1926-05-21

INQUIRY FOR RETURN

[Stage Direction]
HUDSON BAY RAILWAY AND PORT NELSON On the Orders of the Day:
Mr. G. B. NICHOLSON (East Algoma):: May I ask the Minister of Railways (Mr. Dunning) when I may expect the return asked for by an order of the House passed on March 22nd, for correspondence relating to a possible purchase of the Hudson Bay railway?
Hon. CHARLES A. DUNNING (Minister of Railways and Canals):	The return may
concern different departments. My impression is that so far as it relates to my own department it has gone forward, but I shall have the matter looked into.
3628	COMMONS
Locarno Treaty
LOCARNO TREATY On the Orders of the Day:


Mr. PETER McGIBBON (Muskoka-Ontario):: I would ask the Prime Minister, now that the session is drawing to a close, if he is willing to tell the House what attitude his government is going to take on the Locarno treaty.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: The Locarno treaty does
not became effective until after Germany has been admitted to the League of Nations. If we wait for another week or two to discuss the question at the regular time, I do not think the interests of any parties concerned will suffer. I may say to my hon. friend that it has been suggested that the subject of the Locarno agreement might properly come up for discussion when we are taking up the estimates relating to External Affairs, and I hope to bring on those estimates very shortly after we conclude with the budget resolutions.


Peter McGibbon: I understand that the
next meeting of the league will not take place until next September. I hope the Prime Minister will not keep us here till then.


William Lyon Mackenzie King: I am at one with my hon. friend in the hope that the session is drawing to a close.



WAYS AND MEANS


[Stage Direction]
The House in committee of Waj's and Means, Mr. Duff in the chair.
Customs tariff-469b. Machinery and apparatus and parts thereof for use only in producing unrefined oil or fertilizer from shales, not to include motive power of a class or kind made in Canada: British preferential tariff, free; intermediate tariff, free; genera/1 tariff, free.
Mr. ROBB:: The hon. member for East
Lamb ton (Mr. Armstrong) expressed a desire to speak on this item. I am not sure whether any other hon. gentlemen wish to speak on it or not. I suggest that we might clear the slate, with the understanding that the hon. member can speak on another item.
Item stands.


DRAWBACKS
[Stage Direction]
3. Resolved, that schedule B to the Customs tariff, 1907, as amended by chapter thirty-eight of the statutes of 1924, be further amended by striking thereout item 1031, the enumeration of goods, and the rate of drawback to the said item and to provide that the following items, enumerations and rates of drawback of customs duties be inserted in said schedule B:- Customs tariff-1050. Sugar, when used in the manufacture of loganberry wine. Provided that drawback shall not be payable in respect of any raw sugar produced in a British country-payable as drawback 99 per cent.

Sir HENRY DRAY'TON: What is the change there?
James Alexander Robb: It is a new item to permit the use of sugar in the manufacture of loganberry wine.


Sir HENRY DRAYTON:: Is that a new industry?


James Alexander Robb: It is not a new industry, but they claim they have not been given the same privileges as the other wine-makers throughout Canada. This places them in the same position as the others.
Mr, ROGERS: Is there anything else in the loganberry wine except sugar?


James Alexander Robb: You will have to ask somebody from British Columbia.


Mr. STEVENS:: Yes, the finest berries in the world.


Mr. SPENCER:: On account of the noise in the chamber it is impossible for us in this section of the House to hear anything that is being said.


The CHAIRMAN:: The hon. members will have to refrain from talking.


[Stage Direction]
Item agreed to.
Customs tariff-1051. Artificial silk tops and waste or artificial fibre silk tops and waste enumerated in tariff item 583A, when further manufactured after the 31st day of December, 1925, and prior to the 1st day of January, 1928-payable as drawback 80 per cent.
Henry Lumley Drayton: What is the change here?


James Alexander Robb: This is extending the privilege they have had for some years for the further period of two years only. The article is not made in Canada. It is used in Canadian mills for making wool.


Mr. GARLAND (Bow River):: I have not heard one word the minister has uttered.


James Alexander Robb: I will speak more loudly.


Edward Joseph Garland: If it is impossible for the minister to make himself heard where he is sitting, perhaps the Minister of National Defence will permit him to take his seat, and then we might all hear.


Mr. CHAPLIN (Lincoln):: This item is under tariff number 583A. I understand this matter was dealt with during the last several sessions of parliament. The article mentioned herein, in regard to which this item is submitted, is now being manufactured at Cornwall, and yet the minister wants to extend this provision for a longer period. Is that the wish of the people who originally bad this item put on the statute book?

