March 28, 1933

LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

If the house will

just keep quiet I think I can get up steam soon enough. Mr. Speaker, I should like to begin over again, but as what I have said would come out of my forty minutes I do

not think I shall. However, before the interruption I was congratulating the Minister of Finance upon the very acceptable manner in which he performed his somewhat difficult duty. We realize he had not a very rosy picture to present, but he did it well enough. Then, the hon. member for SheUburne-Yar-mouth (Mr. Ralston) certainly displayed an ability to criticize the shortcomings of the budget. He levelled a devastating and withering criticism against the government, which the hon. member who has just taken his seat has not been able to break down.

My good friend the Minister of Trade and Commerce (Mr. Stevens) is recognized as one of the best parliamentary debaters, and for that reason he need not apologize for his inability to do anything. We never dreamed of casting any reflection upon his ability. When the whip of the Liberal party asked concerning the book from which he was reading, we were not casting any reflection.

I shall spend only a very few moments discussing some of the matters with which he has dealt. I shall not cover all of them because were I to do so my whole forty minutes would have expired. He indicated, first, that he hoped we were all wiser than we were last year at this time. There is not much evidence of increased wisdom as a result of experience either in the wide-world without or in the government of Canada, within. Certainly, that is so if we are to judge the government by its present policies. My good friend compares tiwo years of trade-both of them Tory years. That is not a very effective comparison. Because one Tory year happens to be better or worse than another Tory year does not assist us in arriving at any intelligent conclusion. In order to make a somewhat better showing my good friend, the minister, adopts a new system of comparison altogether. Apparently, now, when values are down, comparison of values is not the right way. How does the business man value his returns at the end of the year? How does the farmer value his returns? Does he figure out the number of carloads of wheat he grows, or the number of dollars he handles? We heard so much of that kind of comparison last year that we are simply fed up on it. There is not one word by Tory writers about the small amount we are getting in return. In order to make it look better he transfers our trade figures from values to volume, and in that transfer shows evidence that, on that basis, we import more castor oil, more bologna and more nuts, than formerly. Then he complains that as the values are low, inevitably our revenues must be low.

The Budget-Mr. Motherwell

He is trying to do the impossible when he attempts to convince this house and country that prohibitive duties produce revenue. At every convenient opportunity the government used the services of the Minister of National Revenue to jack up the pound to the necessary level for the purpose of making a higher price for duty purposes. They pegged the pound, increased values for duty purposes and then complain that they had not enough revenue or had not enough opportunities to impose higher duties and then wonder why our revenues are down. Their memories are very short indeed, Mr. Speaker. I would not have much trouble with even all the lesser points raised by the hon. member who has just resumed his seat as his futile efforts were quite laboured, but I shall have to turn to a discussion of other matters.

I shall speak first about the five or six good provisions in the budget. There are not many such, but there are a few. If I may, I shall also make one or two recommendations. Although my good friend does not speak in complimentary terms of our former recommendations, at all events I shall take my chance. In my view the appointment of a commission to investigate the monetary situation is good business. I have always taken the ground that the public have no right to expect any government to be a body of experts capable of dealing with every question arising. I am willing to concede all due credit to the minister, but I am suggesting that surely the government must have realized years ago that they did not know much about practical monetary problems and should have appointed this monetary commission two years ago. They may have had the theoretical knowledge, but they did not apparently know how to apply it. Yesterday the Prime Minister delivered a stirring address on currency, exchange, and so on, but how much of what he said does he carry out in the government of Canada, except what he should not, such as making the Canadian dollar hug the American dollar rather than the British pound.

Then there is the permanent elimination of the everlasting doubt about the duty on repairs to farm implements which is all to the good. The government jiggled that around, through the same Minister of National Revenue, to a point where the duty was as high as 25 per cent. However, it is now down to the old Liberal level of six per cent. If the repairs to an implement are only charged six per cent, what about the implement itself being reduced that low

tariff rate? Some day this government perhaps will attain sanity and not be taxing the farmers to the hilt on the implements of production and losing much needed revenue at the same time. I venture that hope, but I am afraid their term of office will not be long enough to get around to it.

