June 10, 1935

LIB

Edward James Young

Liberal

Mr. YOUNG:

Then my hon. friend meant it. Now let us see what happened to the price of tobacco in Ontario last season. Prior to that there was a surplus of flue cured tobacco in the hands of the farmers of Ontario, amounting to some ten million pounds. In addition to that, one company, the Imperial Tobacco Company, the year previously had purchased some five -million pounds of tobacco more than its normal requirements. That meant fifteen million pounds of tobacco in Canada more than ordinarily we would require, with a crop coming on. In the fall of 1933 the price fell to about 17 cents a pound, I think, and prospects were that the price would not be very good the next year. The manufacturers and the growers got together and tried to agree on a price; I think they did agree on a price of 27 cents a pound, but some of the manufacturers refused to sign the agreement. Later a scheme was organized under the marketing act and a board was set up. That board set the price of tobacco-and I say this -with all deference to my hon. friend from Shelburne-Yarmouth (Mr. Ralston), who says boards have no right to set prices-by some means or other, for the year, at 24J or 25 cents per pou-nd. That price was agreed upon and all the tobacco was used up; all the tobacco was sold at that price, not only the crop of that year but the carry over from the previous year. To whom was it sold? It was not sold to consumers or manufacturers in Canada. British buyers of tobacco, who ordinarily go to Virginia for their flue cured tobacco, found that they could buy tobacco in Canada for 25 cents per pound while the price for the same tobacco in the United States was 32 cents per pound, so they came to Canada and bought their supplies. That was why there was an advance in the price of tobacco last fall. It was not due to the marketing act; it was due to the artificial scarcity created by the United States government at enormous cost to the United States treasury.

Trade Commission-Mr. Young

Now my hon. friend says that we should use money out of the treasury in order to raise the prices of those commodities that are being sold at a loss in order that all our people should get a fair price for their products.

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UFA

Donald MacBeth Kennedy

United Farmers of Alberta

Mr. KENNEDY (Peace River):

No, I

did not say that.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

My hon. friend left that

impression on my mind. I think he did say that there was justification for taking money out of the treasury in order to increase prices.

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UFA

Donald MacBeth Kennedy

United Farmers of Alberta

Mr. KENNEDY (Peace River):

No, I did not say that.

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LIB
UFA

Donald MacBeth Kennedy

United Farmers of Alberta

Mr. KENNEDY (Peace River):

I said

there was justification for what the United States government did in connection with the control of acreage.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

My hon. friend said there was justification for taking money out of the treasury, anyway. I think my hon. friend said that.

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UFA
LIB

Edward James Young

Liberal

Mr. YOUNG:

Then we will forget all about the hon. gentleman and we will start at this point: My contention is that in fixing our price structure in Canada-that is, the prices at which commodities are sold-we should start- with the world prices of our export commodities; that is the price we cannot control, the price the world is willing to pay us for the things we export. Then our policy should1 ibe to bring our domestic prices in line with those export prices. If we do that we put those of our citizens who are engaged in the business of producing commodities for export in a position to buy other commodities in this country. In that way they give employment to those producing those other commodities that w; buy on the same level and it becomes possible to exchange labour, one class with another. But (when you maintain domestic prices at a higher level than export prices you put a large section of our people out of 'the taarket; they cannot buy the products of their fellow citizens and they axe not in a position to exchange their labour for the labour of others, and in consequence other people are idle because they cannot sell the product of their labour. That is what leads to unemployment and distress generally.

This evening I listened to the hon. member for Winnipeg South Centre (Mr. Kennedy), 92582-225

and as he argued I could not help but think of some of the arguments used yesterday in support of Bill No. 73. He contended we ought to pass this legislation because we have power to do so. I do not think we should be so much concerned with the question whether or not we have the power. The first thing we should decide upon is whether or not the legislation is desirable. As he argued in that way I was forcibly reminded of the old saying that no man can safely be entrusted with power except the man who does not want it. When you hear a man arguing that we should exercise power because we have it, then I say he is not a safe man to follow or to be entrusted with power.