Ways and Means-Drawbacks


James Alexander Robb: The people to whom this was originally given have been consulted, and they offered no objection to this extension. My hon. friend will observe that it refers to waste, and they have not made any of this waste yet.


James Dew Chaplin: This item is to be taken into consideration along with the other item. Just as soon as they begin to manufacture they will have waste. They started to manufacture only a few months before the first of January, and they could not be expected to have waste. If we change that item now, what becomes of them during the next six months or a year?


James Alexander Robb: It is extended for two years only and it has been represented that the people interested have no objection.


Mr. TOLMIE:: Reverting to item 1050, in connection with loganberry wine, is the condition in that item, with reference to sugar produced in British countries, the same as that which applies to grape wine?


James Alexander Robb: The same condition.


[Stage Direction]
Item agreed to.
Customs tariff-1052. Artificial silk yarns or filaments enumerated in tariff item 5S3aa, imported prior to the 1st day of January, 1926, when further manufactured prior to the 1st day of January 1927-payable as drawback 80 per cent.
James Alexander Robb: This is to permit them to use the stock on hand on the 1st of January, in order to give them a year to clean up.


[Stage Direction]
Item agreed to.
Customs tariff-1053. Cellulose acetate in powdered form imported after the thirtieth day of April, 1927, and prior to the first day of November, 1927, when imported by manufacturers and further manufactured in their own factories before the first day of December, 1927-payable as drawback 99 per cent.
James Alexander Robb: This is for a new industry, a very large one, which it is proposed to establish at Drummondville, and this is given them for a six months' period until they get started.


Mr. MANION:: Are there any other industries of this kind in Canada.


James Alexander Robb: No, it is a new industry. It is represented to us that it is different from any of the other industries.


James Dew Chaplin: What is the difference between this industry and the one established at Cornwall? They are both manufacturing artificial silk are they not; both products are made by practically the same process, out of pulp, and both in exactly the same way, or as nearly as possible in the same way.


James Alexander Robb: It has been represented to us by the promoters that in many respects they are different products.


James Dew Chaplin: What do the gentlemen who are not the promoters but are the beneficiaries under the last tariff say with regard to it?


James Alexander Robb: I am interested in getting new industries in the country. It is represented that this concern will make a capital investment of $10,000,000.


James Dew Chaplin: Is the minister not at all interested in keeping faith with the gentlemen with whom he made arrangement a year ago? The minister made an arrangement a year ago with another firm already established, and now by this tariff he takes off this duty-


James Alexander Robb: No.


James Dew Chaplin: -by permitting this cellulose acetate to be brought in. This acetate is the basis of artificial silk. The cost of cellulose acetate is 75 per cent of the cost of artificial silk.


James Alexander Robb: My hon. friend will observe that this is only for a period of six months. The department has had no objection from the other industries which have been established.


Henry Herbert Stevens: Is it not true that, in the case of the industry established in Cornwall the permission to import or to secure the drawback on cellulose acetate was extended until they had installed the necessary plant and machinery to make their own cellulose acetate; that in the period so fixed in previous legislation they expended the capital, put in their own plant and are now successfully making cellulose acetate? The minister extends this privilege to a sister concern, a new concern, as he says, but does he not realize the injustice he is doing to the concern established a couple of years ago which acted in perfectly good faith?


James Alexander Robb: No. The business is so large that the older concern is not able to supply the requirements of the industry. I repeat that they have no objections.


Henry Herbert Stevens: Is it intended to limit thi3 strictly to six months?


James Alexander Robb: That is what the item says.


James Dew Chaplin: The minister
says that they have no objections. Has he had any correspondence with that company?


James Alexander Robb: I have had correspondence, but they have offered no serious objections.

Ways and Means-Drawbacks


James Dew Chaplin: The minister
uses the word " serious " now. Will he read some of the correspondence so as to let us see whether the objection is serious or not? The minister said a moment ago that he had no objection from this company upon whom this duty was levied in this country. Now he tells us that there is no serious objection. It is only fair that the minister who has had correspondence with these people should place it before the House so that we may know whether the objection is serious or not.


William Duff: Shall the item carry?


James Dew Chaplin: No. Surely
the minister is going to make some statement in reference to the matter. What does he mean by "serious"? Is he serious himself? It is only fair to the committee that he should put on record the letter showing whether there are any objections or not. The truth of the matter is that this House imposed a duty on an article so that a firm might make it in this country. That duty came into effect on the first January of this year and this firm has had three months and fifteen days of protection. Now the bars are let down for another company. It does not make any difference whether this other company is large or small, the arrangement was made; it was on the faith of the government that this company, one of the best in the world, came here from England. They have established themselves in this country on the basis laid down by this government, on the promise of a duty, and this government left them with three months and fifteen days of that protection. Now they have practically taken it off in favour of another company.


