Mr. GEORGES BOUCHARD (Kamou-raska):
Mr. Speaker, as vice-chairman of the committee on farm implement prices I have much pleasure in seconding the motion for concurrence in the report of our committee which was presented on April 8, 1937, as moved by the hon. member for Lake Centre (Mr. Johnston). As everyone knows, the inquiry was first conducted by the standing committee on agriculture and colonization, according to the order which reads as follows:
March 2, 1936: Ordered, that an immediate inquiry be made by the standing committee on agriculture and colonization into the causes underlying the high price of farm implements, with particular reference to the advance in prices for the year 1936.
After twenty-five sessions of this standing committee it was felt that a more compact group of members should proceed with the work, and the following recommendation was made to this house:
Your committee recommend:
1. That the inquiry be continued at the next session of parliament by a special committee of the house.
2. That such special committee be appointed as early as possible after the commencement of the next session of parliament.
3. That during the coming recess of parliament the government take into consideration the necessity of continuing such investigation as may be deemed advisable for such continued inquiry.
4. That the records, exhibits and evidence filed with or taken by your committee be placed in the custody of the Minister of Agriculture, and that such records, exhibits and evidence be made available to such special committee upon its appointment.
Acting upon the recommendations in our report, instead of entrusting the continuation of this work to a standing committee composed of sixty members, the government moved on February 1, 1937, the following resolution:
That a select special committee of the house be appointed to continue and complete an inquiry begun by the standing committee on agriculture and colonization, pursuant to a resolution of the house on March 2, 1936, into the causes under-lying the high prices of farm implements, with particular reference to the advance in prices in the year 1936.
I want to thank the government for this decision, and I wish to offer my most hearty felicitations to the Acting Deputy Speaker, who presided over this special committee, first, because he was the first one to bring the question at issue to the attention of the house, and, second, for the able and courteous manner in which he presided over the deliberations of the committee. It was no uncommon achievement for a chairman to have merited an expression of satisfaction from, an hon. member with a parliamentary experience as long as that of the hon. member for Kootenay
East (Mr. Stevens), and one whose competence in part had been gained in presiding over the price spreads committee. That hon. member said, as reported at page 1207 of the report of the farm implements committee:
There has been harmony here, and your presiding has been excellent; there is nothing to complain about at all, and I am not complaining.
I believe it will be agreed by all hon. members who served on the committee that we sat in an atmosphere of peace and yet of activity. The very competent officers-the clerks, accountants and solicitors-contributed to making our sittings most enlightening. We have no complaints with regard to the witnesses. They were fair-minded, and I do not believe they used words to conceal their thoughts. This was a fact-finding committee which made a report on proceedings extending over 1,300 pages, a report which should be of value to the general public, to the expert, to the student, to the economist, to ail who can take advantage of it. I admit I do not know many men who could grasp the significance of the report, but I must point out that the investigation should make for a closer approach to harmony among different social activities.
When one first hears about manufacturing costs and retail prices he is inclined to think that the manufacturers are robbing him. But, as one who often injured his little finger with a sickle, I suggest we owe a debt to the manufacturers for the modern implements which help the farmer of to-day. I am not fossilized to the extent that I am unwilling to admit the great help to the farmer brought about by improved machinery. But on the other hand the agricultural implement companies should not forget that in a certain way they live in partnership with the farmers, and that they should trade on a basis of mutual advantage. Although some may say it is a truism or a platitude, I believe one of the first recommendations of the committee, that the prosperity of the farm implement industry is directly dependent on the prosperity of agriculture, is a basic principle.
The third recommendation reads in this way:
That, as a result, the price level of farm implements during the next few years is of the greatest importance to agriculture.
Without any desire to antagonize the agricultural implement companies, beyond the limits of the evidence adduced or the limits imposed by the fair-mindedness of any public man, I believe I should make the following observation. Throughout the years of the depression between 1930 and 1935, agriculture in Canada suffered perhaps more than it did in any other country. Importing countries
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had raised tariffs against our products. They adopted quotas, and restricted supplies. While experiencing severe competiton in foreign markets, the Canadian farmer had to purchase his production and consumption goods from industries which were afforded the greatest protection in Canada's history. Not only had he to face tariffs, but he had to face a monetary policy which forced the prices of his products to disastrously low levels. When recovery from the depression commenced, industrial organizations, in order to rehabilitate their own position first, began to exploit primary producers.
