January 30, 1928

CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I claim to know. My

right hon. friend claims to know with respect to this side, and I do know with respect to his. There appeared an editorial ini the Free Press of Winnipeg a few days ago dealing with the matter, and the editor of that paper asked, "Why be a stickler for names? It does not make any difference what you call them." That is the very point I desire to discuss.

What is international law? What is the law of nations? It is not something that you may set at naught by the use of terms that have no meaning. It is highly important that your terms be used in the sense which diplomatic usage and custom and established precedents have given to them down through the centuries, and when you use the word "minister" it means just what I have read to this house, and the same with the use of the word "ambassador". It is important that there should be no confusion in terms. These are words used in the intercourse between civilized states, and they are exactly defined by the authorities. Oppen-heim, in his International Law, says:

Law of nations or international law is the name for the body of customary and conventional rules which are considered legally binding by civilized states in their intercourse with each other.

Bearing that in mind, I have no hesitation in saying that to set up an ambassador in the United States is not a difficult thing to understand. They realize our position within the British Empire, but when you are dealing with foreign nations, using the word in the larger sense, when you are dealing with people unaccustomed to our institutions, the implications are such as to leave a wrong impression on the public mind, and those implications involve responsibilities of a character which this country is not ready, in my judgment, to accept. You set up a ministry in Tokyo. The Japanese are highly specialized in international law, and they will read the word "state" as meaning just what I have said, and " minister" as meaning just what I have said. They will treat Canada in the sense I have indicated from the authorities, with all the implication? relating to

The Address-Mr. Bennett

property, protection, navy and army, and all these other matters that are involved. What are the implications with respect to setting up diplomatic relations in Tokyo? One can understand it in Paris, where they are familiar with our institutions, but when you are dealing with a far-off country, the situation is fraught with the greatest possible danger to this country. It is all nonsense to talk of the status of Canada being improved because you call somebody a minister. What this country wants in Japan and all other foreign countries are trade commissioners, under the Minister of Trade and Commerce, to carry forward Canada's trade. The Minister of Trade and Commerce (Mr. Malcolm) knows that trade commissioners are what are wanted, men who will carry forward Canada's trade, not our diplomatic skill and power, to the countries of the world. What this country desires to deal with are practical matters, not matters that carry with them the implications of international law to which I have referred, and these are serious matters that cannot be dismissed with a wave of the hand. They are matters that have caused wars in days gone by-the designation and description of a country's representative, the rights and powers and immunities they enjoy in foreign capitals, their right to speak with authority for the state they represent their right to command armed forces, whether naval or otherwise-all these questions are involved in these implications. I say that what this young country wants, with the Colonial Laws Validity Act still outstanding, is not ministers in foreign capitals dealing with diplomatic matters, but rather trade commissioners dealing with matters affecting the expansion of our trade and commerce; and when you appoint a diplomatic representative I say that the implications involved are most dangerous. They are fraught with the greatest possible danger to the body politic. It is easy to talk in terms of great boasting of the position of our country, but Canada's position in Japan will be no greater with an embassy or ministry or legation set up in Tokyo than if under the old flag you still carry on trade and commerce and look to the British navy for your protection.

I desire to make it perfectly clear that we on this side of the house are opposed to setting up these legations as long as our present status continues. We do not desire that the implications that are attached to our position shall be misunderstood in the world at large.

It is going to bring about disaster, as certain as anything can be. About that there can be no doubt. One need not engage in prophesy; one need not be a prophet who reads the diplomatic history of Japan and the United States during the last twenty-five years, to understand what it means to start diplomatic relations in Tokyo. It is only necessary to know what has taken place to understand the situation. You, Mr. Speaker, represented this country in dealing with problems of immigration and if we set up an embassy or legation in Tokyo you can realize the position. We embark on these different problems with respect to immigration and other important problems, but it is idle boasting to talk about our position in a foreign country because some representative over there can wear gold lace and a uniform. That does not advance the interests of the country a single sou.

Mr. WOODSW'ORTH: Does the hon. gentleman not agree that some very far-reaching implications along the line he has been mentioning are involved in Canada's membership in the League of Nations?

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

The position with respect to Canada's status in the League of Nations was threshed out before we became a member of it, and therefore was understood by all who became subscribers to it. It was set out in the treaty and was not dependent upon customs and traditions which have come down to us. It is in the first, part of the treaty of Versailles and there is definite provision with respect to what may happen and what shall happen. In the other case there are implications which may arise by the usages of international law.

There are other things for which the speech from the throne is remarkable. We were told that the position in regard to a fuel policy would be announced, and we were informed that a coal policy was in process of incubation, that the matter would be settled in a short time. But there is nothing in the speech in regard to money being spent at home rather than abroad; there is no explanation of the people leaving Alberta to seek work elsewhere, when thousands of them could be employed to dig the coal out of the western provinces. No policy is announced which will have the effect of keeping these people at home. It is not considered of importance.

Then there is nothing in the speech from the throne with respect to the St. Lawrence waterway. I have looked over the speeches from the throne for the last few years to find a reference to that subject. Hon. members

The Addreae-Mr. Bennett

present this afternoon will probably recall the reference to it in 1924; I will read it so that there may be no misapprehension about it. In 1924 the Prime Minister placed before us, through the representative of the crown, the following:

A further interchange of correspondence has taken place between my government and the government of the United States with reference to the St. Lawrence waterway. In the opinion of my advisers, the importance of this question is such that further inquiry should be instituted before a final decision is reached upon the proposals which have been under consideration.