James Alexander Robb: If my hon. friend moves to have the correspondence brought down there will be no objection whatever. I repeat: This is only for a period of six months in order that this company may establish itself. It represents to us that the product is not the same; but even if we admit for a moment that the product is the same, does my hon. friend argue that for all time Canada is going to give a monopoly to one industry?


James Dew Chaplin: I never argued any such thing. I say that when a duty is imposed on an article, anyone can come in and take advantage of the duty the same as anyone else. What right has the minister to take the protection away from one firm and give another the benefit of it? That is what is being done by this measure.


James Alexander Robb: We are giving this only for a period of six months and we are giving to this concern concessions similar to those given to the other.


James Dew Chaplin: But the minister made an arrangement with another firm that the duty would come into effect on a certain day. Instead of carrying out that arrangement, the minister says that they are doing this only for six months. In other words the minister says that the government are justified in breaking their word for six months.


Mr. STEWART (Argenteuil):: Has my hon. friend in his possession correspondence from the company complaining in this regard?


James Dew Chaplin: The company
did not correspond with me. The minister has the correspondence.


Charles A. Stewart: Is the hon. member speaking on behalf of the company? He seems to be very much exercised over the matter.


James Dew Chaplin: 
James Alexander Robb: They take the same attitude
to-day.


James Dew Chaplin: They take the same attitude to-day? How do we know that? Why should the minister refuse to put the correspondence on the table and let us see for ourselves? For my part I do not agree with the minister at all that they take the same attitude. However, the result was that the time was extended and the duty was to take effect on January 1 last. With these budget resolutions now before us, however, we find that these people have had only three months and fifteen days of protection. Another firm comes along and the minister says, "Oh, well, we have somebody big to attend to now. We have to help them." Why should the minister help someone else at the expense of the people who are already here and with whom he has made an arrangement? The thing is absurd; it is unreasonable; and it is eminently unjust. It is something that is not at all creditable to the minister.


James Alexander Robb: My hon. friend apparently
has not read the resolution. He says that they have had only three months' protection. If he reads the resolution he will observe that its provisions will begin to take effect only on April 30. 1927. and will continue in force until November. 1927. Now I confess at once, after listening to my hon. friend, that I have some doubts as to whether he represents the views of this company or not. If he does, then the representative of the Manufacturers' Association in Ottawa, v/ho called upon the minister, has misrepresented the situation, for he said to mg that these people offered no objection and did not regard the change as serious.


James Dew Chaplin: This is my
answer to that, statement:	I do not see why
the minister should want to hold someone else responsible now. Why should he drag somebody else into the proposition? That is very much in line with his statement last night, which in my opinion was very much beside the point, to the effect that another gentleman had camped on his doorstep on behalf of some other firm. It seems to me the Minister would do well to leave out such irrelevancies, especially as I understand that he has had correspondence with these people. If he has had such correspondence in reference to this matter, why should he not put it on the table?


James Alexander Robb: The correspondence of the
Department of Finance is not carried around by the minister or anybody else. If the hon. member moves for a return I will table it.

Ways and Means-Drawbacks


James Dew Chaplin: I will ask the
minister to allow the matter to stand for the time being until the correspondence is tabled.


James Alexander Robb: No; I cannot let it stand.


Robert James Manion: I confess I am at a loss
to imagine why the minister should refuse the request of the hon. member for Lincoln that this matter be allowed to stand pending the return of the correspondence. If the minister is acting in good faith, as I beileve he is, I see no reason why he should object to bringing down the correspondence before the item is disposed of, in view of the fact that the hon. member makes rather serious charges against him.


James Alexander Robb: My reason for not holding
over the item is the fact that this House comprises 245 members and the hon. member for Lincoln is only one individual. I do not propose to hold up the rest of the House on his account. -


Robert James Manion: Let me point out to the
minister that the hon. member for Lincoln, is one of 116 members sitting around him, the vast majority of whom most probably share his views. He is therefore not alone in this matter. Apparently, if we are to draw any conclusion from this incident, it is this-that the Minister of Finance will enter into an argeement with some corporation from England to establish an industry in this country and, having given them a solemn undertaking to protect them for a certain length of time, he will go back on his word after a very brief interval. In other words, the government again break faith with those to whom they have pledged themselves to carry out some undertaking.