Then we have certain bearer bonds being taxed very properly under this budget. I am surprised that was not done long ago. And Canadian bonds bearing interest that is payable in New York funds has also been made to contribute five per cent to the treasury which is also looking for needed revenue where it can be found. You cannot take blood out of a stone or take the breeks off a Hielan'man. Then again we have in this budget the reduction of the pound from 14.40 to $4.25 for dumping duty purposes. I cannot enumerate all the little tariff changes. We will do that in the resolution stage. There are four or five little items concerning which I will say the government did fairly well, but they are eclipsed by the bad things in this budget As to the very thing that is apparently intended to be the best, the stabilization fund, when I come to that there will be a question mark, how it is going to work out, and why it was not extended to all the exports to Britain. We have no opportunity at this stage of discussing as we would like to this question of adjusting adverse exchange with the old country by means of a stabilization fund, or of bringing witnesses to find out who inspired this happy thought. If it came from the regular source, the advisers of the government, why did they not think of it long years ago instead of waiting until farmers and others were bled white by the adverse exchange, and at this late moment dealing with it through the questionable medium of the exporter. I think we should have the matter referred to the committee on agriculture and colonization, where we can call witnesses and find out why the list of articles is so circumscribed, and why the provisions are not extended to other commodities of much greater national importance than honey or maple products, although they are both delightful foods. Then if it cannot be shown before the committee that the government is justified in circumscribing the number of articles that come within the intended benefits of this fund, it should apply to all our exportable commodities. Although it is the same pound, the same reduced pound, that is used in every case, and consequently all suffer adverse exchange alike, all are not treated alike in having it adjusted. Of course it goes without saying that we will support any reduced duties,

The Budget-Mr. Motherwell

-I do not think they are very important or they would have been read. But the bad things are so overwhelmingly greater than the goods things that when the vote comes we will certainly know which way to vote.

In order to get the proper setting for this blundering budget I will have to take the house back for a year or two. It is admitted that the government has made many heroic if futile attempts to aid agriculture. They have been both persistent and heroic but in large measure quite unsuccessful. I am going to recite some of these major blunders that have been made from time to time. I am not going to commend the government because they merely made the attempt to assist agriculture; the attempt to be any good must be successful and most of these heroics were foredoomed to failure from the very outset.

In the budget of June, 1931, the Prime Minister outlined some assistance that was going to be given to the wheat farmers by the railways absorbing five cents per bushel of the freight charges on Canadian wheat. That proposal was temporarily abandoned in favour of payment of this five-cent bonus to the exporter on all exported wheat. For two solid months less two days this Liberal opposition from early morning until dewy eve asked that this sum be given direct to the farmer rather than through the questionable medium of the exporter. It took us that length of time to convert, the government to our view of the little likelihood of it never finding its way back to the producer, but finally the Prime Minister became converted and adopted our suggestion. Yet in the face of that conversion he now establishes a new fund all of which goes through the same exporter avenue that they themselves virtually condemned and departed from two years ago. And they ask us now to throw up our sweaty caps and cheer for an institution of that kind-Last year's caps too, by the way, because we cannot afford a new one this year. But even after adopting the giving the five-oents bonus direct to the farmer, the government gave it to the farmer who needs it least, a Christmas box sometimes running up to $1,000 per grower and aggregating over $12,000,000, and then open a loan and collection department to deal with the poor fellow who had no crop; an order given and a note signed before they get enough to put in thedr eye and see any the worse for it. That is the kind of treatment the no-crop or little-crop farmers of Saskatchewan get, with respect to which the Prime Minister spoke with such eloquence on the first of July, 1931. A national calamity had struck western Canada, he declared. We were enthralled by his eloquence

and humanity and what he was going to do for this calamity-stricken portion of Saskatchewan. But the Prime Minister is frequently great oh profession and light on performance. He gave generously, to those who needed it least, and those who needed it most he treated in the way I have described and absolutely refused to distribute any bonus on an acreage basis so that it would reach those who had the misfortune to have no crop.