During the course of the inquiry it was generally agreed that the problem of the farm implement industry did not lie so much in low prices as in the inability to secure a normal volume of output and sales. Since the volume of sales has improved, the machinery companies are in a much better position than they were four or five years ago. At the beginning of the depression the tariff on farm implements was increased to twenty-five per cent. The argument has been advanced that in spite of the increase in tariff, the companies did not increase their prices. It should be pointed out that the years following 1930 were characterized by a general decline in prices so that in fact the prices were relatively raised. With the drop in duty from twenty-five per cent to twelve and a half per cent, under the Canada-United States trade agreement* effective on January 1, 1936, the implement companies still have plenty of opportunities to raise prices to the Canadian farmer without inviting increased importations.
It should be pointed out that while the tariff on implements was reduced to 7i per cent in May, 1936, the present excise tax of three per cent on imported goods makes the rate 10-72 per cent. It will be argued that the farm implement industry in Canada is a large employer of labour and that by giving more protection to this industry it will be enabled to employ more Canadian labour. In this regard it is interesting to look at the average number of men employed by the industry during the past years. The following figures are taken from a table to be found at page 87 of the evidence:
During the five years 1925 to 1929, the average number of employees in the farm
implement industry ranged from 7,559 to 11,408, or an average for the five years of 10,187. After the increase in the tariff in 1930, the average number employed in the period 1930 to 1934 ranged from 7.405 to a low of 2,758. The average number of men employed in 1932 was only 24 per cent of the average number employed in 1929. There are not many industries with such a record of unemployment, especially an industry with a tariff protection of 25 per cent plus a three per cent excise tax. For the period 1930 to 1934 the average number of men employed in the implement industry in Canada was 4,276. These figures show that tariff protection does not stabilize the economic life of the country. Employment and agricultural production did not decline as did the farm implement industry. Agriculture is the greatest stabilizing influence a country could have, and Canada is sacrificing her agriculture on the altar of industrial development. I invite the house to consider recommendation 17, which reads:
That reduction in the tariff should and does, in the long run, tend to lower the price level to the farmer, depending on the extent of free price competition in the industry.
Coupled with that is recommendation 16, which reads:
That it is the opinion of the committee that the cost of cream separators to the consumers should he reduced and with that end in view recommends that this item be placed on the free list.
I urge upon the government the necessity of placing cream separators on the free list, as they were before 1930. A cream separator is an essential piece of machinery on most farms. It is not like a binder that may be used only for two or three days in a year and sometimes not at all; this piece of machinery is used twice a day every day during the year.
I direct attention also to recommendation 18, which reads:
That in the farm implement industry there is competition in the matter of sales but little effective competition in the matter of prices.
The problem of combination and monopoly is a very complicated one. Though there is no evidence to that effect, the lack of competition in prices should make the government cautious in its supervision. I am confident the implement companies will favour recommendation 24, which reads:
That the companies should encourage the further standardization of replacement parts in the same implements manufactured by different companies and in addition standardization of the implements themselves.
The following recommendation, number 27, will give comfort to the farmer, more particularly to those whose credit has not been impaired by bad times. It reads:
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That the cost of credit to the farmer purchasing farm implements on time is excessive and the companies should take immediate steps to reduce these credit charges.
The further standardization of parts should make easier and less costly the sale of replacement parts. This is referred to in recommendation 28, reading as follows:
That the profits to the farm implement companies on the sale of replacement parts is excessive and the price of these to the consumer should be materially reduced.
I am glad to see a notice of motion in the name of the hon. member for Weyburn (Mr. Douglas) on the order paper. This will give an opportunity to hon. members to discuss this matter. It reads in part:
That this house recommend to the government that they encourage farmers to organize in provincial units for the cooperative distribution and servicing of farm implements.
I invite the attention of the house to recommendation 32, which reads:
That after due consideration of all the essential factors, the committee is of the opinion that any suggestion of a further increase is not justified at the present time.
Let me refer for a moment to the improvement in the financial situation of the companies in the years 1933, 1936 and 1937. I read in the Montreal Gazette, for instance, of February 8, 1938, under the heading Jump in Earnings of Massey-Harris, the following:
Operating income $3,044,267, against $1,523,344 in preceding year.
Working capital up-Net profit of $1,043,728, first since 1929, compares with $58,414 loss a year ago.
Then in the Financial Post of February 26 I read:
Shareholders of Massey-Harris Company were told at the annual meeting on February 22 that the company was successful in increasing its turnover in every country in which it operated last year.
The manager, Mr. Duncan, in concluding his remarks said:
Under the circumstances, however, the future is somewhat beclouded, but we do believe that in view of the very marked improvement in the economic position of the farmer in the majority of the agricultural countries of the world, and the undoubted progress which your company is making, that subject always to the hazards of crop and weather conditions upon which this business is ever dependent, we are justified in looking forward to 1938 with confidence.