Mr. DUNNING:: That is not so.


Robert James Manion: Who says it is not so?


Charles Avery Dunning: Read the resolution.


Robert James Manion: I know quite rvell what
the resolution contains. But does it make any difference that there is a slight change in the time specified in the resolution? The fact is that the minister is violating his agreement.


James Alexander Robb: The representative of the
Manufacturers' Association has said that the company offers no objection.


Robert James Manion: But the representative of
that association is not the representative of the company, and it is the company with whom the minister dealt.


James Alexander Robb: Does my hon. friend speak
for the company?


Robert James Manion: No; nor do I know the
company at all. But I have heard this dis. cussion, and I have heard the member for Lincoln make a statement which the minister so far has not denied, that an agreement was entered into with the company to. give them protection until they were well established. And now the minister comes along, when another company comes on the scene, and proposes to ignore his agreement, in order that this other company may be established in Quebec. That is the situation as it is represented to the minister now.


James Alexander Robb: Is my hon. friend opposed
to industries being established in Quebec?


Robert James Manion: No; I am as good a friend of Quebec as the minister is. The minister will not question that. I have never had anything against Quebec. I do believe, however, in living up to one's agreements; I believe in keeping faith with the industries of Ontario as well as with those of Quebec. Now, are we to draw the conclusion from the minister's attitude in this matter that no corporation that proposes to set up in this country maj'' place confidence in this government for any longer period than three and a half months? Are we to assume that in so short a time this government will set aside an agreement it makes with such a corporation for the reason that some other firm wishes to establish an industry? It does not seem to me that we shall attract many capitalists if we pursue such a policy.


James Alexander Robb: Before the item passes I want to clear up this matter. We never agreed with any company. Neither this government nor the preceding nor any other government ever undertook to give the company a monopoly of business for all time, and the company recognize this fact, because through the representative of the Manufacturers' Association they have said that they offer no objection to the item. I want to know now whether my hon. friend from Lincoln and my hon. friend (Mr. Manion) are speaking on behalf of the company?


Robert James Manion: I cannot speak for the
hon. member for Lincoln, but I have already told the minister that I do not even know the name of the company. But I have heard the matter discussed this afternoon and I heard, the hon. member for Lincoln make a reasonable request, that the minister allow the item to stand over until to-night and table the correspondence in the meantime. Why cannot the minister let the item stand? We

Ways and Means-Drawbacks
shall not get through these resolutions tonight, and to my mind the minister is taking a very unreasonable and unfair stand in this matter.


James Dew Chaplin: The minister
again implies that I am acting for the company. Let me assure him, as I have already done, that I am not doing anything of the kind. I am saying, however-I have said it many times before-that in my opinion the minister is not treating these people fairly. He wants to know whether they have complained to me. No. But I understand that they complained to the minister. Now, the minister says the matter is not serious. Well, if that be so why can he not table the correspondence and let us see for ourselves just what it says?


Mr. LAPOINTE:: Even if they do complain, why should parliament be deprived of the right to change the tariff in any matter?


Robert James Manion: Parliament is not being
deprived of any right, but we are simply asking that the correspondence 'be brought down.


Ernest Lapointe: In regard to tariff matters the House of Commons is supreme.


James Dew Chaplin: Undoubtedly.
Parliament is supreme, and the minister is getting his cue from the hon. gentleman alongside him when he makes that statement. But is there a government at all?


Ernest Lapointe: Yes.


James Dew Chaplin: And does that
government make an agreement and then break it in six months? That is what you have done and what you evidently will continue to do.


Ernest Lapointe: Governments cannot
make agreements on tariff matters.


Henry Lumley Drayton: The minister
on reflection will, I think, postpone consideration of the item. I fancy he will make headway if he does so. We know nothing of the matter, having had no information regarding it until we came into the House. The minister knows that after some difficulty-I will not expatiate on that point-the member for Lincoln discovered that objections had been made, and he finds now that there has been correspondence on the subject. He wants to have that correspondence brought down, and the minister is willing to bring it down but he proposes to do so at a time when the correspondence can do not the slightest good. The Minister of Justice (Mr. Lapointe) gets very wrathy and declares that parliament is
supreme. Who is questioning that fact? Who is challenging the right of parliament in any respect? But may I suggest to the Minister of Justice that we on this side constitute a part of parliament and that we too have some rights? We have got at least 116 out of 245, and we propose to exercise those rights. And we are justified in doing so. Now, the only way that parliament-this supreme body -can handle this matter intelligently surely is with the evidence before it. The minister says he has the correspondence and that we can have it after this is all settled. I wonder if the Minister of Justice-	.


