June 22, 1938

SC

Eric Joseph Poole

Social Credit

Mr. POOLE:

Never mind Aberhart.

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CON

James J. Donnelly

Conservative (1867-1942)

Mr. DONNELLY:

Follow his policy and put them all to work.

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SC

Eric Joseph Poole

Social Credit

Mr. POOLE:

If this government were more kindly disposed, and a little more in contact with the issues confronting Canada, it would realize that the best thing for it to do would be to overstep certain constitutional questions and give that eminent gentleman, Mr. Aberhart, an opportunity to carry out his policies in Alberta. When I hear hon. members call across the floor, and when I hear them criticize Alberta, I say to myself, " They are not afraid he will fail; they are afraid he is going to win." And we will.

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CON

James J. Donnelly

Conservative (1867-1942)

Mr. DONNELLY:

I saw him four years ago, and I knew very well he would not get anywhere.

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SC

Charles Edward Johnston

Social Credit

Mr. JOHNSTON (Bow River):

I suppose he looked as good as the hon. member does at any rate.

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SC

Eric Joseph Poole

Social Credit

Mr. POOLE:

I am not going to argue with you, because-

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LIB

Walter Edward Foster (Speaker of the Senate)

Liberal

Mr. SPEAKER:

I must ask the hon. member to address the chair, and when referring to other hon. members to indicate their constituencies.

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SC

Eric Joseph Poole

Social Credit

Mr. POOLE:

I apologize, Mr. Speaker. Out of all argument as a rule comes more heat than light. I think hon. members of this group ought to be complimented on the stand they have taken in spite of all the opposition that has been voiced against them. The Liberal party is supposed to be progressive, but we see the Liberal government aligning themselves, either directly or indirectly, with the financial system and with those organizations which will break up the British Empire before they will give up their privileges. These are men who have no patriotism, men who recognize no national boundaries, men who pro-fMr. Poole.]

duce nothing; they are men who make their money from the free instruments that this government has given to them.

I am seeking cooperation, and I do not think I should be ridiculed. I am seeking understanding, something which every hon. member of this house should seek. I ask the cooperation of hon. gentlemen opposite. We may smile to-day, but let me say to hon. gentlemen opposite that when I hear of riots occurring across this country, when I see evidence of the widespread poverty in this land of abundance, I come to the conclusion that these are birth pangs which will bring forth the revolutionary child which will grow to an aggressive maturity as the evidences of social injustices and economic insecurity become more apparent. We are generating forces which will destroy the last semblance of democracy. Let me say to hon. gentlemen opposite that the conditions which we have to-day in this country

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?

An hon. MEMBER:

The drought.

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SC

Eric Joseph Poole

Social Credit

Mr. POOLE:

An hon. member says that these are due to the drought, but let me say that the conditions which prevail in this country, while they may be better than those that prevailed in Germany, are speedily reaching a point where democracy will be destroyed. Democracy can live only by the good results which it gives. When governments refuse to listen, when they just sit back and ridicule every proposal made to them, there is very little hope for a greater Canada.

My hon. friend says that this depression is a result of the drought. A few years ago the present leader of the opposition (Mr. Bennett) went over to London to attend an imperial conference. The proposal was made at that conference that since there was overproduction there should be a reduction in our wheat acreage. The hon. member states that our present condition is due to the drought. Let me tell him this: Should we have two crops similar to the one' we had in 1928, and there is no greater demand for Canadian wheat than exists at the present time, we will soon have 400,000,000 bushels of wheat piled up in our elevators, and conditions then will be worse than they are to-day as a result of the drought. No doubt the drought is a contributing factor to our present condition, but we must not forget that the depression is world wide.

I am not blaming anyone in this country for our present condition, but I am critical of the government and of government members who ridicule every progressive thought out of existence. Remember that the truth of these things will prevail. For political

The Budget-Mr. Poole

reasons you may go on the hustings in Saskatchewan, backed with your great resources, and tell the people a story in order to get elected. Merely getting elected is not victory. Victory lies in the achievement. Victory means to achieve something. Victory means doing something that will bring security to your people. That is the business of this House of Commons. We should see that in this land of abundance, not one man, woman or child shall be deprived of the opportunity-

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CON

James J. Donnelly

Conservative (1867-1942)

Mr. DONNELLY:

Where do you get that abundance? We have not had a crop for nine years.

