May 3, 1939

CON

Joseph Henry Harris

Conservative (1867-1942)

Mr. HARRIS:

Instead of its being discrimination, is it not a case of charging whatever the traffic will bear? Would the hon. member enlarge on that point?

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

I am glad my hon. friend suggested that. I believe that is exactly what it is. It is the law of the jungle.

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CON

Joseph Henry Harris

Conservative (1867-1942)

Mr. HARRIS:

Is it not the same law as that of the medical fraternity?

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

I am happy to say that I know something about the medical fraternity, and I must say that that is not true. It is just the law of the jungle. In other words, because Saskatoon is not in a position to get gasoline from the United States more cheaply, we have to pay the last cent the traffic will bear. That is exactly what they are doing, and that is exactly what jungk law is. When you cannot help yourself, you are going to be devoured.

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?

An hon. MEMBER:

You should operate.

I Mr. Youms.]

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CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

An operation would be too expensive.

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

I want to say a word or two with reference to another matter before I direct attention to the remedy I have in mind. I should like to refer to the textile inquiry conducted by Mr. Justice Turgeon. I congratulate the hon. member for Beau-harnois-Laprairie (Mr. Raymond) upon bringing this matter before the house the other night and directing attention to what has been done by certain textile companies. A mill was closed in Sherbrooke and the public were made to believe that the company could not continue to operate under the tariff protection then prevailing. That was as great a challenge as could possibly be made to a government of this country. I congratulate the government upon the fact that they accepted the challenge and immediately set up a commission to investigate the whole textile industry. I congratulate them also upon appointing as commissioner such an able gentleman. All the facts were brought out so that they can be read by anyone.

I believe that if everyone in this country who is capable of understanding what it contains would read this report from cover to cover, there would almost be a revolution. Let me give two or three items of information from this report. There was a protection- perhaps my hon. friends immediately opposite know just how this came about-of 386| per cent. On an invoice value of $43.60 the laid down cost of the fabric was $217. This was changed a little later on in order to assist t.he industry, and the resulting tariff was 494i per cent. When this government came into power amendments were made which brought the tariff down to 193-^ per cent, and one would think that was high enough. That is when the mill closed. On January 1, 1938, the tariff was still 143 per cent.

I want to deal shortly with the financial set-up of the company. In 1904 there was an amalgamation of several companies which finally became the Dominion Textile Company. The sum of one million dollars was put up by this company, and what did they get for it? Let me quote what the commissioner says at page 119 of his report:

The financial risk which the members of the syndicate assumed in entering into the carrying out of the venture which culminated in the creation and the putting into operation of the Dominion Textile Company was limited therefore to their $1,000,000 investment. It never exceeded that amount at any time. At the outset this investment gave them preferred stock of the par value of $500,000, and common stock of the par value of $5,000,000.

The Budget-Mr. Young

He goes on to say:

The syndicate's $1,000,000 investment proved unusually profitable. One of the members of the syndicate who was examined in Montreal said that he had retained all his shares, except some transferred as gifts to members of his family. I do not know whether any of the other members are in this position. The interest on the $500,000 in preferred shares has always been paid. The $500,000 invested in common stock has yielded an average annual return of over 98 per cent, reaching a high point of 150 per cent in several years and never going lower, after the first two years, than 50 per cent. No dividend was paid for the first two years.

There was another reorganization of the company. What really happened was this: By a process of revaluation the assets were written up about $7,500,000, and $4,500,000 was added for goodwill. Of the $28,000,000 investment which the company finally came to represent. $14,000,000 was added in the way I have mentioned by writing up the assets and adding millions for goodwill. Mr. Heward in his factum says:

Viewing the company's earnings in relation to the value of its investment, its earnings have been entirely inadequate.

Its earnings have been entirely inadequate? The commissioner then comments:

He (Mr. Heward) concludes that the protection afforded to the textile industry "is not sufficient to assure to that industry a fair yield on its investment having in view the risks involved."

At page 117 of his report the commissioner says: _

The community, having accepted the sacrifice of the tax imposed upon it for the industry s benefit, has the consequent right to know what is going on under the regime thereby created presumably in the interest of the nation.

And at page 201 he says:

My intention is that all companies should supply the required information: public companies, private companies, subsidiaries, etc. The questionnaires prepared by the commission auditors and filed as exhibits might, I believe, serve as a model for the compiling of proper annual returns with possibly some modifications to ensure greater particularity in some respects.