Witnesses appearing before the price spreads commission were of all sorts and classes. They came to us with their grievances; we listened to them and then we asked what remedies they had to suggest. In nearly every case the 'suggested remedy was the same. They all1 said, "Eliminate our competitors, and we will be all right." That is all they asked-a monopoly in their own particular lines of business. The stockyards operators ca.me before us and asked us to eliminate the competition of the packing houses and thereby force the farmers to send all their stock to the stockyard, so that in the end the stockyards would have the handling of it. The manufacturers came to us and asked not only monopolistic powers but what they called self-regulation in industry. They asked power to come together and form agreements, and requested that in such agreements they be allowed to determine who may be permitted to enter that business in Canada, at what prices they might sell, how much they might produce, and so on. The small merchants came before us and asked for the elimination of larger competitors. Even the trade unions were heard, and what did they ask? They asked not the right to join any union they wished, but the right to put competing unions out of business. Every person wants monopoly, yet inherent in every man is a distrust of monopoly. We are all afraid of it, though we all feel it would be all right if we were in on it. The distrust of monopolies is well founded; it is based on the experience of the human race and, I might say, on self knowledge. Our experience has been that whenever we are in the grip of a monopoly we suffer for it. In the 'bottom of our hearts we know what we would d'o if we had a monopoly, and that is why we do not want any other person to have one.

Trade Commission-Mr. Young

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CON
LIB

Edward James Young

Liberal

Mr. YOUNG:

Yes, but we are all the same. The majority of the commission do not believe in monopolies, but they have argued in this way: We have a certain number of monopolies, and since we cannot do anything else with them we had better regulate them. That is the effect of the recommendation they made to the government. They recommended that existing monopolies should be sanctioned and regulated. The legislation brought down by the government provides for the sanctioning of monopoly but leaves out the other part, namely the regulation of it. I doubt if a single member of the commission would have signed a recommendation to sanction a monopoly without another provision for the regulating of it.

The objections to monopolies are twofold. First they oppress the consuming public. Having the whole market to themselves and fearing no competitors they charge their own prices, dictate their own terms and become as arrogant as you please. The second objection is that a monopoly always leads to extravagance and inefficiency. Those are the two great objections. No act of parliament can provide against the second effect. The proposal in the recommendations of the commission was for the regulation of monopolies, but all we can regulate in regard to monopolies are their dealings with the public. We may say to a monopoly, "You must pay certain wages; you must work certain hours; you must produce at a certain rate and you must charge certain prices." We might do all that, but no commission will ever be set up competent to go into the facts in connection with a monopoly and determine whether or not the factory in question was run efficiently. Extravagance and inefficiency will grow up, develop and keep on developing so long as a monopoly exists. It is impossible to regulate that feature out of it. The only regulation which will force efficiency upon a monopoly is that of competition. The spur of a competitor will force it to be efficient to a degree a commission or regulation could never attain.

Then, in regard to unfair trade practices, will anybody tell me what is fair and what is unfair in business? This afternoon the hon. member for Hants-Kings (Mr. Ilsley) pointed out that there were two kinds of unfair practices, those which were ethically unfair and those which were economically unfair. We may all decide that which is ethically unfair, but already we have laws against such practices. If those laws are not sufficient, let us make them sufficient. But

when we come down to a determination of what is economically unfair we have an entirely different problem.

Let us go back to a consideration of tobacco. Complaints were made to the commission that the Imperial Tobacco Company were guilty of unfair trade practices in that they were not paying the farmer a sufficient price for tobacco. But that was not the only complaint made against the Imperial Tobacco Company. That was the complaint of the tobacco growers, undoubtedly, but it was not the complaint of the small manufacturer. The small tobacco manufacturers came before us and complained that they could not pay the price the Imperial Tobacco Company was paying. Their complaint was that the price Was too high. Now, who will decide what is fair? Would a commission decide it? Would it not be better to have it decided by economic forces? Is it fair for a man in business to pass on any advantage he has gained from his higher efficiency or for any other reason? On the other hand, would it be unfair for him to pass that advantage on to his customer or to the consuming public? The mass buyer has a certain advantage over the small buyer, that of buying in large quantities. Because of his larger orders and because he pays cash he can buy cheaper than the small buyer. But he is under certain disadvantages, too. Being a mass buyer and operating in a large way he has to be more efficient than the small buyer, and efficiency costs money. He has to maintain a staff of supervisors and efficiency experts to keep all kinds of checks on his employees. That is an expensive procedure. Then, too, he lacks personal contact with his customers, something which the small merchant has and can maintain. There is a class of individual retail merchants of whom the mass buyer is afraid and with whom the mass buyer cannot compete. I refer to the individual merchant who will adopt the practices of chain stores and mass buyers. That is, he will be one who will clean up his premises, handle fresh goods, keep them moving and give as good service to his customers as the larger stores may give. That man, with the advantages I have indicated, plus personal contact with his customers, can back the mass buyer off the map. Not long ago I met a gentleman who told me that for twenty years he had sold shoes right across the road from one of the largest department stores in this country. He said, "If I could have got closer to them, I would have done so." I said, "How did you do it?" He replied, "By personal contact with my customers." He had the advantage of personal contact; the large store had the advantage of