So we condemn the government on these counts; first, that the payment was first to be through the exporter; second, that when they did adopt the proper method they gave the money to those who needed it least and withheld it from those who needed it most, but gave them a loan and then within six months insisted on having half of it paid, although it was only contracted the previous six months. To-day those farmers, or many of them, are stripped barer than the day they were born because they were pressed to pay through the Saskatchewan relief commission on behalf of this federal government those loans and seed grain advances that they needed themselves to live on through this hard winter. The next blunder was the Stamp commission. I am in favour of commissions, but there are commissions and commissions. This was a good commission too, but before the report got through this house word went out that there was an appendix that should be taken out. Instead of using the proper surgical appliances to do it, instead of having a clever surgical operation, they asked us to tear it out ruthlessly with our bare fists. And it was torn out. Mine is in yet, because I want it to use before my audiences-I mean the appendix in my copy of the report, not in myself. Then we had the inquiry before the agriculture committee with respect to Garnet wheat. I do not know what possessed the government to take the attitude they did against one of the best wheats we ever developed. Our export trade shows to-day, and our customers on the other side say that there never was a time in the history of Canada when our wheat was more acceptable than it is at this moment. Yet we have 35,000,000 bushels of Garnet wheat, most of which goes to the Pacific as two Northern and No. 2 Pacific is one of the best selling wheats both in Europe and Great Britain to-day. However, I can congratulate my hon. friend the Minister of Trade and Commerce upon having seemingly receded from that untenable position, and having regard to that I will not press the point further.

Then as to the world grain conference and exhibition. The Minister of Agriculture (Mr. Weir) appeared rather to disadvantage in con-

The Budget-Mr. Motherwell

nection with this matter, but I do not blame him. No doubt he was speaking for the Minister of Finance; that was easy to see, but in spite of their fumbling and backing and filling with this great enterprise I believe it is yet going to be one of the greatest events of its kind ever staged in the world.

Now we come to the Mr. John I. McFarland episode. IVe have been lectured on more than one occasion by the Minister of Trade and Commerce as to the proprieties we should observe in the house; we have been told that we should have more consideration and less curiosity as to Mr. McFarland's activities on the grain exchange. Well, Mr. Speaker, when the government appoints a gentleman who has the backing of the banks and of this dominion I think we have a right to know what is being done. Did you ever hear of the federal farm board in the United States doing business by the surreptitious, hole in the corner, star chamber methods which have been adopted by this government with regard to this wheat transaction originally taken over on behalf of the wheat Producers, Limited, the pool? In the United States, where a federal board was set up, everything was done in the light of day; everyone knew what was going on and everyone was glad when it was all over. The speculative wheat activities of the American farm board and the stabilization committees appointed under it, contributed I believe very materially to the defeat of the Hoover government. But we have been censured on more than one occasion because we wanted to know a little about what was being done by this autocratic government under the unemployment relief measure which was financed with money raised by Canadian taxpayers and we surely should know. Last April, almost a year ago, one or two lion, members from the west suspected for over a year and were pretty sure that Mr. McFarland was in the wheat future business with a line of credit and government guarantees, yet it was not until a year had elapsed that the hon. member for Willow Bunch (Mr. Donnelly), the hon. member for South Battleford (Mr. Vallance) and the hon. member for Weyburn (Mr. Young) made certain inquiries as to just how the matter stood. I have not time to quote many of these inquiries, but I will read the question asked by the hon. member for Wey-burn and the reply given by the Minister of Trade and Commerce, and I need only refer to the admission later made by the Prime Minister (Mr. Bennett). I quote from page 2084 of Hansard for last year:

Mr. Young: Mr. Chairman, I have not the reference before me, but speaking from memory, and of course subject to correction, 53719-220

may I say that in the Financial Post of last week the statement appeared that when Mr. McFarland undertook to sell the 1930-31 crop he at the same time bought futures against it, and that as a result of his activities the government to-day is holding millions of bushels of future wheat which it cannot get rid of, except iat a loss, until the price goes up.

This was not a direct statement; it was simply an interrogation in order that the Minister of Trade and Commerce might say what he thought of that rumour. Here is what he said:

Mr. Stevens: I do not know of a bushel of wheat held by the government, either directly or indirectly.

