February 28, 1928

LAB

Abraham Albert Heaps

Labour

Mr. HEAPS:

The year 1921 was the year of deflation when large numbers of men were thrown out of employment. But in the previous year, 1920, there were probably 100,000 more men employed in industry than at the present time. Why not take that year?

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LIB

James Malcolm (Minister of Trade and Commerce)

Liberal

Mr. MALCOLM:

There is something in what my hon. friend said for this reason: Taking the statistics referring to employment -and I have never denied this fact-1920 was the peak year of the post-war boom-we all admit that-and it was in that year that our index number was based on 100. But what we are concerned with at the moment is the decreased employment at the time this government took office in the spring of 1922, together with the figures of employment . to-day, showing as they do to hon. gentlemen oposite that their contention that the successive budgets we have introduced have done nothing to increase the activity of industry in Canada is not fair and is not correct.

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CON

Isaac Duncan MacDougall

Conservative (1867-1942)

Mr. MACDOUGALL:

I wish to ask the minister if his attention has been called to a report in to-day's press of a speech made by the Minister of Labour-

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LIB

Hewitt Bostock (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Order.

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CON

Isaac Duncan MacDougall

Conservative (1867-1942)

Mr. MACDOUGALL:

-in which he says unemployment is the biggest problem in Canada to-day.

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LIB

Hewitt Bostock (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Order. '

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LIB

James Malcolm (Minister of Trade and Commerce)

Liberal

Mr. MALCOLM:

I should be happy to answer my hon. friend's question.

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LIB

Hewitt Bostock (Speaker of the Senate)

Liberal

Mr. SPEAKER:

I do not think it is fair, now that we are under the forty minute rule, to interrupt an hon. member who has the floor unless with his express permission.

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LIB

James Malcolm (Minister of Trade and Commerce)

Liberal

Mr. MALCOLM:

I am quite satisfied to answer the hon. gentleman's question.

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CON

Isaac Duncan MacDougall

Conservative (1867-1942)

Mr. MACDOUGALL:

I was quite certain when the hon. gentleman resumed his seat that he was willing to answer the question. My question is this: Has the minister's attention been drawn to a report in to-day's Montreal Gazette crediting the Minister of Labour, one of his colleagues, with the statement that unemployment is the most serious problem that Canada has to deal with at the present time?

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LIB

James Malcolm (Minister of Trade and Commerce)

Liberal

Mr. MALCOLM:

I have not heard that

statement, but I think my hon. friend is fair enough and broadminded enough to realize that at the present time, as always at this time of the year there is sea-

The Budget-Mr. Malcolm

sonal unemployment. That is the situation which has always prevailed in Canada and always will prevail.

It is not possible for me in the forty minutes time allotted to deal with many phases of the budget, but there are certain particular matters I should like to discuss. The budget of my hon. colleague the Minister of Finance may be subjected to criticism by some members in the opposite corner of the house on the ground that it was a rich man's budget; it may be criticized by other hon. gentlemen opposite on the ground that certain reductions in tariff items were too severe, but I will say that the general effect of the gradual sales tax reduction which my colleague has introduced meets with general approval all over Canada as does the reduction in the income tax.

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?

An hon. MEMBER:

No.

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LIB

James Malcolm (Minister of Trade and Commerce)

Liberal

Mr. MALCOLM:

I am not saying that it

meets with the specific approval of every man in Canada. Any man who could win the approval of the members in every corner of this house has no right to be on earth. I am prepared to say also that any man who could get the general approval of every member of the house half the time should be translated. But speaking generally the budget has been well received across Canada.

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PRO

Agnes Campbell Macphail

Progressive

Miss MACPHAIL:

Do you think-

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LIB

James Malcolm (Minister of Trade and Commerce)

Liberal

Mr. MALCOLM:

I did not interrupt my

hon. friend from Southeast Grey and I would ask the same courtesy that I extended to her.

I should like to deal with the criticisms on trade matters which have been presented to the house. They can be divided into five points. In the first place there is the criticism that we are exporting too much to Great Britain in comparison with the amount we import from her. Secondly there is the criticism that we are importing too much from the United States in comparison with what we are exporting to that country. In the third place our trade balance is criticized on account of its decline. In the fourth place we are criticized for exporting raw material and in the fifth place our trade treaties are under criticism as not being favourable to Canada.