With respect to this the house was a unit. And now in 1928 we understand a report has been made; it was tabled this afternoon, but there is no indication in the speech as to what action is to be taken, although my right hon. friend is reported in the press as saying that this is the most important question that could engage the attention of the people of this country. Under these circumstances I suggest that this country had a right to expect that if the matter was to be dealt with it should be referred to in the speech from the throne, and if it was intended to give it further consideration it is just as well to say so in 1928 as it was in 1924.

The speech from the throne makes no reference at all to reduction of taxation or to economy. President Coolidge of the United States pointed out the other day that the time to practise economy was when the revenues are buoyant and when the country was enjoying a period of temporary prosperity. What are we doing with respect to the national debt? Are we endeavouring to deal with that in a comprehensive way, setting aside or earmarking any particular sums of money in that connection? We have not done so and are not doing so.

Further, while the speech from the throne contains no reference to reduction of taxation, I submit to you that the country expects, nay, almost demands, that there shall be a reduction of taxation at the present session. The people of this country are weary of the interminable difficulties in connection with the sales tax. I believe I voice the opinions of my hon. friends to my left when I ask that the sales tax be entirely abolished. When the sales tax is being used as a protective tariff I think you should call it by its proper names, and that you should use the proper instrument to protect the trade of the country, instead of the sales tax.

These are the only matters I desire to refer :o at this time. In hurrying through my remarks, however, I passed over one matter which I desired to bring to the attention of the Minister of Justice. I refer to the

following remarks of the Chief Justice of Canada in regard to the question of appeals to the Privy Council: '

If our nationhood is to become a thing of substance and reality, either the appeal from our courts of last resort to an English tribunal must entirely disappear, or provision must be made for an adequate imperial court of appeal, as the ultimate appellate tribunal for all parts of the empire, whose decisions will be as binding in England and Scotland as in the dominion.., including the latest welcome addition to their ranks, the Free State of Ireland.

And he prefaced his remarks by saying that:

While this subordination of our courts is maintained-while this badge of inferioty is attached to them-our vaunted Dominion status as a full partner in the empire seems but an idle boast-a sop thrown to our vanity.

These -were the observations of the right hon. Chief Justice of Canada, given in a considered address from which I have just read.

Now, Sir, I have trespassed entirely too long upon the indulgence of this House, but the matters which are now about to engage our attention, whether from the standpoint of domestic policy, empire relations, or international affairs, are all of tremendous importance. They are not only important within themselves, but their implications are more important still. The matters that I do urge the government to take under its immediate consideration are matters affecting the settlement of this country, the reduction of our debt, the practice of economy, and the lessening of taxation. For this country, situated as it is with respect to the republic to the south, cannot maintain taxes higher than they are there and hope to attract settlers and retain them. This is one of the prices we pay for our geographical position. Therefore it is incumbent upon the government at the earliest possible moment not only to reduce taxation and remove from the statute books those taxes that are generally regarded as nuisance taxes when applied to the individual in the conduct of business, but also to see that our revenues are judiciously and economically expended for the purpose of providing for the public service and also of reducing our fixed charges by reducing our national debt as quickly as possible. Above all, the government should see that the supremacy of parliament is maintained. That is, the measures which are now being dealt with by the executive should not be so dealt with unless authority therefore has been obtained from parliament. As we all know, parliament came into being to protect the people of the country against encroachments of power on the part of the executive.

The Address-Mr. Mackenzie King

Whether that executive be king or cabinet matters not; if the rights that belong to parliament are not observed it will be found that the executive perishes.

Therefore we urge these matters on the government, and we who sit to the left of the Speaker promise to the full extent of our ability to help the government to carry them into effect. Our best efforts, our ability and our resources are at their disposal to secure that permanent settlement so desirable to the progress of this great Dominion.

Right Hon, W. L. MACKENZIE KING (Prime Minister) : Mr. Speaker, I am pleased that my first words to the hon, gentleman (Mr. Bennett) upon the conclusion of his address can very sincerely be words of congratulation at the moderation of tone which has characterized it in comparison with addresses which we have been accustomed to hear in previous parliaments.

I am also pleased to be able to thank my hon. friend for the compliment which he has paid to those who have spoken on this side of the house in moving and seconding the address. Naturally we join very heartily with him in the praise which he has accorded the hon. member for Hants-Kings (Mr. Usley) on what was generally conceded to be a very excellent address. The hon. member has come into this house as one of the youngest of its members, he has been here but a short time, in fact this is his first parliament, and each time he has spoken he has given evidence of that high reputation which he had as a public speaker before he came into the House of Commons. His address reflects credit not only upon himself and his constituency, but equally upon this parliament.

May I say that I think the speech of the hon. member for Provencher (Mr. Beaubien) was in every particular equal to the speech delivered by the hon. member for Hants-Kings. It was delivered in French, and might have been delivered by him with equal facility in English. Had my hon. friend opposite read it carefully, he would in his references to it, have spoken differently. He said that the speech might well have been delivered by my hon. friend from Provencher had he been speaking on his side of the house.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

My right hon. friend did not understand me correctly. I said: Had he been sitting on this side and had we been the government-he in tlhe opposition.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

All I have

reference to is my hon. friend's remark that the speech might have been delivered from the other side of the house. If one reads the

speech one sees that it is very loud in praise of the present administration and somewhat condemnatory of certain of the policies of my hon. friends opposite. In that regard I agree with him that the speech might well have been delivered on the other side with regard to the respective merits of the two political parties.

