June 4, 1931

LIB

James Layton Ralston

Liberal

Hon. J. L. RALSTON (Shelburne-Yar-mouth):

I am glad, Mr. Speaker, that at least my first word to-day can be a word of congratulation to my right hon. friend opposite (Mr. Bennett) upon the address which he delivered on Monday last. I fear, sir, that sentiments of this character will be but few in the course of the remarks I shall address to the house to-day, and therefore I hasten now to assure the right hon. gentleman that both the house and the country appreciate the care which he took and the thoroughness which he manifested in putting on Hansard a very complete record of the business affairs of the Dominion of Canada for some time back. I am sure that the house, and particularly those members who have been here but a short time, welcome statements from those in authority as to the affairs of this country, and I have no doubt that the information which the Prime Minister has given will be of assistance not only in this debate but in the future as well.

We all realize, I think, that the Prime Minister is a busy man, and if I had any complaint to make touching his mode of procedure on Monday last it would be this: I feel that if there had to be any curtailment of information or any abbreviation of discussion, such abbreviation might perhaps have been more advisable so far as the first portion of the right hon. gentleman's address was concerned. And I, for one, regret, particularly in the position in which I find myself to-day, that the right hon. gentleman saw fit to deal so briefly with matters which to my mind, if I may humbly suggest it, were of transcendent importance as compared with the matters of the past to which he referred in the first part of his speech. In view of the fact that he did refer to the past, and placed on Hansard a good many figures with respect to the last few years, I may be pardoned if I take the same privilege, at least to a limited extent. I do wish, however, in what I have to say, to deal with the more immediate past and with the present and future.

Let me say first of all that, in my opinion, it is a matter of regret to the country that the Prime Minister has found it necessary to introduce his budget at so late a date in the year. He realizes, I have no doubt, perhaps

better than any other man in thi3 house, how necessary it is that business men should have some definite idea of the conditions under which business transactions are to be carried on. He understands that constantly forecasts are made with respect to what the tariff will be. He knows that these forecasts are unsettling. He knows that they are likely to lead to far-reaching results so far as our business men, those engaged in commerce and, as well, the primary producers of the country are concerned. They enter into or refrain from transactions in the light of the information they receive on the budget, and action or inaction may prove to their advantage or to their detriment as the case may be. Obviously, therefore, it is a matter for extreme regret that the right hon. member should have waited until practically summer before bringing down his budget. I am giving him full credit for having kept his pledge to bring down the budget in May: I am regarding the budget as having been virtually brought down on May 31, inasmuch as that date fell on Sunday. But even so, Mr. Speaker, my right hon. friend's budget is considerably later than any budget that has been introduced by any of his predecessors. There is one exception to this statement. It is true, there was one late budget in 1922; in that year the annual financial statement was brought down within the last ten days of May. I mention this fact now because I feel that the reason for the lateness of the Prime Minister's budget on this occasion is a matter which is germane to the discussion. And as a very junior member of the house, compared to my right hon. friend, I feel it my duty to refer to something which I am sure is in the minds of the business community of the country, of the members of this house, and generally of the people of this dominion. It is this.

I submit that the reason for lateness of the budget this year must be attributed to the Prime Minister himself. With the capacity he has for work and the ability which he possesses to put through matters that engage his attention, the right hon. member has seen fit to insist upon retaining two important positions in the government of the country. Nothing can be done in relation to the budget until the Minister of Finance gives his approval. And the Minister of Finance cannot give his approval so long as he is engaged in some other direction as Prime Minister. The consequence is that the business people of the country has been kept in a state of uncertainty day after day, week after week and month after month, pending the completion of the budget. It is unfair to my right hon. friend; it is unfair to his government;

The Budget-Mr. Ralston

and it is unfair to those who are interested in the matters which are being dealt with that this delay should take place and this unsatisfactory state of affairs continue.

I know what my right hon. friend has in mind in this regard. He believes that under the constitution taxation and the tariff come within the Department of Finance. He believes, and properly, that he cannot delegate to his Minister of National Revenue the duties with which he is charged and the responsibilities which are his in this respect. Tariff and taxation are properly matters that come within the Finance department, and that is all the more reason why the Finance department should be administered by a minister who has the fullest time and every opportunity to devote to that single task and responsibility, and who is not obliged to deal with multitudinous affairs, as my right hon. friend is bound to do as Prime Minister. It is for this reason that I say that the blame, if blame there be-and I submit that there is-for the lateness of the budget this year rests upon the shoulders of the right hon gentleman himself. And if he will permit me once more, humbly, respectfully but very earnestly, to make the suggestion, I submit to him that in my opinion the 'time has come in the affairs of this country, when, for his own sake and for the sake of the country as well, he ought to hand over the responsibilities of the portfolio of Finance to someone else in order that those responsibilities may be promptly and properly discharged.

