March 16, 1928

LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

My hon. friend will observe that as we go along. This letter is from the

office of the managing director of the Dominion Textile Company, and is dated February 27:

Dear Mr. Robb:

Your recent tariff changes, in so far as cotton goods are concerned, apparently will be considered quite popular. I wonder whether you are aware that few of these changes are in accordance with the facts put before the Tariff Advisory Board?

Apparently this gentleman thought he was the only man to place any facts before that board.

The net results are that there is little reduction to the general public, but a very serious one to this company, amounting to something in excess of $600,000 annually, which amount you propose to distribute through the medium of increased protection to seven other cotton companies, five of whom are producing coarse gray cotton goods, previously more fully protected than the lines of gray cottons produced by this company, when considered in the light of labour and cost of production.

Based on this year's production to date, we will, at the end of our year (March 31), have produced approximately 41,500,000 pounds of gray cloth and yarn. Of this quantity, approximately 4,600,000 pounds of yarn, averaging coarser than 20's and sold as single, will receive a reduction of four and a fraction per cent, equivalent to about $64,000. Approximately 750,000 pounds, sold in ply yarns, are unaffected.

The bleachery processed 16,256,000 yards, weighing 4.889,000 pounds, approximately one million pounds of which receive a reduction of 3 per cent under the preferential, from which its competition mainly comes. The balance of the bleachery production is unaffected in this tariff, but it has been seriously affected for many years, as this department has not averaged four days' operation per week owing to the already utterly inadequate protection of 15 per cent under the preferential tariff.

The remaining 31,000,000 pounds of gray cloth production is cut 2J per cent under the general tariff, and has only 12J per cent protection under the preferential.

In addition to this some 32,000,000 yards of printed cloths will receive a further reduction of 24 per cent. As the margin for printing is= to-day barely sufficient to cover costs, this reduction will affect the print works to the extent of making it impossible for it to meet its comparatively small proportion (allotted to it) of the common and preferred dividend requirements.

What appears to be, and is most unfair, is the fact that prints receive a protection of 2| per cent less than yarn and raw stock dyed fabrics, notwithstanding the fact that to produce the above quantity of prints will require buildings and machinery in excess of $2,500,000 more than will be needed to produce a similar yardage and value of yarn and raw stock dyed fabrics, and, at the same time, requires a much larger number of operatives with skill and technical knowledge not needed in the other plant.

We have recently spent rather more than one million dollars, and will not have completed changes and additions to the program, started last summer at the print works, before the end of this year, solely with the view of giving

Ways and Means-Customs Tariff

service to the public as, owing to the altered conditions of trade in the method of buying, forward purchasing is almost a thing of the past, and we do not expect, owing to the extremely small runs or yardage processed at any one time, to be able, on the twenty-four printing machines, to produce as great a quantity as we processed on twelve machines five years ago. .

The reason for this is that the quantity ordered at one time is so small that a much greater time is occupied in setting up a machine to print a design, than is required in the actual printing. _ .

By comparison with England, in our basic rate for printing we ask a customer to give us an order for 3,600 yards to be coloured in three different sets of colours, or 1,200 yards per colouring, whereas in England the basic rate is for 12,000 yards, or 4,000 yards per colour. .

Approximately two hours and fifteen minutes is required to set up a printing machine and make the two changes in the colour boxes, and one hour and thirty minutes running time, or a total of three hours and forty-five minutes to print 3,600 vards. To print 12,000 yards a total of five hours and fifteen minutes is required. We can produce only about 10,000 yards daily against 24,000 yards in an English works. Our labour and overhead cost is more than doubled. A great many of our orders are for 200 yards.

This reduction of 5 per cent m the general and 21 per cent in the preferential, bringing the British prints to an 18 per cent rate, will have a most serious effect on the print works and the town of Magog with its population of over 5,000 depending entirely upon this company. In addition to this a large farming community finds a very satisfactory home market for its products in this district.

As shirts and clothing are sold at set prices, it is most unlikely that the $1.50 shirts, for instance, will be sold at $1.47, the difference represented by the reduction in duty.