Now, Mr. Speaker, I Shall endeavour to follow my hon. friend as far as I may be able in the order in which he has spoken on the various subjects under review. May I first of all join with him in expressing our sympathy, the sympathy of the Canadian people with Lady Haig in the great bereavement which she has sustained in the death of her illustrious husband. When I learned this morning that General Haig had passed away, I felt it would be the will and wish of parliament and the people of Canada that I should immediately cable, in their name, the deep regret which we all feel at the loss sustained by the British Empire and, indeed, the world by the death of this great and distinguished soldier.

My hon. friend touched very lightly upon the diamond jubilee of confederation. If I stop to refer to that subject as mentioned in the address it is not for the purpose of basking in reflected glory, as he has intimated might possibly be the motive, but rather to give credit where I feel credit is due for what I believe is generally conceded to have been one of the most memorable events in the history of our country. As hon. members will recall, at the last session of parliament a national committee was appointed, to which was entrusted preparations for a fitting celebration of the sixtieth anniversary of confederation. The Right Hon. George P. Graham was made chairman of that committee, and subsequently Mr. Cowan and Mr. Desy were appointed secretaries. I should like to take advantage of this the first opportunity in parliament publicly to thank these gentlemen for having given their time and efforts so unselfishly to the work of the committee, and I should like in the same connection to make special reference to the great service rendered our country by Hon. Thomas Ahearn, who had so much to do with the successful broadcasting to all parts of this Dominion from parliament hill of the proceedings on July 1.

I think, Mr. Speaker, we have all reason to feel a special pride in the degree to which all parts of this Dominion participated in the celebration of its sixtieth anniversary. The occasion evoked a national pride, a

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The Address-Mr. Mackenzie King

sense of national unity to a degree that up to that time had never been expressed; and whatever makes for Canadian unity serves, I submit, in the highest way not only the interests of Canada, but the interests of the empire as a whole.

I am sorry that I did not understand the reference which my hon. friend made to some remarks of mine respecting His Royal Highness the Prince of Wales and the Prime Minister of Great Britain. I followed him, I think, in all other particulars, but I confess that even at this moment I cannot conceive precisely what their bearing was. At the time, I said that I thought it was a particularly fortunate and happy circumstance that whereas confederation had been brought into being by Canadian ministers visiting London and there co-operating with the British parliament and the sovereign of Great Britain in the enactment of the British North America Act, at the time we were celebrating the diamond jubilee of confederation we should have, not Canadian ministers visiting London, but the heir to the British throne and the Prime Minister of the British House of Commons visiting this Dominion to participate in the celebration of the sixtieth anniversary of that event. I think, Mr. Speaker, that that was a feature of the events of the year in which we all felt a great measure of pride. I would also say that my hon. friend might have fittingly made reference to other visits which have been made to our Dominion by distinguished .statesmen of the Brjitish Empire in the recent past. Since the last Imperial conference we have had as guests of this country in addition to the Prime Minister of Great Britain, the Prime Minister of Australia and the Prime Minister of New Zealand, and I am proud to say that we have to-day in the capital of our country, as our guest, the President of the Executive Council of the Irish Free State, another of the sister dominions of the British Empire.

I would further say that I think my hon. friend might well have made reference, while dealing with the speech from the throne, to other features 'which have contributed largely to international good will during the course of the present year. I was happy to see that in reference to the legation which Canada has opened at Washington, my hon. friend has changed to a considerable degree the point of view to which he gave expression during the last session of parliament, and that in common with the citizens of Canada generally he has come to see that the opening of that legation has been a helpful factor in the

economy of this nation, and 'helpful also in the larger affairs of the British Empire. I think the opening of legations at both Washington and Ottawa by the Canadian and United States governments respectively, is an event worthy of mention, and I feel that the experience we have already had of the services of these legations is sufficient to convince us that the step taken was a wise and eminently practical one, and will prove increasingly helpful as the years go by.

The visit of Their Excellencies to the United States was a feature of the year which I think was deserving of mention, if only to illustrate as it does the international good will to which that visit gave expression. I am happy to say that in the course of another week we in Canada will have the pleasure of receiving the Secretary of State of the United States, who intends to pay a visit to our Dominion at that time. The visit of His Royal Highness the Prince of Wales and the Prime Minister of England, in conjunction with Canadian ministers of the crown, to Buffalo, there to meet the Vice-President of the United States, the Secretary of State and other ministers of that government in the dedication of a bridge which commemorates more than a century of peace between our neighbours to the south and ourselves, was another event of which I think we on this continent have reason to be proud, and which may well be held up as an example to the world.

I should make mention at this moment, and I take this the first opportunity so to do publicly in parliament of the appreciation of parliament of the gift which was announced by His Royal Highness the Prince of Wales as coming from His Majesty the King in commemoration of the diamond jubilee of confederation. Honourable members know, this gift consists of oil portraits to be hung in these buildings of His Majesty and the Queen, as well as portraits of their late Majesties King Edward and Queen Alexandra. They are a possession which I am sure will always be greatly treasured in these houses of parliament.