With reference to the first item namely that we are exporting too much to Great Britain and not importing enough therefrom, may I ask how many hon. gentlemen in the house realize that we keep our trade figures as trade figures only, that in reality we do not know the destination of many of our exports. We know that Great Britain is the greatest distributing and greatest trading nation in the world; she does not begin to consume anything like the

percentage of goods which we credit to her in our export figures. For example, Great Britain herself admits the redistribution of

83,000,000 bushels of Canadian wheat. She admits also the redistribution of a great deal of flour ground from Canadian wheat. The total export figures of the North American continent, and they have to be taken together, show an export of 170,000,000 bushels of wheat from Canada to Great Britain and of 17,000,000 bushels from the United States, whereas Britain's figures of import show only 104,000,000 imported from the two countries. Hon. gentlemen in this house know that the British merchant who buys a cargo of grain on this side has the option of chartering a vessel and transferring that cargo to one probably of four or five points. The cargo may be transferred to Rotterdam even if its possible destination is in Switzerland. In so far as our figures show the expo'rt is made to Britain and Britain is credited with that export. Now practically all the European countries keep their trade figures on a country of. origin basis so that our statistics of trade in the total are correct; but they do not show exactly our trade with these other countries. Switzerland claims to import a very great deal more wheat than our figures show. France claims to import $11,000,000 of Canadian products in excess of our trade figures. Germany claims an import of twenty-four or twenty-five million dollars more than the imports which we credit to her. In fairness I want to say that there is no loss of trade. The British exporter is able to distribute our products probably better than we could distribute them ourselves, so that no loss of exports occurs. The only difficulty that arises in the whole situation is the problem of finding who our final customer is and allocating the business to the proper countries. That problem has been confusing to the statisticians of the world for several years. It was a subject of veiy vital study at the conference which was held last month in Cairo at which Canada had a representative. It will be much better if we can ultimately have figures on a country of origin and country of destination basis as we will then have a better opportunity of judging our trade with given countries. It is safe to say that if our trade figures were absolutely correct on the country of origin and the country of destination basis many of the compliments or much of the criticism with regard to our trade with given countries would have to be completely reconsidered.

With regard to our imports from the United States which are supposed to be excessive, practically the same problem in another form presents itself. The United States, like Great

The Budget-Mr. Malcolm

Britain, is a trading country of great magnitude. On account of its proximity to Canada it is a convenient country to buy from, and it has special advantages in importing due to its great population and its ability to import in bulk cargoes. A great percentage of the purchases made through United States wholesale houses by Canadian merchants are made as a result of convenience and their ability to import in large quantities. Moreover, many of the raw materials which we use in our industrial life come through the United States but are not of United States origin. Probably the rubber industry is the most outstanding example' of this. Ninety per cent of the cotton used in the rubber industry is Egyptian cotton, so I am informed by the chairman of the association, but it is bought on the Boston market. The rubber used in this industry is imported via the * United States, but it all comes from the Straits Settlements and Malaysia. Therefore we have this anomaly that as regards teas, coffees, spices and other agricultural products, which come in great quantities from agricultural countries and are collected in the United States, we are crediting to the United States in various items tens of millions of dollars which, if we were crediting our imports to the country of origin, would really be credited to some part of the British Empire.

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CON

James Dew Chaplin

Conservative (1867-1942)

Mr. CHAPLIN:

We have always done

that.

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LIB

James Malcolm (Minister of Trade and Commerce)

Liberal

Mr. MALCOLM:

I appreciate that fact. I am pointing out to the house that in dealing with our statistics of United States imports, we should divorce from them the figure's which represent imports really from within the empire. Furthermore, it is not fair to allow such imports to stand as United States imports for another reason. I may say in passing that a distinguished British visitor whom we had here recently was quite interested in the problem and I believe he is making a study of it. We are endeavouring to develop trade within the empire. We are trying to show that we are patronizing, as far as we can, other parts of the empire. At the same time so long as we are not able to segregate our empire imports which come to us via the United States, we do not give credit to the other parts of the empire for the purchases we really make from them, and so long as we export through the United States we are not receiving credit ourselves for doing business within the empire.

In the third place we have heard a good deal of criticism with regard to our favourable trade balance declining. The decline in

our favourable trade balance, which to-day stands at $156,000,000, is to be admitted; but it is also to be admitted that the favourable trade balance which we have is the largest favourable trade balance of any country in the world, and while a decline has occurred, it can easily be accounted for as the speeches of some hon. gentlemen opposite have already indicated in this debate. The total decline in our exports is due entirely to the decline in value of agricultural products. As regards wheat alone, the average value of a bushel of wheat for the calendar year 1927 was $1.41; for the year 1926 it was $1.52, thus reflecting an average lower value in the price of flour of thirty-five cents a barrel. Indeed it may be said that all agricultural products taken together account for a greater decline, not in the volume of our trade, because the volume of our trade is as great, but in the dollar value of our exports, than the total decline. The interesting side to this question is that the value of our non-agricultural products, that is, our manufactured articles, has actually increased during the past year. That again, I will say to the hon. member for Lincoln (Mr. Chaplin), bears out the contention that our industrial development has been increasing during the past year.

