June 21, 1938

REPORTS AND PAPERS

CHARGES RESPECTING REMOVAL OP STONE AT KINGSTON TO PROPERTY OF A. E. STANSBURY

LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Hon. IAN MACKENZIE (Minister of National Defence):

As I promised the other evening during the discussion on the estimates of the Department of Labour, I desire to table copy of report under date May 26, 1937, of Major H. Stetihem, Royal Canadian

The Budget-Mr. Lauison

Dragoons, to the staff adjutant, Royal Military College, in regard to the removal of stone; also, dealing with the same subject, copy of night letter, dated June 15, 1938, from commandant, Royal Military College, to Major R. C. V. Bessonette; copy of night letter, dated June 16, 1938, from Major R. C. V. Bessonette to the commandant, Royal Military College, showing that permission was given to remove the stone in question.

Topic:   REPORTS AND PAPERS
Subtopic:   CHARGES RESPECTING REMOVAL OP STONE AT KINGSTON TO PROPERTY OF A. E. STANSBURY
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PRIVATE BILLS

FIRST READINGS-SENATE BILLS


Bill No. 161, for the relief of Marjorie Ruth Nicholson Lowe.-Mr. Walsh. Bill No. 162, for the relief of Anna Vereszczak Finchulc.-(Mr. Jacobs.


SASKATCHEWAN ELECTION

REFERENCES BY MR. BENNETT TO STATEMENTS REPORTED TO HAVE BEEN MADE BY MR. MC-NIVEN-QUESTION OF PRODUCTION OF DOCUMENTS


On the orders of the day:


CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Right Hon. R. B. BENNETT (Leader of the Opposition):

A few days ago the hon. member for Regina City (Mr. McNiven)

questioned the accuracy of some reports to which reference had been made during the course of debates which took place in his absence. I was not in the chamber when he began his explanation, but I promised that I would produce the documents. I find that under the rules I have no right to produce the papers in view of the fact that the hon. member has denied the accuracy of the report a part of which I referred to. I shall therefore have much pleasure in showing the press reports privately to the hon. member. But I desire to make this statement in view of what took place before I came into the chamber.

Topic:   SASKATCHEWAN ELECTION
Subtopic:   REFERENCES BY MR. BENNETT TO STATEMENTS REPORTED TO HAVE BEEN MADE BY MR. MC-NIVEN-QUESTION OF PRODUCTION OF DOCUMENTS
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THE BUDGET

DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE


The house resumed from Thursday, June 16, consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.


CON

James Earl Lawson

Conservative (1867-1942)

Hon. J. EARL LAWSON (York South):

Mr. Speaker, one would indeed be insensible of feeling were he not moved by the applause which has just greeted him from all sides of the house as he rises in his first attempt in the role of so-called financial critic of the

government. I do most sincerely appreciate the generosity and the expression of goodwill of hon. members of this house.

It was with mixed feelings of gratitude and disappointment that I listened to the hon. Minister of Finance (Mr. Dunning) deliver his budget the other day: gratitude to find that the minister had become converted to so many Conservative doctrines and policies, with which I will deal later, and disappointment to find no provision in that budget to give relief to the hard-pressed taxpayer of this country. The minister's diction was perfect, his articulation modulated, and I admired the agility of mind with which he could take a given set of facts and weave them into an argument to explain the prevailing conditions in this country, when in fact those very facts demonstrated clearly the shortcomings of this government to meet the needs of the people.

I do, however, congratulate the Minister of Finance on bringing down a budget at all. Most of us read in our school books the story of the Spartan boy who stood with stoical face while a wolf concealed beneath his clothes gnawed at his vitals. So long has the delivery of the budget been delayed this year that the business community has become very fearful that the wolf of the laissez-faire policy of this government had consumed the vitals of the government and that we would not have a budget at all. Every year preceding the delivery of the budget there is, for a few weeks, a slackening in business and industry because of the uncertainty of business men and industrialists as to the conditions under which they will have to carry on their business for the ensuing year by reason of tariff or taxation changes. This year that uncertainty has been emphasized and continued until it has grown into a major factor in the si owing-up processes of recovery which were going on in this country while the government was pursuing the mirage of a consummated trade agreement. Later on I shall have something to say with respect to the government's trade agreements.

The minister's explanation of the business decline in Canada during the past eight months or a year, with its consequent result of declining income, must have seemed naive to some of the Liberal members of this house. In order to convey to the country the idea that the policies of this government had saved the dominion from a recession to the same extent as that experienced by other countries, the Minister of Finance made this statement as reported at page 3893 of Hansard:

In the last four months of 1937, our nearest neighbour experienced a decline in business activity more drastic than that which followed

The Budget-Mr. Lawson

the collapse of 1929. World production, trade and prices have also declined but less rapidly than in the United States.