I come now, Mr. Speaker, to consider some parts of the address of my hon. friend in which I feel he hardly did justice to the situation as it exists in Canada at present. As hon. members will have noticed, he made many references to the necessity for increased immigration. He said we were crying out for labour in this country and that we should do everything in our power to stimulate the supply.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I did not say we were clamouring for labour.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

I am glad my hon. friend makes it clear that he did not say we were clamouring for labour, but he did say that we needed immigration very much; we are agreed on that. I would point out to my hon. friend that immigrants who come to this country and do not work are not the class of immigrants we want; we want people who will work. I was struck, as I am sure other hon. members must have been, by a curious kind of contradiction in the remarks of my hon. friend. He opened by stressing the unemployment which he said exists in this country, and returned to this subject when he came to the latter part of his address. He was seeking to belittle what was said in the speech from the throne with respect to the prosperity in Canada to-day when he spoke of unemployment; when that particular point had served his purpose, in order to criticize the government from an opposite point of view, he began to stress the necessity for increased immigration.

I may say to my hon. friend, so far as the p'olicy of the government with respect to immigration and unemployment is concerned, that this country needs all the immigrants we can successfully assimilate and put into employment in Canada, but we do not intend to extend our immigration policy to a point where it will lead to large unemployment in any of the industrial centres of our Dominion. I think if my hon. friend is sincere in his desire to increase immigration, as I am sure he is, he will be better advised if he directs his attention more to laying stress on the prosperity of Canada and the publishing abroad of that fact than to making references in this house or elsewhere to unemployment in Canada at present. As a matter of fact we all know that for years past there has not been a time in Canada when there was less unemployment than exists at present. May I quote to my hon. friend the statement of a member of his own party, a prominent member, although not in this house? I refer to the Premier of the province of Ontario, and what he had to say to a delegation which waited on him only a few days ago. It was asking the Ontario government to help provide for some alleged unemployment in this province. What was the reply made by Hon. Mr. Ferguson? It will be found in the Toronto Globe of January 24. It seems that the delegation was from York township, members of the township council were evidently representing that there was some unemployment, and in reply to their request Premier Ferguson said: '

With the great activity in building and all kinds of construction work, I am at a loss to

The Address-Mr. Mackenzie King

understand why there should be any serious unemployment. As a matter of fact, a general survey of tlie situation has led the government to believe that there is no real distress, and there is less ground for complaint than there has been for some years.

That is the. view of the Ontario government after having made a survey of this province, and I would commend that view to my hon. friend as coming from a better source than the one from which he has derived his information.

What are the facts in regard to employment? Let me quote from the authentic records of the Bureau of Statistics as to actual employment. My hon. friend says these figures are gathered from firms which employ people; certainly they are. One would not go to a firm which did not employ anyone in order to get information as to employment, and I contend that the degree to which there is employment is better represented by statistics from employing films than by any other possible source.

The Department of Trade and Commerce, in the statement issued on January 16 of the present year, reports the employment situation in Canada as follows:

Employment as reported by employers throughout Canada was in greater volume in 1927 than in any other year since 1920, there being almost uninterrupted expansion on a large scale from early in January until tlie first of September. This upward movement carried the curve of employment to a level many points higher than in any of the last seven years and considerably higher than at the basic date in 1920, when the post-war boom was at its maximum. During these seven months of advancing employment, nearly 125,000 persons were added to the staffs of the reporting firms, a number which was practically the same as in 1926 and greater than in the same period of any other year of the record except 1922, when the opening up of industry following the depression of 1921 caused the employment of approximately the same number of extra employees.

If my hon. friend will consult other sources of accurate statistical information he will find that they all substantiate this position.

My hon. friend referred to the condition of trade, and indicated that in some particulars it was not just what he would like to see it.

I think he will admit that the total volume of trade this year has been larger than that of any previous year. My hon. friend says that the imports are greater, but that the exports are somewhat less. That is quite true, but why are the imports greater? The imports are greater because-and if he looks at the figures I think he will find I am correct -we have been importing a large quantity of raw materials to be worked up in our

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The Address-Mr. Mackenzie King

manufactures, that we have also been importing large quantities of equipment. These two items, the increase in raw materials and the increase in equipment, each of them representing expanding industry in Canada, are responsible for the imports being larger this year. In regard to exports my hon, friend will find that prices ruled considerably lower in some of the agricultural commodities, and for that reason, perhaps more than for any other, the total exports do not range as high in gross value as in previous years. Nevertheless the fact remains that the balance of trade in Canada was more favourable than was the case with respect to the balance of trade of any other country of any standing in the world. Our favourable balance of trade was $151,000,000 in 1927, the largest per capita favourable trade balance of any leading nation. I will not take time to quote the figures with respect to internal trade activities. Internal trade may be judged by the wholesale and retail figures of which I have a statement here, but to save time I shall pass them over. They disclose a great increase of business. I would, however, like to give to my hon. friend and to the house the record of the amounts of cheques charged in the clearing house centres of Canada. They are an index, and an important one, with respect to business transactions and to progress. These figures, secured from the Canadian Bankers' Association, show the bank debits in Canada to have been as follows:

1924 $27,157,000,000

1925 28,126.000,000

1926 30,358,000.000

1927 36,393,000,000

These figures disclose an increase of nearly 33 per cent between 1924 and 1927 in the volume of business transacted in Canada by means of cheques drawn upon our chartered banks.

