May 9, 1938

LIB

Walter Adam Tucker

Liberal

Mr. TUCKER:

Anyone will throw a sprat to catch a whale.

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

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Yes, but this was not a sprat to catch a whale.

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

Walter Adam Tucker

Liberal

Mr. TUCKER:

For all the benefit it did agriculture, it was.

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

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

The hon. member for Rosthern must excuse me if I decline to enter into a controversial discussion with him, because I am going to continue my observations on the basis I commenced them. But I shall have much pleasure in entering into that phase of the matter on another occasion.

Let us proceed farther. Is it right to suggest that the Canadian manufacturer should have the major part of the market in this country on condition (a) that his quality is right and (b) that his price is fair? The hon. member for Lake Centre (Mr. Johnston) agrees with that.

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

John Frederick Johnston (Deputy Chair of Committees of the Whole)

Liberal

Mr. JOHNSTON (Lake Centre):

I agree if the price is right.

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

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I followed the hon.

member, and I wish to be fair. He has said that he agrees with that view if the price is right, and the quality is also right.

We now come to a consideration of these two factors. I have already dealt with quality; nothing further need be said about that. It is admitted by even the most censorious. I now proceed to the question of price. I have said that I have been forty years in western Canada. In civil life I was a member of the bar, a solicitor as well as a barrister, and I can recall that as a youth, when I went there first, in the old office I saw accounts sent from the United States by implement firms to collect from those who had shifted residence from the United States to Canada. I can remember, too, being struck by the notes signed for Deere and McCormick machinery, and things of that kind, and I frequently talked with them about the situation. I do not mind saying that I frequently talked with the representatives of the manufacturers because to me, coming from eastern Canada, it was a little difficult to understand just what these high interest rates meant-so much per cent per month, and matters of that sort. Well, I slowly learned what was involved, namely the tremendous losses sustained by the manufacturers. Just as they pointed out, these people had left their country and gone

o!'J52-170i

to another, taking with them their implements which were not paid for in full; and there were the difficulties that came about by reason of servicing, parts and matters of that kind, together with the many uncertainties connected with the business on account of uncertain crops.

But I saw a lessening of the conditions imposed in those notes. I remember that the late president of the Massey-Harris Company, Sir Lyman Jones, came to western Canada on one occasion to look over the various agencies of the company and discuss this very problem with them. He was most anxious that farmers should get their implements at the lowest possible price consistent with a fair return upon the capital. And I remember asking the present High Commissioner for Canada in London. Mr. Vincent Massey, who was president of the Massey-Harris Company, in order that I might make the statement publicly, whether or not the Massey-Harris Company had ever sold implements abroad for less than they were sold in this country. He made an investigation and assured me that I might say publicly, as I did on more than one occasion, that they had not charged for their implements abroad a lower price than they had charged in Canada. That was something I was anxious to know; I was proud to have him make that statement and, as I say, I repeated it publicly on many occasions.

What is a fair price? I wonder if we would think it fair to have someone say to us here that he thought fifty cents a bushel was a good price for the wheat of the Minister of Agriculture (Mr. Gardiner). I wonder if we would regard it as fair for someone to come to a professional man and attempt to fix his fee. I heard a story of one of the most eminent United States surgeons who, having operated upon a distinguished and rich patient, had a cheque sent to him for a very large sum of money. He sent it back; he said "Our patients do not fix our compensation." They may discuss it, but the charge is made by the man who has something to give or sell, or a service to render.

Although there is a permanent board to deal with these matters, it was suggested that a committee of the House of Commons should deal with this question. I ask my fellow Canadians, is that fair? Each of us, while exercising the utmost care in the world, cannot help being actuated by some political or personal concern. We are the representatives of parties, and unconsciously we find our: minds warped or, shall I say, just a little given to supporting a particular view; and

Farm Implements Committee Report

with that state of mind we have a committee that is going to investigate a situation or a condition and then make a recommendation as to the correctness or otherwise of these prices. Is that quite right? Is that quite fair? I pointed out that it was suggested in part of the report that the farmer was being exploited. I said I thought on reflection that one of the hon. gentlemen who spoke the other evening would hardly think his desk-mate, Mr. Moore, who is a director of the Massey-Harris Company, was endeavouring to exploit anybody. From what the house knows of his interest in the farmers, does it think he is endeavouring to exploit them? Yet he is a director of this enterprise.

