March 15, 1938

LIB

William Ross Macdonald

Liberal

Mr. MACDONALD (Brantford City):

They will be found in the financial reports submitted to the committee by the implement companies, and if hon. members will take the trouble to look into those reports they will find that my statement is correct.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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CCF

Thomas Clement (Tommy) Douglas

Co-operative Commonwealth Federation (C.C.F.)

Mr. DOUGLAS (Weybum):

Has the hon. member the figures for individual companies as well as the average of all taken together?

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB

William Ross Macdonald

Liberal

Mr. MACDONALD (Brantford City):

No, but that could be easily ascertained, and if the hon. member cannot obtain it himself I shall be glad to obtain it for him.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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CON

Alexander McKay Edwards

Conservative (1867-1942)

Mr. EDWARDS:

The figures are all in the price spreads report.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB

William Ross Macdonald

Liberal

Mr. MACDONALD (Brantford City):

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

Are those the rates on commodities coming into Canada from the United States?

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB

William Ross Macdonald

Liberal

Mr. MACDONALD (Brantford City):

I am talking about farm products coming into Canada from the United States.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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SC

John Horne Blackmore

Social Credit

Mr. BLACKMORE:

Has the hon. member the figures from New Zealand?

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB

William Ross Macdonald

Liberal

Mr. MACDONALD (Brantford City):

From New Zealand there is a substantial duty on butter.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Five cents.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

Plus exchange, which amounts to between three and four cents.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB

William Ross Macdonald

Liberal

Mr. MACDONALD (Brantford City):

In conclusion I would point out that the forcing of Canadian manufacturers out of business would with the resulting unemployment involve a tremendous loss to Canadian economy and leave the farmer dependent entirely upon foreign sources of supply. It has been a matter of consistent observation that any country which is entirely dependent on foreign sources of supply invariably pays more for its products. I would refer my hon. friends to a statement I read showing that farm implements cost more in other countries than in Canada. The Canadian farmer would be the loser if farm implements ceased to be manufactured here or were produced on a very much smaller scale than at present. The best interests of the Canadian farmer, of the working man and of this industry itself would be served by the maintenance of a reasonable tariff, especially if it were established on a basis of permanency. A reasonable tariff, I suggest, would be one which would be

low enough to assure a reasonable price to the consumer and high enough to ensure steady employment to the working man.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB-PRO

Joseph Thorarinn Thorson

Liberal Progressive

Mr. J. T. THORSON (Selkirk):

I wish I could be as eloquent on behalf of the dairy farmers of Canada as the hon. member who has just taken his seat (Mr. Macdonald, Brantford City) has been on behalf of Canadian manufacturers. I intend to confine my remarks to the subject of cream separators.

The statement was made in this house some days ago by the hon. member for Greenwood (Mr. Massey) that no evidence had been taken from the Canadian manufacturers of cream separators. A similar statement was made a day or two ago by the leader of the opposition (Mr. Bennett).

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I did not say "not any," but " not any adequate evidence." I think you will find there was some evidence.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB-PRO

Joseph Thorarinn Thorson

Liberal Progressive

Mr. THORSON:

I accept that. To-day the hon. member for Brantford City stated that very little evidence had been taken on the subject. It might be desirable, therefore, that hon. members should note the evidence that was given before the special committee on farm implements with respect to cream separators.

There are four principal companies in Canada that manufacture or assemble cream separators-the International Harvester Company of Canada, Limited; the Massey-Harris Company, Limited; the De Laval Company, Limited, and the Renfrew Machinery Company, Limited. Questionnaires were sent out to the two larger companies, the International Harvester Company and the Massey-Harris Company, and full replies were given by them. One of the questionnaires asked the companies to supply full information with regard to a number of typical farm implements, including cream separators. Cream separators, therefore, received exactly the same amount of attention as any one of the other typical farm implements in respect of which information was requested and given.

The officers of these two large companies appeared before the special committee and gave evidence freely, frankly and in great detail. They were examined by counsel to the committee, Mr. R. T. Graham, K.C., and cross-examined by members of the committee; they had the fullest possible opportunity of placing their case before the committee. Detailed evidence was given as to costs of cream separators, manufacturing costs, distribution costs, selling costs and sales realizations. These details were given with regard to all the typical farm implements in respect of which

Farm Implements Committee Report

information had been requested. In the case of the International Harvester Company there were nine typical farm implements in respect of which information was requested and given. Their No. 2 cream separator was in this list. If anyone is interested in the information that was given to the committee he will find it all in the tables that appear on pages 138 to 146 of the evidence. Comparable information was given in respect of the Massey-Harris Company, in so far as it is possible to compare it with the information given by the International Harvester Company. It is not possible to give absolutely comparable information because of the differences in the systems of accounting of the two companies. In the case of the Massey-Harris Company there were seven typical farm implements listed, and included in this list was their 500-pound cream separator. The tables for the Massey-Harris Company will be found at pages 1092 to 1100 of the evidence. These tables were compiled as the result of facts and figures given by the companies themselves. The companies cooperated fully with the committee and its auditor, Mr. Walter J. Macdonald, in giving the basic information that was desired, and there were no complaints made at any time by the officers of the two companies to which I have referred.