Then further on:

In December a moderate decline set in and by April-

That is, of 1938.

-the index of the physical volume of business in Canada was about 9 per cent below that for April, 1937.

I advanced that argument in this house in 1934 when the Conservative party was the government and the Liberal party was the opposition. It was in the budget debate. I compared the drop in the trade of the world and of the United States with Canada, having regard to the peak year 1929, and the year for which we then had statistics, 1933, and comparing the year 1929 with the year 1933 I pointed out to the house that whereas world trade had dropped 68 per cent, and whereas the trade of the United States had dropped 65 per cent, the trade of Canada under the then Conservative government had dropped only 62 per cent. That argument was derisively received by the members of the then Liberal opposition, and one need only read the pages of Hansard to ascertain their criticism of it. Well, what is sauce for the goose is sauce for the gander. If the fact that Canada's business activities have maintained a higher level than those of the United States or the world during 1938 is attributable to the policies of the government in power in this country, then a similar condition which prevailed at the depth of the depression must be credited to the former Conservative government.

It was indeed a consolation to have the Minister of Finance at least converted to the views expressed by the Conservatives some years ago, but I should like to point out that if the policy of a government with respect to internal and domestic problems can make the country more resistant to world forces and conditions, then obviously trade agreements such as that made by Canada with the United States are not helpful in maintaining business activity and employment at a maximum level in Canada. The Liberal policy as advocated in the election of 1935 and as advocated by the Liberals when they were in opposition in this house from 1930 to 1935 was trade agreements and more trade agreements. According to the Liberals, our problems of unemployment and excessive taxation could all be solved if we but went out and made trade agreements, throwing open our domestic market to the different countries of the world. How well I remember the present Prime Minister (Mr. Mackenzie King) 51952-258

standing in his place in this house and condemning the then Conservative government for its alleged policy of economic nationalism. He told us not once but time and time again that our policy of economic nationalism would never solve the problems of Canada and that they would only be solved by trade agreements with the different countries of the world and with the United States in particular. Apparently the Minister of Finance has learned that in times of depression trade agreements are but as aspen reeds. I again quote his words from the budget speech which he delivered last Thursday, as reported at page 3894 of Hansard:

Export trade is the chief medium through which changes in economic conditions in other countries affect the Canadian economy. Up to August last business conditions throughout most of the world had been improving and the world price level had been rising.

Therefore I say that Canada's progress upward from the depths of the depression is attributable to the general advance in business conditions throughout the world and to the raising of the world price level. If further evidence be required, I quote again from the budget speech of the Minister of Finance at page 3897 of this year's Hansard:

All who have listened to this recital of the facts in connection with recent developments in our foreign trade will, I am sure, be impressed with how vulnerable our economy is to the impact of external influences, and there may also be some who will question the wisdom of any substantial reliance upon foreign trade. There is no doubt about the high degree of vulnerability in our position.

So we have the Minister of Finance admitting that if we are to seek primarily to trade our products with foreign countries rather than fabricate and consume them at home we shall be dependent upon conditions in those foreign countries for the maintenance of our internal economy and of our own standard of living. Surely that is heresy to the doctrines of Liberalism.

The Conservative party has never advocated that we in this land should be economic nationalists, but we have advocated that to the extent that it is possible to consume in our own domestic market the things which we can produce economically, that domestic market should be protected, and every producer and every manufacturer in Canada should have an equal opportunity to sell his products in his own home market. To the extent that we produce more than we can consume, Conservatives have advocated the negotiation of trade agreements whereby we might accept products of other countries which we cannot produce economically in exchange for the surplus of our own products. Thus

The Budget-Mr. Lawson

it will be seen that the Conservative policy lessens to the greatest extent the degree of vulnerability resulting from economic conditions in foreign lands, and provides, having regard to world conditions, a maximum of employment for Canadian workers in Canadian factories fabricating Canadian products, and a maximum price in our own markets for our own natural products.

The minister stated that the Canadian economy was not showing any weakness which required corrective processes during 1937. He based the statement on the fact that the rate of decrease in employment was not as rapid as the rate of decrease in the physical volume of business.- He said, as recorded at page 3898 of Hansard:

In each of the last two years I have had to refer to the failure of employment to keep pace with the striking gains in business activity and to point out that this was a condition usually met with in the early stages of recovery from business depression. I am therefore pleased to be able to report that during 1937 the increase in the volume of employment was for the first time since 1929 more rapid than the rise in industrial production, and also that since tire downward trend in business began last December employment has declined less rapidly than other business indices.

