March 26, 1935


The house resumed consideration of the motion of Hon. E. N. Rhodes (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the proposed amendment of Mr. Ralston.


CON

John Howard Myers

Conservative (1867-1942)

Mr. J. H. MYERS (Queens):

Mr. Speaker, in rising to say a few words on the budget I wish first to congratulate the Minister of Finance (Mr. Rhodes) on what I consider was the clearest and most complete statement of the business of the country that Canada has heard for many a day. I wish also to congratulate the Prime Minister of Canada and

The Budget-Mr. Myers

the present government for having so conducted the affairs of Canada during the five difficult years through which we have just passed as to make the delivery of such a budget possible.

I listened with my usual interest to the hon. member for Shelburne-Yarmouth (Mr. Ralston) who always acts as the financial critic for our friends on the other side. I have always admired the cleverness of an orator and, may I say that on former occasions the hon. member for Shelburne-Yarmouth has excelled himself as a financial critic. To-day however I felt sorry for him, because at the beginning of his remarks he was attempting to criticize the budget of a government whose actions have met with the approval of the Canadian people. Throughout his observations the hon. member laboured very hard to make the best of a very bad cause, and had it not been for the fact that he is a skilful lawyer and has an exceptional gift of oratory, I do not believe he would have succeeded. Listening to him this afternoon I concluded he was a much better lawyer than politician and a much better politician than Canadian citizen, or he would never have attempted to criticize the budget presented by the Minister of Finance.

Canada has come through four or five very difficult years; these have been trying times not only in our history but in the history of the whole world. It is pleasing to note that notwithstanding the fact the government faced an almost impossible situation when it came into office, both as to finances and as to trade, we now have succeeded on ordinary account to the extent of having a substantial surplus to our credit. It is pleasing also to note that the Minister of Finance has budgeted for a surplus approximating about $21,-

000.000 for the coming year.

Unfortunately problems over which this government or the governments of any country have little or no control must enter into the picture. In Canada we are faced with a railway problem and must decide what we will do with it. It is not necessary nor is it my intention to follow the many figures quoted by the hon. member for Shelburne-Yarmouth, -but in passing I should like to say that all hon. members are interested in the Canadian National Railways. We wish all our railways well, and it should be the aim and object of every true Canadian citizen to try in every way to promote the interests of those railways. Especially should this be true so far as the Canadian National is concerned, because the Canadian -people have a direct interest in that system. I believe the railway management as at present constituted

is doing its very best under difficult circumstances. I would go further and state that railway employees throughout the dominion are loyal to the railway system, whether they be connected with the Canadian Pacific Railway or the Canadian National Railways. They are endeavouring to the best of their ability to further the interests of the roads with which they are connected.

We need not look very far to encounter some of the difficulties. Hon. members opposite will say that the high tariff policy of the Conservative party has clogged channels of trade, that we have done this, that and the other thing, and that we have not acted in the interest of the railways. One need only walk down the streets of this city of Ottawa to observe one factor which has had an adverse effect on the development of our railways. The condition, which I shall describe in a moment, is common to every country and at present I can see no way of getting rid of it. As a matter of fact I do not believe the people of Canada would want to get rid of it. I refer to the motor trucks and the large transportation outfits we see in our cities and on our highways. Only to-day I saw on Bank street the largest transport I have ever seen. It had come to Ottawa from the city of Montreal, and is operating in competition with the railways in which we have an interest. I do not know what can be done about it. The figures given by the Minister of Finance would lead us to believe that trade is recovering quickly, and it would seem to me that in years to come the railways may make a -better showing than they are now making. Yet I am not prepared to say, in view of what may be seen abroad in the land to-day, that -our railways will ever be able to make revenues and expenditures balance. We must make up our minds to assist the railway by subsidies, by payment of their deficits or by whatever method may be found necessary.

One fact is certain, namely that we cannot do without railway facilities. The great distances to be overcome, the heavy commodities to be transported, such as wheat from western Canada, coal from the maritimes and Alberta, lumber and farm products from other sections of the country which can be moved only -by railway, lead us to believe that railways are a necessity, and that being so we should do our very best to assist them in every possible way.