That was a year ago, yet last November the Prime Minister admitted from his place in this house that the government through Mr. McFarland had been in the wheat business for more than two years. I do not know how to reconcile these two diametrically opposite statements, nor am I going to attempt to do so; these two hon. gentlemen, the Prime Minister and the Minister of Trade and Commerce can settle it between themselves. They cannot both be true, however, and we believe we know which is the correct statement and that it is the Prime Minister's. We know that the government is not only in the wheat business to the extent of the wheat taken from the pool but that they have bought practically the same amount of wheat in order to stabilize the market and protect their own investment. Why conceal it longer? These facts are known. I was disposed to be lenient with the Minister of Trade and Commerce when I dealt with this question last fall; I took the ground that possibly he thought it better not to admit publicly what had been done for state reasons. In other words it was a little diplomatic tarrydiddler rather than a straight out and out whopper. Now we want to know when they are telling whoppers and when they are telling tarrydiddilers. From now on we will not know, so I think it would be well if the two ministers should settle it between them, so that we may know which is telling the facts and which the fancies.

What has been the reason for this secrecy? The government will get nowhere by trying to do a wheat future business in a backdoor fashion. No wonder wheat went down. People in other countries, sensing what was going on in Winnipeg, threw their wheat on that market and jammed down the price. That is why the wheat-marketing policy of the government only succeeded in driving the little fellow off the market and forcing wheat to the lowest point it has reached in three hundred years. Great is Diana of the

The Budget-Mr. Motherwell

Ephesians; great are our political Dianas over there in the matter of holding up the price of wheat, not only in Canada but evidently all over the world. If this later stabilization proposition in this budget works out in the same way the minister will wish he had never introduced the proposal as the government is now heartsick of their wheat stunt. However, I will come to that in a moment. I will hurry along with this recital; it is not very pleasant but it is necessary in order to get the setting for the last step in the present budget in this ghastly array of blunders.

The next major blunder I have is the Ottawa economic conference. I think we heard of that in the early part of this session; there was some discussion of the so-called but delusive six per cent preference on wheat and the preferences on butter, apples, and other commodities. Why are these things passed up and disregarded, and excluded from the intended benefits of this stabilization fund? Is it because the government thinks some good has been done by Mr. McFarland, who tried to hold up the market but failed? Is it because they think the preference of six cents has put any lining in our pockets? They have not said so but they must think so or they would not dare pass by such important commodities as lumber, apples and all cereals. That is one reason why I want this matter referred to the agricultural committee. I think this is more important than the piffling milk investigation in which we are now engaged. We are getting a good deal of interesting information but we have no power to act, in my estimation; this is largely if not entirely a municipal matter, and in dealing with it federally we are just meddling in other people's business. So I hope the agricultural committee will try to redeem itself by considering a prdposition like the proposed stabilization fund that is worthy of the ability that can be found among its members.

We had a number of other proposals to assist agriculture among them the Serkau proposition, that famous 'cattle deal with Russia. The government tried to put the opposition in the position of being in favour of Mr. Serkau's proposal. Certainly we were in favour of trying to sell cattle or anything else to any country under the sun that would pay proper prices. Of course many of Serkau's proposals were absurd, though I suppose they were made as feelers, just as dickerers often make propositions to feel out the prospective customer. I think the Minister of Agriculture came out at the big end of the horn; so far as he was concerned as he showed that he wanted to make a bargain and trade our

cattle for Russian oil and other products, and for that he is to be commended. But his lord and master came along from mid ocean on his way home and snuffed out that proposition like a candle, after which the minister had to get into line. Why is it that we cannot deal or barter with Russia? When the Liberal government was in power we were jeered at for selling five or six thousand horses which were running about our prairies eating up good grass, and which had no particular economic value to us. That was a much more difficult time to deal with Russia. Why cannot hon. gentlemen opposite with all their financial ability do the same? So far they have failed to do so when our western and eastern farmers have large herds of cattle, both dairy and beef, ready to be sold. Russia is hungry for these cattle but the government will not permit the two parties to get together to make a bargain. Is it any wonder the government is going down in public estimation? Every day the sun rises and sets this government is going lower in the estimation of a vast body of the people of this country. It has got to such a point that the electors are rearin' to go and get at the ballot boxes. Nothing in the world will save their political necks, not even their confreres in the Cooperative Commonwealth Federation corner to my left.