With regard to the two other companies, the De Laval Company and the Renfrew Machinery Company, special questionnaires relating to cream separators were sent to each of these companies. The De Laval Company made a full reply to the questionnaire sent to it, and one whole session of the committee was devoted to the evidence given by the officers of that company. Their general manager, Mr. Breyfogle and their auditor, Mr. Cutmor, appeared before the committee and gave full and detailed information that was very useful to the committee. The Renfrew Machinery Company made no reply to the questionnaire that was sent to it. I understand that the auditor of that company was in consultation with the auditor of our special committee, and that he promised that the information requested in the questionnaire would be given, but no information was ever furnished at any time by the Renfrew Machinery Company. They were given every opportunity to do so, and now they have no cause for complaint. In addition, evidence relating to cream separators was given by correspondence from MacLeod's Limited, and there was also evidence given with regard to the effect of tariffs, customs rulings and freight

rates upon the prices of cream separators. Therefore, Mr. Speaker, the special committee had a great deal of evidence before it; it gave very careful study to the question of cream separators 'before arriving at the following recommendation:

(16) That it is the opinion of the committee that the cost of cream separators to the consumers should be reduced and with that end in view recommends that this item be placed on the free list.

This recommendation was made unanimously; I submit that it was justified by the evidence that was before the committee and that it is justified by the needs of the dairy farmers in every part of Canada. There is an unanswerable case for the recommendation thus unanimously made by the special committee on farm implements.

What is the history of the tariff on cream separators? For over thirty years before 1932 cream separators came into Canada free. This is as it should be; for there is no farm implement so important to the needy mixed farmer, the needy dairy farmer, as the cream separator. It has often been described as "the handmaiden of thrift." It is the cream separator that provides the poor farmer with his cream cheque, which is practically the only cash that he gets, and it is of more importance to the dairy farmer in hard times than it is in good times that his implements of production should be provided at the lowest possible cost. A change was made in the tariff in 1932, when the Ottawa agreement was entered into. The tariff was then increased to 25 per cent under both the intermediate and general schedules. It remained on the free list as far as importations from the United Kingdom were concerned, but note this. Not a single cream separator had come into Canada from the United Kingdom for three years before the Ottawa agreement was concluded. They had come mainly from the United States, Sweden or Belgium. The average importations of cream separators into Canada during the years 1930, 1931 and 1932 amounted to $833,000 per year. None came from the United Kingdom during these three years. Seventy-five per cent of the importations came from the United States, thirteen per cent from Sweden, six per cent from Belgium and the balance from Finland and other countries. So in 1932 the tariff was jumped up from the free list to 25 per cent on importations of cream separators from all countries except the United Kingdom, which for three years had not exported a single cream separator to Canada, and which was itself a large importer of cream separators.

1350 COMMONS

Farm Implements Committee Report

But this was not all, for article IX of the Ottawa agreement guaranteed this 25 per cent margin of preference to the United Kingdom in respect of cream separators for the whole lifetime of the agreement. Therefore during the five years that the agreement was in force it was impossible to make any reduction whatever in the tariff on cream separators, and for five years this high protection was clamped on against the dairy farmers of Canada. In the first speech I made in this house during the session of 1936 it was my privilege to describe this clause of the Ottawa agreement that guaranteed this margin of preference as a vicious clause, and I urged its deletion from the agreement when it was to be reconsidered in 1937. In that year we made some progress. The Ottawa agreement was revised. There was no reduction in the tariff on cream separators but they were no longer tied to the margin of preference to which I have referred. Cream separators are not mentioned in schedule 5 to the Ottawa agreement of 1937, and therefore they are not tied to this guaranteed margin of preference of 25 per cent. In the session of 1937, further progress was made through the recommendation made unanimously by the special committee on farm implements, of which I was a member, that cream separators should be put upon the free list. This present session therefore. Mr. Speaker, is the first since 1932 that the government has been free to act in the matter of tariffs on cream separators, and I sincerely urge upon the government that it should carry into effect at this session the unanimous recommendation of the special committee on farm implements, that cream separators should be put on the free list. This recommendation should have the active support of every hon. member who represents a rural constituency in which there is mixed farming, and in which there are dairy farmers. There are in Canada 2,600 butter factories or creameries, of which 1,200 are in the province of Quebec. There are thousands of farmers in this country who depend upon cream separators for the only cash they receive. There is no implement more important to these small farmers than the cream separator.