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LIB

Walter Edward Foster (Speaker of the Senate)

Liberal

Mr. SPEAKER:

If the hon. member desires to ask a question, he should first obtain the consent of the hon. member who is speaking.

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CON

James J. Donnelly

Conservative (1867-1942)

Mr. DONNELLY:

Where does the hon.

member get the idea that there is abundance in this country, since we have had no crop for nine years. _

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SC

Eric Joseph Poole

Social Credit

Mr. POOLE:

We have had a balance of trade of some $300,000,000. If we have not enough, why are there so many unemployed? Why do we put these men to work to produce more? There is the argument. What is your reply? We do not live by wheat alone. Have we not forestry and mineral resources, and everything we want?

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CON

James J. Donnelly

Conservative (1867-1942)

Mr. DONNELLY:

Not out there.

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SC

Eric Joseph Poole

Social Credit

Mr. POOLE:

Yes, we have. We have a greater abundance of these things than most nations of the world. I am quite convinced that no nation can prosper in the midst of misery and degradation. I hear hon. members state that there is work for all recipients of relief, but that is not true until you change your policy. The general condition of unemployment is there. So far this government have not been able to obliterate poverty. They will never obliterate poverty until they change the monetary system, until they issue credit in the terms of public need, as the Prime Minister put it. This will not be done until we understand the true nature of price. Rising prices are no criterion of future prosperity.

On every occasion when the Minister of Finance has been dealing with the monetary policy of this country he has turned to our group, as though replying to us, and has seemed to be a prophet of fear. He has told the house that there cannot be monetary reform without inflation. Of course that is not true. The monetary reform that we propose will bring down the price level as production goes

up. not increase prices in order to make our dollar valueless. We would increase the value of our dollar in order to make more goods available to the people. We are convinced, and I believe the Liberal party will be in ten years or so, that man will never go to work in industry as he has in the past. Only a few short years ago in 1928 a total of 44,000 harvest workers went to western Canada to work in the harvest fields. Since that time thousands of combines and other pieces of farm machinery have been purchased to do away with the need of these workers, and incidentally to do away with their wages, the only instrument they have with which to purchase goods.

From time to time in this house we have heard expressed a fear of communism and fascism. We have been told of the high virtues of democracy. But let me say this, that the move will be either to the right or to the left. This country of only 11,000,000 people has been blessed by the Almighty. If we cannot put men to work building useful public projects, if we cannot give our people a hope for a better future so that they in turn can build homes, then I say that we are indeed bankrupt.

I said when I rose that I was not going to deal with the whole budget, because that is an impossibility in forty minutes; but I do want to emphasize the question of money, which was touched on by the Minister of Finance in the budget. The task of the minister will become more and more difficult as the years go by if he does not take control of the monetary system of this country in all its phases, not only the Bank of Canada but the chartered banks. It must be recognized that the consumer is the greatest factor in our whole economic structure; that monetary reform does not mean a rise in prices, but rather that increased production means a reduction in prices, and that in any equitable economic system in this or any other country you must in an age of abundance begin with the consumer to make up the difference between the cost of production and the ultimate price of goods on the retailers' shelves.

Mr. ARTHUR-J. LAPOINTE (Matapedia-Matane) (Translation): Mr. Speaker, in order not to delay the passing of the budget, I shall not make a long speech. I desire however to take this opportunity to offer a few observations which I conceive to be in the interest of the country.

It is the duty of public men to call the government's attention to abuses which may creep into its organizations without its knowllb COMMONS

The Budget-Mr. Lapointe (Matapedia)

edge. While refraining from destructive criticism. I believe that the time has come to olfer certain observations concerning the administration of the Canadian National Railways, more particularly as regards the French-Canadian representation on their staff, many members of which, highly paid and arrogant, seem to be constantly defying public opinion.

