May 13, 1921 (13th Parliament, 5th Session)


John Archibald Maharg



I would take it for
granted that the hon. gentleman would be able to distinguish between $600,000 odd and $2,000,000 odd, and that he would draw his conclusions as to which was the most important.
The Prime Minister undertook to give us quite a little discourse this afternoon on tin plates manufactured in the United States. Hie showed that there had been a tremendous increase, which is no doubt perfectly true. But he might have gone a

little further and given, us another illustration or two to show the great benefit that had come to the people of the United States through protection. They have now in the State of California, a plant for manufacturing borax. For a number of years the United States purchased all their borax. They had in that country no plants manufacturing this product. An agitation was commenced because of a borax discovery in the State of California. Prior to the time that this institution was established, the United States had purchased their borax for $50 a ton. This industry was started, and from that time on the United States paid $150 a ton for this article. If you can show to the people that protection has helped them in this case, then I fail to understand protection, if the people of the United States are benefited by having to pay $150 a ton for their borax when prior to the time that the protection was given to this industry they could purchase it for the sum of $50 a ton. I fail to see it. This is another illustration where only one-half of a story is told.
The Prime Minister referred to protection in Great Britain to-day. He told us that it would be only a matter of time until Great Britain would be a protectionist country; at least he used words to, that effect. In the Citizen of to-day and also in the Montreal Gazette of May 13, an article is published, and I want to read a few extracts from it. It is in connection with the banking interests of Great Britain and their attitude towards protection in England. It savs: .
A manifesto signed by a score of leading bankers, was published here to-day, protesting against any legislative or administrative measures to check the free exchange of goods with foreign countries and declaring the policy of trying to exclude foreign commodities to be a mistaken one.
The following is, a quotation:
We cannot limit imports without limiting: our export trade, and striking a grave blow at world-wide commerce on which this Kingdom principally depends. [DOT]
Further on it says:
We desire to enter a respectful protest against every restrictive regulation of trade which tends to diminish the resources of the State.
The signers include Lord Avebury, partner in Courts and Co,; Lord Chalmers, former joint secretary of the Treasury; Frederick C. Good-enough, chairman of Barclay's Bank, Limited; Sir Everard A. Hambro, a director of the Bank of England; Lord Inchcape, senior partner in Mackinnon, Mackenzie and Co.; the Right Hon. Frederick Huth Jackson, director of the Bank of England; Sir Robert Kindersley, director of
the Bank of England; Walter Leaf, chairman of the London County Westminster and Parr's Bank, and Reginald McKenna, director of the . London City and Midland Bank, and former Chancellor of the Exchequer.
It goes on to say this action threatens to cripple the country's resources and impair its credit abroad. A further quotation from this manifesto is as follows:
We have to build up the markets we need by encouraging continental nations to export to us, for it is only by exports that they can reestablish their credits and provide funds for the payment of their debts. ,
I shall not burden the record with further quotations. I give these just to show that the hanking interests of Great Britain are alarmed at the possibility of the principle of protection being introduced into that country again.
When speaking of the twine industry I omitted to give the figures. As I said, when the Prime Minister was on his western tour he told the people in one of our cities how the twine industry had gone to pieces since it was placed on the free list. He stated that in 1890 practically 80 per cent of the twine used in Canada was of Canadian manufacture, while at the present time the amount of twine supplied by Canadian manufacturers was only 25 per cent of the total consumption in Canada. The Prime Minister undertook to give us a little history of the twine industry this afternoon, but he forgot to give us the figures as well. In 1890 the total value of the output was 1,723,534: in 1900, $2,212,263. There is a gradual increase in 1910, 1915, 1917, and up until 1919, the latest year for which reports are available from the Statistical Branch here in Ottawa, and the total value in, that year is $9,810,449. That does not look as though there had been much of a decrease. The increase in output would figure out at a very high percentage.
I wish now to direct attention for a few moments to the Budget. My first observation would be that I am of the opinion that the Finance Minister has been possibly a little too courageous and has gone just a little too far. I think you will find that this Budget will be more than protective; I am of opinion that it will he prohibitive in some respects, and possibly in many respects. However, I shall not quarrel with the Minister of Finance if it does prohibit some of the things that are heavily taxed in the Budget, for there are some things that we can get along very nicely without, particularly beverages, and drugs containing a very high percentage of alcohol.