Let me point out to my right hon. friend that the condition of things with respect to the administration of the Finance department has resulted in something more than a late budget. Under the system which my hon. friends opposite have adopted, of dealing with tariff matters, the public can no longer appear before a tariff board. They must wait around the doors of the Finance department and must be heard when they can; and more often than not they are not heard at all The result is that the consideration of budget and tariff matters, from the point of view of the public at large, is extremely unsatisfactory. I have no desire whatever to make invidious distinctions, but those who have special briefs to present are enabled to present them, while the public, who ordinarily might attend tariff board hearings, have no opportunity at all to be heard, especially in view of the fact that the Prime Minister is so busy in connection with other matters arising outside the Department of Finance.

My right hon. friend, at the close of his address-and, I repeat, it was a very com-

plete and thorough address saving the criticism which I have made with regard to the latter part of it, which in my opinion deserved more attention and explanation-and after an eloquent peroration, appealed for the cooperation and the united interest, as he put it, of all members of this house in consideration of the affairs of the country. May I suggest to him that appeal would have come with greater force had he, in the discharge of the duty which fell upon him, not seen fit to go out of his way, not in one instance only but in several, to make rather partisan comparisons and somewhat severe attacks with reference to gentlemen on this side of the house, and to indulge in a good deal of recrimination in the course of an address which has come to be regarded in this house and in the country at large as probably the most momentous and dignified deliverance during the entire session of parliament.

Before I deal with other matters I want to mention one or two of these because I do believe they should not be allowed to go unanswered. For some reason or other my right hon. friend seemed for a moment to get out of line with the address he was delivering. In the course of his remarks he made tihe statement that the Liberals had made every effort to bring about the failure of the Imperial economic conference. The right hon. leader of the opposition (Mr. Mackenzie King) asked him whether he had not been given a free hand, and he replied that an effort had been made to belittle and if possible to destroy the adjourned conference at Ottawa. I want to say to my right hon. friend if he does not know it already, and I think he does, that such a suggestion is as false as it is absurd. If that adjourned conference does not come off, the man most responsible is the right hon. gentleman himself, who left England, after some remarks had been made, with the statement that " if her proposal is to be thus contemptuously rejected Canada could only accept the rejection and act accordingly by embracing other means at hand of further strengthening her economic position in the world." That attitude did more damage to the Imperial economic conference than anything which the Liberal party could have done. We took care during the course of a debate earlier in the session to put on record our attitude and our opinion with regard to that .conference, and we did it in order that Great Britain, the sister dominions and the world at large generally might know that notwithstanding the attitude and methods which the right hon. gentleman

The Budget-Mr. Ralston

and his friends had pursued, there was a large body of opinion in this country and in this house which was strongly in favour of, and would welcome and support, negotiations to be conducted in a broader spirit of tolerance than the spirit shown by the right hon. gentleman. We hoped as a result of that debate, and we still hope, notwithstanding the suggestion of the right hon. gentleman that the adjourned Imperial economic conference may not come off, that he and his advisers will even yet reform their attitude and change their methods and reconstruct their proposals so that the place which Canada occupied in Great Britain before the last Imperial conference will be restored to her, and that in the light of that altered attitude and that improved atmosphere the purpose may be accomplished for which the Imperial economic conference was called.

In speaking of the New Zealand treaty the right Ihon. gentleman shook his finger at this side of the house and said that we over here were the ones responsible for New Zealand withdrawing from Canada the privileges of the British preference. I want to point out to him and to the house, that it was his party that moved an amendment to the effect that the New Zealand treaty should be abrogated.

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CON

Richard Bedford Bennett (Prime Minister; Minister of Finance and Receiver General; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

It never should have been made.