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

James Shaver Woodsworth

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

Mr. WOODSWORTH:

Mr. Speaker, I rise to a point of order. I wonder whether it is quite fair to refer to a member of this house by name, and put anyone who chooses to criticize a certain policy in the position of criticizing the personal qualifications of a member of the house? We have had the report of the textile commission which shows that a great many gentlemen who stand very high in the estimation of the people of this country have been guilty of exploitation. I do not want to accuse Mr. Moore of being guilty of exploitation.

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

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

What is the point of order?

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

Frederick George Sanderson (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. DEPUTY SPEAKER:

The hon. gentleman has stated his point of order, and in my opinion it is not well taken.

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

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I was about to state, Mr. Speaker, that I think what may be said with respect to one is equally true with respect to all who are charged as trustees with the maintenance of these industries.

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

Walter Adam Tucker

Liberal

Mr. TUCKER:

The point of order was not stated by the hon. member for Winnipeg North Centre (Mr. Woodsworth). I suggest on a point of order that there is a rule that nobody, not even the leader of the opposition (Mr. Bennett), is permitted to refer to another member of this house by name. I submit that is a point of order which certainly can be raised

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

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I had already thought of that very carefully, Mr. Speaker. I am now speaking of a gentleman in his capacity as a director, not as a member of this house. He is the member for Ontario.

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

James Shaver Woodsworth

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

Mr. WOODSWORTH:

I was interrupted

by you, Mr. Speaker, while stating my point of order; I was about to state it much more definitely. I do not think that even the

I Mr. Bennett.]

leader of the opposition, with his long parliamentary experience and occupying the prominent position he does, has the right to transgress the rules of this house, as I think he is doing, by designating a member of the house by name. That was why I rose. I do not think he can very well refer to a member of the house in one capacity and in the next breath refer to him in another. It was for that reason I raised the point of order.

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

Frederick George Sanderson (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. DEPUTY SPEAKER:

I have already given my ruling on the point of order.

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

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I can assure you, Mr. Speaker, that I have very carefully thought of that question. I have here several names under the heading "directors";

G. W. Allan, K.C. J. S. Duncan J. H. Gundy F. P. Jones J. A. Kilpatrick J. F. Lash, K.C.

G. W. McLaughlin W. H. Moore F. K. Morrow T. A. Russell, LL.D. E. R. Wood, LL.D.

I shall overcome any difficulty that may be experienced by the hon. member for Winnipeg North Centre (Mr. Woodsworth) and the hon. member for Rosthem (Mr. Tucker) by saying that I understand that the W. H. Moore whose name I have mentioned is the member of this house for Ontario, so all difficulty on that score will disappear.

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

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

That complies with the rule; the other did not.

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

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Yes; that complies with the rule.

I desire to make it abundantly clear that I do not believe it is quite right to charge men with exploiting the farmers of the country unless there is some evidence to support that statement. I should be only too willing to uphold any remedy that might be offered for the purpose of preventing exploitation. But there is one test which is not unfair, I submit to hon. members; that is, the audited reports of the enterprises themselves. Whether or not enterprises have made profits is usually indicated by an auditor's report, and those reports do not indicate that for years these enterprises have made substantial profits, nor have they made any returns commensurate with the capital employed.