If he can shut these out, I will have no fault to find with him. But with respect to some other items, I am afraid that the Budget will act detrimentally, because of its prohibitive nature. I shall not dwell on that particular point at this time, but I would like to give to the House my opinion as to the point we have reached in this matter of protection.
My own candid opinion is that protection has reached the point where it does not protect; where it does not give employment, and also the point where it does not prevent the goods that are taxed from entering this country. We have only to dwell for a very short time on our trade relations with one of the countries with whom we do the largest 'business, and that is the United States. We are one of her best customers, and she is one of ours. To prove that protection does not protect, there is at the present time on certain commodities, in fact on everything that we import from the United States, a protection. I imagine that some hon. members will say that that is not so, that a great many articles are on the free list. That is quite true, but we have an adverse rate of exchange which operates exactly the same as does a protective tariff. This adverse exchange operates on every article we import from the United States, and it has run as high as 19 per cent, but on the average has been between 14 and 15 per cent, I would say. If we add that amount to the protective tariff, which we have every right to do, as it operates exactly the same, we shall find that we have all the way from 25 to 50 per cent of a protection against goods coming in from the United States., Now our exports from the United States last year, I think, must prove conclusively that protection does not protect. What the reason is, it is difficult to know; it has 'been ascribed to several different causes. However, the fact remains that the tariff does not protect although we have as high as 50 per cent of a duty to contend with in some cases, and that is operating continuously. The other evening while the Minister of Marine and Fisheries was speaking, he addressed a question to this corner of the House to the hon. member for Marquette (Mr. Crerar), I believe. He asked where would we get the necessary revenue if we reduced the tariff. I think I would be quite in order if I were to answer the hon. gentleman if he were in the House by asking another question: Where would the revenue come from if we followed the ad-
vice of the Government and its supporters and bought our goods in Canada, and not from the United States? They tell us we can secure practically everything in our own country. Well, if we did not import from the United States, where would the revenue come from? We imported from the United States goods last year to the amount of $856,000,000. Hon. gentlemen opposite, in support of their argument that they have reduced the tariff since they came into power, stated (that the average tariff on dutiable and free goods was now 16.5 per cent. I take it that that is correct. Now if you collect 16.5 per cent on all the imports from the United States, you will find you have approximately $140,000,000. Our total revenue received from the tariff last year was $165,000,000. Now where would your revenue come from if you did not import those goods? You would have reduced younr revenue from tariff to about $25,000,000. I think the $856,000,000 of goods imported from the United States under these adverse conditions-the duty and the exchange rate-proves conclusively that we have reached a point where protection does not protect. There must be something wrong somewhere. Another argument they have given us for not doing business with the United States is that it will improve the adverse rate of exchange. They told us that the one and only cause for the adverse exchange rate with the United States was our adverse balance of trade with them. That argument has been heralded all over the country and was mqde use' of throughout Western Canada when the Prime Minister was touring that part of the Dominion. Now, I desire to investigate this adverse balance of trade for a few years back so that we may find out just what the facts are. Let me state the facts in the following table. In order to save time, I shall give the figures in round numbers:
Exports 1913-14
Imports 1913-14
Adverse balance of trade.. ..
Exports 1914-15
Imports 1914-15
Adverse balance of trade.. ..
Exports 1915-16
Imports 1915-16
Adverse balance of trade.. ..
Exports 1916-17
Imports 1916-17
Adverse balance of trade.. ..

395.000. 000
219.000. 000
or 55 per cent
186.000. 000
296.000. 000
110.000. 000
or 37 per cent 216,000,000 370 000,000
154.000. 000
or 42 per cent
290.000. 000
664.000. 000
374.000. 000
or 129 per cent