Far be it from me, Mr. Speaker, to raise the racial cry. In these troublous times, a peaceful solution of our problems is essential. However, I am not one of those who believe that, for the sake of harmony, we should maintain a passive attitude in the face of injustice.

Under cover of a politically-independent commission, it is sought to surround with mystery the administration of our national railways. High officials receive salaries so exorbitant that it is considered undesirable to reveal them to the public, for fear of creating a scandal. A certain, number of them have at their disposal luxurious private cars which are being repaired this year at a cost of many thousands of dollars, while, under the pretext of economy, poor subordinate employees are being laid off and deprived of the wage that allowed them to maintain their families.

I notice with regret that whenever economy has to be practised it is always at the expense^ of the small man. Why not begin by reducing the salaries of officials who are paid ten, twelve or fifteen thousand dollars a year, often for doing nothing? With the exception of a very few higher officials, no member of the Canadian National Railways' staff should receive more than $5,000 a year. These officials have got to the point of thinking that they own the railways. They say: We are managing the national railways; you, members of parliament, mind your own affairs. But when the time comes to vote, 30, 40 and even 50 millions of dollars to cover the deficit, it is we who vote the money and the people who pay it.

I do not wish to be unpleasant to the Minister of Transport (Mr. Howe), for whom I ^ have the greatest esteem. I am aware of his devotion to duty and I know that he is doing his best. Moreover, he is simply applying rules that have been in force for many years. But, since the present system lends itself to numerous abuses, it should be changed and the people's representatives who, after all, are responsible for the. administration of the country's affairs, should know what is going on in that field.

The possible amalgamation of our two great railway systems is being spoken of more than ever. I am absolutely opposed to such a (Mr. A. J. Lapointe.]

plan, for it would lead to the creation of a powerful monopoly which would be disastrous to the Canadian people. I take this opportunity to call the attention of the house to the manner in which the people of the province of Quebec are being treated by the Canadian National Railways. It is a rather extraordinary thing that the stations situated between La Reine and Fitzpatrick and between Noranda and Taschereau, covering a distance of 411 miles, all in Quebec province, are under the jurisdiction of an Ontario superintendent. The same situation exists on the Gaspe coast and from Matapedia to Riviere du Loup, a stretch of 366 miles, where a New Brunswick superintendent is in charge.

Until a few years ago Matapedia was a divisional point for the Gaspe trains. Under the Conservative administration, again for alleged purposes of economy, but most unjustly for the province of Quebec, Matapedia was replaced as a divisional point by Campbellton, New Brunswick. Those who have heard the story know how interesting it is. As for me, I would call it revolting.

But that is not all. When in Quebec territory freight cars are in need of repairs, they are sent from as far as Lake St. John to Lea-side, Ontario, or to Transcona, near Winnipeg, to undergo repair work which could be done just as well in the shops of the province of Quebec. The moving of these cars over such great distances involves an enormous expenditure and deprives the workers of Quebec of employment to which they are entitled.

_ I shall now say a word about the manner in which the French Canadians are treated by our national railway system. I hold in my hand a Canadian National Railways telephone directory for the Montreal region. It bears the title. Private Branch Automatic Exchange Telephone Directory. Canadian National Railways, Montreal, and the form number 6466. Looking over it, I understood more than ever the causes of the unrest and discontent that exist in the province of Quebec. I advise hon. members, for their edification, to read this directory which I hold at their disposal. They will then realize the standing of the French Canadians in the Canadian National Railways organization and will better understand our grievances. It is practically impossible for a French Canadian to obtain a copy of this directory; the officials seem to hide it well, for fear that, here again, the public might find out what is going on. It is clear, Mr. Speaker, that there exists within the Canadian National Railways an organization which is seeking to eliminate French Canadians from the posts to which they are entitled. I therefore consider it necessary to investigate this situation, which should not

The Budget-Mr. Woodsworth

be allowed to continue. Our English speaking friends may be tired of hearing our often repeated complaints, but I wish to tell them that, if we were used a little more fairly, if we were not always kept in the background, we would not so often deem it our painful duty to discuss with such frequency a problem very disagreeable to us.