Coming to the companies that have been benefited, the three tire duck companies and the two duck companies, producing more than 20 000.000 pounds, receive a straight increase of 21 per cent upon their entire production, and no reductions.

The Wabasso Cotton Company, at Three Elvers, -which was started after fine yarns were put on the free list, receives 71 per cent preference and 15 per cent general protection jtn single fine yarns, and 15 per cent preference and 25 per cent general on fine ply yarns, all of which is an increase. They also receive an increase under the preference of 5 per cent on such cloths as they fabricate in which artificial silk is used, and which, I understand, represents about one-fifth of their looms.

They receive no reductions with the exception of 3 per cent under the preference on the negligible quantity of made-up sheets and slips which they produce.

In their Shawinigan yarn plant at Shawinigan Falls, Quebec, spinning yarns, they will receive the same reduction as we do, but Mr. Whitehead made the statement to Mr. Moore and myself that he had never made a cent in the Shawinigan plant, and that if he got a protection on fine yarns he would convert this plant to spin fine yarns. The Hamilton Cotton Company receive reductions and increases that offset one another.

[Mr. Robb.3

On the face of things, it would appear that the tariff in very unfortunately framed against the company that has been honestly, efficiently, and economically operated, and should receive greater consideration.

Under proposed conditions, there is no question but that this company, and its more than seven thousand operatives will be seriously affected, and the latter, at least, are worth your reconsidering the proposed schedule.

Hon. gentlemen opposite will observe this:

Nearly one hundred million lineal yards of cotton cloths were exported to this country last year, in almost equal quantities, by Great Britain and the United States, plus imports under French and intermediate rates. At least sixty per cent of these imports directly affected this company.

We have also to accept orders for large quantities of cloths, subject to drawback rates, in order to keep occupied.

There are a great many points not touched upon in this letter that I would be glad of an opportunity to discuss with you if you will be good enough to give me an appointment.

Sincerely yours,

F. G. Daniels,

Managing Director, Dominion Textile Company.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

Would the minister just

at this point answer a question, if he will be so kind: Taking this as a presentation

of one side of the case, what other facts influenced the minister to disregard all this and make these reductions which are complained of?

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

The minister has not

given the explanation he promised. He said he was going to take the house into his confidence and tell hon. members what facts induced him to disregard the other set of facts which he has so ably read, but he has not done so. Now he says that we rejected the advice of the tariff board. Why the tariff board has given no advice whatever.

Mr. ROBB-: Yes, the advice of the tariff

board in relation to these particular items is coming to the house through the minister. This is what they suggested as a fair reclassification of these items so that the yam people would enjoy a share of the protection. I realized at the time just what we were running into and that there would be some opposition, and I am going to keep out of trouble hereafter.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

The minister said a

moment ago: I have tendered to the house

the findings of the tariff board and my hon. friends opposite-meaning us-have rejected their advice. We are not rejecting it, because there is nothing to reject. Here is what we find in this remarkable report. I shall not read it all but they start with about two pages of a dissertation, upon the tremendous load that has been placed on their shoulders. For instance the report says this:

It is probably safe to say that a greater mass of work has never fallen, within the same space of time, upon a commission.

They are looking for sympathy. Then the report goes on to say:

The board may be regarded as still in process of organization.

That statement has been made although the board has been organized for over two years. Then further the report goes on to point out that the board thinks there should be a change in the method of procedure. A change in the method of procedure referred to came about through the dependence of one reference upon another. It has taken them two years to find out that the tariff is an interrelated structure which every schoolboy knows from the time he can write. Everybody knows that the whole tariff structure is interrelated. Then follows about a page intimating that, to the amazement and surprise of the board, they found1 that when they came to the rubber schedule it affected the cotton schedule, as if it was not known that cotton went into the manufacture of rubber goods. And so it goes on, and the recital takes two or three pages. Then the report says this:

There is just a question whether the present method of making applications is suited to thorough efficiency in enquiry.