My hon. friend spoke of the railway receipts and he was a little critical of the statement made in the speech from the throne that the gross receipts of the railwaj^s had increased. I do not think my hon, friend denied the truth of the statement but he drew attention to the fact that the net receipts had not been as considerable as in previous years. As a matter of fact, the gross receipts do show, exactly as the speech from the throne indicates, a very considerable increase. In the case of the Canadian Pacific Railway the total receipts for 1926 were $197,636,000, and the total for 1927 was $201,403,175. In the ease of the Canadian National Railways, the total receipts for 1926 were $253,376,000, and for 1927 they amounted

tMr. Mackenzie King.]

to $256,164,000, a considerable increase in the case of both companies. Why do the net receipts not show the same measure of increase? My hon. friend knows the explanation but he did not give it to the house. He knows that considerable increases were made in the wages paid to the employees of both railway systems, changes resulting in an increase of several million dollars. The fact that there was a later movement of some of the crops and a lowering of rates on the carriage of grain and other commodities also helps to account for the difference in net. receipts. The fact that the reduction in the net receipts is so largely accounted for by the improvement in the position of that large body of the community represented by railway labour, is of itself a circumstance which speaks well for the increased prosperity in business of this country.

I might make further reference, as evidence of the prosperity in Canada, to building operations. The news manager of the * MacLean Building Reports, in a statement published in the Commercial and Financial Review for the year 1927 by the Montreal Gazette, -has the following in reference to building construction:

Not since the boom days of 1912 has construction come within $100,000,000 of the record established in that year, until the past twelve months, when nearly $419,000,000 were spent or contracted for throughout Canada in this important industry. The fact of such a large sum, greater by 12.3 per cent than the record of 1926, was spent in the program for 1927 after five heavy building years speaks very favourably for the prospects for this year.

The official record of building permits issued in sixty-three cities shows a total value of building amounting to over $185,000,000 in 1927, as compared with $156,000,000 in 1926, an advance of over 18 per cent on -what was itself a record year.

I submit, Mr. Speaker, that my hon. friend would help his immigration propaganda mudh more if he gave these figures to parliament and to the world instead of attempting to create the impression that the country is not as prosperous as everyone but himself is prepared to admit.

Now what is the position with regard to manufacturing in Canada? The manufacturing industries of the Dominion operated on a larger scale in 1927 than in any other recent year, as is shown by the monthly record of employment; 4,000 of the larger manufacturers report an employment of 477,000 persons, and the flood of manufacturing activity in 1927 is estimated as having been four per cent greater than in 1926

The Address-Mr. Mackenzie King

I could quote figures to show how considerable also has been the increase in different branches of agriculture. I pause to make mention that Canada has come to be the leading exporter of wheat among the countries of the world. I could also point out that in mining we have made vast strides in production and in export. Coming to forestry may I say that in newsprint Canada is now the leading producer in the world. We have, in our production, passed in Canada beyond merely domestic and imperial records to world records.

In concluding this branch of my subject I should like to give my bon. friend, also for use in his immigration propaganda, the opinions of the leading bank managers in this country. I submit that he will be well advised to secure and broadcast statistics of this character if he wishes to bring into the Dominion a class of people who are ready and willing to work, and who will see before them in this country a land of great promise and of great opportunity.

The president of the Bank of Montreal, in his statement this year, declares:

Bank debits, bank clearings, bank deposits, car loadings, railway gross earnings, imports, note circulation, and lower mercantile mortality reveal that the tide of business has risen during the year. ... I see no reason why an abatement of confidence in the continuance of these prosperons conditions need be apprehended.

Then the general manager of the Bank of Montreal states:

I have referred to the past year as the most expansive in the country's commercial history. That Canadians have experienced a greater degree of individual prosperity than ever before is, I think, undisputable.

The president of the Imperial Bank states:

Evidence of the general growth and prosperity of Canada may be observed on all sides.

The president of the Royal Bank of Canada:

Those who were most careful in their studies of world economic trends were forced to the conclusion that a return to world stability in commerce and finance would be accompanied by such a rising tide of demand for the products of Canada's fields, forests and mines as would assure a prolonged period of prosperity. The steady improvement in agriculture, mining, manufacture and internal and external trade which has characterized the years 1925, 1926 and 1927, has done much to vindicate the good judgment of this leadership.

The president of the Bank of Toronto:

The year just closed is notable for the sound progress made in nearly every branch of our economic life... So far as the future is concerned we have every reason to be confident. Our present prosperity is not superficial, but is well founded on natural resources, organization and efficiency.

56103-3J

And, finally, the general manager of the Bank of Commerce, at the annual meeting on January 10, 1928, makes this statement:

In conclusion: the general business situation is sound, the purchasing power of the people of Canada is greater than it has ever been before, and the development of the natural resources of the country proceeds apace. These conditions make for prosperity, and the general frame of mind of the public is genuinely optimistic. This creates an ideal atmosphere for future progress. and, if we will but give painstaking attention to our business and avoid excesses such as overtrading or speculation, we in Canada can face the future with confidence and certainly look forward to another year of progress and prosperity. -

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

He does deal with immigration directly?

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

This is the

way in which to deal with it. It is a much more effective way. I shall have a word to say on the subject of immigration later on. But let us see how we are viewed by observers outside. This house is familiar with the work of the Babson Statistical organization of Wellesley Hills, Mass. Mr. Creighton J. Hill, of that institution makes this statement:

Fundamental conditions in the Dominion indicate that general business in 1928 will exceed that of 1927, and while in the states the trend will be slightly downward, in Canada it is going to be upward. Canada is to-day in a position to maintain an independent prosperity through 1928.

May I conclude these references by quoting from an hon. gentleman who sits with my hon. friend on the other side of the house;

I mean the distinguished member for Mount Royal (Mr. White). In his financial review of the year 1927, published in the Gazette that hon. gentleman has the following to say:

Canada has never before enjoyed a year of so general progress and prosperity as that of 1927. Production, distribution, manufacturing, transportation and foreign commerce exceeded all previous records.