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

The treaty was abrogated and no suggestion was made of withdrawing the British preference until last session when my right hon. friend struck New Zealand a blow in the face by doubling the tariff against New Zealand butter. I think my right hon. friend will find that the attitude and feeling in New Zealand was that the treaty could be abrogated if it was not satisfactory-there was a provision in the treaty itself for abrogation-but when the duty of butter was made eight cents instead of four she found it was time to look for trade in other places. This is an illustration of the difficulties which my hon. friends get into with regard to trade. They are very anxious for export trade, but to have export trade you must have some import trade as well.

Another matter to which I desire to refer, perhaps much more important than those I have mentioned, was the criticism directed at those on this side in connection with the Canadian National Railways. As I said before, those on this side of the house and the country generally, welcome opinions and particularly from a gentleman so well informed as the right hon. the Prime Minister, but I do not believe he did himself justice and I am sure he did not do this house or this country justice by the way in which he dealt with the finances of the Canadian National Railways. I want to put on record what my right hon. friend said on that occasion because it is only by reading it in full that one can get the implication. Page 2159 of Hansard shows my right hon. friend as saying:

The balance sheet of the Canadian National Railways, through the profit and loss account indicates a loss in the eight-year period of 346 millions of dollars. The first and largest item making up this loss consists of 253 millions of dollars charged in the railway accounts-but not paid-as interest on the sum of 604 millions of dollars of direct assistance by way of cash loans which the government has given to the company. As between the government and the system, this is only a book-keeping item. The actual burden of this liability was taken over by the dominion and has been carried by the taxpayers of the country.

And further on he said:

The situation, therefore, is that since 1923 an additional capital liability of 400 millions of dollars has been assumed in respect of the railways, involving an increase in the annual interest charge of 20 millions of dollars. The system has failed to earn its interest charges during the period by a round sum of 86 millions, and the government had itself borne the carrying charges in respect of 604 millions of dollars contributed direct to the system, as well as, since 1927, operating losses of $17,500,000 on eastern lines.

And then on page 2160:

The Canadian National Railways Act provides that the governor in council takes the position of shareholders under the Railway Act, and when I point out the sums that have been expended and the obligations that have been created during the last eight years, I do so because it has been done at the initiation of the government which is now the official opposition. Bear that in mind. I do think there is a failure on the part of the Canadian people to understand and appreciate the extent and character of the obligations which have thus been placed upon them. There you have $86,000,000 of a deficit in interest earning power in the last eight years, in addition to which the people of this country paid interest on $604,000,000 advance for the running of the enterprise.

My right hon. friend should first be fair to the railway and then perhaps after that the house and the country will be fair to those on this side. In fairness to the railway, let me point out that the 1604,000,000 to which my right hon. friend referred would appear to anyone reading the passages which I have quoted as being advances during the past eight years.

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?

Some hon. MEMBERS:

No.

22S6

The Budget-Mr. Ralston

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

That 8604,000,000 was loans made not to the company-my right hon. friend used the word " company "-but made as far back as 1911 to the Canadian Northern Railway, the Grand Trunk Railway, and the Grand Trunk Pacific Railway, for purchases of railway equipment, and finally 857,000,000 out of the $604,000,000 to the Canadian National Railways. Those loans begin not in 1923, the beginning of the eight-year period mentioned by my right hon. friend, but back in 1911. My right hon. friend is quite correct in saying that this was a bookkeeping entry; it was nothing else, and I as a private member of the house have always understood it as a bookkeeping entry. These advances were made from time to time by the government to the various sections of what is now the Canadian National Railways. The railway has never been expected to pay a dollar of interest on this $604,000,000; it has always remained on the books and some day when the financial reconstruction of the railway takes place that amount will be wiped off. The suggestion contained in the last passage of the remarks of my right hon. friend is that the gentlemen who are now the official opposition " initiated " the charges for this interest on the $604,000,000. Only $57,000,000 was initiated since 1923; there was one amount of $42,000,000 paid to the Canadian Northern back in 1922, or practically only $100,000,000 in all, out of that $604,000,000 that was advanced under a Liberal administration. I want the house and the country to understand that my right hon. friend's insinuation that this was initiated by hon. gentlemen on this side, is incorrect. But what aJbout the railway? Did my right hon. friend give a true picture of the finances of the railway in respect of that matter? I think the report of the railway to December 31, 1930, has been brought down to the house. I find there a record of the $604,000,000. I think my right hon. friend mentioned $614,000,000 because he was dealing with matters down to March 31, 1931. instead of December 31, 1930.