They doubt whether the methods of procedure are suited to a proper kind of enquiry. Then they go on to say further that the board have no power to compel the production of financial statements and documents, but they do not ask for the power because they say they have been accorded all the courtesy that is necessary from the various manufacturing concerns. Then after two or three pages more of just such stuff as that, we come down to the last couple of pages of the report wherein they make their findings. These are their findings. They recite the reference and they go on to say:

Little difficulty has been experienced as to the duty of enquiry.

That is they do realize that they must make enquiry; that part is clear to them:

Possibly we might have succeeded better proceeding under a set of questions stated by you-

That is addressed to the Minister of Finance:

-outlining the scope of the investigation, but we believe that on the whole our duty of enquiry has been discharged with reasonable satisfaction.

They say that although the minister confesses that there is not a single fact found. He says that he has repudiated the whole thing and will depend upon his own judgment. Then the report goes on to say this:

Difficulty, however, exists as to determining the nature of the advice we are presumed by order in council to tender to the minister.

They do not even know what they should advise the minister upon. They have not the faintest idea of the nature of the advice they should return to the minister after operating for two years and after hearing over one hundred cases. I think there are 98 recited in the report and there are doubtless a good many more. Then the report goes on:

Reports of the enquiry into the major references. and some of the minor as well, are lengthy, and at times somewhat involved, usually containing valuable statistical matter. To present the evidence in precis form, possesses the advantage of brevity-and the disadvantage of incompleteness.

Ways and Means-Customs Tariff

They do not attempt to prepare a precis of the evidence or even to summarize it. The least they could have done was to summarize the evidence and to submit it to us for judgment. The report goes on to say that there would be a hearing at great length and then someone would appear before them whose evidence would disturb the quasi decisions already made, making it necessary to reopen the case and call back the witnesses again. Yet the minister constantly twits us with negligence dn our part in not going through this involved mass of evidence and sifting one part from another, although he admits that he has not done so himself. They say:

Reports of the inquiry into the major references. and some of the minor as well, are lengthy, and at times somewhat involved.

They say, as I have already stated, that there is a disadvantage in preparing a precis and therefore they prepared no precis. Then we have some further observations:

The transcripts contain the arguments of the applicants and their opponents, which, in our opinion, cannot be satisfactorily summarized.

Thus we have Mr. Moore and his board, a board that has been organized for two years, telling us that the arguments of the applicants and their opponents cannot be satisfactorily summarized, and yet we members of this house are asked to take this half ton of evidence and understand it fully without the assistance of even a single expert. This is not a haphazard decision on their part. They say:

After mature deliberation we have concluded that to attempt a summary would be not only unfair to those who have argued before the board, but as well would render to you

The Minister of Finance.

-and to parliament an incomplete service.

Therefore they attempt no summary. After reading this report I am inclined to agree with the minister that his decision was perhaps the right one, namely, to kick them out lock, stock and barrel and go on his own.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

I did not say that.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

That is virtually what he said. I was rather inclined to compliment him on his decision.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

I did not say that. I cannot accept the compliment.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

He said that he was going to use common sense instead of the advice of the tariff advisory board. This is another statement 'by the board that is worth considering:

-but as well would render to you and to parliament an incomplete service. The obvious

intent of argument is to influence those who have authority over the matter under discussion.

Therefore they should make no summary, make no finding for fear they would influence those who had to decide the matter, that is parliament or the minister. This board was set up and heralded throughout the country as a solution of the great question of the tariff that had been bothering the government for years. They said: We, the great Liberal

government, have now set up an advisory board and the whole question is solved. Yet this board, through the Minister of Finance, tells parliament that because argument which is made before it, is intended to influence those who have authority to judge the matter, therefore they refrain from summarizing, finding on, or even making a precis of the argument.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
LAB

Herbert Bealey Adshead

Labour

Mr. ADSHEAD:

Was the tariff advisory

board not inaugurated with the consent of both parties?