The estimates also for agriculture, the first industry in Canada, were slaughtered this session in a manner which seemed to give some hon. members opposite a great deal of delight. The preceding government had pulled them up-it took some pulling-to where they totalled ten or eleven million dollars, but down they went with a slam to three and a quarter millions less. Public sentiment was so enraged that the government restored about three quarters of a million, leaving a net loss of two and a half million. This vote has been banged down again this year by another $400,000 drop. We are told further that $14,000,000 is going to be cut off all the estimates in order to make the budget not balance next year and doubtless this will mean a further pro rata cut for agriculture.

Having got over that phase, we come now to this precious budget itself. This country has seen a succession of blunders which cannot be paralleled in any other country having responsible government. As I have often pointed out, the Minister of Agriculture has no chance to make good. If he was the angel Gabriel and had all the agricultural knowledge in the world, without more support than he is getting from his colleagues he could not make

The Budget-Mr. Motherwell

a showing for agriculture in Canada. I do not mean to say that he has no shortcomings himself, but I make that statement in justice to him.

I come now to the preferred products in the matter of exchange adjustments. I do not want anyone to think that I have anything against the tiny bee. I did a whole lot of work in my time to develop the bee industry. There is no more healthful and profitable way in which anyone can take the necessary saccharine requirements than through honey. This is more especially so since the price of sugar has been raised so greatly by this budget.

The next preferred item to which I shall refer is maple products. I think hon. members from Quebec will agree that the last government was the first one to give an official status to these products. About the last thing I had the privilege of doing when I was a minister in times gone by was to put these products upon an official graded basis. This action was met with the jeers of hon. gentlemen opposite. This statement will be confirmed by a reference to Hansard of 1929. The present government now seems to consider that these products should be put in the preferred list and others much more important left off. I intend to show the inconsistencies and the unaccountable way in which this government selected the list of thirteen preferred commodities. According to the official statistics, the average total export of honey to Great Britain during the last two years was about $1SO,000 and the average total export of maple products was $16,000. It must not *be forgotten that these items are exported elsewhere than to Great Britain. Yet wheat and lumber, the exports of which are valued in millions and tens of millions, do not appear in this list. How are we to account for that? Our good friends on the other side have been scratching their heads and bringing themselves near to a nervous breakdown in an effort to find something agriculturally which will be acceptable to the people of this country and which will "show us the way out." Apparently someone came along to the government at the last moment with the bright idea of this stabilization fund. Such a scheme is not new. I have before me an article by Doctor C. J. Robertson of the international institute at Rome which appeared in Saturday Night, of March 25. This article shows that all the ventures including this stabilization fund scheme have been tried before and in other countries but have failed in their purpose. I have not the time to read this article, but that is its purport.

53719-mi

Why is butter excluded from the intended benefits of this stabilization scheme? I asked this question of the Prime Minister but all the answer I received was that we were not upon an export basis and our butter was selling at a higher price than it was in Great Britain. He stated that as none was being exported, there would be no exchange charges to pay. Does he mean that this government intends to keep our butter upon a domestic basis all summer? Is that the hopeless program which the government has for the dairying industry? I do not think there have been more than three and at the most no more than five years during the first half century when we were not upon an export basis in the summer. If we are to attach any value to the Prime Minister's excuse- that is all it was-as to why butter was not included in this preferred list, it must be that he does not expect that we will be exporting butter this coming year. That is a damaging admission; that is the way this government is going to develop dairying.