In order to show them the actual situation, I invite them to visit with me the province of Quebec where we will effect a little investigation. Let us first go to Montreal, and visit the shops, or the large offices of the Canadian National Railways on McGill street.

If my hon. friends pay a visit to the different branches,-Traffic, Finance, Accounting, Purchasing, Industry, Natural Resources, etc.,

they will not find more than two French Canadians out of every twenty employees. They will also find that French Canadians have been almost ostracised from important positions and that high salaries never go to them. They will look in vain for bilingual signs, either on the walls or on the office doors. If they ask the elevator operator for information in French, they probably will receive the same answer as I got, a few weeks ago: "I do not understand." All that is going on in the greatest French centre of America.

I will then ask my hon. friends to travel to the eastern part of the province of Quebec. But, before we leave Bonaventure station, we will pay a short visit to the offices of the sleeping-car department. My hon. friends will no doubt be received as I was a few days ago when I spoke French to one of the employees: " Do you speak English "? said he. " If so, all right, because nobody here understands French."

We will then board the Ocean Limited, the night express, where further surprises await my hon. friends. In the sleeping-cars, they will try in vain to make themselves understood in the French language. After a night's rest, we will go to the dining-car. In any of the places between Rimouski and Matapedia, the stretch covered from 6 to 9 a.m., when the train passes through one of the most beautiful districts of the province of Quebec, which is also one of the most exclusively French, I defy them to find, among the eight employees on the staff of that car, a single one who can speak French. The end of our trip will be in Campbellton, New Brunswick. Over SO per cent of the lines administered from that divisional point are in the province of Quebec. Of the 14 employees there, four only are French Canadians. The staff in the divisional office numbers 21, of whom only four are French

Canadians. Forty-five men are employed in the roundhouse and seven only are French Canadians.

Mr. Speaker, it is all very well to speak of union and harmony between races. But, when one of the races which forms a third of the total population of this country must put up with the rebuffs and the humiliations which I have just described I am bound to confess that union and harmony are impossible. I will frankly ask the hon. members who represent Toronto constituencies in this chamber if the people of that city would submit for long to such a treatment. Although the situation has substantially improved since 1935 in many aspects, it is evident that French Canadians do not receive that measure of justice to which they are entitled.

It takes some courage to voice these truths, but I did it with the best intentions possible. I felt that it was my duty to call the attention of this house on the subject, because that situation is bound to have serious consequences, if no remedy is applied in the near future.

Mr. Speaker, the descendants of those who discovered our country, who opened it to civilization and kept it for the empire on certain occasions; the descendants of those who contributed to such a degree to make of Canada the beautiful and great country it is to-day, are entitled to fairer treatment. When they receive it, good will and harmony will exist between the two great races, which are essential factors of our social and economic progress.

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CCF

James Shaver Woodsworth

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

Mr. J. S. WOODSWORTH (Winnipeg North Centre):

I rise to support the subamendment of the hon. member for Rosetown-Biggar (Mr. Coldwell). I should like to call the attention of the house to certain facts brought to light by the royal commission on the textile industry which was appointed in January, 1936, and reported in January of this year. The commissioner, Mr. W. F. A. Turgeon said:

. . . the advantage of protection is granted to these companies subject to certain conditions, which parliament should recognize and government should enforce.

And further:

. . . the great value of the inquiry lies, not in this report . . . but in this material itself ... in the factums prepared with great care and handed in by counsel for the commission. . . .

I propose to-day to follow quite closely the brief presented by Mr. J. C. McRuer, commission counsel, consisting of some 426 mimeographed pages. As far as possible I shall um the language of the brief.

The Budget-Mr. Woodsworth

In my speech on Monday on the Vancouver situation I referred to this record as a shameful. sickening story of heartless exploitation, of wholesale robbery by men prominent in the public life of Canada. Inordinate greed, barefaced lying and criminal fraud characterize the careers of this gang of high-class .crooks. I suggested that these exploiters were sheltering within our tariff structure and compared the leniency with which they were treated with the harsh methods used in evicting the unemployed from the post office in Vancouver. The member for Parry Sound (Mr. Slaght) accused me of using immoderate language, of being bitter, vitriolic and vituperative. I should like to place before the house some of the facts and leave the facts to speak for themselves. These facts have been known to the government for over a year, but so far as I can learn, there has been no change in the situation. We have now another budget and we are told that we are to have no tariff changes.

