions under which some of our urban population live they will find that things are not as bright in the cities as the bright lights would lead them to believe. I recognize that those residing in the rural parts of the Dominion have some difficulties and that life is not always as interesting as they sometimes would like it to be; but if I could take a poll of all our farmers, I wonder how many of them I would find living under circumstances that they do not know the day or the hour when the bailiff will come along and say: Your rent is overdue; pay up or out you go.

There may be some, but only a comparatively few farmers are in such distress. But in our great cities to-day if hon. members will examine the conditions they will be astounded to find how many people are living practically from hand to mouth, and do not know from one month to another whether they are going to receive sufficient wages to enable them to continue payments on their homes or rent to their landlords.

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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

If the hon. member will allow me? Taking his statement about city conditions to be correct, and admitting that the policy of this country for the past fifty years has been high tariff with very little lowering of duties from time to time, does he think it worth while to continue this system?

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PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

My answer to the hon. member is: We never have had a consistently high tariff. He expresses some impatience with that answer. Well, if he cares to examine the tariffs of other countries he will find that our tariff is exceedingly moderate, and always has been.

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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

Will the hon. member allow me to substitute for the phrase, "high tariff" the phrase, "system of protection" that we have had for the last fifty years?

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PRO

Donald MacBeth Kennedy

Progressive

Mr. KENNEDY (Winnipeg):

Then my answer is: Our chief difficulty is that we have never had adequate protection. When I say, "adequate protection" I do not mean high protection, I do not mean low protection, but I do mean such a measure of protection as is necessary to allow industry to carry on-to expand and to pay its workmen the standard of wages necessary for them to live in this country.

1164 COMMONS

The Address-Mr. Kennedy (Winnipeg)

Mr. SPENCfE (Maple Creek): Will the Lon. member admit that agriculture is an industry?

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February 19, 1926