June 9, 1922 (14th Parliament, 1st Session)


James Steedsman



The Budget-Mr. Coote

doing us a little. Now, what is the trouble? Raw material was not any cheaper then than it is now. Labour may have been a little cheaper, but surely not so much as to make that difference. In those days the shoemaker applied skilled labour to every part of his manufacture. My hon. friend says, that to-day he pays $11 and $12 for his boots; why the difference? The system under which we are working entails a maximum outlay of capital in connection with goods that are manufactured. Take the quantity of boots and shoes that are in warehouses, wholesale and retail stores, and so on throughout the country; undoubtedly there is a tremendous amount of capital involved. But who has ceased to wear shoes? Not anyone in the prairie provinces, especially if he is an agriculturist. I cannot see that there is any force in the arguments of my hon. friends on the other side.
I do not wish to detain the House any further. I will just say in conclusion that had the Government gone as far as I have suggested; had they taken these inconsistencies out of the tariff and placed agricultural implements on a level with binders and mowers so far as duties are concerned, we would have felt disposed to wait with some degree of patience. If the system that I have suggested were adopted I have no doubt that the Minister of Finance would be able to come before the House next year with proposals involving a great reduction of customs duties and to justify his position to this House and to Canada.
Mr. GEORGE G. COOTE (Macleod): Mr. Speaker, it would seem almost in order to apologize for taking part in the debate at this time. When the matter was mentioned in the House yesterday by the Prime Minister (Mr. Mackenzie King) and there was some suggestion of closing the debate last night, I sincerely hoped that that would be arranged, and for my part I was quite willing not to inflict on the House any speech on the budget. Seeing that that was not arranged and that the debate is continued, I want to say a few words in explanation of my position in regard to the amendment which is before the House.
The other night when the Prime Minister was speaking he quoted part of a parable from the sixth chapter of Luke, where it speaks of removing the mote from thy brother's eye. I could not help thinking
[Mr. Coote. I
that he had omitted the best part of the parable, which starts off with these words:
Shall the blind lead the blind? shall they not both fall into the ditch?
When it comes to a question of political morality, Mr. Speaker, which this amendment seems to raise, I feel that that verse is very applicable. I do not feel that it is my duty to charge the Government with being guilty of immorality in a political sense. When this amendment was first introduced I felt that I should support it, but after listening to the argument of hon. members to my right I came to the conclusion that I could not consistently vote for it, because it was proved to my satisfaction that many members who are supporting the present Government stated during the campaign that they were not in favour of any tariff such as was set forth in the tariff plank of the Liberal platform. The thing to me seems to be rather inconsistent. I think that individual members of the Liberal party will have to be judged by their own constituents. I was glad to hear Mr. Speaker remark the other day in this House that he did not recognize parties; that he recognized only individual members. I think that the individual members of this House are responsible to their constituents. Therefore Mr. Speaker, I feel at the present time, unless some argument is advanced which would change my mind, that I shall not support the amendment. I shall leave the Government to be judged by their constituents. I believe that no government and no party can rise any higher in a moral sense than the people, and if the people at home will judge them, and if they care to send them back, that is perfectly democratic, and I shall be satisfied with that.
I feel there has been far too much time taken over this budget debate. I believe that if party politics had been left out of it, if the washing out of party political linen had been avoided, the debate might Jiave ended before this. Speaking for myself, I did not come here to play politics. I came here to endeavour to represent the people who live in the constituency of Macleod to the very best of my ability. In fact, I think that party politics is the greatest curse from which this country is suffering to-day, and I do not think it is possible, or at all events probable, that that idea can be given too much prominence at the present time. I think it is the duty of every member of this House seriously to consider whether we could not evolve some