The object of what I suggest here is twofold: (1) That information of the affairs of each of these companies and of this tariff-protected industry as a whole, at least as complete as it has been made by this inquiry, be available at all times to those who have the right to possess it, that is, the government, parliament and the tax-paying community; (2) that this information be required in such form, and with such particulars, that the element of secrecy and of consequent deception, in so far as it may exist (and the evidence does not show that it is all-pervading), will be done away with. As an instance of the secrecy to which I refer I may mention what came to be known during the inquiry as "secret reserves," that is profits undisclosed.

He goes on to say:

In so far as the community is especially concerned both as investor and taxpayer, it can properly exercise its rights in matters of policy, that is company policy and national economic policy, only on the condition of having access to full and accurate information. The element of publicity is essential to these purposes.

I have dealt with two concerns only. I could mention others, but I have not the time.

We in this house legislate and give special privileges of one kind or another to different industries. Then we seem to feel we have done our full duty. There seems to be no system of following up these special privileges to see what is being done under them. The leader of the opposition (Mr. Manion) said a short time ago that he was in favour of protection-I am not-but that he was opposed to manufacturers taking advantage of that protection. But I think we can all agree on this, and it is what I suggest, that parliament should see to it that means be provided for close supervision and scrutiny of everything that is done behind the protection of the tariff with respect to every commodity-wheat, if you like; I do not care what it is. But the people of this country have the right to know what is being done behind the tariff. Some may say: Leave it to the tariff board. But it is so long since we have had a tariff board of the kind I would call a tariff board that I do not know what a tariff board might do. So I do not agree with that suggestion. Nor can you ask the Prime Minister or the Minister of Finance to undertake this task, nor any of the other ministers, because they have all so much to do that it is not humanly possible for them to undertake a work of such magnitude. I suggest to the government that a minister should be selected, specially charged with the investigation and control of special privileges granted by parliament. It would be his duty, with the assistance of an expert group of accountants, to look into every industry that receives special privileges from this parliament, and then he would be able to inform the house of what was being done.

The tariff board situated on the shores of the Ottawa river is too far away for me. A minister should be specially charged with the duty of constantly investigating these protected industries, as suggested by Commissioner Turgeon. It would be a real job for any one minister. I think he would be the busiest minister in the cabinet, including even the Prime Minister. Until parliament takes serious cognizance of the fact that abuses are taking place behind the special privileges

The Budget-Mr. Young

that it grants, and until the necessary investigations are made to ascertain what is going on in these industries, we have not done our full duty and we have no right perhaps even to be here. Members of this house on all sides, serious men and women, have come here to do their duty. We do it as we see it, and then we go home and trust that something will be done to prevent abuses from arising. I am not blaming the members of the government. Indeed I give credit to this government as I can give it to no other, because as soon as Mr. Blair Gordon challenged the authority of government in this country, this government set up a royal commission to investigate the textile industry. That showed at least that the government was not going to be. bullied but was determined to find out the facts. We must have means at our disposal for making continuous investigations into industries receiving special privileges, and we must follow up those investigations vigorously to see that no unfair advantage is being taken of the tariff. I do not know whether the government is listening to me-

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LIB

Louis Édouard Fernand Rinfret (Secretary of State of Canada)

Liberal

Mr. RINFRET:

lam.

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

-or whether the members of the house are listening, but I do know that when the people of this country are fully apprised of the facts and give them full consideration, they will demand a closer supervision than we have ever had of all these industries that are receiving special privileges from parliament.

There is the gasoline industry, for example. When we have crude oil within our own gates, right at our back door almost, why should we not be getting the benefit of low-priced gasoline? I have never yet been an advocate of governments going into business, but I would say this to the oil companies of this country, that unless they are prepared to look this matter squarely in the face and act accordingly, the governments of Alberta, Saskatchewan and Manitoba and the parliament of Canada should seriously consider whether they will not take over this natural product which is at our very doors and supply it to the people at the lowest possible price.

I hope that I am not standing in this house to-day uttering idle words. I trust the oil companies will realize that members of this house are serious when they make statements of this kind. I feel sure that, no matter in what quarter of the chamber we may sit, the views I have expressed have the approval of hon. members. We cannot permit private corporations to go on exploiting the public. An hon. member who interrupted me a little

while ago, and who is now out of the chamber, said that they are getting all the traffic will bear; that is exactly what they are doing.

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CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

The hon. member said that of the medical profession.

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LIB

Alexander MacGillivray Young

Liberal

Mr. YOUNG:

No. If my hon. friend

knew as much about the medical profession as he knows little, he would never have said anything like that. Unless we are prepared to deal with this matter definitely and realistically we shall, be subject to and shall deserve the condemnation of the people. Western Canada, with great oil resources at its doors, should no longer be allowed to suffer as it is suffering.