As there has been criticism in this house that we are exporting too much raw material, let me give this statement as being absolutely sincere and true, namely, that compared with United States exports, the percentage of all exports that leave Canada in manufactured form is something of which every Canadian has a right to be proud and is a steadily increasing quantity. I am sorry I have not the correct figures of exports of raw materials by the United States during the past year, but I know it amounts to about 39 per cent, whereas we exported raw material to the extent of 46 per cent. Their manufactured exports plus semi-manufactured exports amounted to 53 per cent, whereas ours amounted to about 46.6 per cent. Thus it is seen that the United States is about six points ahead of Canada. A very interesting factor however comes into this question of exports, namely, that of our total exports of raw materials, amounting to $578,000,000, no less a quantity than $340,000,000 worth is represented in the value of our wheat, whereas in the total export of United States raw materials a very much smaller amount, which I am sorry I have not under my hand as I left the sheet- in my room, is represented in the value of wheat. If from these figures we divorce wheat, which is one of the great commodities which we are exporting to a far

The Budget-Mr. Malcolm

greater extent than the United States, it is seen that we in Canada are exporting as high a percentage of manufactured goods as is the country to the south.

There is one point on which I should like to speak for the benefit of my Progressive friends. Some people have argued in this house and, indeed, it has been argued in the country, that an industry should not be supported by governments unless it is indigenous to the country. May I point out that, with each passing decade, with increasingly easy lines of communication and especially lines of transportation, the world is becoming more and more of an economic unit. To my hon. friends who say that we should not export raw materials I should like to point out the very significant fact that in 1870 the cost of moving freight on American railways worked out at 1.89 cents per ton mile; while in 1926 the cost of moving freight on Canadian railways worked out at one cent per ton mile. Even these rates are high in comparison with water transportation. The cost of moving grain from Port Arthur to Port Colbome by boat on the great lakes is just one-eighth of the cost of moving any commodity by rail; the rates on grain work out at less than one-eighth of one cent per ton mile. Water transportation has in fact become so cheap that every great seaport in the world has very favourable rates as compared with every other great seaport and we have ceased to measure by distance; we are measuring now entirely by carriage rates. It is notable that products of tropical countries are moving more freely from those countries for processing to the temperate zone, and that practically all of the products of tropical countries are now being processed in countries such as Canada. What is the reason for this? There are, I believe, three reasons to consider. First, there is the superior skill of our people; secondly there is the ability of a skilled people to harness the powers of nature in the work of turning a raw material into a finished product, and, thirdly there is a great potential market for the commodity in the country in which it is being processed. Canada is a very notable example in this regard. We are to-day importing raw materials from the four corners of the globe; we are becoming an industrial nation, the second industrial nation of the British Empire. This is a position of which we are proud and which we intend to maintain, and we are doing thirty per cent of this business on materials which we do not produce ourselves. I would like to give to the house 56103-54

and to put on Hansard a few very interesting figures with regard to this group of industries

Take that great group of industries of which iron and steel are the basis, and which some day will use Canadian ore-I hope soon, because up to the present time ninety per cent of the ore used in Canada comes from either Newfoundland or the United States. We find that in 1926 that group employed 103,500 persons, paid $137,000,000 in wages and salaries, manufactured materials to the value of $258,000,000, and produced products to the value of $505,000,000, adding a net of $247,000,000 to the wealth of Canada. Practically all the iron which is the basis of that group of industries came from other countries.

The story of rubber is probably one of the most amazing stories of any product. The rubber industry has grown tremendously in the last twenty-five years, and probably deserves consideration from the people of Canada to an extent that very few other industries do. Bringing its raw products from the opposite side of the world it has developed to the point where it is not only supplying the needs of Canada but has become a very important export factor in this country. It has grown to enormous proportions. It employs about 15,000 people, pays $15,000,000 to $16,000,000 in wages and salaries, produces commodities to the value of $80,000,000 or $90,000,000, which with some other commodities produced in smaller plants will make a total of $100,000,000. Its exports of its own products amount to $26,000,000, and with other rubber articles exported the exports probably reach a total of $30,000,000. Yet all the raw commodity comes from other countries.

Our tobacco industry employs about 8,000 people, and produces goods to the value of $65,000,000, and until recently this industry has been based upon a raw material which is imported.

Our sugar industry employs about 3,000 people and produces goods to the value of $65,000,000.

Our cotton textile industry is to-day employing in Canada 22,000 people, and producing goods to the value of $86,000,000, and every pound of cotton, its raw material, comes from some other countiy.