The Budget-Mr. Coote
better system of government in this country. I want to say frankly that the budget is to be a great disappointment. If we could have in this House an honest vote regardless of party affiliations and political reasons as to whether we should have in this country a lower tariff or the present one, I should be very glad and I should be willing to accept that vote as final for the next few years; but we are not able to have that honest expression of opinion on the tariff, for under our present system I realize quite well that many low tariff Liberals cannot give expression to their honest feelings in regard to the tariff. Therefore 1 say that party government is at least a hinderance to the development of this country. I had expected that the budget Would contain some jkind of a compromise on the tariff, a compromise between low tariff and high tariff views, but the budget as 'brought down shows that the Finance Minister has leaned a great deal too far towards high protection. It reminds me of a story I heard in my election campaign of an Irishman who had been predeceased by two wives. When his friends asked him before he died where he would like to be buried he said, "Well, bury me between Betty and Bridget, but incline (my head a little towards Bridget." I think the Prime Minister inclined his head too far towards those in his party who are desirous of having a high tariff, and that is the reason why the budget brought down is so much at variance with the tariff plank in the Liberal party platform.
The most striking thing in the annual financial statement presented to this House, I think, is the immense national debt. I believe that two billion dollars of this debt is the result of the great war, and in my humble opinion the greater part of it, at least, should never have been incurred. Had the government which was in power while the war was on been possessed of real patriotism, they would have collected from the people of this Country in the way of taxation a sufficient amount to have paid the larger part of the expenditure necessary to carry on the war. I think Sir Thomas White is reported to have said at the time of the flotation of our second last loan that Canada was then wealthier than when she entered the war. I maintain that he is condemned by his own words. Had he had the courage, he could have collected during that time from the people's increased earnings, through taxation or
conscription, or whatever you wish to call it, sufficient to have paid the greater part of the cost of carrying on the war, and this would have served a double purpose; it would have kept down the high cost of living, or what became the high cost of living, and would at the same time have saved us from the financial plight in which we find our country to-day. The exemption from taxation of the income from Victory bonds was, to my mind, nothing less than a crime. These bonds have now very largely found their way into the hands of the wealthy class in this country, and when our fighting men returned they as well as the rest of the people are compelled to pay taxes On their cigarettes, their soda water, their chocolate bars, to raise the interest on this immense amount of tax-exempt bonds. I consider the action of the government at that time in conscripting the manhood of the country and exempting wealth was nothing less than a national sin. I believe that nations, as well as individuals, are punished for their sins and as the Good Book itself says, the sins will be visited on the children to the third and fourth generation, and I believe that will be true in the case of this country. We have a millstone of debt around our necks to-day which I doubt if we will ever get rid of.
I should like to see placed on the statute books of this country a law which would compel any government which might happen to be in power to conscript the wealth of this country in any future wars in which this country might engage, if we ever do, and I pray we may not. Our debt now is approximately seven times as great as it was in the year 1914, and I maintain that a policy which might have been adequate to enable us to carry our debt in 1914 is not adequate to meet the needs of the country to-day. Our interest charges have increased since 1914 by 1,300 per cent, while the value of our export of wheat, which is the greatest single item in our export trade, has increased in that time only 55 per cent. This will surely bring home to hon. members what an awful interest charge we are carrying. We are so used to talking in millions that I do not believe our people realize the full extent of our national debt and of our interest charges. I am told that our interest charges to-day are more than the people of Canada spend for bread, which is the staff of life. If this terrible amount of interest is ever to be paid, it can only
The Budget-Mr. Coote