As I said a little while ago, I congratulate the two provincial governments on the action they have taken. When the matter is finally decided in the privy council we shall know definitely where the authority lies. In the meantime I would urge that upon the appeal which is now before the Supreme Court of Canada, and will ultimately go to the privy council, the dominion government should be represented before the privy council by the ablest counsel obtainable, in order that the interests of the whole country may be protected. I believe that there must be very great changes in the British North America Act. I believe that the parliament of Canada must get greater control. The fact that we cannot to-day enact a measure of unemployment insurance indicates the need of greater control by the dominion; surely there is nothing which it is more necessary for this parliament to control than the practices which have grown up under protection by the creation of special privilege.

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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Hon. C. H. CAHAN (St. Lawrence-St. George):

I do not intend to follow the

hon. member for Saskatoon (Mr. Young) into his discussion of textile production. I have read the report of the learned justice, Mr. Justice Turgeon, to which he has referred, and my recollection is that those who have been criticizing the textile industry throughout the country have paid very little attention to that report. Only recently I heard a remark made by an hon. member who sits at my left about a $500,000 investment bringing great returns; to-day the hon. member (Mr. Young) states that the investment is a million dollars. I have not the figures at my hand; I am simply trusting to memory, but if these gentlemen will look into the facts they will find that the companies which were brought together represented an investment of ten or twelve million dollars, and that the extra $500,000 or a million dollars was required to put them

The Budget-Mr. Cahan

upon a sound working basis. I am prepared at any time to discuss with hon. gentlemen the question whether the tariff on textile imports is excessive and results in prejudice to the consumers of this country.

The hon. gentleman has mentioned Mr. Blair Gordon. I have not the honour of Mr. Gordon's acquaintance, and I have no personal relations with him. But when the hon. member criticizes Mr. Gordon's position in this matter I can say this, that he has not read intelligently the report of the learned justice, and that he has not made proper deductions from the findings of that report.

The textile industry is one of the most important industries in the province of Quebec as in the province of Ontario. It gives employment to thousands of men and women in this country who otherwise would not have employment. But a discussion of the matter requires more than the time now at my disposal. I rose to discuss the budget presented by the Minister of Finance (Mr. Dunning).

Having carefully read his observations, apart from the statistics which were presented with them, I may say that the budget address of the finance minister might accurately be described, without exaggeration, as a complacent expression of platitudinous inexactitudes, designed to please his hearers by combining into one innocuous pronouncement the variable tenets of the several political groups in this house. It was evidently intended to placate all classes and conditions of our population.

The minister assumes that our external trade is the chief source of this country's prosperity, but he also declares that to the extent that we promote our export trade with foreign countries, to that same extent the impact of every trade recession falls with special severity upon the producing population of this country. In other words, in so far as we look to the acquisition of external markets as the chief, if not the only, basis of our permanent prosperity, just in so far do we give hostages to fortune by placing the control of our economic conditions in the hands of foreigners, who have merely a temporary interest in the stable and efficient development of this country.

In recent years our export trade has not represented more than fifteen per cent of our annual production, while our domestic sales of our domestic products have represented approximately eighty-five per cent of our total production.

The minister also expressed his personal conviction that "it is not beyond the capacity

of an expanding Canadian economy" to absorb those now unemployed in Canada who are willing and able to work. In that conviction I personally share. But measures adopted to expand the sales of our primary products in foreign markets will never, in my opinion, suffice to create employment for Canadians who are now unemployed.

We have a practical monopoly of a few products, such as nickel-as appears from the statement of the Prime Minister (Mr. Mackenzie King) to-day, we have not a monopoly of it, although we are alleged to have-for which foreign countries are dependent upon Canada. Our other primary products find only markets, which are competitive markets, in foreign countries, markets which in times of peace are largely supplied by those of our competitors who pay lower wages and thus force their workmen and workwomen to adopt standards of living which our people will never willingly accept.

We cannot compete in these foreign markets with competitors in central and south American countries, or in European or in Asiatic countries, whose conditions of life are not far removed from those of earlier and more rustic times.

Knowing .as I do from personal contact and personal experience the conditions of life which prevail in many other countries with whose products we now compete in foreign markets, I cannot believe that the oft-repeated fact that Canada, of all countries in the world, with its comparatively small population, enjoys the fourth largest export trade, is a reliable index of national prosperity. In other words, the extent of our export trade, as compared with the export trade of other countries, is not, and cannot under present conditions be accepted as a reliable index of the domestic prosperity of this country.