Much has been said about the unemployed and unemployment relief. I believe the government has dealt with those problems most generously. All h-on. members regret that a

The Budget-Mr. Myers

portion of our citizens is unemployed, and regret further the fact that many of our people have found it necessary to accept relief. Possibly more are depending on relief than should be depending upon it. However, be that as it may, we must face the problem of unemployment and deal with it as best we can. I repeat that this government has been most generous in the way it has dealt with relief, with the unemployment question and in its treatment of the different provinces and municipalities. 1 noticed in the press of this morning that about eighty mayors of different cities throughout Canada met yesterday in Montreal. There is no reason why mayors of cities should not meet, but we know that sometimes at their meetings they make strange statements and pass stranger resolutions. So far as unemployment relief is concerned they were of the opinion that all they had to do was to pass the responsibility over to the dominion government. They would let the dominion government put up the money and foot the bills of the cities, the municipalities and the provinces. While reading the newspaper article and again while the hon. member for Shefburne-Yarmouth was speaking so eloquently and stating his belief that after the next election the Liberal party would be returned to power, I thought it strange in view of the assurance which he seemed able to give the house that the mayors who met in Montreal yesterday had not postponed their meeting about six months until the right hon. the leader of the opposition (Mr. Mackenzie King), so famous for his generosity as expressed in 1929, came back into power. Then all they would have to do would be to come to him and he would hand out five cent pieces for the whole Dominion of Canada.

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CON

Felix Patrick Quinn

Conservative (1867-1942)

Mr. QUINN:

He said, "Not a five cent piece."

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CON

John Howard Myers

Conservative (1867-1942)

Mr. MYERS:

The Dominion of Canada, along with the rest of the world, has been facing difficult times, but we have another problem on our hands which has not faced the other countries. I refer to the drought stricken areas in the western provinces, a most unfortunate situation. I had the privilege of going through that country two years ago and I saw what it looked like. As a farmer I am able to realize what it means to a man to go out in the spring of the year with high hope in his heart to put in a crop which he may never reap. I commend this government for every effort put forth on behalf of these people in the western provinces who have been stricken so severely. Not a dollar spent on

their behalf has been wasted, and it is a credit to this country that this problem has been dealt with in such a generous manner.

The hon. member for Shelbume-Yarmouth sought to convey to the house and to the country the impression that the present government has always tried to increase the tariff. To my mind nothing is further from the truth. Ever since this government came into office it has been seeking in every way possible to clear the channels of trade and to lower the tariffs against countries which show an inclination to do the same thing for us. Time will not permit me to go into this matter to any great extent, but figures have been placed on Hansard time and time again in connection with the tariffs of other countries, both at present and for the past five or six years. I could give the tariffs at present prevailing in Germany, in France, in Italy, in Czechoslovakia, in the Argentine, in Ireland and in many other European countries, but these have been given time and time again and no purpose would be served by repeating them. Whatever my opinion may be worth, it is that the tariffs of these countries are at least fifty per cent higher than they should be. There is one fact which I would draw to the attention of hon. gentlemen opposite: these tariffs were raised during the life of the previous government. There is not one single instance that I know of where an increase occurred in the tariff of a foreign country since this government came into office.

We were told by the Minister of Finance that since this government came into office and through the workings of the Ottawa agreements the tariff has been reduced on 250 items while 150 items have been put on the free list. This was done to facilitate the movement of trade and commerce between the different parts of the British empire. A reading of the reports issued by the bureau of statistics or of the newspapers of the country will show an increase in trade and commerce brought about by these agreements.

. A statement was made the other evening which I cannot allow to pass without correction. The debate on the budget is more or less a free for all fight and an hon. member is entitled to bring anything he wishes to the attention of the house. I have not the pleasure of the immediate acquaintance of the hon. member for Laprairie-Napierville (Mr. Dupuis) and I cannot say whether he is in the house this evening, but on March 21 he made the statement that this government had increased the duty on potatoes since coming into office. This statement will be found on page 1951 of Hansard. If there

The Budget-Mr. Myers

is any one thing that I claim to know a little about, it is potatoes, potato shipments and tariffs on potatoes. I took the trouble to find out just what had happened in connection with the duties against potatoes. My information is that prior to May 2, 1930, potatoes which were imported into Canada from the United States were subject to a duty of 35 cents per hundred pounds. Under a tariff change which went into effect on May 2, 1930-

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CON

Felix Patrick Quinn

Conservative (1867-1942)

Mr. QUINN:

A Liberal government.

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CON

John Howard Myers

Conservative (1867-1942)

Mr. MYERS:

-potatoes entering Canada were made free of duty with the proviso that should any country impose a duty against potatoes from Canada, an equal duty would be imposed against potatoes coming from that country.

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CON

Felix Patrick Quinn

Conservative (1867-1942)

Mr. QUINN:

A countervailing duty.