Ninety per cent of all the crude oil used in the petroleum industry in 1926, the products of which were worth $71,000,000, was imported.

A very interesting industry which we have developed in Canada is the aluminum industry. Bauxite the raw material used in that

The Budget-Mr. Malcolm

industry, is brought from British Guiana by water to Quebec, and by virtue of our cheap power the industry has been established there. These industries, which are all using raw material imported from abroad, have been established here by virtue of the potential market in Canada, by virtue of the superior skill of our people, by virtue of our knowledge in harnessing the powers of nature, and in addition, by virtue of certain political advantages in the form of British preferences which have enabled them to enter the export field. By virtue of her preferred position Canada is to-day exporting to seventy-five or eighty different countries.

We have had a policy in the Dominion of Canada, for which I am proud to give full credit to a former Minister of Trade and Commerce in another government, of creating trade agencies and establishing steamship communication. That policy has been of inestimable value to this country. If the house could read the many letters in the department showing appreciation from Canadian industrialists as to how much this assistance has meant to Canada's export industry, I am sure they would be proud of the service, I am surprised to hear some hon. gentlemen say that Canada should not be manufacturing anything except those things for which she has the raw material. If we took away from the industrial life of this Dominion the raw materials which by reason of our climatic conditions we cannot produce and must import, I am afraid that the whole industrial fabric of the Dominion would fall.

I am also prepared to say to my hon. friends opposite that so long as we expect the nations of the world to allow us to take raw materials from them which we do not produce, we cannot afford as Canadians to refuse to give to them some of the raw materials which we have in abundance and which they need for fabrication in their own country.

I want to place on Hansard a few more figures Showing whether the policy of this government has been injurious to the various industries with which I have been dealing. It was said in 1922 that industry would languish in Canada if the policy of this government was put in force. I do not think that has been the case, Mr. Speaker. The hon. member for East Toronto (Mr. Ryckman) the other night made a most amazing statement when he said that industry-manufacturing, I think, was the word he used-was stagnant in Canada. My hon. friend is one of the leaders in the rubber industry. No one knows that industry better than my hon. friend,

and he knows that in 1922 the employment in the rubber industry in this country was nothing like it is to-day. In 1921 there were twenty-six manufacturers of rubber products in Canada, employing an average of 8,586 people.

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CON

James Dew Chaplin

Conservative (1867-1942)

Mr. CHAPLIN:

You did not change the

duty on rubber. That is the reason.

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LIB

James Malcolm (Minister of Trade and Commerce)

Liberal

Mr. MALCOLM:

I admit that, but I will give my hon. friend an illustration the other way in a moment. To-day that industry produces goods to the value of almost $100,000,000. I say to my hon. friend from Lincoln (Mr. Chaplin) that we did not change the duty, but we did change the trade treaties with certain countries, and that gave them a market. My hon. friend also realizes this, that the most notable industry in Canada as an example of not hiding behind the tariff is the rubber industry. That industry deserves the compliments of the people of Canada in this, that in no size of tire is its price over eight per cent higher than in the United States, and on some smaller tires it is lower. They have been able to establish an export trade in foreign countries where we have no trade privileges, and where they have had to compete with the other countries of the world. The rubber industry, I think my hon. friend will admit, has grown very materially in this country.

The policy of the Liberal government has always been to encourage, by trade treaties, wider markets, and my hon. friend, in speaking of trade treaties, must remember this, that from the time we came into power up to the end of March, 1927, we have made fourteen trade treaties, and to these countries we have sold $7,700,000 of rubber products. In 1921 our total exports of rubber products were only $800,000. To Australia, New Zealand and the British West Indies, countries which in recent years have received more favourable trade treatment, the rubber industry sold goods in 1922 to the amount of $600,000, while to-day that figure has reached over $6,000,000.

Canada is going ahead in spite of the cries, the odd cries, of ruination. I will admit they are odd, and in fairness to the leader of the Conservative party I am glad to say that they do not come from him. He has not upon any occasion that I know of made statements of that kind. We as Canadians have a right to be proud of our country. We as a government are prepared to face criticism by the opposition of our methods of administering the affairs of the country, but with the figures in front of us of our industrial production and industrial employment I say

The Budget-Mr. Edwards (Frontenac)

that if we put our shoulders to the wheel of developing this country, and confine our criticisms to each other, and not to the Dominion, we shall make very much greater progress than was made when the Dominion was a target for attack.

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CON

John Wesley Edwards

Conservative (1867-1942)

Hon. J. W. EDWARDS (Frontenac-Adding-ton):

Mr. Speaker-

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February 28, 1928