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

Not this one.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
LIB

James Alexander Robb (Minister of Finance and Receiver General)

Liberal

Mr. ROBB:

It is the personnel of the

board my hon. friend objects to, I imagine.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

No, it is what the board does.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

I have always believed

a board of experts, acting under the leadership of the government for the purpose of investigating and assembling facts in a properly organized form, would be of inestimable value to the government and to parliament. A business man or any person having to make a decision on any subject can certainly make that decision very much better if all the facts are assembled, properly organized and placed before him in sequence. In the presentation of a case on the tariff there must necessarily be involved arguments and an array of facts brought forward in an unorganized form. Any group of individuals can sit and listen; but what a tariff board is for-and there is not one atom of reason for their existence if they do not do this- is to winnow out of what they hear some of the kernels of wheat of argument and present those to the house, and to disperse the chaff, leaving the chaff for us to winnow through if we want to, and if we suspect the wheat has not all been winnowed out. That is the secret of success in connection with any tribunal. This is the way in which the board think they have discharged their function. They say:

We have deemed it our duty to pass on to you the transcripts containing the records of our public proceedings with only explanatory comment.

Ways and Means-Customs Tariff

As a matter of fact there is not even explanatory comment. Let us not forget what they said a moment ago, that so involved was the hearing that they did not dare to make a precis. Yet they have the temerity to come to parliament and say:

We have deemed it our duty to pass on to you the transcripts containing the records of our public proceedings with only explanatory comment.

We realize that in so doing we may not be rendering all the service you expect from us, but it has seemed to us that the precise way in which we may be most helpful will in course of time be developed by experience.

Can anyone imagine a report of that kind being presented to parliament? It is an insult to the intelligence of this parliament, and I do not blame the minister for casting it aside and using, as he said a moment ago, his common sense in the formation of this tariff. It is perfectly clear from this report why it is that we have before us a tariff revision which the minister finds difficulty in explaining. There is in the realm of economics nothing more complicated than a tariff, nothing that requires more accurate and detailed knowledge, and the minister should not be saddled with the responsibility of presenting this tariff in all its details to the house. What they should have done, for the benefit not only of the minister but of the members, was to make a precis of these revisions with an explanation based upon the facts presented to the board and the reasons for the changes. Let us take, for instance, the letter which the minister has just read, a letter from Mr. Daniels of the Dominion Textiles. I am just recalling the contents of it, having heard the minister read it. In that letter this company, a large company with a very big investment in Canada, makes the statement that as a result of this revision it is going to be penalized in certain respects and there will be a serious loss to its business. The company points out that it is in competition along certain lines with other firms which in some measure are receiving assistance whereas this company is suffering a reduction. It does not matter what we may think of the principle of protection or free trade, the fact remains that the country owes it to our business men and organizations to deal with them equitably. I would appeal to my hon. friends who may stand for a principle of no tariff, or low tariff, or whatever you like; at least let us stand on the principle of equitable treatment to all parties alike. It would be infinitely better to put in a flat reduction than to pick out one firm here for special, favourable treatment and another firm there to be penalized.

As I intimated in my question which the minister has very great difficulty in answering-and I understand the difficulty now that I have read over this report-in view of the facts presented by the Dominion Textiles in that letter, what other set of facts warranted the changes that the minister has made? I am not saying that these changes are wrong. It may be that the case of the Dominion Textiles is not really a case, but we are not in a position to judge. We have one side of it presented by the Minister of Finance, and the other side is in half a ton of evidence which we are invited to go and look over. So I say to the Minister of Finance that the revision presented to us to-day is one that we cannot with confidence support; and not only that, we cannot with confidence pass it through this house without the most careful scrutiny and without a great deal of anxiety for fear that industry will be injured.