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CON

John Howard Myers

Conservative (1867-1942)

Mr. MYERS:

That was one of the countervailing duties in the Dunning budget. On May 2, 1930, the United States imposed a duty of 50 cents per hundred pounds against potatoes from Canada and a countervailing duty of the same amount immediately came into effect. Under a tariff change which occurred in the United States on June 18, 1930, the duty was increased to 75 cents per hundred pounds and a similar countervailing duty was immediately put into effect in Canada. After this government came into office and during the short session of 1930 the countervailing duty was repealed and replaced with a straight duty of 75 cents per hundred pounds. This duty was imposed subject to the maintenance by the United States of the same duty against our potatoes. At that time I happened to be in the very thick of this fight, as I was a director of the Prince Edward Island Potato Growers' Association. I should like to quote the president of the association as follows:

The greatest national service the Prince Edward Island Potato Growers' Association rendered was in 1929, when the industry was threatened by a tariff duty on the part of the United States which would have completely lost to Canada the large markets already mentioned had it not been for the prompt and insistent efforts of the Prince Edward Island Potato Growers' Association, backed by the organizations it had built up in New York, New Jersey and the southern states. The association, through these organizations as spokesman, employed an outstanding firm of barristers in Washington, specializing in tariffs, prepared and submitted an intensive brief to the committee on ways and means of the United States House of Representatives, covering years of marketing, and vigorously set forth reasons protesting against any further increase in tariff.

fMr. Myers.]

The association, without the help of any dealers either in this province or any other province of Canada, faced this crisis alone; and at a cost of approximately twenty thousand dollars, five thousand dollars of which was later paid by the provincial Department of Agriculture, were successful in preventing the duty on potatoes from being raised for the 1929 crop; when some time later the tariff was increased, the increase was kept down to 25 cents a hundred pounds.

It was the intention of the Americans at that time to put on a duty of SI per hundred pounds against Canadian potatoes going into that country, and it was only through the efforts of the potato growers' association of Prince Edward Island that the duty, was kept down to 75 cents. There was so much heat over the question in the United States, and the state of Maine fought it so vigorously, that the congressmen from that state refused on that occasion to take their seats in congress until the president assured them that a tariff of 75 cents would be placed against Canadian potatoes. Let me tell the hon. member for Laprairie-Napierville that when next he undertakes to discuss the tariff on potatoes he had better first acquaint himself with the facts which he intends to present to this house.

I understand that I have but twenty minutes left, and I will use the time to my own advantage and that of the province from which I come. Every man can best discuss the things he knows most aboult, and I desire in the short time that remains just to tell this house what we in the maritime provinces think of the late Liberal administration, the treatment we received from them, and also the treatment that has been accorded us as maritimers and, speaking for my own province, as Prince Edward Islanders, during the term of the present government.

Prior to 1926 the maritime provinces, and I believe rightly, considered that they had not been getting fair treatment from the federal government. I am not here to say whether or not the contention was jusitified, though I believe it was. At any rate, the Liberal administration, taking cognizance of these protestations from the maritime provinces, in 1926 appointed a commission to deal with these maritime claims. That body was known as the Duncan commission and was headed by a very clever man in the person of Sir Andrew Rae Duncan, from the old country. It carried on its investigations, and here I should like to read to the house a part of the conclusions at which the commissioners arrived:

The terms of readjustment-

The Budget-Mr. Myers

That is, speaking of financial readjustments between the maritime provinces and the federal government.

-are Obviously a matter for detailed determination and assessment, so that the actual amount- as well as the reasons and purposes attaching to it-can be recognized by the rest of Canada as fair and equitable. It is not posible, therefore, to make a final recommendation as to the increase and form of dominion aid which is required to satisfy the just claims of the maritime situation,-

The house will pardon me when I say that I took the privilege of underlining those two words, "just claims."

-but we recommend that the dominion government should give immediate consideration

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LIB

Peter John Veniot

Liberal

Mr. VENIOT:

I know that the hon. gentleman wishes to state the facts, but does he mean to say that up to the present time the interim payments have never been made?

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CON

John Howard Myers

Conservative (1867-1942)

Mr. MYERS:

The hon. gentleman misunderstood me. I said that the situation was so desperate that the Duncan commission recommended, and there were made, interim payments. But the final settlement was never made until this present session of the House of Commons. This government does everything in a businesslike way and it appointed the White commission, whose report I believe is in the hands of hon. members-I received mine a few days ago. I was pleased to note 92582-135

that that commission gave Nova Scotia an additional $425,000; New Brunswick $300,000; and Prince Edward Island, $150,000.

The question I would put to my Liberal friends from the maritime provinces-and I might include in this the hon. member for Gloucester (Mr. Veniot), though he will never be back in this house-

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LIB

Peter John Veniot

Liberal

Mr. VENIOT:

What!

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CON

John Howard Myers

Conservative (1867-1942)

Mr. MYERS:

Does he think he will?

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LIB

Peter John Veniot

Liberal

Mr. VENIOT:

I am sure of it.