The profits of the Cockshutt Plow Company also showed a wide gain last year.
In conclusion, Mr. Speaker, I desire to say, with my colleague from Lake Centre, that the rehabilitation of the agriculturists of this country is a pressing national problem, and I believe the government should explore all the
avenues leading to more and more successful agriculture.
(Translation) Mr. Speaker, in conclusion, may I be allowed to express the hope that the farmers of my province, who met the depression with such undaunted courage, may still rely that the government, which never failed them yet, will obtain for them a decrease in the cost of their implements.
Mr. E E. PERLEY (Qu'Appelle): Mr. Speaker, as stated by the hon. member for Kamouraska (Mr. Bouchard), who has just taken his seat, and who was vice-chairman of the committee that inquired into this matter, the inquiry was first suggested by the hon. member for Lake Centre (Mr. Johnston) on March 2, 1936, who moved that an inquiry be made to ascertain the causes of the increased prices of agricultural implements in January of that year. The question was referred to the agriculture committee under the chairmanship then of the hon. member for Macdonald (Mr. Weir). Counsel and auditors were provided, the committee held many meetings and heard many witnesses, in particular the heads of the different companies manufacturing farm implements.
I should like here to pay my respects not only to the members of the committee, who I think made an honest effort to get at all the facts with respect to that increase in price, but also to the witnesses, and the heads of the implement companies for the way in which they tried to assist the committee by giving us every possible detail with respect to every branch of the industry.
When the house was ready to prorogue that year it was felt by the members of the committee that we could not present a satisfactory report within the time available, and it was therefore recommended that the evidence be tabled and that a special committee be set up at the following session to continue the inquiry. A committee wras duly set up and continued the inquiry under the chairmanship of the hon. member for Lake Centre, our Acting Deputy Speaker. Last year the committee decided to proceed along somewhat different lines. The auditors were given authority to go into the head offices of the different implement companies and audit their books, and finally a report was presented to the committee by the auditor and reviewed with him by the committee. Different witnesses were called and questioned on the auditor's report, and we certainly secured further details with respect to the manufacture of implements and many other branches of the trade; but I think we could almost as well have made as satisfactory a report at the end of the committee's work in 1936 as last year
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or in the report we are considering to-day. As a member of the committee I endeavoured to give the subject the closest possible attention and to hear as much of the evidence as possible, and I drew this conclusion, that the prices of implements in Canada at that time, and to-day, were more or less controlled by the International Harvester Company of America.
The report quotes a mass of figures, draws certain conclusions and makes certain recommendations, to which the hon. member for Iiamouraska has referred more particularly than I propose to do to-day.
The hon. member for Lake Centre, in moving adoption of the committees' report, enlarged on the conclusions and recommendations of the committee; and he drew certain conclusions himself, which appear in Hansard of March 11 last, at page 1243. I must say that the procedure was a little out of the ordinary. The chairman generally moves the adoption of the report and makes certain references to the recommendations, but it is not often that he goes as far afield as the hon. member for Lake Centre did in moving adoption of the committee's report. But the hon. member for Lake Centre did draw certain conclusions of his own, and then made this statement, "These conclusions are made by me.' I agree with all the conclusions he draws. I think they were admirable in themselves and almost as good a set of recommendations as the committee would have made if they had condensed their report and conclusions into such a brief space as the hon. member took. I am not quarrelling with him very much in that respect. I only want to point out that he went far afield in dealing with the report in that way, and I trust that other members will not be criticized if we also transgress and go a little far afield.
The hon. member quoted certain figures which were not altogether relevant with respect to agricultural production and other matters. I certainly do not agree that increases during 1936 and 1937 in the prices of implements in Canada can be charged to a high tariff; for these increases took place, as the hon. member for Kamouraska has just stated, after very substantial reductions in the tariff rates. The first reduction was fifty per cent.
The hon. member for Lake Centre referred to the resolution introduced in 1911 by the Hon. Arthur Meighen. May I remind the house that the tariff which was introduced and passed by the house in 1919 was the lowest with respect to farm implements that we have had under any government in this country. I refer to a certain number of imiple-
ments, and particularly to tractors and parts thereof; as we know, they were put on the free list. What happened? Following that enactment, and as a result of that tariff change, some twenty concerns that were manufacturing tractors or parts thereof in Canada went out of business, and there was then a steady increase in prices up to 1929 or 1930. I could quote the prices which prevailed during that period, but the facts can be found in the report by anybody who will take the trouble to review it.