Ernest Lapointe: Whether this company
likes it or not, in what way does it affect the merits of the proposal?


Henry Lumley Drayton: We might, for example, Mr. Chairmap, know for the first time something about the reasons which are actuating any tariff change; we might, for example, know whether there were any real reasons against it; we might, for example, get to know whether the government are acting on sound reason or without any reason at all. So far as I am concerned. I have absolutely nothing against this item. I am frank to say I know nothing about it. But I do think, Mr. Chairman, we will make better headway if when a request which does seem to me reasonable, a request which flows from what the minister himself says, that he has this corresnon Hence is not lightly turned down. Apparently, from what the minister says, there are some objections to the legislation. I wonder if the Minister of Justice thinks _ we ought to decide the question without knowing anything about the objections, without knowing anything about the merits. There is no doubt as to what these people want. It is a question of the merits they show in their correspondence, that is all. Is not the House entitled to consider the merits one way or the other; and how can they do so without having the facts before them? As I say, I know nothing about this item, but, it does seem to me we will get better results if we deal frankly with each other, and if these objections, whether good or bad, be made known to the House before the House acts.


Mr. KAISER:: The Minister of Justice
says that parliament is supreme in these tariff matters; but yesterday when a motion was proposed by the hon. member for South Oxford (Mr. Sutherland) to raise the tariff on meats to five cents, the Chair ruled that parliament had nothing to do with it, that it was the discretion of the government alone.

Ways and Means-Drawbacks


William Duff: The hon. gentleman is mistaken; that was not the reason at all.


Mr. CAHAN:: Mr. Chairman, so far as
this industry is concerned which is to be established in the province of Quebec, I am naturally desirous of giving every advantage' to it or to any other new industiy which may be established in that province or in any other province. But the only reason which we have so far before the House for the passing of the item in its present form is that some representative of the Canadian Manufacturers' Association, orally or in writing, stated to the Minister of Finance that there is no reasonable objection to it. Now,
I for one, although a Conservative and a protectionist, absolutely refuse, even if the Minister of Finance is willing to do so, to put my conscience and my judgment in the keeping of any representative of the Manufacturers' Association.


Ernest Lapointe: I agree with that. .


Charles Hazlitt Cahan: I think we are entitled to know if there is any serious objeetion. The minister admits that there is objection, but in his mind it is not serious. Now, many objections have been presented in argument before this House which the minister does not regard as serious-


James Alexander Robb: Hear, hear.


Charles Hazlitt Cahan: -but which we regard as very vital, material, relevant and important. Therefore I suggest that in keeping with the usual courtesy of the minister it will assist in passing those items as expeditiously as possible if he does lay before the House the information which he has. The Minister of Justice suggests that there is no ground for inviting the presentation of this correspondence to the House because it does not matter what protest has been made, it will not influence the opinion and judgment of the government. Now I am sure the Minister of Justice does not intend to go that far. He is certainly one of the most courteous of ministers, and he is always more courteous than his suggestion would indicate. I am sure he really does not mean that.


Ernest Lapointe: A moment of weakness.


Charles Hazlitt Cahan: Having knowledge of the
objection, the minister does not regard it as very serious or very relevant; but as the question has been raised with regard to its seriousness and relevancy, why not allow the members of this House to judge for themselves, to have the actual facts presented by the correspondence?


James Alexander Robb: I observe that the hon. member for East Lambton (Mr. Armstrong) is now in his seat and I am prepared to take up item 469b-in view of the very great courtesy with which the hon. member for Lincoln has asked for this.


James Dew Chaplin: Mr. Chairman,
I have to thank the minister very heartily for his consideration.
Item stands.
Customs tariff-469b. Machinery a<nd apparatus and parts thereof for use only in producing unrefined oil or fertilizer from shales, not to include motive power of a class or kind made in Canada: British preferential tariff, free; intermediate tariff, free; general tariff, free.