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CON

John Howard Myers

Conservative (1867-1942)

Mr. MYERS:

I am very glad to have that assurance from the hon. gentleman, because I have come to be very fond of him during the last four or five years, but my information is that he is to be beheaded at the end of this session. The question I want to put to my Liberal friends from the mari-times is this: How will you justify yourselves in the eyes of the people for keeping Nova Scotia out of $425,000 for the past nine years? How will you justify yourselves in the eyes of the people of New Brunswick for keeping that province out of $300,000 for the last nine years? And I shall be happy to go back to the people of Prince Ediward Island and tell them that when we wanted the terms of the Duncan commission's report fully implemented we had to come to a Conservative government led Iby the Right Hon. R. B. Bennett to have it done.

There was another question that was agitating the minds of the people of my province, another recommendation of the Duncan commission, and that is with respect to the car ferry between New Brunswick and Prince Edward Island. It was recognized by the Duncan commission that there is a pact of confederation between our province and the federal government that there shall be maintained continuous steam communication between that province and the mainland the year round. That is a contractual obligation; those were the terms under which we were induced to come into the union. Even though that obligation is there, under the Liberal administration they continued to charge up the cost of the operation of that car ferry to the Prince Edward Island Railway, so that when we wanted any improvements on our island railway we were always met with the fact that there was a huge deficit which was attributable to the operation of the car ferry that was a direct responsibility of the federal government. Here again let me say that that situation was not rectified, we were not able to have our claim in that regard corrected until last session, 1934, and the credit for

The Budget-Mr. Myers

having that done goes to the present Minister of Railways (Mr. Manion). Further, under Liberal rule, when we crossed on that car ferry we were charged $4 for an automobile one way and $7 return. Last session we were able to present our claims in that regard to the Department of Railways at Ottawa, and again with the sympathetic help of my good friend the Minister of Railways we were able to have that charge for automobiles crossing on the car ferry reduced to 82 one way and S3 return. Therefore when any hon. members visit our province during the coming tourist season-and I hope they will all do so-it will cost them only the very small sum of $3 for a return ticket for their automobiles crossing between Prince Edward Island and New Brunswick.

I have a great many notes before me and would like to have been able to take the time to develop them fully, but there is no use in skimming over a subject. Therefore 1 will mention just one more item. I would like to put this question to the Canadian people: We all realize now the advantage to Canada of the empire trade agreements that were entered into in 1932; every man who is fair realizes it. But let me point out to the house that this measure together with every other that has been brought before us by the present administration has received the sternest opposition at the hands of hon. gentlemen opposite. The question that I want to put to the Canadian people, that I want to put to the electors in my constituency at the present time, is this: Those agreements were made for a term of four years and naturally that term is up in 1936. Whom do you as Canadian electors want to have to renew those agreements? Will it be hon. gentlemen opposite who have fought those agreements in season and out of season when they were going through this house for ratification? Is it hon. gentlemen opposite to whom you want to entrust the renewal of those agreements, or is it to the man who had brains and courage enough to go over to the old country, to tell the authorities there what he wanted and to come home with the bacon?

Just one more point and I shall be through. I speak now of the farm loan act. I am sorry to have to hurry over this because there are many other matters that I should like to speak about, but I shall wind up with just this one. In the budget speech of the Minister of Finance there is a statement that struck my attention very forcibly. In speaking of the Farmers' Creditors Arrangement Act, one of the many advantageous measures

that the government has had passed on behalf of our farmers, the minister made this remark:

Admirably supplementing this act is the new Canadian farm loan legislation which provides for releasing to agriculture ample government funds at the cost to the government plus the expense of administration. Changes in the organization of the farm loan board will make it possible to bring these funds to efficient farmers in all provinces with a minimum of red-tape and a maximum of expedition.

I am more than interested in that farm loan act. I am a farmer myself, and without being egotistical I doubt if there is any other man in this chamber or indeed in Canada who better understands the difficulties that have beset the farmers of the dominion for the past five years. The situation was well outlined to us to-day by the hon. member for Shelbume-Yarmouth, although it rather amused me to hear a lawyer talking about the problem of marketing wheat. The situation among the farmers to-day is this: The farmer who has held his own in the last five years has done wonders. But time never stops. In the last five years the farmers of Canada have not been able to lay aside any money. We have boys growing up. What are we going to do with them? We have made no money in the past five years to buy them new farms. Are we going to let them drift into the cities, to go into the relief camps, to swell the ranks of the unemployed, or are we going to try to buy them farms and keep them in the country where they should be? To my mind that is the use that should be made of this farm loan act. I know of many fathers to-day who would like to be in a position to buy farms for their sons; but they have not the money; they have not made a dollar clear in the last five years. A boy who was twenty years old five years ago is now twenty-five; if he is worth his salt as a young Canadian he is thinking of establishing himself, of making a home for himself, and he should receive the encouragement that I believe he will get under this farm loan act. I hope to see this legislation made use of in every province, so that money will be available at a low rate of interest for farmers who want to buy farms on which to settle their own sons and thus prevent them from drifting into the cities as too many have done during the past few years. There is no doubt that one of the great difficulties that we have in Canada today is that too many people have forsaken the farms and have drifted into the cities. I heard a great deal of discussion the other