Let me give some illustrations of how the situation affects this country and the people of the country. Mr. A. 0. Dawson, president of Canadian Cottons, seems to be very tenderhearted as he refers to the widows and orphans. In fact, he bases his scheme for further protection against competition from Japan on the following grounds:

. . . Because my own company is becoming hoary with age. A great many of the shares are now owned by widows and orphans. Some three or four years ago when we had to discontinue paying dividends it was simply heartbreaking to me to receive personal calls and letters from people who informed me that the withdrawal of our dividends brought them on the verge of starvation.

Now, what are the facts? Canadian Cottons has earned for the shareholders since 1892 a total of $24,560,804.50. Although the original investment cannot be determined with accuracy it was shown to have been not more than $3,930,130. Again, Mr. Dawson showed very great solicitude for the workers. He said-and I quote:

Because of Japanese competition, our workers will be drawing starvation wages and the industry itself will be in extreme danger of annihilation.

These statements are absolutely unfounded. The company has an undistributed surplus available for shareholders of $5,782,067, of which $2,277,208.81 is a secret reserve, not even disclosed to the shareholders, and there is an additional $9,000,000 accumulated undisclosed surplus represented in fixed assets. In addition the company, having been given the legal opportunity of accumulating these reserves, has taken a secret and unfair advan-

tage of the government by concealing its profits and failing to pay the required income tax.

It is hardly necessary for me to point out, as the brief does, that it is from the taxpayers and consumers of the country that a protected corporation receives its right to make special profits that it otherwise could not make. It is the right of those conferring these benefits to be furnished with accurate and honest information in regard to the benefits accruing to the recipients of the special privilege.

Let me turn to another well known person, Mr. B. Gordon, managing director of the Dominion Textile Company. He also shows a very great concern for what he calls "the true interests" of the employees. The secretary of the Syndicat Catbolique du Textile de St. Gregoire wrote him asking for an opportunity to discuss with him the matter of wages paid at the mill. How did Mr. Gordon reply?

We do not propose to discuss the affairs of this company with people like yourself. . . .

He went on:

. . . fomenting discord. . . . As in the past, the management of this company will be conducted with their true interests at heart.

What are the "true interests" as revealed by wages paid?

The share that the worker has had in the advantages of the protective tariff during this period is indicated by the average annual wage paid per individual. From the records available, the highest average was $277 per annum in 1888, and the lowest $224 in 1905.

Contrast those low wages with the dividends paid.

The total of the dividends paid in the stock issued on the original investment of $500,000 from 1929 to 1936 amounted to $5,812,500. The total of the dividends paid on the stock issued on the original investment by members of the syndicate in 1905, between the years 1906 and 1936, inclusive, amounted to $14,837,500, or an average annual rate of 98-4 per cent per annum.

I do not think I need comment.

In addition to the earnings that have been paid out in dividends, the common stock shareholders have a very large equity in the company. . . . The original investment of $500,000 made in 1905 has yielded a return of $14,837,500 in dividends and to-day has, according to the company's records, an additional present value of $14,671,105. This is after charging off to profits $22,943,471 for depreciation, and $12,492,186.92 to equipment and repairs. . . .

There appears to be a secret reserve of profit amounting to $17,265,72817.

Is there any reason why the consumers of this country should continue to pay exorbitant rates for their goods; any reason why the

The Budget-Mr. Woodsworth

wage earners in these industries should continue to be paid pitiably low wages, while the financiers make the enormous profits indicated by these figures? The brief says:

The evidence shows that in its relations with the public and its employees the leaders of this industry have maintained little regard for human relations. The laws of power appear to have dominated and directed the policy of the industry, rather than regard for justice.