be done by all the people of this country who are able to work being put to work, and we must also give them the very best machinery and tools available. The only way in which we can create new wealth, as a basis for taxation to meet our annual expenditure, is to put to work every man in this country who is willing to work, giving him the most modern and up to date tools and machinery which can be had and making his tools and machinery as cheap as possible. We have in this country great natural resources. Why should we place in the way of any man who is willing to work at these resources in developing them, any hindrance in the shape of a tariff duty on tools and machinery. Fcr my part I never could see the sense of making any man who was willing to work a bucksaw pay a tariff tax on that saw. If that be true in respect to a bucksaw it will also apply to any other of our tools.
I just want to give one instance of what this would mean to the development of wealth in Canada. Take in my own constituency; we are told by our geologists that we have there a large oil area. Now, there is nothing which western Canada is more in need of than a larger supply of oil, kerosene and gasoline. To-day in my constituency gasoline is retailing at from 60 to 65 cents a gallon, yet we persist in maintaining a duty of 27i per cent on oil drilling machinery of the kind made in Canada, as well as a duty on casing and practically everything required for the drilling of a well. When I was in the Black Diamond oil field in Alberta last year one of the drillers there told me that he was fully convinced that if the tariff was taken off their tools, machinery and supplies they could drill three wells for what it now costs them to put down two. Surely it would be in the interests of Canada to promote this oil industry. If we can drill more wells we can get a larger supply of oil; that would cut down our importations from the United States- practically all cur oil is coming from there at the present time-and it would help to diminish the adverse balance of trade which some hon. members to my right are so much concerned about.
The present budget proposes to put small farm tractors on the free list for the purpose, we are told, of encouraging production on our farms. Surely the Minister of Finance knows that it takes either gasoline or kerosene to run those tractors; they will not run of their own accord. And [Mr. Coote. |
yet tractors are put on the free list, and a prohibitive duty is maintained on oil well drilling machinery. To put it mildly I think that is absurd. What I said about oil well drilling machinery will apply equally to all well drilling machinery. The Minister of Agriculture has told us in very strong language that mixed farming is the salvation of that part of western Canada. Now the Minister of Agriculture, who should back me up in this, knows that there is one kind of stock which must be well watered, and that is the kind of stock which we have out there. It cannot be watered on a great many of our farms at the present time because we have not sufficient water. Drilling for water is a very expensive proposition. On my own farm, I think, the well cost me $500, and it takes every drop of water we can get to water our work horses and mi ch cows. Under these circumstances how are we going into mixed farming, and into stock raising? I have a neighbour that drilled two dry holes, each 200 feet deep which cost him $800 and then he had no water. If there is one kind of machinery which should be put on the free list it is the machinery for drilling wells. I remember a few years ago reading an article in the Grain Growers' Guide by a city man who was trying to point out to the farmers that they could live so much cheaper than men in the cities. One of his arguments was that it did not cost us anything for water, whereas the city man had to pay water rates. Sir, the interest on my investment in that particular well and pump cost me far more than the water rates that that man paid in Winnipeg. If I have to pull that pump out of a 200-foot well for repairs that operation of itself will cost almost as much as it costs that city man for his year's supply of water. The trouble in this country is that we do not know each other's problems. I can assure you, Mr. Speaker, that from the remarks I have heard in this House there are many men here who do not understand the problems of the farmer in western Canada. I only hope those men who feel that they do not know these problems will come out and see them. I hope they will not think they have seen them from the window of a pullman car, but that they will come out to where I live and we will be very glad to take them out and introduce them to some of those problems. One of them, by the way, is grasshoppers. I have had three letters from that district in the last