The Budget-Mr. Coote

night in the house about relief camps. Let me say at this point that these camps are not employment but unemployment camps, and one point that should be impressed upon every young man in them is this: You should try to get out somewhere; get a job for yourself; make yourself independent, self-reliant, so that you will not have to be leaning on the state or the taxpayers. There is a great deal more that I could say, but my time is about up and when a man is through, I think the correct thing to do is to stop.

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CON

Ernest D'Israeli Smith

Conservative (1867-1942)

The Acting SPEAKER (Mr. Smith, Cumberland) :

The hon. member has spoken for forty minutes.

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CON

John Howard Myers

Conservative (1867-1942)

Mr. MYERS:

I will bow to your ruling, sir, and sit down, with this prophecy, that when the next election is over, the present Prime Minister (Mr. Bennett) will be back to lead this house and this government.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. G. G. COOTE (Macleod):

As I have only forty minutes, I shall not attempt to follow the speech made by the hon. member for Shelburne-Yarmouth (Mr. Ralston) this afternoon or the one made this evening by the hon. member for Queens (Mr. Myers), particularly as I have an amendment of my own to move. For the last five years the Minister of Finance (Mr. Rhodes) and his predecessor have struggled in vain to balance the budget;

Dominion fiscal year 1933-34 (net figure- interest receipts deducted from revenue

anil from interest payments)

Provinces, fiscal years ended 1933. except B.C.,

where 1932 figures are used (gross)

Municipalities. 1932 (gross)

they have practised the most drastic economy that could be thought of and tried all sorts of new taxes, but in spite of their best efforts the total deficits of the five budgets they have introduced amount to over $600,000,000. I am not criticizing them for not balancing the budget, but I do feel like criticizing them for adding this amount to our interest bearing debt. The additional interest bearing debt amounts to $60 for every man, woman and child in Canada.

I have here the figures of the total public debt and I should like to put them on Hansard, but I do not think time will allow me to give the details, except to say that the total debt of the dominion, the provinces and the municipalities, both direct and guarantees, as of March 31, 1934, was shown to be $7,160,000,000 and the total interest charge thereon $330,765,000. Most of this debt was created prior to 1929, and due to the change which has taken place in price levels, the burden is now equal to what a debt of $10,000,000,000 would have been in 1926 to 1929.

I have also a statement showing the total revenue, total interest charges and percentage which interest bears to the total revenue, for the federal, provincial and municipal governments in Canada. These figures are so illuminating that I should like to place them on Hansard.

Total Percentage interest charges to

Total interest totalrevenue charges revenue$313,323,040 $188,518,573 60.2183.188.327 62.546.592 34.1374.663,231 79.700,447 21.3$871,174,598 $330,765,612 38.0

We are spending the best of our energies in attempting to pay this interest. Speaking for myself I am growing very tired of it, and many others are also. The deficits, I said, amount to over $600,000,000, and of course the government revenue reflects in some degree the financial position of the people generally. Federal, provincial and municipal governments, struggling to balance their budgets, and the people, suffering poverty in the midst of plenty, are victims of the money policy of this government. That money policy is one under which our money is theoretically based on gold, in reality based on scarcity, because gold is the scarcest commodity known. It is a policy under 92582-135i

which money is king and everything else is subservient to money. The chances of the people to work, to produce, and to consume, are dependent on the whims of international bankers. For five years we have slavishly 'ollowed the policy dictated by the bankers of New York. The president of that country compared them to the money changers who were driven out of the temple. I believe Canada should have its own money policy. We should be masters in our own house, and we could then control conditions in Canada. The previous speaker (Mr. Myers) said we were victims of circumstances largely beyond our control; I say we are victims of a policy which is largely within our own control. If

The Budget-Mr. Coote

we would control our money policy we could make conditions in Canada so different from what they are to-day, that it would seem like another country. Had the government been less orthodox we might have followed a policy suited to our own needs as Australia did. I know that the Minister of Finance would be disappointed if I did not draw his attention to conditions in Australia. Australia abandoned the gold standard, stopped deflation, and the result of that and of the reduced interest rates was an increase of revenue to a point where they had budget surpluses instead of deficits. In 1931 their budget deficit was 853,788,000 as compared with Canada's $83,849,000. For the following years the figures are:

Canada Australia

Year Deficit Surplus1932

$114,000,000 $ 6,570,0001933

220.000,000 17,730,0001934

133,000,000 6,507,000

Then let me also draw attention to the amount of interest on the national debt in the two countries:

Year Canada Australia1931

$122,229,000 $115,000,0001932

125,643.000 83,061,0001933

135.000.000 76.607.0001934

139.894.000 73,797.000

The figures for Canada do not include interest paid on account Can. Nat. Railways.