I met a gentleman down at the hotel this morning who, while not in the cotton business, is in the textile business and knows a good deal about it, and I asked him this question. Let me say first that it was not a question of lobbying; I am not afraid of this talk about lobbying, because I believe that any respectable and responsible business man has a perfect right to come to a member of parliament and tell him his case, if he so desires. I know nothing about the cotton industry myself; I am not supposed to know anything about it; it is not my business; and how am I going to learn anything about it if I do not get the information from these various sources? I met this gentleman and asked him, "what about the cotton schedule? Is it a satisfactory schedule? How do you view it? What criticism do you make of it?" He replied, "I venture this statement, that there is not a man in Canada, in the business or out of it, who understands that cotton schedule-not one." And, Mr. Chairman, I venture this statement, that there is not a member of the minister's staff who understands it, and we in this parliament are going blind on this question right at this hour. I predict without the slightest hesitancy that within the next three or six months the minister will be faced with incontrovertible evidence calling for some changes in the tariff that he is presenting to us to-day, or else of allowing serious hardship and loss to ensue to business in this country. We are asked to approve of this tariff, which is not a tariff that has been carefully thought out and prepared. It is true the minister may have slaved as he said yesterday, and spent sleepless nights worrying about it until the small hours of the morning. It is utterly absurd

Ways and Means-Customs Tariff

to ask the Minister of Finance to sit up night after night revising the tariff of Canada or of any other country. The thing is preposterous; it cannot be done, that is all. There is not a minister of finance either in past history or now living in any country who could do that work. He may, over a period of two or three years, but by the end of that time the whole thing would be obsolete.

The thing I am complaining of, and it is something which the house ought to resent and condemn, is the presentation to the house of a report such as this from the tariff board. There was only one possible alternative for the tariff board, if they were to escape the just condemnation of this house and of public opinion, and that would have been to remain silent, simply saying: We are unable to report.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Edmond Baird Ryckman

Conservative (1867-1942)

Mr. RYCKMAN:

And send in their resignations.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

Yes, send in their resignations. My point is that there is no responsible body of citizens, tariff board or any other group, that has any right after two years service to present a report like that to parliament.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
?

An hon. MEMBER:

What is the date of the report?

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

The letter addressed to the Minister of Finance accompanying this report, which is sessional paper 132A, is signed by Mr. W. H. Moore, chairman of the board, and dated January 5, 1928.

I repeat, this thing is more serious than merely the question of a difference of opinion over the tariff, because when we find this on a few cotton yarns, just one little item in the tariff, what are we likely to find in the rest of it? I gave an illustration last night, a most striking illustration. I do not know whether it is corrected in the schedule or not; I am waiting to see. A couple of years ago a designing individual, looking for the advantage of an American firm that he represented, by subtlety or suggestion or in some way or other secured the introduction into a tariff item of certain words, and the words were simply "when imported by the manufacturer." They sound very harmless, but what was the effect of those words? Their effect was to penalize the British exporter over five per cent as against the American exporter. The item dealt with cotton manufacturing machinery, and it ran into a large amount. The insertion of those words made all the difference between the British firm continuing business or not. It actually drove them out

of the market, and in a most unfair way, as I will show. The British manufacturer desired to supply parts in Canada for his machines that had been purchased in this country, and he opened a warehouse in Montreal, where he kept his parts. That was a desirable thing, but because he did that, he was penalized 5 per cent customs duty more than his American competitor who kept his plant in Boston, and shipped his parts into this country one at a time. I mention that only to illustrate how words can be introduced into a tariff item that may not only penalize but jeopardize the very existence of an industry in Canada in favour of a foreign competitor. So we speak with some degree of warmth, and I think we are justified in saying indignation, when we aTe asked as an opposition, and when the house is asked as a representative body of men, to deal with a revision of the tariff based upon a report such as that presented by Mr. Moore and his colleagues.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
PRO

John Evans

Progressive

Mr. EVANS:

Having listened to the discussion yesterday and again to-day, I do not think the house is yet seized of the importance of these new duties in the cotton schedules, particularly items 522a and 522b. The cotton industry has been amply protected in the past. The hon. member for Vancouver Centre said that all tariffs constitute argument. It seems to me that this one constitutes much more; it constitutes bargaining, simply bargaining. Here is a new tax imposed by the Liberal government, which professes to be against tariffs altogether.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink
LIB

Lucien Cannon (Solicitor General of Canada)

Liberal

Mr. CANNON:

The government never

claimed that at all.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF, 1927, AMENDMENT
Permalink

March 16, 1928