The Budget-Mr. Coote
two days and this statement, or something very similar, was in each of the letters:
It is hot and dry and the grasshoppers are hatching by millions.
The other statement is:
We are having a dry time and fighting grasshoppers as hard as we know how to.
The reason I speak of these grasshoppers is that our Department of Agriculture assures us that the only way we can combat them is to poison them. Yet paris green, which is necessary for this purpose, is subject to a tariff duty. Last year I spent three of the worst weeks in my life fighting grasshoppers, and I assure hon. gentlemen that if they have never done this they have a treat in store for them should they ever be required to do so. I have seen grasshoppers so thick where they hatched that there was not room enough on the ground for all of them to hatch-they were three deep. They would eat off the wheat and make the land as bare as the floor of this House. The only way in which you can stop them is by poison, and yet poison is subject to a tariff tax, to maintain some manufacturer in eastern Canada. The farmer when he has to fight grasshoppers must fight with his back to the wall; if he does not poison them they will surely eat his crop.
Now, Mr. Speaker, I am going to try and get away from the tariff; I want to say just a few words in regard to the cattle industry. First of all I wish to commend the Minister of Finance for endeavouring to secure reciprocity with the United States. If it can be secured it will be the salvation of the cattle industry in western Canada; if it is not secured I do not know what is going to happen to the industry. Chicago is the natural market for the cattle of western Canada. When the Emergency Tariff was put into force by the United States it made it very difficult for our cattle men to ship to Chicago, or at least it left them very little profit after the cattle were shipped. At the same time that is where most of our cattle had to go last year. In the summer of 1919 and even 1920, some of the banks in western Canada were urging the ranchers to buy more cattle and even to buy grazing lands and leases. The winter of 1919 was one of the worst, from the ranchers point of view, which we have experienced in a great many years, and practically all these men were compelled to buy great quantities of feed it prices ranging from $20 to $60 per ton. Tn the summer of 1920 our hay crop was
very short again, and although this winter was not quite so hard, they were again forced to buy great quantities of feed at fairly stiff prices. In 1921 the United States put on their Emergency Tariff against our cattle, thus almost closing the Chicago market to our ranchers. This fact was pointed out to the government which was then in office, and the announcement was made through the papers that they had concluded arrangements with the banks that the banks should carry the cattle men over until this year so that they would not be forced to sell at the extremely low price prevailing last fall. In spite of all that appeared in the papers in this regard, it is an actual fact that many of these ranchers were forced last fall to sell many of their cattle which were not properly finished. In some cases they were forced to sell cattle which had cost them at least $90 per head to raise, for from $30 to $40 per head. I have a letter here from one rancher, and I know of the case personally, stating that he was forced by the bank to sell over a hundred head of cattle, three year old steers, at a little over $30 per head, although he had sufficient hay to carry them over the winter. These cattle had cost him $40 the year before, and he had fed them for a full year. If he had been allowed to carry these cattle over another season, there is absolutely no question that he would have made another $25 per head and I think the bank should have helped him. The bank which forced him to sell the cattle was the Merchants Bank of Canada, and within a couple of weeks after this forced sale was made, it was stated in the press, that this bank had lost in one bad loan approximately $4,000,000. That loan was made to a firm of stock brokers for what might be termed gambling purposes. The banks are forcing the real producer out of business, but will furnish money to stock brokers to gamble with.
I think it is a matter of regret that the Finance Minister should have considered it necessary to give his approval to the amalgamation of the Merchants Bank with the Bank of Montreal. This Parliament should have ordered a parliamentary inquiry into the Merchants Bank case. We might have secured very valuable information which would help us to make a proper revision of the Bank Act next year. This banking question is getting to be rather a burning one in western Canada. As a rule a three months' loan is no good to an agriculturalist. He would be better if he
The Budget-Mr. Coote