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CON

Richard Bedford Bennett (Prime Minister; Minister of Finance and Receiver General; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

I dealt with the public accounts. My hon. friend is dealing with the calendar year.

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

I am dealing with the accounts as supplied by the Canadian National, and if there be any discrepancy between the figures given by my right hon. friend and myself, it is due to the three months' difference between December 31, 1930, and March 31, 1931. There were loans amounting to $604,000,000 from the Dominion of Canada, loans which, as I said, were never intended to be paid back, and which were spoken of re-

peatedly throughout the debate to which I shall refer in a minute, as bookkeeping entries.

Mr. MANION; Why does the hon. member say that they were never intended to be paid back?

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

The expression "bookkeeping entry" has been used repeatedly. As a private member I always understood that they would not be paid back. Perhaps I am wrong, and the Minister of Railways has a perfect right to say that they will be. I do not, however, think they will. Only a year or two ago the present Minister of Justice (Mr. Guthrie), speaking in the house, again referred to them as bookkeeping entries, and I assume that would indicate they were not intended to be a permanent charge against the railways.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

Only because the railway

has not been able to pay them back.

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

With all due deference

may I say I do not think my hon. friend is quite right about that. The fact that the railway has not been able to pay it back does not make it any the less a debt; but when you call it a bookkeeping entry, that means you do not intend that it shall be paid back..

In addition to the $604,000,000, this record shows that there is $1,168,000,000 due to the public on guaranteed and unguaranteed liabilities, and with respect to that, the position of the railway has been that if we assume it has paid the full interest to the public on $1,168,000,000, or a charge of about $50,000,000 a year, straight through since 1921, after paying that it has a deficit of only $86,000,000. That is the $86,000,000 to which my right hon. friend referred. One would have thought there had been some recent advance of the $604,000,000. The deficit of $346,000,000 to which my right hon. friend referred is arrived at by charging interest, not only on amounts which are due to the public, but on the $604,000,000 bookkeeping entry. My right hon. friend admits that at another point in his address.

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CON

Richard Bedford Bennett (Prime Minister; Minister of Finance and Receiver General; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

My figures are taken from the company's report.

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

Certainly. But there is

the inference on the record. My right hon friend may not have intended to convey it, but he certainly gave me a wrong impression as I listened to him the other day. I find the $86,000,000 is a deficit after paying every dollar due to the public on account of interest on the $1,168,000,000, operating expenses and everything of that kind. When

The Budget-Mr. Ralston

was that deficit incurred? Most of it was incurred in three years as follows:

Year Deficit

1923 $21,000,000

1924 23,000,000

1930 29,000,000

The latter is the only one to which my right hon friend referred. That makes $73,000,000 in those three years of the $86,000,000. Yet my right hon. friend with considerable alarm says: You have here a deficit of $86,000,000 in interest earning power in the last eight years, in addition to which the people of this country paid interest on $604,000,000 advance for the running of the enterprise. He does not believe the people understand the obligations which have been imposed upon them.

Nobody so far has had any doubt about the matter. My right hon. friends sat in the committee on the Canadian National Railways year after year. I am sure resolutions have been moved by the Minister of Trade and Commerce (Mr. Stevens) for the adoption of the report in connection with the Canadian National Railways. I think it was in 1929 my hon. friend made a very illuminating address in regard to the finances of the Canadian National and he did not find any particular fault with the loans amounting to $604,000,000 which had existed since 1911. He did not seem to think the railway had done so badly, and I may say that of the $1,168,000,000 due to the public, a certain number of perpetual debentures date from 1875. Therefore there is no need of registering surprise at this late date with regard to the finances of the Canadian National. They have been before the house continuously and and my hon. friends have had every opportunity to investigate and bring them to the attention of the house.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

Does my hon. friend mean that the amount of $1,168,000,000 has existed since 1875? I do not think wrong figures should go out to the public.

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

A portion of it.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

That is quite different.

It was only a very small portion of it.