Mr. ARMSTRONG (Lambton):: Mr. Chairman, I appreciate the courtesy which the minister has extended to me in allowing me the few minutes' grace necessary to bring up this matter. The industry which I am speaking for is located in my riding and over S3,000,000 has been invested in it. Thousands of people in the town and adjacent villages are vitally interested in this industry. In the first place, let me say that I have no objection whatever to the item as it stands. I am merely bringing up the subject at this point, this being the only item in which crude petroleum is mentioned. The minister supported the Hon. Mr. Fielding in 1923 in removing the bounty on crude petroleum. At that time there was a bounty of a cent and a half per gallon. This bounty was to offset the removal of the protective tariff. The minister is well aware that every bit of casing, pumps, tubing, rods, valves, and tools of all kinds used in the oil industry have either to be purchased from a protected industry in Canada, or, if that material is brought in from the United States, a duty of from 27J per cent to 30 per cent has to be paid thereon, in addition to sales tax of five per cent, all of which goes into the treasury of this country. So it will readily be seen that it is impossible for the producers to carry on under present conditions, if they have to buy their supplies from industries in this country protected to that extent. The minister has been told this a number of times; delegations have come to Ottawa and placed this matter before him and he has been urged in the strongest possible terms to give some relief to this industry. Last session there was placed before the minister the report of an investigation made by Mr. Hume of the Geological Survey, which showed conclusively that the industry could not carry on under present conditions. I will

Ways and Means-Customs Tariff
admit that a great many properties are continuing to operate, but I do not know of one being carried on at a profit. I can safely say that practically every property in that western district is being carried on at a loss, owing to the conditions I have stated.
The minister was urged last year to make an investigation, and he was good enough to do so. He sent his expert, Mr. Russell, who is now before him, to investigate that industry. Mr. Russell spent a considerable time there and, as we thought, made a very fair investigation. He was given every opportunity to investigate every part of the industry; he had statements placed before him of the operation of a number of the large producing companies; they showed their books to him, gave him financial statements, and placed before him conclusive evidence showing that they could not possibly carry on without some form of protection or bounty, or the removal of at least the duty on supplies which they purchase from protected industries. I understand that Mr. Russell made a report upon his return to Ottawa, as was natural. I have asked for that report, which I think is a reasonable request, but unfortunately the minister has not seen fit to bring it down. I am satisfied that if it were placed before parliament it would be seen that Mr. Russell has come to the same conclusion as Mr. Hume, that this industry could not possibly carry on.
I received a letter from the minister a day or so ago asking why the production of crude oil in Canada had materially increased since the reduction of this bounty. I can answer that in this way, that so far as the old districts are concerned the production has decreased. But two or three years ago an important well was drilled by the Imperial Oil Company in the northwest, and that well is responsible for all the extra oil worth mentioning that has been produced in this country. Millions of dollars were spent by the Imperial Oil Company before that well was brought in, and millions of dollars have since been spent by that company and others in trying to bring in another such well. That well is not producing what we call crude oil, but it is oil of a more refined nature, and I am informed that it can be taken from the well and placed right in the motor, while the crude oil produced elsewhere has to be further refined.
These are just some of the things I would like to place before the minister, and I would like to urge that this industry be given some relief. I do not wish to take up the time of the House in going into further details, but I sincerely hope the minister has come to some definite conclusion in regard to this
matter. I looked upon the minister as a fair minded man in years past, when I had the privilege of sitting in the House with him, and I cannot believe that he will continue to keep the producers of crude oil in western Ontario in their present position. I tell him frankly that unless some immediate assistance is given that industry, inside of twelve months it will be in a very much worse condition than it is to-day.


Mr. MacLAREN:: This item deals with
the duty on special machinery connected with the production of oil from shale and the production of fertilizer from oil bear-i p.m. ing-shale. This is a new industry in Canada; at present no such operations are being conducted in a commercial way, and the necessary machinery for this work is not made in Canada. This is therefore an instance where it seems proper that the tariff should allow this expensive and special machinery to be brought into Canada without duty. It will not interfere with any firm or firms making this machinery7 in Canada, because this machinery is not made here. I therefore take this opportunity of approving of the item, because I hope it will lead to the establishment in Canada of these industries, and because it does not interfere, as I have already said, with any manufacturers in Canada who make this special apparatus. So much for that.
I should also like to say a word in reference io the bounty on oil. There was a bounty granted by parliament for a number of years, but two or three years ago it was removed by the previous Minister of Finance. His reason was that there were immediate prospects of there being a large discovery of oil in the northwest of Canada, which, should it occur, would involve the payment of a very heavy sum of money by way of bounty to the owners of these oil wells. At the time it was pointed out in this House that that was a premature decision. While we hoped that the oil would be found, actually it was not found, and it has not been found up to to-day in large quantities. It was also pressed on the minister that the amount of bounty to be paid might be safeguarded by limiting payments to a certain amount of production, to a certain number of barrels from any particular well in a certain time. That would have safeguarded against any great expenditure of the funds of the country. However, that view did not prevail, and with two years' notice the bounty was removed. I would again take this opportunity of stating that I think the bounty was removed prematurely. Actually the oil
3636	COMMONS
Ways and Means-Customs Tariff
wells that we have in Canada to-day are not remunerative; they require further development. The oil wells in the county of Albert, for instance, at the present time are just able to carry on; I do not think they pay a dividend to the shareholders at the present time.
My observations, therefore,, Mr. Chairman, on this matter are that I am glad to have the opportunity of approving of this item because it gives ian opportunity for the further development of a new industry which I trust will prove a profitable one. Secondly, I hope that the matter of bounty on oil production in Canada, properly safeguarded, will still remain in the memory of the Minister of Finance, and that he may see his way to restore the bounty for a certain period.