It will be noted that in 1931 the interest payable on the Australian national debt was $115,000,000, but by the next year, 1932, without any material change in the amount of the debt, the interest charge was reduced to $83,000,000, an actual saving of $32,000,000 or 27 per cent. Between 1931 and 1932 a deficit of $53,000,000 was changed to a surplus of $6,570,000. These changes were brought about as a result of legislation reducing the rate of interest on both public and private debt, and the adoption of a different financial policy under which the gold standard was abandoned and the currency of Australia allowed to depreciate in foreign countries.

The real burden of debt is determined by the amount of goods that have to be produced ;o pay the interest. In Canada due to low price levels, it has been increased by over thirty per cent. In connection with these public debts that I have mentioned I think it is fair to state that public debt is immortal, it never dies, it lives forever. But we poor mortals must continue to pay interest on it, and the rate of interest is the most important thing to consider. In the final analysis it is more important than the amount of the debt. Australia not only reduced the rate of interest

by legislation but reduced the burden of debt on their people by raising the commodity price level. The price level for agricultural products in Australia for the last four years has averaged forty per cent higher than in Canada, yet the cost of living in Australia in June, 1934, was still one point below what it was for Canada.

The government of Canada to-day have many problems. I shall not attempt to list them all, but in addition to the debt problem we have a farm problem-which I consider the most important of all-an unemployment problem; and a railway problem. Under the present orthodox financial policy there is no solution of any of these problems. I make no apology for emphasizing the question of finance, as the budget deals primarily with the financial position of the country, and the solution of every one of these problems involves the question of money.

I want now to invite the attention of the house for a few minutes to this very important question of money. In this very complex system in which we live or are trying to live, speaking in the material sense, money is the most important factor. Man must have money for his three primary requirements, food, clothing and shelter. I will not enlarge on that, but merely tell the story I heard a few years ago about a man in this city going home one night and on one of the side streets he was held up by a thug who said: "Hand over your money or I'll blow out your brains." "Well, go ahead," the man said, "I can live in Ottawa without brains, but I can't live here without money." That, of course, applies to other cities besides Ottawa. The man who has all the money he wants can buy anything that it is physically possible to create. He can have anything for himself from a super airplane to a private submarine and everything in between. The man who has plenty of money to-day can live in a style that Solomon in all his glory never dreamed of. Mankind has always sought Utopia, and I think it is fair to say that the man with all the money he wants has found it; if he has not it is his own fault. Our scientists, engineers and workmen have solved the problem of production, in a comparative sense at least. We have over eight million horse-power mechanical energy developed and installed in factories and power houses. When that is harnessed to our modern, labour saving machinery, we have the equivalent of eighty million slaves to work for us, a nation of ten million people. As Stuart Chase

The Budget-Mr. Coote

says, we have eighty million big, black slaves that do not need to be either fed or clothed and that are willing to work for us twenty-four hours a day.

As the result of the work of our scientists, inventors and engineers we have a wonderful social heritage of which we are not making very good use. Our productive system was so efficient in 1929 that we were told we got into this depression through over-production. One of our leading bankers made that statement a few years ago, and one of his friends said the way out was to work harder. Every member of this house knows that if you get into a jam by producing too much you cannot get out of it by working harder, but perhaps we might get out by thinking harder. The banker does not realize, or this banker did not, that we have passed from the age of scarcity into the age of potential plenty, that the cause of the depression through which we have been passing was under consumption rather than over production. The cure is to consume more. We now have mass production, but of what use is it unless we can get mass consumption? The people would consume more if they had the purchasing power, and when I say purchasing power I mean money. A money system that would give us purchasing power sufficient to buy back what we can produce might be called the key which will unlock the door to the age of plenty. The present money system is obsolete. I have a clipping from the press which states that even Mr. Frank Vanderlip, past president of the National City bank, says the gold standard is abandoned forever. Let us hope he is a true prophet.