I say, Mr. Speaker, and I say it with considerable pride, that there has never been an occasion when one standing in the position of leadership of a government was able to give to this parliament a record of greater progress or a message of higher hope, present and future, than I have been enabled to give to this house to-day.

My hon. friend said that we ought to promise something in the way of reduction of taxation; he suggested that we should show something in the way of diminution of the public debt. I wish to assure my hon. friend that is exactly what we have been doing, . and when he becomes more familiar with the record of the government, as, with the passing

The Address-Mr. Mackenzie King

of time, I trust he will, I have no doubt he will be quite satisfied in his own mind on these points. Let me in this regard submit a few figures which I think will be of special interest to him. When we came into office we found that the government that had preceded us had been successful in one particular, namely, in adding to the public debt by leaps and bounds. There had been an increase of many millions in the public debt of the country, and as a matter of fact the situation was one of the gravest with which an administration could be confronted. The problem was not a simple one, how to reach the point where the budget of thecountry could again be balanced satisfactorily. What where the facts? In thefiscal year 1920-21 there had been an increase in the debt of $92,000,000. It will be remembered that this government took office in December 1921, so that practically all the figures of the fiscal year 1921-22 wereattributable to the previous government's administration of affairs. Instead of the public debt decreasing, it was being added to progressively by colossal sums. True, there was in 1921-22 a little difference,

accounted for possibly by the fact that the present administration had been in office three months of that particular yeaT, but it .was not such as to minimize the effect of the immensity of the figures. The public debt for the year 1921-22 was increased $81,000,000 such was the amount of difference between receipts and expenditure in that year. It is true that, in order to try ultimately to balance the budget, Mr. Fielding, who was then Minister of Finance, found it necessary slightly to increase taxation. Mr. Fielding took the position, which I think was a sound one, that this country could not go on running deeper and deeper into debt, and that if we were to reach the point where Canada should enter upon the road to prosperity and progress we must at least balance the budget, and, if at -Ji possible, have surpluses instead of deficits in our yearly accounts. A slight increase in taxation was made at the time to help to meet the situation. The result was that the next year, although we were unable completely to avoid an increase in the public debt, the increase for the fiscal year 1922-23 was, not $81,000,000 as it was the year before, but $31,000,000. The year following that, after our policies had had an opportunity to get under way in the country and their effect had been tried, there was a complete reversal in the position of affairs, and from that time on we have heard no more of deficits, having had surpluses every year. In the fiscal year 1923-24 we had a surplus of $35,000,000; in

[Mr. Mackenzie King.l

1924-25 a surplus of $345,000; in 1925-26, a surplus of $27,000,000, and in the fiscal year ended March 31, 1927, a surplus of $41,000,000. It is too early yet to say what the surplus will be in the present year, but it is not revealing any secret when one advises parliament that the figure will be quite large and that, again this year, we shall have a very considerable surplus as a result of our financing.

What in addition has taken place this year along the line which my hon. friend commends to us? He says that we should redeem outstanding obligations. In 1925-26, outstanding obligations of $20,000,000 were redeemed in cash, while in 1926-27 the redemption in cash was $43,000,000. In the present fiscal year there have been three maturities, one of $29,000,000, bearing interest at the rate of five and a half per cent, redeemed in cash on November 15; while four per cent treasury notes, amounting to $8,000,000, were redeemed in cash. On December 1, a maturity of $63,000,000 became payable. This was a five per cent loan, tax exempt, and $18,000,000 was paid off in cash, the balance being taken care of by borrowing from the banks treasury notes at the rate of four per cent. This was the lowest rate of interest that the government had secured in pre-war days. As a result of our financing in the present fiscal vear, the annual interest saved alone will be $3,600,000.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Is my right hon. friend

aware that the government guaranteed $65,000,000 for the Canadian National Railways, $20,000,000 for three years' notes maturing last year, and $15,000,000 bank loan, usually paid in cash, for which they issued securities, or taking these two, $35,000,000 in outstanding guarantees.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

I will leave it to my hon. friend the Minister of Finance (Mr. Robb) to go into the details of the financing of the railways when we come to the budget, but I am giving to my hon. friend facts and figures which are incontrovertible with respect to maturities that have been redeemed and cashed during the past year.

Now while the government has been reducing the public debt, while it has been reducing outstanding securities as they have been maturing, while it has been refunding large sums of money with other securities bearing a lower rate of interest, it has at the same time been steadily reducing taxation. My hon. friend said he thought that we ought to reduce taxation. I want to tell him that that is exactly what we have been doing, and doing steadily for the last few years. The record of this

The Address-Mr. Mackenzie King

government in the matter of tax reduction is one of the most remarkable records that any administration has ever had to its credit. Let me just refresh the memory of hon. gentlemen with respect to what has taken place in that regard. .The principal taxation reductions since 1923 have been as follows:

In 1923, reduction of sugar duties, $2,500,-

000. Changing the sales tax so that it shall apply as at the source. The first year this change showed a considerable reduction. Reductions under the British preferential tariff of 10 per cent where the goods are brought direct to the ports of Canada.

In 1924, reduction of sales tax from 6 per cent, to 5 per cent and articles added to the exempted list. In the customs tariff the principal reductions were agricultural implements, saw-mill and logging machinery, coal-washing machinery, the estimated reduction of customs and sales tax revenue being $24,000,000.

In 1926 there was reduction of duties and excise tax on motor vehicles; sales tax reduction on canned fish from 5 per cent to 2J per cent; reduction in postage; the receipt tax was abolished; reduction -in income tax; the estimated total reduction in revenue being $25,000,000.