The strife between capital and labour will continue with unremitting bitterness as long as employers seek legal advantages and special privileges from various governments of the dominion and arrogantly deny to their employees, on whose behalf these advantages are obtained, any share in or control over the direction of the policies under which the fruits of those advantages and privileges are distributed.

The employers are part of the Canadian Manufacturers' Association, incorporated by act of parliament. The employers demand that competition be eliminated from abroad and assert the right to organize, to regulate and eliminate competition among themselves. At the same time they arbitrarily deny to their employees the right to organize in their own interest. And the government appears to quite acquiesce in that policy. When the government imposes a customs duty on an article imported into Canada it does more than tax the consumer of imported goods by indirect taxation. It gives to the Canadian manufacturer of similar goods a right to impose on the consumers of goods subject to customs duties a private tax for his own benefit. Viewed in this light, Canadian customs tariff laws are a governmental subsidy to Canadian industry.

Where a protected industry does no substantial export business, all capital created through the operation of the business, over and above a reasonable return to the investor on capital invested by him, has been contributed by the consumer and not by the investor. Protection of the industry cannot be justified for the purpose of providing a return to the investor on the ground that he is entitled to a return on capital employed in operations that has been created out of profits earned in excess of a reasonable return on the capital invested by him. It must always be remembered that a portion of that capital, and in many cases the greatest proportion of that capital, has been provided by the consumers of Canada and not by the investors.

I have been referring to one or two particular companies. Many other companies have followed the same course in regard to their capitalization. According to the brief:

The effect is that promoters of mergers and amalgamations have succeeded, by a process of recapitalization and refinancing, in getting into their hands a large amount of capital stock for which they have paid nothing, and the management of the companies is expected to produce a dividend on this stock. The government of the country is called upon to furnish tariff protection to enable the management to do so. The consumers and the employees have to bear the burden of the dividends.

I spoke the other day of the defrauding of the government, and I am going to quote now directly from the brief.

Canadian Cottons . . . was not only setting aside large concealed reserves, but was not disclosing to the proper authorities its true profits and was depriving the government of the taxes justly and legally due. It has in fact been shown that the officers of the company falsified the returns to the government in order to conceal the existence of the secret reserve, which between 1916 and 1936 reached a maximum of $2,506,128.18, and is admitted to be in 1936, $2,277,208.81.

I should like to ask the government if these taxes have been collected. The other day the Minister of Finance (Mr. Dunning) said something about these companies being in the courts. He dad not explain just what he meant, but I suppose there has been some reference to the exchequer court. I should like to ask very definitely that before we are through with this debate we be told what portion of these back taxes has been collected.. And one further thing I should like to ask; whether or not the criminals have been punished.

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UFOL

Agnes Campbell Macphail

United Farmers of Ontario-Labour

Miss MACPHAIL:

They do not punish

criminals of that kind.

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CCF

James Shaver Woodsworth

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

Mr. WOODSWORTH:

The other day we had poor young fellows gassed and clubbed for trespassing on public property, but here are men high in the public life of this country who are able to deceive and defraud the government; and apparently though the facts have been in the hands of the government for over a year now, little action has been taken. In the brief there is the phrase "apparently they deliberately falsified"; again there are the words "misled and deceived the government" ; and that the statement of Mr. Dawson, "is utterly without foundation." Let me read section 413 of the criminal code:

Every one is guilty of an indictable offence and liable to seven years' imprisonment who, being a director, manager, officer or member of any body corporate or any company with intent to defraud,

(b) makes, or concurs in making, any false entry, or omits or concurs in omitting to enter any material particular, in any book or account or other document-

The Budget-Mr. Woodsworth

It is all very well to send to the penitentiary men who may be guilty of some petty theft, but what about these men who are guilty of defrauding the government and violating the criminal code? Was I not right in saying the other day that in this country justice is not impartial; that we have one law for the rich and. another for the poor? I want to quote a sentence from the brief in this connection :

It is submitted . . . that the law as defined by our statutes and interpreted in the English court of appeal has been transgressed.