The next thing I should like to point out is that money is not wealth. Money is a title to wealth. Money is a purely artificial thing; as Stuart Chase says, it is a creature of man and strictly subject to his control. To-day money might be very well described as a system of tickets to goods, and when 1 say money I mean all purchasing power whether it is in coin, paper notes or bank deposits, and the bulk of our money is of this latter kind, that is, bank deposits. I should like to give some figures as of October 31, 1929; I take these figures because at that time we were supposed to be enjoying prosperity. Bank notes outstanding at that time totalled $1S5,000,000; dominion notes amounted to $211,000,000 while bank deposits amounted to $2,368,000,000. It is quite evident to any person, then, that at that time approximately $2,000,000,000 of bank deposits was created by bank loans. I need not labour this point;

I need only state that if within the boundaries of any nation you consider all the banks as one system, practically speaking, every bank loan and every bank purchase of securities creates a deposit. The repayment of a bank loan and the sale of a security by a bank destroys a deposit, and in the words of Right Hon. Reginald McKenna, " the amount of money varies only with the action of the banks." Some people think the amount of money does not vary; they say there is just as much money in the world now as there ever was, but generally they wind up by asking where it is. That is not true; the amount of money does vary. That is well illustrated by the case of the United States, where in 1929 bank deposits amounted to $55,000,000,000, while in 1933 those deposits had shrunk to $38,000,000,000. In other words, $17,000,000,000 worth of money had disappeared in that country. I asked the banker who gave me these figures where that money went, what became of it, and he said, " Why, it was destroyed."

The bulk of our money to-day is credit extended by the banks. That credit is created by the action of the bank when it takes our chattels, our goods or our bonds as security and writes for us a credit in its ledger. Money, then, is largely a system of bookkeeping, and I would suggest that the first step we should take in order to get out of this condition of poverty in the midst of plenty should be to institute our own system of financial bookkeeping. Establish a national bank, or credit house, call it what you will -we could use the Bank of Canada. Then make the right entries in the financial books. That is the first step to take to solve this problem of distribution, which is the greatest problem facing this and almost every other civilized country to-day. The problem of distributing among the people the goods which they are able to produce is without a doubt the greatest problem we have to face. On what basis should the entries be made in the financial books? I would say on this 'basis, that what is physically possible should be financially possible, and I challenge any hon. member to say why any proper financial system should not be of that kind, capable of making financially possible everything that is physically possible.

It was proved during the war that this could be done. We financed the war not by borrowing but by creating the money in Canada. Whenever we wanted anything for the army, if it was physically possible to create it we did so, and we created the money. We never failed to create anything

The Budget-Mr. Coote

that was required by the army if it was physically possible to create it; we did not say, "We have no money; we cannot afford it." But that is what we have been saying to the unemployed and the poor farmers in this country. We could afford it if we had the right system. The present system does not reflect reality; we are told that things which are physically possible are not financially possible. Many things are physically possible, socially desirable and almost necessary; in fact they are necessary, yet we are told that we cannot have them because there is no money. We suffer to-day under the tyranny of money, and money is an awful tyrant. As Lord Melchett said, we have made money a rod for our backs. There is plenty all round us, but with the money system that exists at present we cannot have it.

Credit should be based upon the ability to produce goods as required, when required and where required. If this country and this government had the courage to do so a system could be set up under which credit would be issued on that basis. This credit should be issued without interest, and I want to say emphatically that credit and money can be issued without interest just as well as with interest. It should be issued in sufficient quantities to enable us to produce all the goods socially desirable and physically possible, for home consumption or for export in exchange for other goods.

I want to make it clear that what I propose would not interfere in any way with our ability to export goods; as a matter of fact it ought to enable us to export more goods, because I am sure it would enable us to produce them much more cheaply. At the same time we should see that there is sufficient purchasing power in the hands of the people to buy back all the goods we produce for home consumption plus the imports we receive in exchange for the goods we send out. What we suffer from chiefly at present is a chronic lack of purchasing power. Purchasing power, where it is required, must equal the selling price of the goods produced. To correct the situation which exists at present, this chronic lack of purchasing power, it will be necessary to issue credit for consumption. Under the orthodox system, in the main, credit is issued only for production, but what is the use of this production if we cannot consume it? So why not see that the amount of credit that is available for consumption will equal the value of our production, at fair prices, as I have said already?

fMr. Coote.]

We have in Canada a wonderful cultural heritage to which I have already referred, and we have a perfect right because of that cultural social heritage to distribute a national dividend in Canada. An accurate bookkeeping system will enable us to determine the amount of that national dividend. We have a competent bureau of statistics which could tell us the amount of goods produced, and we want a bank or credit house that will make the entries in the financial books which will equal the entries in the production books.

In other words, see that sufficient purchasing power is issued where it is needed to buy back these goods. Some people say, "Oh well, you would have inflation under that." We can guard against inflation, but at the moment there is nothing more needed in Canada than some reflation. You would have to have considerable of what some people call inflation to get us reflated back to the point where we could carry this terrific debt without sinking ourselves up to our necks in the mire. Some of this money which I am suggesting should be paid out for consumption would go to replace part of the money which is now created as a result of bank loans at six and seven per cent. The amount of money needed would have to be determined by the management. They would use the index of employment and the average price level just as the engineer would watch the throttle on his engine. He advances the throttle when he wants the engine to go faster and closes it down when he wants the engine to go more slowly.