In 1927 there was further taxation reduction : ten per cent on all rates in the income tax; in the sales tax a general cut of 20 per cent; excise tax on matches cut 25 per cent; reduction of rates on cheques, bills of exchange, promissory notes and similar documents.

The total reduction in taxation amounted in that year to $27,000,000. So I say to my hon. friend that instead of telling us what we ought to be doing he should be thanking us for what we have been doing, and he should have not merely the hope but the expectation that we will continue in that way. It is not for me to say what the Minister of Finance will have to tell this House when he brings down his budget, but I for one shall be very much surprised if he does not stow again this year, as in former years, a surplus, reduction of the public debt, and further tax reductions. I think, Mr. Speaker, I have perhaps dwelt at sufficient length upon the remarks of my hon. friend with respect to the position of the country at the present time, the government's action in the matter of economy, and its interest in the public welfare from the financial side.

I come now to the next subject on which he touched, the Dominion-provincial conference this year. May I say that when my hon. friend asked me on Thursday last for the report of the conference I mentioned to him that there was no official report for fhe reason

that when the conference met it was agreed, not by one side, but by all present, that the conference would perhaps make better headway and that we would come nearer to an understanding of each other's difficulties if we did not attempt to have a record kept of the discussions, but gave to the public from day io day a precis which was carefully prepared by one who was present for the purpose of taking down the essential features of the discussion. That precis, before it was issued to the press, was submitted to representatives of the provincial governments and of the federal government. It was issued in fairly extensive form, and I may say to my hon. friend that comparing the official precis that was issued in connection with this conference with the records of previous conferences, it is much more complete than the record of any previous conference. Possibly it would be well if parliament were furnished with that precis in a form in which it could be made available to hon. members, and I am very pleased to say to my hon. friend, as he has drawn attention to the omission of an official record, that to-morrow I shall lay on the table of the house the official precis of the conference as given out from day to day, and that in a form which I believe will merit its publication by parliament.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Thank you so much.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

That will give to members of the house an accurate statement of what took place from day to day in so far as it is desirable to have the proceedings of the conference made public.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That is all that is wanted.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

May I say a word about the Dominion-provincial conference-because I think it was one of the most important events of the year-as to how the conference was called, its method of proceeding, and so far as time will permit me to touch upon it, what occurred in the course of the proceedings.

Hon. members will recall that at different times in this house it was suggested that certain matters should be taken up at a Dominion-provincial conference. With respect to some of the questions that W'ere discussed the conference was called largely as a result of the express wish of this House of Commons. In order that the subjects taken up might be as inclusive as possible, some months before the conference was held a communication was sent to the premiers of the provinces asking them to enumerate any

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The Address-Mr. Mackenzie King

subjects they would like to have brought up for consideration between the Dominion government and their provinces. When replies had been received from all the premiers these subjects were then classified and an agenda was carefully prepared which sought to so arrange matters as to make the discussion as logical and orderly as possible. The Dominion had certain questions which it desired to discuss with the provinces, as well as the questions which the provinces themselves submitted, but it was found that all the questions fell broadly into one of three classifications. They were questions either of a constitutional nature, or which had to do primarily with finance or they were of an economic and social character. The agenda as presented to the conference contained the different subjects for discussion under these three divisions. I might give hurriedly to the house the main topics that were discussed in this way. Under the head' of constitutional questions, the following subjects were discussed:

1. Senate reform.

2. Procedure in amending the British North America Act.

3. Participation by provinces in international labour conferences.

4. Regulation of aircraft and flying operations.

5. Industrial Disputes Investigation Act.

6. Incorporation and operation of companies, including trust, loan and insurance tompanies.

7. Regulation of the sale of shares and securities of Dominion companies.

8. Representation of Nova Scotia in the House of Commons.

Under the heading of "Financial" the following subjects were discussed:

1. Federal subsidies, including recommendations of Duncan report thereon.

2. Other proposed federal aids:

(a) for highway construction.

(b) for technical education.

(c) for agricultural education.

(d) for unemployment relief.

(e) for steel industry.

3. Partition of federal lands.

4. The Canadian Farm Loan Act, 1927.

5. Taxation:

(a) Delimitation of fields of taxation.

(b) Taxation of the Canadian National Railways.

(c) Comparative taxation.

(d) Income tax. Method of collection.

6. Reduction of customs and excise duties.

[Mr. Mackenzie King.l

7. Consideration of interests in which the Dominion and provincial governments exercise jurisdiction:-

(a) Agriculture;

(b) Policing;

(c) Health;

(d) Construction, maintenance and upkeep

of railways.

(e) Developing markets for Canadian products.

(f) Establishment of national research laboratories and co-operation in research.

Social and Economic

1. Immigration. Federal and provincial

co-ordination.

2. Fuel problems.

3. Old age pensions. Social insurance.

4. Water-power development.

5. Fisheries.

6. Child nutrition and transmission of infection.

My hon. friend asks how parliament is to know what was to be done with respect to these various subjects and what was the attitude taken by the conference upon them. My reply to him is this: that the various subjects were dealt with in different ways. It was possible to dispose of some of them on the spot. For example, among the subjects dealt with was the question of the regulation of air craft and flying operations. That question related to a possible conflict of jurisdiction as between the dominion and the provinces on the subject of aerial navigation. It was agreed that that question should be made a subject of reference to the supreme court, and the reference was agreed to by the Minister of Justice and has since been made.