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

I can go further back

than that. Some date back from 1858 and some from 1883. I did not think I conveyed the idea that the whole amount of $1,168,000,000 had existed since 1875, and I am sure nobody who has sat in the house and voted moneys to be lent to the Canadian National would be under misapprehension in that respect. I submit to my right hon. friend that no good purpose can be served by giving the

impression that the finances of the Canadian National Railways have suddenly gone wrong. The finances of the Canadian National Railways have been spread on reports which have been placed before the house year after year; they have been investigated by committees of the house; officials of the road have been before the committee, and it is not doing any good service to the country, or the Canadian National, this great experiment in public ownership which we are conducting, for the Prime Minister in one breath rather to insinuate that the railway is behind some $604,000,000 which he himself calls a bookkeeping entry, and in the next to insinuate that something wrong has been done by hon. members on this side to permit that state of affairs to continue, when the fact is that everbody in the house is cognizant of the situation and the only difference between this year and last is a deficit of $29,000,000 which has been added to the expenses and that is after paying interest to the public on an amount of about $1,200,000,000.

I want to refer hon. members to what was said not very long ago by the minister who sits to the right of the Prime Minister. On March 8, 1928, the present Minister of Justice (Mr. Guthrie), as reported at page 1122 of Hansard, had this to say about the railway that had all these loans and deficits:

Nobody will pretend-not the Minister of Railways, for he knows too well, nor the Minister of Finance-that this government or any member of it is entitled to a particle of credit for the improved showing made in connection with the Canadian National Railways. The management of the road is supposed to be entirely divorced from government control.

I commend that to my right hon. friend the Prime Minister who suggested that the Minister of Railways had been able to get a coal furnace installed in the Canadian National railway hotel in Vancouver. I thought the railway was free of government control altogether.

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CON

Richard Bedford Bennett (Prime Minister; Minister of Finance and Receiver General; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

No man knows better

than my hon. friend that it was not.

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

To continue:

It is under the absolute control, so far as management goes, of Sir Henry Thornton and his board, without government interference, and they are entitled to the full credit for the result obtained-$125,000,000 of relief for the treasury of Canada in four years.

That is the testimony of 'my hon. friend the Minister of Justice only three years ago. Here is another one:

The real fact is that the Finance minister and the Minister of Railways are endeavouring to appropriate to themselves the credit that is due to Sir Henry Thornton. They are endeav-

22S8

The Budget-Mr. Ralston

ouring to bask in the reflected glory of the president of the Canadian National Railways without there being the slightest foundation for their claiming any credit for his achievement.

The point which I desire to make is this, that if credit be due to anyone in respect to the reduction of the net debt of the dominion that credit is directly due to the management of the Canadian National Railways; for the improved showing -which they have been able to make and for the relief which for the last four years they have been able to afford to the treasury of Canada, without one move of the hand or one stroke of the pen by the Finance minister or any of his colleagues, Sir Henry Thornton and his board have accomplished that feat, and to them credit is due and to them the thanks of the country should be returned.

That was three years ago. This is two years ago-the same gentleman speaking. On March 7, 1929, as reported at page 742 of Hansard of that date, my hon. friend the Minister of Justice says:

The result of operations for last year was very gratifying, and I would ask the Minister of Finance to note that the treasury of this country has been relieved very substantially for the last four or five years through the successful operation of Canada's National railway system. On January 1, 1924, an announcement was made by the president that for the first time in its history the national system had produced a net revenue over operating expenses, for the year 1923, amounting to $4,155,000; in 1924 that revenue had increased to $18,000,000; in 1925 it had increased again to $33,000,000; in 1926 the revenue was $48,000,000; in 1927 it dropped back to $42,000,000; and for 1928 we have the wonderful result of a surplus in net operating expenses amounting to $58,000,000. It will take $50,000,000 of that amount to pay the interest on the bonds which the public hold. I understand the management of the road will pay that interest this year and will still have on hand a balance of $8,000,000 for other purposes.

That was the year before last.

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LIB

William Duff

Liberal

Mr. DUFF:

Who said that?

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LIB

James Layton Ralston

Liberal

Mr. RALSTON:

That was Mr. Guthrie.

He went on to say:

_ But what about the money it owes to the dominion treasury? The minister intimates that the sum of $32,000,000 odd is owed this year to the government for interest. It is put down in the books as a debt of the railway, but is purely a book-keeping transaction, and I presume it will be added to the $1,258,000,000 which the company owed to us at the beginning of the year-

If I may interject, I think my hon. friend was wrong in saying that that amount was owing to the government:

-making the total indebtedness of the system to the dominion treasury about $1,300,000,000 and to the public about $1,000,000,000.

In both those respects I think my hon. friend is somewhat wrong. He continued:

In respect, however, to the National railway we on this side of the house are all optimists.

We look upon that railway as practically our own infant and our own creature.

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June 4, 1931