That condition does not reflect strength in the Canadian economy. Increase in employment always trails increase in business activity, and likewise decrease in employment always trails decrease in business activity. If the Canadian domestic market has a given consumption, the moment the goods of the Canadian manufacturer begin to be displaced in that market he does not immediately discharge his employees or some of them. He first endeavours to compete by increased production without increased cost of production, or alternatively he still hangs on producing goods for a while in the hope that the recession is only temporary. That is the reason why we did not feel the impact of the trade agreement made by this government with the United States in 1936. It was not until it got into full swing in 1937 that it began to affect our employment and our Canadian economy.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

Some hon. MEMBERS:

Oh, oh.

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

James Earl Lawson

Conservative (1867-1942)

Mr. LAWSON:

My friends may laugh, but I will give some figures in a moment. When United States manufactured goods were first given greater opportunities in our domestic market our industrialists endeavoured to meet that competition. The lapse of some months having proven that they could not meet the competition, you have had for the last eight months or a year a constant slowing up of employment in industry, and that slowing up will continue and be accelerated

as the operation of the Canada-United States trade agreement becomes more effective. Already you have had a slowing up, as the minister pointed out the other day, the index of employment in this country on October 1, 1937, being 119-6 and on May 1, 1938, 111-5.

The foregoing leads me to a discussion of the trade agreements made by this government. The Minister of Finance has endeavoured to establish the paternity of this government for the empire trade agreements. Again I quote his words, as found on page 3925 of Hansard:

Since the present administration came into office, Canada has been a contracting party to the two most comprehensive trade agreements that have been concluded since the great war. Our agreement with the United States in 1935 and our agreement with the United Kingdom in 1937 resulted in the reduction of effective duties on a wide range of Canadian imports. They also secured the enlargement and consolidation of marketing opportunities for Canadian exports in the two biggest import markets of the world, which in the last calendar year took between them about eighty per cent of Canada's total exports.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

It sounds pretty good.

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

James Earl Lawson

Conservative (1867-1942)

Mr. LAWSON:

It does sound good. But I propose for a few minutes to consider these two trade agreements, not as to their collective results, but as to the results which have flowed from each.

I have previously stated that the trade agreement made by this government with the United States is contributing to unemployment in this country. Now let me consider the figures in connection with the United States trade agreement. My recollection is that the trade agreement came into effect on January 1, 1936, and was adopted in this house in May of that year. Well, I take the exports from Canada to the United States, excluding gold, for the year ended March 31, 1937, and I find that they aggregate $364,354,990. Our exports to the United States for the next succeeding year, ended March 31, 1938, amounted to $343,250,669, a decrease of $21,104,321. Now let us look at our imports from the United States. For the year ended March 31, 1937, these imports amounted to $393,720,662. For the next succeeding year, ended March 31, 1938, they amounted to $487,328,980, or an increase of $93,608,318. In other words, while our exports to the United States decreased by $21,000,000 odd, our imports during the same period from the same country increased by $93,000,000 odd. If hon. members care to examine the book from which I obtained my figures, namely "The Trade of Canada, April, 1938." as issued by our own bureau of statistics, they will find an almost unbroken record for the last year, of our

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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193S


The Budget-Mr. Lawson imports from the United States increasing month after month. No wonder this government is struggling to make a new trade agreement with the United States to avoid the complete destruction of the Canadian market as a result of the last agreement they made with that country. Now for a few moments let us turn to the empire trade agreements. I was unable to obtain from the bureau of statistics a compilation of figures for exactly the same period of time as those relating to the United States, but I got them to within a month of it. So the figures I am about to give end with the month of April in each year instead of the month of March. Our imports from the British Empire during the twelve months ended April, 1937, amounted to $201,539,570. and our imports for the next succeeding twelve months, ended April, 1938, amounted to $231,208,159. In other words during that year our imports increased by $29,668,589. Now let us look at our domestic exports to the British Empire. For the twelve months ended April, 1937, our domestic exports amounted to $502,290,701. For the twelve months ended April, 1938, they were $519,659,942, showing an increase in our domestic exports to the British Empire of $13,369,241. In other words, while our exports to the United States under the Canada-United States trade agreement decreased by $21,000,000 odd, our exports to the British empire increased by $13,000,000 odd. When one contrasts the benefit of the empire trade agreements to Canada with the detriment of the United States trade agreement, is it any wonder the Minister of Finance on behalf of the government refers to the empire trade agreement as "our agreement with the United Kingdom in 1937"? The empire trade agreements were made originally by a Conservative government under the leadership of the present leader of the official opposition (Mr. Bennett), in 1932, for a period of five years. They were renewed by this Liberal government in 1937, without any substantial or material change in a single principle.


June 21, 1938