I think the government is under an obligation to explain before this house rises what it proposes to do with regard to the very serious state of affairs that has been brought to light by the textile commission report, which has been placed in the hands of all hon. members. Let me quote again:

-Sir Charles Gordon, the president of the Dominion Textile Company, makes the statement to the shareholders: "While the company has an issue of preferred stock it is evident that the governments of one kind and another are the real preferred shareholders as their takings this year represent earnings of $42 per share on the company's preferred issue."

In making this statement to the public, indicating that the company is especially burdened with taxation, it, however, is not disclosed to the public that these taxes are all paid by the consumers. While, in fact, it is ordinary business practice for any corporation to pass on to the consumer its municipal taxes, this company passes on its income tax to the consumer.

I believe that statement is very much along the line of the statement made in this house the other day by the right hon. leader of the opposition (Mr. Bennett).

Several years ago we had considerable publicity with regard to the danger in which our industries were being placed because of Japanese competition. This is what Mr. G. B. Gordon said:

-that the Japanese situation had resulted in an entire lack of orders for the mills at Sherbrooke and Valleyfield, and that it would be necessary to stop 600 looms at Sherbrooke and 500 at Valleyfield.

What does the brief state with regard to that? I quote:

It is submitted that the evidence is conclusive that there was no Japanese competition existing on the 15th of January, 1936, which would justify any reasonable business man in Mr. Gordon's position assuming that he would no longer be able to manufacture goods at Sherbrooke that could be sold, and that it was therefore necessary to close the mill indefinitely and throw approximately 500 employees out of employment, either to starve or to become objects of public charity.

If this is a proper conclusion, then the real object in closing the mill is apparent. Owing to the condition of the stocks at Sherbrooke and the shortage of machinery at the print works, it was convenient for the company to close this particular mill at that time; in fact it had been convenient to curtail production for some days prior to the closing.

What are we to make of business men who call upon the government for special privileges on grounds that are absolutely without foundation? And what are we to say with regard to a government that continues to give special privileges to firms of this character? Let me quote again from the brief:

The evidence seems to be conclusive that the statements made in the letters written to members of the government by officers of Canadian Cottons Limited were unfounded, and, instead of the business of the mills being strangled, the evidence shows that while they were making threats of closing the mills, they vvere increasing the purchases of their raw materials.

Now I want to come to consider this matter of protection, which ever since most of us were children has been the main subject of our budget debates. Instead of quoting from some of our classical economists I want to quote from this brief, which deals with actual facts, with concrete situations. Here is something concerning Canada and the United States:

It will, therefore, be apparent that no customs duties were necessary to protect the Canadian manufacturer as between Canada and the United States of America in respect to cotton yarns at this time. It is, however, interesting to note from a study of exhibit 820 that while prices moved up in the United States of America, due to the adoption of higher rates of wages and shorter hours of labour, the prices in Canada moved up at the same time, the increase in 1933 being from $24 in April to $30 in July, with no corresponding increase in rates of wages or decrease in hours of labour; in fact the reverse occurred, that is, without any increase in hours of labour, the rates of wages were reduced by ten per cent in April, 1933.

And later:

In this instance the Canadian manufacturer received more than three times as much for manufacturing the yarn as did the American manufacturer.

We become so deadened by the incessant propaganda that has been carried on that we may fail to realize the import of statements of this kind. Anyone who goes across the boundary line to the United States and buys goods in that country and, upon his return, attempts to purchase the same goods in Canada, knows that we pay much more in this country. But we are told that we have to do that on patriotic grounds. We

The Budget-Mr. Woodsworth

are told that we cannot compete, and that our manufacturers are under special handicaps. Yet, let me read this sentence again:

In this instance the Canadian manufacturer received more than three times as much for manufacturing the yarn as did the American manufacturer.

As it is stated later on, this gives the. benefit to the investors, and not to the worker.

Let us now look at the wages the workers have received:

The protection given in 1930 amounted to 25 per cent more than the whole of the mill wages paid for the fabrication of the yarn.

Let us turn out the hundreds of thousands of employees in those factories. Let us pension them for life, at a good pension, and the country would be far better off than it is under existing arrangements. I should like to read that paragraph again:

The protection given in 1930 amounted to 25 per cent more than the whole of the mill wages paid for the fabrication of the yarn.