Exports 1917-18 440,000,000
Imports 1917-18 791,000,000
Adverse balance of trade.. .. 351,000,000
or 45 per cent
Exports 1918-19 447,000,000
Imports 1918-19 746,000,000
Adverse balance of trade.. .. 269,000,000
or 36 per cent
Exports 1919-20 501,000,000
Imports 1919-20 801,000,000
Adverse balance of trade.. ,. 300,000,000
' or 38 per cent
Exports 1920-21 574,000,000
Imports 1920-21 856,000,000
Adverse balance of trade.. .. 282,000,000
or 34 per cent
It will be seen very clearly from this statement that the year in which we had an adverse exchange rate is the year that we had the very lowest (percentage of imports ever exports, and that must surely prove to the House that the argument that has been advanced by the Government and their supporters is absolutely fallacious. As we see here, in one year the percentage of imports over exports was 129 per cent, yet we had no adverse exchange rate against us then. I think the Government will need to look around for some further reason to advance for the adverse exchange which we have against us at the present time.
During last February I had occasion to visit a merchant in Western Canada, and we engaged in conversation as to the cost of textiles. At that particular time they were making inquiry for their supply of textiles for the coming year, and I asked him what the prospects were for his securing his textile requirements in Canada. He showed me his figures and allowed me to make the comparisons for myself, and those figures and his statements showed that he could go into the United States and purchase his textiles there, pay the adverse exchange rate, pay the duty on textiles, which ranges from 14 to 35 per cent, pay exchange and freight to his home town, and then undersell the Dominion textile manufacturers' price by 20 per cent. It is no wonder, Sir, that American goods are coming into our country, if that is the state of affairs that exists. The Minister of Trade and Commerce (Sir George Foster), speaking on the Budget a few days ago, stated that it was impossible for us to escape the burdens of war. With this I quite agree, and I do not think that any one has any thought of attempting to escape those burdens at this time. Certainly we had no thought of escaping the burdens of and responsibilities of war when war was on. With the sentiment expressed by the minister I agree fully.
But my complaint is that while the burdens of war were being placed on the shoulders of the people, that was the time we should have taken steps to relieve them as far as possible on the financial side. At that time we advocated to the then Minister of Finance the imposition of direct taxation, but our advice was not accepted. However, since the close of the war, and now that unemployment is rife throughout the country, as it has been for the last two years, the Government, in view of the unfavourable conditions that exist, finds itself compelled to impose such taxation. It has been stated publicly that we have some 200,000 unemployed men in the country, to say nothing of the 11 p.m. unemployed female labour which we have. To my mind, it would have been much better had the Minister of Finance at that time, when everybody was busy in the country and had plenty of money, introduced direct taxation in some form or other. But it was only when the grim necessities of war confronted him that he was compelled to do so. Now, this is one of the planks in our platform which the hon. member undertook to quote from to-night. He did not go very far with it, however. He just used sufficient of it to serve his purpose, ajid I shall touch upon that a little later. But in that platform, if the hon. member had read it to the House, he would have found that the very methods which the Minister of Finance very reluctantly put into operation were advocated. Several of the things advocated in that platform the Government have had to do because of the grim necessities of war; and I contend that the grim necessity of economy will force whatever Government may be _ in power in the near future to go on accepting the provisions of that platform, if we are to escape bankruptcy. I should have liked the hon. gentleman to have gone a little further into the platform while h ewas reading it. He gave two quotations to prove to the House that it was a free trade platform. What were they? They were these: He said the platform proposed an all round and substantial reduction in the tariff, and that it advocated free trade. That was one of his arguments. His other argument was that the platform stated we should gradually increase the British preference until within five years we would have complete free trade with England. Now, Sir, these are the two arguments he advanced in support of his statement that the platform in question was a free trade platform. I leave it to the House and the

country to judge just to what extent the hon. gentleman succeeded in proving his contention. I would have liked him to have gone on and told what that platform proposes to do for the consumers of this country, but the hon. gentleman took very good care not to refer to that point. He did not state to the consumers of this country that that platform proposed to give them a free market in which to buy all their foodstuffs, and he was not particularly anxious that they should know that. That might suit the consumers possibly, but that is not what the Government wants. My hon. friend might have gone a little further and found additional arguments along that line. However I will not dwell any longer on the subject at this particular time.
Now let me return to some of the statements of the Minister of Trade and Commerce (Sir George Poster). He gave us certain reasons for not reducing the tariff at this particular time, but the same reasons have been brought forward for a number of years past. I remember very well that the first reason advanced for delay in this matter was that demobilization was in progress-that we must not interfere with matters of trade while demobilization was going on. Time passed and the "existing unrest" was cited as a reason for making the excuse a little stronger. Then later on the Minister of Agriculture, who comes from the western coast, stated that we must have protection to preserve us from the competition of cheap Oriental labour. Now, Sir, during the by-election which followed the acceptance of a portfolio by the Minister of Agriculture promises were made with respect to providing a dry dock at the Pacific coast which, it seems to me, created a most ridiculous situation. On the one hand we have a tariff which is designed to prevent imports from coming into that port which is to have the dry dock, and on the other hand the dry dock itself, is intended for the repair of the ships that presumably-if the policy of the Government and its supporters was carried out- would come in empty. It seems very inconsistent to spend millions of dollars in building a dry dock to accommodate shipping, and on the other hand enforcing a tariff which will prevent those ships from finding any business.

Full View