Then there were other matters, such as the regulation of shares and securities of Dominion companies, which were referred to special committees of the conference, and the committees brought in recommendations suggesting legislation. That legislation was subsequently introduced into the House and dealt with. Other matters, such as constitutional questions, were discussed, largely with a view of obtaining an interchange of opinion on the part of the provinces of the Dominion, and consideration was promised by the federal government to the views expressed.

I shall not go through the agenda, but as parliament proceeds with its deliberations, with respect to every subject that is there mentioned it will be possible for the ministry, either in answer to a question that may be asked or by legislation to be broueht down to

The Address-Mr. Mackenzie King

make clear to the house just what were the various matters dealt with and the attitude of the ministry upon them.

There is one subject which I think I had better touch upon immediately, as it is one which, though not dealt with at considerable length by my hon. friend opposite, was nevertheless the subject of consideration at the conference and has been the subject of considerable speculation by the press ever since, and that is the St. Lawrence waterway project.

I wish to say, in regard to that, that my friend is right when he quotes me as saying that I believe there are few if any questions which have ever come before parliament more important and far-reaching in their many bearings than the question of the deepening of the St. Lawrence waterway. It has political, economical, national and international aspects, all of which are very far-reaching, and on behalf of the administration I wish to say we are fully seized of the magnitude of that question, and we do not propose to be precipitated in any way into a hasty discussion of its many features or except upon the maturest consideration into any diplomatic action with respect to them.

My 'hon. friend draws attention to the fact that there is no reference in the speech from the throne to this important subject. Here may I draw his attention to the circumstance: that this is an international question. If it has any significance ait all, the significance in largest part lies in the international phase of it, and how that international phase is to be dealt with. My hon. friend is accustomed to big business and knows the care with which all large business transactions have to be surrounded, and I venture to say that the last thing he would do, and the last thing any business man would do, in connection with his own affairs, when he was considering a possible transaction with some other party, would be to disclose his hand any more than he was obliged to disclose it, until it came to a point where it was certain that negotiations would be successful. The government has given this great project the most careful and thoughtful consideration. First of all, there was a report of the International Joint Commission which was subsequently considered by a joint board of engineers; the members of this board differed among themselves thereby necessitating a reference back of certain of the matters which they had under consideration. In the United States an advisory committee to the administration was formed, to advise the government on the findings of the report which was presented to them; that advisory committee gave its advice, and some publicity was subsequently given to the advice given by that body. This government appointed an advisory committee. The advisory committee met as soon as was feasible after the report with its appendices of the joint engineers was presented, and as soon as they had sufficient time to study the subject. They spent some time in this city, considered different aspects of the problem, conferred with the administration, and gave us the benefit of their views and opinions. Among other subjects upon which they gave us advice was what in their opinion was the correct form of reply to be made to the United States government to a despatch which had been sent to us on that allimportant question.

I want to draw the attention of parliament to one statement which is contained in the views of the advisory board as presented to the government. It is the statement which concludes the report with which they presented us. It reads:

We would add the suggestion that in view of the delicacy of the international negotiations involved it would be inadvisable that our report be made public until such time as, in the discretion of the government, it might be published without prejudice to Canadian interests.

I wish the house to realise that that is the reason and the only reason why the government has not up to the present time made public the views of the advisory committee as presented to the government by that body. That body itself, recognising the many bearings from an international point of view of the advice which they have submitted, felt it would be inadvisable to have their report made public at the present time, and may I add in that connection that I hope hon. gentlemen and the public at large, and the press of the country in particular will not prejudice this all-important situation by attributing to the board of advisers expressions of view and opinion of which they can have no knowledge whatever. The report has not been made public, and so far as I have been able to see some of the alleged descriptions of what it contains are, to say the least, very wide of the mark. At the present time we are replying to the despatch which came to us from Washington asking for an expression of our views in regard to this great undertaking. We are giving to the United States government an expression of opinion, based upon the views of the advisory board, in order to ascertain their opinion upon those views. Until we have had an opportunity of learning from the administration at Washington how they regard certain considerations which we deem all-important

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The Address-Mr. Mackenzie King

we will not be in a position to say whether or not negotiations are going to be possible for the construction of that great international waterway.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I should like to ask my right hon. friend whether or not the government is prepared to consider the legal implications as between the provinces and the Dominion before we proceed further, because the provinces assert certain rights, I understand. That is the question which I regard as the basis of international discussion.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

I am glad to hear my hon. friend express himself as he does, because in that particular we are in entire accord with him. When the Dominion-provincial conference was held the premiers of Ontario and Quebec both intimated to the government that they thought there should be a reference to the courts of the question of jurisdiction with respect to the power developed as the result of the canalization of waters over which the Dominion government have control for the purposes of navigation. The Minister of Justice (Mr. Lapointe) promised consideration to that request, and as soon as possible after the conference concluded its proceedings the minister had prepared by the law officers of the crown a careful statement of the whole situation as far as it was possible for them to present it, and an order in council was passed on the 18th instant, whereby a reference of the whole question of jurisdiction has been made to the courts in accordance with what we understand are the wishes of the premiers of Ontario and Quebec.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That will be laid on the table, I presume?

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

At to-morrow's sitting I shall have pleasure in laying on the table of the house the reference which has been submitted to the courts.

On motion of Mr. Mackenzie King the debate was adjourned.

On motion of Mr. Mackenzie King the house adjourned at 6 p.m.

Tuesday, January 31, 1928

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January 30, 1928