And a little later:

The Canadian manufacturer was taking advantage of the customs tariff duties to increase the profit to the manufacturer at the expense of the consumer, while giving no benefit of the increased protection to the workmen.

I know some workers do not understand that. Some hon. members will recall that one of these textile companies some years ago brought a whole trainload of workers here to protest against the effects of government policy. The men who came were no doubt real workers. I looked at their hands, and I talked to them. They were genuine employees. They had been told by those who controlled them that certain government policies were the cause of their troubles. They had been told that by their employers, but those employers were deceiving the workers. Again, and again, and again in election campaigns workers have been deceived by false statements of this kind. The brief gives evidence of this.

Look at the profits which have been made. Let us, for an example, consider the artificial silk division. I refer particularly to Canadian Celanese Limited, as an indication of depression prosperity:

The company during these seven years, which embraced the period of Canada's greatest depression, earned in net profits more than the total amount of the cash invested in the company.

If our farmers on the prairies who have worked for years and years, who to-day have lost their all, whose farms are hopelessly mortgaged and their capital swept away, consider these facts, they will realize the great injustice

they disclose. We hear many people in the east begrudging some little relief given to those people in western Canada. Yet we find that this company in seven years earned in net profits more than the total amount of the cash invested in the company.

Of course there are a few people outside the shareholders who do fairly well. In 1935, twenty-eight executives drew $294,458.79, the lowest of which was $5,050 and the highest $35,023.54. In the year 1935, seven persons drew $148,063.59 in salaries. In that year $72,280 was paid in salaries to directors of the company resident outside of Canada. The brief goes on to say:

It will, therefore, be observed that out of the money paid by the consumer over the period of seven years, for every $33 that went to the wage earners, $28.20 went to the higher salaried employees or the investors.

I could take similar figures for the Dominion Textile Company and for other companies.

Let me now come to the question of the financing of these companies. The brief states:

It cannot be contended that if an investment bears interest at an average rate of 20 per cent per annum continuously for thirty years that such a return is inadequate.

Surely that is putting it very mildly indeed! To continue from the brief:

The result has been that on the above basis the consumers of Canada have paid in profits sufficient to pay back to all investors, i.e. bondholders, preferred and common stock holders the whole of their investment-pay all. the interest on the bonds, the dividends on the preferred stock and dividends on the common stock at the rate of 20 per cent per annum on the money actually invested, to pay for the entire buildings, plant and machinery, and to give the company a fund available for outside investment amounting to $24,000,000, all in a period of thirty years.

This government is continuing the same policy, notwithstanding the fact that it went to the country on a policy of lower tariffs, as is indicated in our subamendment now before the house.

Let me now turn to one or two particular branches of these industries. I shall deal first with the woollen divisions, as wool is very important in Canada. I quote:

It is not many industries that can show during the five years of the depression, over as large a cross section as dealt with on page 8, consistently higher earnings on capital invested in the business than for the five years immediately prior to the depression.

Or consider the knit grades division, in connection with which the following statement is made:

For no capital investment in the company at all, the promoters of the syndicate that organized the company in 1906 have realized

The Budget-Mr. Woodsworth

$10,205,304. . . . The consumers, in effect, have purchased the entire plant, and presented it to the owners for nothing, and in addition have provided them with $3,000,000 net profit, and $1,904,949.14 for depreciation.

May I interrupt my remarks at this point to point out that apparently this is the kind of thing the government is proposing to do in connection with the matter which was brought before us at the beginning of to-day's sitting. In that instance we have a company organized with apparently little or no capital, one which is securing equipment from the government and to which, according to reports, the government proposes to give the necessary additional equipment. Then it would appear that on the orders the government give to that company it will guarantee that the company will receive cost plus ten per cent-the same old game all over again in connection with another department of our public life.

But I must return to textiles and give another illustration of the salaries paid by representative companies.

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

Gordon Benjamin Isnor

Liberal

Mr. ISNOR:

Would the hon. member give the name of the knit goods company to which he referred?

Topic:   THE BUDGET
Subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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June 22, 1938