There are some novices in this country who believe that we should produce only enough butter and other commodities to meet the needs of our own country. Let us carry that contention to its logical conclusion. It is contended by some that we should produce only enough butter for our own needs and never go upon the export market, because of the fact that when we do we have to take about six cents per pound less than the present prices. Of course a few boatloads of butter would be permitted to come in from New Zealand in order to make sure of having sufficient. If that is sound reasoning why not apply the same kind of foolish reasoning to eggs, to bacon, to wheat, to lumber, to apples, and to everything else that we produce? If we grew just enough wheat for ourselves thenv we would not be bothered by this pestiferous-exchange question. That would not be a very ambitious program for a young producing country like Canada, but the statement of the Prime Minister leaves no other conclusion to be drawn. Last year we went upon the export butter market about July 1 and I cannot understand why provision has not been made for similar action this year, the same as it was made m connection with cheese. That is my question and there is no answer. I will sit down and take the time out of my forty minutes if any hon. gentleman opposite has any reasonable answer to make. No, they have not an answer, because there is none.

347S

The Budget-Mr. Motherwell

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Frank Boyes

Conservative (1867-1942)

Mr. BOYES:

Will the hon. member permit a question?

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

Yes.

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CON

Frank Boyes

Conservative (1867-1942)

Mr. BOYES:

Does the hon. member not know that cheese produced in Canada and shipped to the old country has a premium over cheese produced in any other country and that it will be better that the bonus be allowed on cheese so that we may produce more and in that way have our butter kept in our domestic trade?

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

That is splendid; it is an heroic attempt to do what none of the rest of the government benchers would dare to attempt, but my hon. friend has failed in it. I know our cheese has a premium of two cents and I know the reason. It has had that ever since the Liberal government adopted the grading system for it.

Topic:   THE BUDGET
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?

Some hon. MEMBERS:

Oh, oh!

Topic:   THE BUDGET
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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

Yes, that is the situation. Since 1928, in fact, since 1927, after the grading system was adopted three or four years, Canadian cheese had a premium in the British market over any cheese that came from other countries. What is more, from that time on the buyers in Great Britain would buy our cheese on the certificate, without even seeing the cheese, the same as was done with our wheat. I am not deriding my young friend; he has Tory nostrums from his older brothers. If what I say is correct-and it is-[DOT] is not cheese the one best able to carry the load? It has a premium now of two cents a pound over any other cheese.

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LIB

James Malcolm

Liberal

Mr. MALCOLM:

The premium is being

bonused.

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CON

Frank Boyes

Conservative (1867-1942)

Mr. BOYES:

May I ask a question?

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

No, I have given

the hon. member one chance and he has failed.

I am not complaining about cheese being included; I am complaining about butter being left out, and according to my hon. friend's statement, butter is the weaker sister of the two and therefore should not be penalized.

Topic:   THE BUDGET
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CON

Frank Boyes

Conservative (1867-1942)

Mr. BOYES:

If butter were being shipped to the old country, what price would it command?

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LIB

James Malcolm

Liberal

Mr. MALCOLM:

The hon. member should make his own speech.

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

Less of course and that is the reason it should be in the preferred list. So much for those two articles. We have

canned vegetables, canned fruits; tobacco, meats, animals. I wonder how long it will take at this rate to include all the exportable commodities we export.

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CON

Henry Alfred Mullins

Conservative (1867-1942)

Mr. MULLINS:

Let me tell the hon.

member-

Topic:   THE BUDGET
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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

If I had time enough I would let my hon. friends talk until midnight, because the more they talk, the more they put their foot in it.

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CON

Pierre Édouard Blondin (Speaker of the Senate)

Conservative (1867-1942)

Mr. SPEAKER:

An hon. member may, by resuming his seat, allow an interruption, but no one has any right to interrupt him without his permission.

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

I do not know

where I was, with all these interruptions. Oh yes; I think our tariff schedules will show that we have nearly 1,300 commodities capable of being exported, so at the rate of thirteen commodities a year it would take just one hundred years to reach the full fruition of the policy of this government in respect to this stabilization fund. If I have exaggerated the number of these commodities by putting them at 1,300, let us put them at one-half of that, or 650. In that case it would take fifty years to consummate that sort of progressive program to help agriculture in Canada. If that is too much, let us cut it in half again and it would take twenty-five years to cover the preferred list. But twenty-five years is too long to wait for this bewildered government to institute agricultural reform, that is not the way in which things are being done on the other side of the line. The Prime Minister is casting sheep's-eyes over there now himself in connection with the possible and, in fact, the sure advantage of reciprocity, so he should not object very much to my referring to it.