May I quote from the Southampton Chamber of Commerce, a very respectable body indeed:

We must be able to spend money while the machine works.

And again:

Production should determine the basis of money and credit instead of money determining production, as it does now.

When men are displaced by machines they and their families must be fed and clothed. Our job to-day is to bring the machines under control; at present they are our masters. As Stuart Chase has said, money and the machine are trampling around through the populace as though they had equestrian rights from God. Our task is to lead them back into the stables, where they belong. Money and the machine, are both labour saving inventions, and they should be the servants of man. They have become our masters.

In considering what methods the government should adopt to distribute this pur-

The Budget-Mr. Coote

chasing power which I have suggested must be paid out I believe the standard we should use when we are deciding the proper measures to take should be that of the maximum of human happiness. That should be the standard by which all reforms which are passed or considered in this chamber should be judged. In the past we have used many false standards, one of which was called efficiency. Every day in the year we have sacrificed human happiness for efficiency. So far as I know we go through this life only once; I believe the good Lord intended us to be happy and placed in this world things which if properly used would be sufficient to make us happy. The first requisite to human happiness is economic security. How many people in Canada have economic security to-day? We have productive capacity sufficient to give every person economic security. After all, the term "economic security" simply means a guarantee of food, clothes, shelter and those comforts and services which we could easily supply to every person. With conditions as they are to-day, after five years of depression, when we have over 1,000,000 people on relief, about 600,000 unemployed, about 200,000 people over the age of twenty-one years who have never had any worth while jobs, and $1,600,000,000 of life insurance policies lapsed in the last four years, economic security has gone so far as most of our people are concerned.

Even before the depression the chances for economic security were none too good. Statistics gathered by a life insurance company in the United States covering the lives of one hundred men, starting at the age of twenty-five, show that at sixty-five they stood as follows:

42 dead.

1 wealthy.

2 well-to-do.

5 able to live off their savings.

28 still working.

22 destitute, living off the state or relatives.

Because of these conditions, with economic security gone for so many old people, I would suggest that we set up a superannuation system for all persons over a certain age, and that such payments be made by way of a national dividend. I would not be dogmatic about the age. In western Canada I would set it at fifty-five years, while in Ottawa I would have to raise it a little to, say, sixty years, so as not to shock any person. I would suggest that we set up a superannuation system for these people as we are now doing for judges, and civil servants, as banks do for their employees, as churches do for their ministers. Why should we not have a national superannuation plan for all our citizens? I have suggested the age of fifty-five or sixty years, and that we should guarantee work at decent wages for people under that age. I would not make a superannuation system compulsory, but would give it to those wishing to retire. I believe in a year's time we could retire

300.000 people and thus provide jobs for

300.000 young men and women who have been going without work. I had better make it clear that this plan would apply to the women as well as to the men. I am not going to be dogmatic as to the amount of superannuation, but I would suggest that phase of the matter would have to be worked out by our bureau of statistics. I am sure however that we would be quite safe in suggesting a beginning of at least $50 per month. I believe that that system would in the course of a year or so take care of at least 300.000 people and the extra purchasing power involved under the scheme I am suggesting would I am sure give employment to another 100.000. According to the census figures for 1931 there were gainfully employed in industry 79.000 people over the age of seventy years. 99.000 between the ages of sixty-five and sixty-nine and 354.000 between the ages of fifty-five and sixty-four. It would be safe to estimate that there would be more than 300.000 people over sixty years of age gainfully employed at that time.

May I point out to this house that in a report made to the president of the United States concerning the automobile industry it was stated that men of forty years weTe considered old in that industry. Even in Canada, if a man employed in industry or business is laid off after reaching his fiftieth birthday, does any hon. member believe that man could get another job? I do not believe he could. '[DOT] j ijf .j

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

Edward Armour Peck

Conservative (1867-1942)

Mr. PECK:

Would you superannuate a man at forty?

Topic:   THE BUDGET
Subtopic:   CONTINUATION OP DEBATE ON THE ANNUAL FINANCIAL STATEMENT OP THE MINISTER OP FINANCE
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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

No, I have suggested fifty-five or sixty years. I would be content to begin at sixty years.

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

Edward Armour Peck

Conservative (1867-1942)

Mr. PECK:

Would the hon. member

answer this question-

Topic:   THE BUDGET
Subtopic:   CONTINUATION OP DEBATE ON THE ANNUAL FINANCIAL STATEMENT OP THE MINISTER OP FINANCE
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March 26, 1935