Ernest Frederick Armstrong: May I
ask the minister to consider this question, if he does not care to give his decision to-day, and to take into consideration the fact mentioned by the hon. member who has just taken his seat to the effect that the payment of the bounty might be limited to a certain number of barrels per day, say five barrels, or less. In that way the treasury would be safeguarded, no undue advantage could be taken of the bounty, and in addition, the industry could be carried on in a reasonable way.


James Alexander Robb: I will do the hon. gentlemen who have just spoken the credit of saying that this is not the first time they have represented to me that there should be a bounty for this industry. They understand that while their duty towards their particular districts is to urge the payment of bounties to help along local industries, my duty is to safeguard the treasury; I must look upon the whole of Canada, and see how it is going to affect the Dominion as a whole. I understand that there is no opposition whatever to the item under consideration, but that hon. gentlemen have taken advantage of this opportunity to present once more to the government the views they have presented so ably and so frequently to the minister in his office regarding the bounty. I gather from the observations of my hon. friend from East Lambton that the oil wells in that district are handicapped to a certain extent because they have to buy supplies in a protected market. We had that matter very carefully looked into. Those industries are located in the oil district near Petrolia-


Ernest Frederick Armstrong: No.


James Alexander Robb: Well, to a degree; not all
perhaps, and they rather objected to us taking away the protection which they now enjoy. We have had representations made to us by hon. gentlemen in other parts of the country where they dig the wells very deep that the casings and certain of the pipes required for these deep wells are not obtainable in Canada. They say that they have obtained these pipes and casings from some of the industries in Canada that are protected, but that they do not stand up under the pressure when they go down to great depth, and we have been urged to reduce the duty and make some concessions in order to allow these pipes and casings to come in. Let me say to hon. gentlemen opposite that I have had these representations presented to me not only from gentlemen on this side, supporters of the government, but from some hon. gentlemen opposite, who have said to us that we might make some concession by way of tariff reductions on certain casings required for the oil industry. I make this statement now so that the industries in Canada which enjoy the protection might at least attempt to improve the quality of their goods. I think it is reasonable, if they get the protection, that they should at least be in a position to supply the goods that are required by the trade. It is true that in the older sections the flow of the oil wells has somewhat diminished, but in other sections it has increased, and my predecessor, the Right Hon. Mr. Fielding, having in mind the advertisements we were reading of the great possibilities of developing gushers overnight, with a great flow of oil, and the danger of the bounty on these gushers bankrupting the treasury, gave notice that the bounty, which had prevailed in Canada for many years, since 1903 or 1904, I think, would be 1\ cents a gallon up to the 30th of June, 1924, and then be reduced to three-quarters of a cent a gallon up to the 30th of June, 1925, when it would be discontinued. Now it is remarkable that while the bounty was on, the flow of oil decreased rather than increased, and as soon as the bounty was taken off, the production of crude oil increased.


Mr. RYCKMAN:: Is that due to the
government?


James Alexander Robb: Well, there was greater production. I have not the figures for many years back, but the total production of crude petroleum in Canada in 1922 was 179,068 barrels; 1923, 170,169 barrels; 1924, 160,773 barrels. During that period we were paying the bounty, also during the six months end-

Ways and Means-Customs Tariff
mg June 30, 1925, for which six months the production was 80,970 barrels. Then, for the following six months, after the bounty had ceased, from the 1st of July to the 31st of December the production, which in the previous six months had been 80,970 barrels, increased without the bounty to 237,283 barrels. With these figures before us I ask hon. gentlemen opposite, I appeal to my genial friend the former Minister of Finance, would we have been justified in going back to the bounty system?


Ernest Frederick Armstrong: I know
the minister is well aware of the reason for that increase; he knows quite well that it is due to that one well of which I spoke a few minutes ago, which has been producing four hundred or five hundred barrels of oil a day. It is folly, in a way, to attribute the increase to the reduction of the bounty.