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. G. B. NICHOLSON (East Algoma):

Mr. Speaker, I know the hon. member (Mr. Motherwell) who has just taken his seat, will pardon me if I do not make any effort to follow him in the interesting remarks he has just delivered to the house.

I wish at the outset to congratulate the Minister of Finance (Mr. Rhodes) on the very able manner in which he presented his budget and the courageous budget that he did present under the most difficult conditions that have ever faced any minister of finance in this country.

I do not intend to follow anything that has been said on the budget. I do not purpose dealing materially with the budget as such;

The Budget-Mr. Nicholson

I desire merely to present one aspect of what I conceive to be the financial and economic condition with which this country is faced and to suggest a line which I think we might follow in an effort to get ourselves and the world out of the difficulties in which we now find ourselves. I wish to refer to only one matter that has been spoken of, and that was by the hon. member for Shelburne-Yarmouth (Mr. Ralston) when he ridiculed the Minister of Finance, who, after stating clearly and definitely that it was the business of each country to do everything it could to maintain its own position, said that nevertheless the situation was now worldwide and not restricted to any individual country. I would rather take the position of the hon. member for North Bruce, the ex-Minister of Trade and Commerce (Mr. Malcolm), when he made this statement in the house a short time ago:

In 1933, we are facing difficulties which have arisen, not through any action of hon. gentlemen at present, not through the action of the people of Canada but through the breakdown of the economic system of the world.

In its essential elements the crisis with which Canada in common with the rest of the world is faced is international, and it is only by international action that a remedy can be found. It is only by international action, if such may become possible, that civilization as we understand it is going to be saved. We are facing a problem, the climax of the period from 1914 to 1930, that can be solved only by sane, international action along sound economic lines. Mr. Ramsay MacDonald, speaking a short time ago at a meeting in London, made the statement that what was necessary in order to start the nations back towards recovery was a rise in world commodity prices, the freeing of world trade and the settlement of war debts and reparations, intimating by the third item that the problem was financial. I am not going to set my opinion against that of Mr. Ramsay MacDonald, but it is my opinion that before commodity prices can rise, before trade can be released, the financial problem must be dealt with. It seems to me that it would be impossible to suggest anything else when we compare the position the world is in to-day with that just prior to the war. The six nations now included in war debts and reparations-the United States, France, the United Kingdom, Germany, Italy and Belgium-expended during the war almost 885,000,000,000 in destroying the things which mankind had been creating for centuries previous to that time. Then, following the war, particularly from 1920 to 1929, the peoples of the world in all parts of it engaged in an orgy of extravagance unparalleled in

history, and the same six nations added to their national and international burdens an additional 880,000,000,000, making a total of almost $165,000,000,000 added to their national and international obligations without taking into consideration their obligations, municipal, provincial, state and so forth, all over the world. To expect that that could happen without a situation ensuing such as that with which we are now faced, to my mind is to expect the impossible. It would be like saying to a man wTho has laboured all his life on the best farm you can find in this country: "You gather up all your machinery, all your furniture, all the equipment and everything you have accumulated during your fife, and set fire to it, and then expect you are going to be just as well off as you were before." The thing to me is so utterly impossible that it is amazing for anyone to expect it.

Many remedies have been suggested. I shall touch on only one or two, and that very briefly. It has been suggested that we can get out of this difficulty by an inflation of currency, by something in the nature of a managed currency, by internal and external currency. But each of these remedies in my view is so honeycombed with difficulties and is so unsound that I do not intend to dwell on them. I shall deal with only one for a moment or two, and that is inflation.