What has happened since 1932? The evidence given before the committee shows some startling facts. In the first place it shows clearly and conclusively that while prices of cream separators were not increased after the tariff was put on, the prices were artificially held up. May I refer hon. members to the comparative statement of prices that appears on page 131 of the evidence.

fMr. Thorson.]

The International Harvester Company, giving evidence with regard to some typical farm implements, gave a statement of comparative prices. The information with regard to their No. 2 cream separator shows the cash price at Regina, Saskatchewan, and also the cash price at Billings, Montana. Prior to 1932 there was comparatively no difference between the price on the United States side of the line and the price on the Canadian side. In 1932 the price of the No. 2 cream separator at Regina was $103.50; at Billings it was $102.30. But let us now see what happened after the tariff was put on. In 1933 and in 1934 the price of the cream separator at Billings, Montana, dropped to $90.90, a drop of $12.40. What happened on the Canadian side of the line? The drop was merely one from $103.50 to $102.50. That is fair evidence, Mr. Speaker, that the price of the cream separator on the Canadian side of the line was artificially held up by the imposition of the tariff of 1932.

There is also clear evidence given by Mr. Morrison of the International Harvester Company, when he said that his company could supply the agricultural implement requirements of the farmers of western Canada from its plant at Chicago, pay the duty and let the farmers of western Canada have these implements at less cost than they could be supplied at from its factory at Hamilton. Then, in reply to the Minister of Agriculture (Mr. Gardiner) Mr. Morrison stated that the amount of duty was decidedly a factor in the cost. I would prefer to have the statement of Mr. Morrison to the statement recently made by a member of this house. Undoubtedly the rate of duty is a decided factor in cost.

Furthermore, the evidence of all three companies shows that the cream separator has been loaded with heavier selling costs for commissions than any other typical farm implement. For example, in the case of the International Harvester Company the percentage for selling costs for commissions in the matter of cream separators is 28-17 per cent, whereas the average for all typical farm implements is only 15-89 per cent. In the case of the Massey-Harris Company there is a similar state of affairs; the commission percentage in the case of cream separators is 21-26 per cent, whereas the average for all typical farm implements is only 12-53 per cent.

Then, the evidence shows one other striking fact. Two of the companies are related to United States companies. The De Laval Company is affiliated with the De Laval Separator Company of New York, through shareholder control. The International

Farm Implements Committee Report

Harvester Company of Canada is a subsidiary of the International Harvester Company of the United States. These Canadian companies imported parts and materials for use in their factories in Canada. These parts and materials came in free of duty, and yet in each case the United States company billed its Canadian subsidiary or associate with the cost of production, plus 25 per cent. It has been stated that they followed this practice because of rulings made by Canadian customs officers. W hether the rulings are correct or incorrect, the result has been that the United States companies in each case have retained in their pockets this 25 per cent profit arising from Canadian business. This additional profit ought to have been used by Canadian companies for the purpose of reducing the price of cream separators and other farm implements made in Canada. In any event, this practice has produced profits for United States companies in the United States, at the expense of Canadians.

Furthermore the purpose of the tariff increase of 1932 has completely failed. I do not think I would be accused of unfairness if I were to

say that the fundamental purpose of the Ottawa agreement of 1932 was to divert from foreign countries to the United Kingdom importations into Canada, so that our trade with the United Kingdom might be enlarged. But the imposition of the tariff has not helped the United Kingdom to any extent, and it has not served the purpose-

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That is not what they say.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB-PRO

Joseph Thorarinn Thorson

Liberal Progressive

Mr. THORSON:

-of keeping out foreign farm implements. With the leave of the house, if I may have it, I should like to put on Hansard a table showing the importations of cream separators into Canada, since 1929.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Giving the countries from which imported?

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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LIB-PRO

Joseph Thorarinn Thorson

Liberal Progressive

Mr. THORSON:

Giving the countries from which importations came.

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

And the number of each?

Topic:   FARM IMPLEMENTS COMMITTEE
Subtopic:   MOTION FOR CONCURRENCE IN SECOND REPORT PRESENTED APRIL 8, 1937
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March 15, 1938