It will be clearly seen that from 1919 to 1930 the increase in price was very considerable. In 1930 a change of government occurred, and the prime minister saw fit to introduce measures which provided for some increase of the tariff on agricultural implements. In doing so, an agreement was made with the manufacturers that they would not increase prices. We know what happened during the ensuing period; we have the figures here to show that there was some reduction in price. Taking for example the year 1935, it will be seen that a very considerable reduction in price of certain agricultural implements took place. The report indicates these price decreases, from. 1930 to 1935. In 1936 the tariff was lowered, and again the implement companies began to increase prices. No conclusive evidence was given to the committee on which it could base the conclusion that this state of affairs was related in any way to the tariff.
Reference is made in the report to the high cost of distribution. I think that is one of the principal findings of the committee. In recommendation 33 it is stated:
That the committee is of the opinion that the cost of distribution of farm implements is unnecessarily high and constitutes an important factor in the prices to the consumers.
I believe we all agree with that, and certainly the industry itself is of the same opinion. But certain things must be taken into consideration in connection with distribution. The western business of necessity is a credit business. The farmers out there have been in desperate circumstances during the past few years, and it will be necessary for many years to come for the implement business in that country to be conducted on a credit or a time basis. Also, when we consider the evidence produced before the committee to show the percentage of business done in Canada by wholly Canadian manufacturers as compared with the amount of business done by United States manufacturers, it will be seen that Canadian manufacturers are under a very serious handicap.
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I believe the figures indicated that the Canadian manufacturer has about thirty-two or thirty-three per cent of the Canadian business, and that United States manufacturers and importers have the balance of sixty-odd per cent. Hon. members will appreciate what the heads of the Canadian factories made very apparent to the committee, that if a condition could be brought about whereby they would have sixty per cent or more of the Canadian business, the cost of distribution would be considerably less, owing to the larger percentage of business; if that should happen we should have, I believe, a reduction in price from that cause alone.
United States manufacturers control a very considerable amount of business in western Canada. I believe it was stated by the head of the International Harvester Company that its business in Alberta amounted to four per cent of the total business done by them on the American continent. It must be recognized that under a system of free entry that company could set a price in Alberta which might involve them in considerable loss as regards that particular part of their business, but when considered in relation to the total business done by them on this continent it would not amount to hardly anything, although it would put the Canadian manufacturer in a very disadvantageous position.
The question of freight rates was brought into the debate by the hon. member for Lake Centre. I wholly agree with what he said on this subject. We have come to the time when we should consider a reduction in freight rates, and not merely on agricultural implements. The subject might well be further considered. All of us must agree that freight rates have had nothing to do with the trend of prices of implements, either up or down, because the rate has been steady since 1897. When the hon. member for Lake Centre suggested that we should revert to the rate which was in force prior to the establishment of the Crowsnest rates, that is, prior to 1897, I found myself in entire agreement with him.
The hon. member made some suggestions of his own with respect to the prices of farm products: here again I certainly agree with him. There is no one in this chamber more anxious than I am to do something for the agriculturist, to assist the farmer in every practicable way, to make it possible for him to pay for the implements which he will have to buy in the next few years. I have suggested on various occasions in this house a reduction of freight rates. I succeeded in one year, I believe in 1934, in obtaining from the then minister of railways a statement as a result
of which an order was issued to the board of railway commissioners asking them to consider a reduction in the differential as between the domestic and the export rate. I also had much to do with the bonus of five cents per bushel which was given to the farmers of western Canada, under which there was paid out about fourteen million dollars. And I had considerable to do with the framing and the passing of the Canadian Wheat Board Act, a piece of legislation which, if it had been given a chance to operate, would have meant much to the farmers by way of getting them an increased price for their wheat.
The time has come when this government should act upon some of the reports that have been handed down in the last two years, particularly this one. Why all this meaningless talk about tariffs, which we have listened to during that time? I well remember, and no doubt it is within the memory of many members of this house-possibly the Liberal party is running true to form-that in the legislature of Saskatchewan a resolution was passed annually for free furniture and implements of production. The Minister of Finance (Mr. Dunning), when he was premier of the province supported these annual resolutions to have furniture and implements of production put on the free list. But we have never had any action in this regard, notwithstanding that both he and the present Minister of Agriculture (Mr. Gardiner) supported such resolutions in the legislature. They have satin this government in the last two years and have done nothing, although we have heard a lot of talk from back benchers. I wonder if the back benchers are going to continue this session talking along that line. H they do, I trust they will force the government to take some action. We ought to know something definite now, and the only way we can find out is for the government to make a move in one direction or the other.
Subtopic: MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937