The minister asserts that this government's "objective has been and is to promote the minimum possible level of unemployment by stimulating the maximum possible level of productivity that could be sustained over a period of time." Such an objective is highly commendable, but the methods adopted by this government to achieve that object are notoriously illusory and futile.

The minister commends the efforts of the government to "restore private capital creation" by an "easy money policy." Those efforts have completely failed of their objective. He says that the government has adopted measures "to restore more normal activity in the construction industry." But people will not exhibit greatly increased activity in the construction or acquisition of

The Budget-Mr. Cahan

hydro-electric resources of the provinces of the middle west, will greatly assist in the development of such secondary industries in those western provinces. I am convinced that our progressive development as a Canadian nation largely depends upon providing such remunerative employment to our own people as will serve to maintain reasonably high standards of living throughout Canada; and to attain that end I am persuaded that it should be one of the essential elements of our national policy, so far as reasonably possible, to conserve our domestic markets for the products of our own workers, rather than to facilitate and foster, as we are now doing, the employment of alien workers in foreign factories for the production of those common commodities necessary for our daily use and consumption, commodities which can readily be produced by our own people, even though in some cases at a slightly increased cost. Our profitable sales in foreign markets, in fact the export trade of Canada, though necessary and commendable, is subject to a hundred contingencies over which our government has no control, such as quotas, local prohibitions and regulations and even the exigencies of foreign wars and civil commotions, which always render foreign trade more precarious and often less profitable than our domestic trade, which Canada should ever assist and encourage. Therefore, while giving reasonable encouragement to a well-balanced foreign trade, an important objective of Canadian statesmanship should ever be to provide increasing, more secure and more profitable domestic markets for the Canadian farmer, as well as diversified and remunerative employment for all who can be employed in Canadian factories.

Employment at remunerative wages is, for the great majority of Canadians, the prime necessity. Their continuous remunerative employment at home is always a matter of paramount economic importance to them, to their families and to the nation as a whole. The warehouses of this country may be full of food products, but they would offer no permanent relief to idle men and women who seek domestic employment in Canada at remunerative wages, and who fail to find it here because the activities of our home factories are restricted by excessive foreign competition, which is chiefly made possible by lower wages and lower standards of living in those competing countries. The workmen and workwomen of Canada are becoming convinced that that economic policy is bad for Canada which tends to deprive them of employment in Canada while opening wide our

extensive and fairly profitable Canadian markets to commodities produced by foreign workers which we can effectively and efficiently produce here at home.

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

Might I ask a question,

purely for information. I am quite in agreement with my hon. friend that we ought to-[DOT]

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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

Would the hon. gentleman let me finish? Then I will answer every question that is within my power.

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

My hon. friend himself does not hesitate to ask questions.

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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

That is so, but I would ask my hon. friend's permission to proceed, because I am within a passage or two of the end of my remarks and I do not wish to be diverted at the moment.

Experience has also proved that state intervention and state interference in the administration of industrial affairs and in business relating thereto are often needless and frequently pernicious. Governments which are selected by popular vote are not infrequently lacking in practical experience and trained efficiency, and frequently the members of a government, when acting as a political unit, are less clear-sighted and less capable than when as individuals they act separately and independently in relation to their own affairs. Governments are often more lacking in wisdom than the individuals who compose them. Edmund Burke once declared:

One of the finest problems in legislation is to determine what the state ought to take upon itself to direct by public wisdom, and what it ought to leave, with as little interference as possible, to individual exertion.

That problem is daily presented to every democratic parliament for more effective solution.

Now, if the hon. gentleman wishes, I will try to answer his question.

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

I do not yield to the hon. gentleman in my desire to see secondary industries in this country prosper and employ as much labour as possible. But the one thought in my mind was whether the hon. member would say that, even with regard to some of the commodities we ourselves can and do produce, he is in favour of the absolute exclusion of some of these products coming from other countries. I have asked this question of others previously.

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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

In reply to the hon. gentleman may I say that I have not been examined recently for sanity, but if I gave that impression I should think I would be lacking in some mental quality.

The Budget-Mr. Kuhl

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

I am sorry I asked the question, since the hon. member does not treat it courteously. I withdraw it entirely. I think I know what his reply should be, but apparently he does not wish to give it.

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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

I gave it, and I will give it again. Certainly the answer is no. There are certain commodities and certain goods which cannot be produced in this country-

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May 3, 1939