never got it. I think perhaps it would not be out of place if I should put before this House a few facts in connection with the banking business in this country. During the last eleven years, the number of banks in Canada decreased from twenty-nine to seventeen. Practically speaking, the directors of seventeen banks have the power to say whether any individual or group of individuals in Canada can secure any credit for carrying on their legitimate business enterprises. If the same decrease in number of banks through failures or amalgamation is continued for the next eleven years, we shall then have five banks in complete control of the credit of this country. The paid up capital stock of all Canadian banks has increased in the last ten years by only 32 per cent. Since the amalgamation of the Merchants Bank with the Bank of Montreal, this capital has decreased until it is now only 28 per cent greater than in 1911. During the ten year period from 1911 to 1921 the savings bank deposits increased by 109 per cent. This is one of the alarming features of the banking situation as the Toronto Globe recently said:
The most disquieting feature of banking in Canada is the continually decreasing ratio of capital to deposits. Twenty years ago capital constituted over 31 per cent of the funds in the chartered banks of Canada. At the close of 1921 capital represented less than 15 per cent of these funds, while six-sevenths of all the credit used in doing the country's business was based on the deposits of the general public. It is doubtful if this change is for the better. The investor in bank stock cannot withdraw his money at will. His capital provides a fairly solid foundation for the structure of bank credit. This cannot be said with assurance of deposits which may be, and usually are, withdrawn. The billion and three quarters of deposits in Canadian banks are of what is known as "time" deposits, and could be held in the vaults during any sudden gust of panic, but if the ratio between capital and deposits in 1901 was reasonable and secure, then capital to-day needs a very considerable re-enforcement. Is Canadian credit as solidly based on six-sevenths public deposits and one-seventh private capital and reserves as it should be?
Let me point out another very important aspect of this decreasing ratio of capital stock to deposits, which is that the double liability clause attached to the capital stock of our banks is supposed to give ample security to depositors. This security is seriously impaired, if the proper ratio between capital stock and deposits is not maintained. Another disquieting feature of the situation is the fact that one bank now controls approximately one-quarter of the savings bank deposits in Canada, and this bank in addition, controls one of the larg-
[Mr. Coote. |
est trust companies in this country. There are many other features which are of national concern but which I will not take time to mention now.
Surveying the whole situation, I think it shows the need of some new system of credit in this country. I would like very much to see the Government give consideration to the proposal of the hon. member for East Calgary (Mr. Irvine) for the appointment of a committee of the House to study every phase of this credit system. We have been told repeatedly during the last two days how Germany had put her people to work, and had produced goods so cheaply, and I have been told-I cannot guarantee this fact-that the reason Germany has been able to do it is that she has issued so much currency. I think the fact that Germany has done that, and has probably made it hard for this country and other countries to compete with her, makes it imperative that we must study this question to see if we cannot secure some better system of credit.
In addition to a better system of credit, we need a new system of distribution. I only desire to mention the question of distribution in connection with wheat. The farmers of western Canada, as hon. members know, or should know, are asking for a wheat board to distribute their wheat. I have been a little bit vexed sometimes at the comments which have appeared in the press in this part of the country regarding our demand for a wheat board. I just want to give you one sample which reads:
One aspect of the case is not an impressive indication of consistency. Ottawa finds it strange that they who most vigorously preach free trade or something near it, in things they have to buy are so insistent upon protection against possible loss or reduced profits in things they have to sell.
I presume that a great many people who read that article will nod their heads in approval of this little paragraph, without, even, a thought of the causes which brought the farmers of the West to their present financial condition, and which have driven them to ask for what this writer calls protection, although I do not for one moment admit there is any protection in it. These men have been brought to their present plight largely by means of protection for somebody else and at their expense- protection for the manufacturer of the farmer's implements, the manufacturer of the clothes he must wear, and the manufacturer of much of the food that he eats, of the furniture which is in his home, of the materials used in the buildings which he

The Budget-Mr. Campbell
must have to shelter him in that cold climate, and protection for the railway company so that they may be enabled to pay their usual dividends and maintain their reserve unimpaired regardless of whether the farmer himself can buy clothes and shoes for his own family. I think it ill becomes any journalist in this part of Canada to hand out such comments as those after the way in which the great majority of them have consistently supported our manufacturing friends in their demands for protection. This Parliament cannot escape responsibility in this matter, as they are responsible for the economic policy of this country Which has been maintained by them, in spite of very strong protests from the farmers on the prairies who are now asking for this measure to help in some degree to solve their marketing problem.
Possibly, Mr. Speaker, my remarks have been a little bit disjointed, because I have tried to cut out most of what has been previously referred to in this debate. So as not to weary hon. members and, I want to mention only one more matter, namely, the remarks made by the hon. member for Comox-Alberni (Mr. Neill), whose candour I certainly admire. In speaking of the tariff, he said something to the effect- I do not think I can quote his exact words -that the tariff was a geographical matter; that a man's view on the tariff was determined according to the province in which he lived, that as a citizen living in Brittish Columbia he was perfectly justified in advocating a protective tariff; that if he lived in Manitoba he would be justified in asking for free trade or something approaching it. If that be correct, I think I am "safe in saying that the people of my province would be quite agreeable to British Columbia or Ontario or any other province having a protective tariff, if they so wished, provided that they would give to our province the same privilege of having a tariff that would satisfy us. If they are not prepared to grant that, the only alternative is a compromise; but it is a great stretch of the imagination to say that the compromise offered by this budget is anything like a fair one.
I am not sure whether I should say these last few words which I have on this note or not.

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