What is it that has created our difficulties to-day? It is that we are living in the greatest period of inflation that the world has ever seen. The disease is inflation. In that connection I might quote a word or two which seems to me to touch the point very accurately. It is from the editor of The Annalist:

How much is enough? That is the question which the inflationists have never been able to>

answer and never will be. Once started on its. insane course, inflation becomes a wild monster,, powerful enough to wreck the best monetary-system ever devised by man, driving all kinds of business enterprise to destruction and business men to despair.

That has been the result of the inflation of the last nineteen years, from 1914 until to-day, and the inflation is just a photograph of the world's debts which I indicated a moment ago, obligations which it is impossible to meet unless some entirely niew plan is evolved, something that we have not yet seen put into effect in any country that I know of.

But there is another way. Sir Basil Blackett, in one of the Halley Stewart lectures, made this statement, that every period of deflation followed a corresponding period of inflation. The usual method by which the world has got itself out of these periods of inflation has been by the hard toil of individual men and

The Budget-Mr. Nicholson

women all over the world working back to the place from which they had slipped because of the inflation. I submit that the higher the inflation the deeper the deflation will carry you unless some means can be found by which it can be checked, and that, as my hon. friend the Minister of Trade and Commerce (Mr. Stevens) said in his speech this afternoon, is what the countries of the world are trying to find, namely, some way by which this downward slide of deflation can be checked and mankind can get back to a stable basis without the tortuous toil and suffering that will inevitably follow if we go to the full depths of deflation.

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UFA

Alfred Speakman

United Farmers of Alberta

Mr. SPEAKMAN:

Exactly; I agree.

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

Yes, we are gradually deflating, but the inflation of credit, the inflation of debts, individual, national, international, of every character, has been of such magnitude that if the world has got to work itself out by the old fashioned plan through its own efforts, then I shudder for future generations perhaps yet unborn. But is that necessary? I submit this-and. I do it with some humility, because I am not the author, and I say so frankly- that I have on my desk here a book written by a Canadian business man presenting a plan and a formula for putting that plan into effect, some will say that because he ds not a world-known author or economist, his plan essentially cannot have any value. Nevertheless I am going to put it to the house as nearly as I can in order that it may be considered, and perhaps the government may think it wise to put it into the hands of expert financiers and economists, with the aim of presenting it to the world economic conference which we hope is to meet early this summer. _

May I say in passing, that notwithstanding all the slurs and gibes that have been thrown at economic conferences, the League of Nations and other international gatherings of the world's statesmen in an honest effort to get us through our present difficulties, I do not know where the world might have landed but for their efforts. They have not yet been finally successful, but just in the last ten days an effort has been put forward which is showing some signs at least of preventing another outbreak of war, which perhaps would be the last war.

The plan I have to submit to the house is the Revaluation of Gold. It is contained in a book written by Peter L. Robertson, and I want to give Mr. Robertson the whole credit for everything that I have been able to gather in this regard. His plan is not the revaluation of gold such as was suggested, for

IMr. Nicholson.]

instance, by Professor Stephen Leacock, the mere adding of thirty per cent or some other percentage to the currency value of gold. His plan is a revaluation and a redistribution of the world's monetary gold on a basis which in my opinion will provide the means whereby there will be some hope of the world getting out of its difficulties. In this connection I put the question of war debts and reparations and international long term and short term debts ahead of any other problem which the world has to face before it can attempt to adjust international tariffs, if you will, or provide some means for a central bank, if you will. So long as that nightmare of war debts and reparations hangs over the European world it seems to me to be utterly hopeless to attempt to get those people to sit around a table and try to work out other problems with which, to say the least, they are not relatively concerned. Let me give only one instance. I believe that the world's war debts and reparations, the national and international long term and short term debts, can in reality all be placed at the door of one country, Germany. In toto they now amount, scaled down as they have been through the Dawes plan and the Young plan, to a total of $31,000,000,000, a sum which anyone who looks at the pages of history must realize is an impossible burden to place upon the German people. Until that is removed, stability in Europe cannot be hoped for. The reason I pin my faith on the Robertson plan, if I may so term it, is because it does provide for a way in which Germany can be relieved of this impossible obligation.

In order that I may be accurate I shall quote what Robertson states:

The object to be aimed at by the revaluation and redistribution of gold-

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March 28, 1933