Trade Commission-Mr. Young

a larger organization. I have no doubt that each was passing on to his customers the advantage he gained, and who would say that they were unfair in doing it?

I ask this question: Should a manufacturer be compelled to keep step with his competitors in all things? Or, if he finds a way of improving his methods and of producing and marketing his goods cheaper than any other person, should he not be required to pass on that advantage to the public-or at least should he not be allowed to do it? Let us take the example of a manufacturer who produces, we will say, $2,000 worth of goods in one week, and in the production of those goods he pays out in wages $1,000. Let us suppose that by greater efficiency, by installing new machinery or something of that sort, he can reduce his wage bill to $500. Should he not be allowed to sell his goods to the public $500 cheaper? If not, this is what happens. He dismisses just that many men, turns them out on the street without work and without wages, and puts that $500 in his pocket. The result is that these men are out of work and you have technological unemployment. Now if instead of requiring that man to put that extra profit in his pocket, if you required or even if you permitted him to pass it on to his customers in the form of lower prices, it would mean that 8500 would be left in the pockets of his customers with which they would buy other goods, and the production of these other goods would pay wages to just as many men as were displaced by the labour saving devices he had installed in that factory. Yet this legislation would forbid a man to undersell his competitor simply because he could produce at a price which they could not, and the result would be a greatly increased measure of unemployment.

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CON

Richard Langton Baker

Conservative (1867-1942)

Mr. BAKER:

From his experience in

manufacturing would the hon. member tell us how a manufacturer could cut down his wage bill from $1,000 to $500 without taking it out of his employees?

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LIB
CON

Richard Langton Baker

Conservative (1867-1942)

Mr. BAKER:

You have not had a large experience in manufacturing.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

Perhaps my hon. friend could tell us whether stocking manufacturers do not sell stockings to-day much cheaper than they did ten years ago.

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CON

Richard Langton Baker

Conservative (1867-1942)

Mr. BAKER:

You cannot cut down your wages from $1,000 to $500 without taking it right out of your employees.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

It is proposed in this bill, Mr. Speaker, to regulate monopolies. My hon. friend from Hants-Kings said this afternoon that he did not think the Combines Investigation Act would be as well enforced under this legislation as it has been in the past. One big advantage in the enforcement of the Combines Investigation Act-as it has been done in the past has been that when would-be monopolists came to the registrar, and they came repeatedly, and asked, "Can we do this or that under the law as it stands?" he refused to tell them what they could or could not do. He would not encourage them to do a thing and afterwards have them say: Well, you told us we could do it. But this legislation proposes to do that very thing. It proposes to sanction any kind of agreement these people come along with, and in that way we shall encourage them to come along with all sorts of schemes, and you will have more combines than ever. The proper way to regulate monopolies, it seems to me, is by competition. Expose your monopolist to ruthless competition, and if he cannot compete, so much the worse for him; you have broken the monopoly.

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UFA

Michael Luchkovich

United Farmers of Alberta

Mr. LUCHKOVTOH:

How can the small retailer compete with the monopoly?

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LIB

Edward James Young

Liberal

Mr. YOUNG:

I have just answered that question, if my hon. friend had listened. We found in the investigation that every one of these monopolies had grown up under the shelter of a protective tariff, and without that tariff they could not live. When you have a monopoly producing any commodity in this country, and then you have competition entering the country from some unexpected source, how long is it until that monopoly is agitating for increased tariff protection, for some kind of government action to shut out the competing product?

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CON

Richard Langton Baker

Conservative (1867-1942)

Mr. BAKER:

Without the tariff there

would be tens of thousands more out of employment than there are to-day.

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June 10, 1935