It was suggested

and I want to get away from that

that the capital structures were not all that they might be. Well, at least they were capital structures that were authorized by the laws of the country, and so far as I have been able to ascertain upon inquiry it has not been charged that there was any water in the capital stock of these

Farm Implements Committee Report

enterprises, either the common or the preferred stock. The change took place from what is called a par value stock to a no par value stock. The change of the unit was a change to which I am personally opposed. I have been steadily opposed to the idea that no par value stock is a sound way to deal with capital structure. But that has nothing to do with the matter; the law authorizes it. As my colleague, the hon. member for St. Lawrence-St. George (Mr. Cahan), pointed out in this chamber some years ago, it would be impossible to change that now, because of the number of enterprises that have shares of no par value, without doing great violence to the whole theory upon which company business is transacted in Canada. That phase is not one that arises here because it is not said, as far as I can see, and so far as the evidence taken is concerned, that there has been a watering of the stock of the enterprise. The change of the unit from a par value stock to a no par value stock may produce, as I sometimes think it does, an erroneous impression in the minds of individuals, but it certainly does not have the effect of watering the stock of the enterprise. That is a matter which I think is sometimes overlooked.

What other question have we that has to do with the fairness of the prices charged? The fairness of the price charged for any commodity is reflected largely by the extent to which the commodity is sold. Let me give an illustration. If you have a limited unit of production your overhead is correspondingly high with respect to (a) taxes, (b) interest on borrowed money, and (c) interest on your fixed obligations-your bond interest and matters of that kind; it has nothing to do with dividends. That can be overcome only in one way; that is by increasing your volume of production, thereby lessening your unit cost. I am going to make in a moment the declaration which I think should be made, that a high duty, or a duty that some hon. members would call high in view of the discussion that has taken place in the house, would have the effect of lessening prices. I am going to do more; I am going to show that this is exactly what did happen in this country, and I am going to give the reason why.

If your units run to only one thousand, and your overhead is one thousand, then you have one dollar per unit of fixed charges, and the wheels go round without added cost as the number of your units increases, except for the small cost that is incident to production itself. The moment you increase

your production, you lessen the unit charge for taxes, interest on borrowed money, interest on your bonds. If, when you are producing but one .thousand units, these three things amounted to S500, you have to add fifty cents to the cost of each unit; but if you increase your production to five thousand, then only ten cents must be added. There is the position. If we are going to get cheap articles in Canada we must do everything within our power to increase the volume of production, which means what I started out with, namely, to as great an extent as possible we should give the Canadian market to the Canadian producer, price and quality being comparable.

Why have we had from time to time to maintain in this country duties that some people think unreasonable? The reason is that it was the only method by which we could secure that mass production without which there can be no cheapening of the price of the commodity. Labour costs in Canada and the United States are comparable. I go to the United States and look at a factory there. Then I go to Australia. I went through a factory in Australia with great care. I look at the factory there; I find the number of units a year that are produced of mowing machines, binders, rakes, or whatever it may be, and I know then what the cost per unit must be to meet interest on borrowed money, taxes and everything of that sort.

We have at this moment a fifteen per cent corporation tax, which is a higher figure than it was in 1930. That tax must be borne by the manufacturer, and he passes it on, of course, to the ultimate consumer, which means the division of the sum total of that tax by the number of units he produces. If the number of units produced is small, the tax is high. The producer may borrow money to expand his business, and if the interest on that borrowed money is divided by only a small number of units, it means that the cost of interest on borrowed money per unit is high. But as you increase the number of units produced, the interest cost is lessened.

Take a bond issue. It is true that some of these implement companies have not been able to meet their bond interest, and they have asked the holders of the bonds to agree to lessen the interest charges over a period of years in order that they may be able to get on their feet. Leaving aside politics for the moment, how would you meet the situation as a man of business? You have a cement mill. Its capacity is five thousand barrels, and you are producing two thousand barrels a day. What will you do? You will do everything in your power to drive that up to five thousand barrels in order to re-

2682 COMMONS

Farm Implements Committee Report

duce the cost of cement to the consumer, because the fixed charges are passed on to the consumer before profit has to be considered. Now look at the taxes. There is income tax, fifteen per cent; that is the corporate tax. Then there is the provincial tax, if you are in Ontario.

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

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

That is after cost of

production.

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

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I say that is included

in the cost of production.

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

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

No.

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

May 9, 1938