James Alexander Robb: I did not attribute it to
the reduction of the bounty.


Ernest Frederick Armstrong: The minister has tried to lead the House to believe that since the bounty was removed the increase had been brought about. I cannot possibly see why the minister persists in compelling this industry to continue to purchase its supplies from protected industries in Canada, and expect them to compete with the tremendous production in the United States. He must realize that in the United States the flush production to-day amounts to over two million barrels a day, and this average has been maintained for the past year. The minister must also remember that in the United States, with their flush production, they have no such thing as a sales tax and no such thing as a duty on the materials they have to purchase. How, then, can he expect this industry to carry on under these conditions? The minister has removed the duty on the larger casings and supplies used in the large wells in the northwest, so why does he not remove the duty on the tubing and supplies used in the eastern territory ? That is surely a fair and reasonable request. Let me repeat. The minister has removed the duty on the large casings and supplies coming into Canada for use in the northwest territory, while the small tubing and supplies used in the east are still under a duty of from 274 per cent to 30 per cent, with the sales tax added. Surely it is not fair to the men in the old territory to expect them to carry on under such conditions. Might I ask the minister whether or not he has considered this phase of the question?


REVISED
James Alexander Robb: I can assure my hon. friend
now that I will look very carefully into this part of his observations. He understands, of course, that tariff changes require some time to consider. I think my hon. friend is on fair ground when he attacks the imposition of the sales tax, and I will have to look into that very carefully as to how it may be administered and restricted to this particular industry. I will take the matter under consideration.


Ernest Frederick Armstrong: I am
very much indebted to the minister; I am sure Mr. Russell will bear me out in the statements I have made.


[Stage Direction]
Item agreed to.
Customs tariff-438. Locomotives and motor cars for railways and tramways: British preferential tariff, 22.J per cent; intermediate tariff, 30 per cent; general tariff, 35 per cent.
Henry Lumley Drayton: There is no
change at all, is there?


James Alexander Robb: There is no change in the
rate.
I beg to move that item 438 be amended to read as follows:
Locomotives and motor cars for railways and tramways, and chassis, tops, wheels and bodies for same.


Henry Lumley Drayton: That really
means parts for railway motor cars?


James Alexander Robb: Yes.


Henry Lumley Drayton: What is the
change for?


James Alexander Robb: For administrative purposes
to cover chassis, tops, wheels and bodies.


Henry Lumley Drayton: In the past
what rate has been given to those parts?


James Alexander Robb: The same as appears now.


Henry Lumley Drayton: There is absolutely no change?


James Alexander Robb: No change.
Item as amended agreed to.
Customs tariff-438a. Automobiles and motor vehicles of all kinds, n.o.p.: British preferential tariff, 15 per cent; intermediate tariff, 25 per cent; general tariff, 27i per cent.


James Alexander Robb: I beg to move that the following be substituted for 438a:
Automobiles and motor vehicles of all kinds, n.o.p., and chassis for same.
Sir HENRY' DRAYTON:	Mr. Chairman,
this is one of the items we have heard a great deal about. My hon. friend now has the opportunity-which I think the right


EDITION
[Stage Direction]
Ways and Means-Drawbacks
hon. Prime Minister sighed for-of producing the expert and furnishing information as to the exact manner in which this reduction was arrived at. Will my hon. friend now give the details that the Prime Minister said he had?
James Alexander Robb: As we get into the details I
shall be very glad to give my hon. friend the information. In the first place let me give him the run of the business. For the fiscal year ending March 31, 1925, the total importation of cars amounted to a value of $8,726,714. Of this total, cars of an estimated value of 11,000 each and under accounted for $1,731,340, while cars of an estimated value in excess of $1,000 each accounted for the balance of $6,995,374. Of passenger automobiles made in Canada on which excise tax was paid during the fiscal year ending March 31. 1925, there were 58,547 cars of a value of $1,200 each and under, valued at $35,047,097, and 6,205 cars of more than $1,200 each, valued at $10,308,230.


Henry Lumley Drayton: What was paid under the different luxury taxes, sales tax and the like?


James Alexander Robb: I am not sure that I have that information at hand just now, but my hon. friend will recall that besides the duty and the 5 per cent sales tax, on cars of $1,200 and under the excise tax is 5 per cent, and that on cars costing $1,200 and over it is 10 per cent.


Henry Lumley Drayton: The luxury tax over and above the sales tax?


James Alexander Robb: Yes.


Henry Lumley Drayton: I have no doubt the minister will proceed and give me the information which shows the manner in which this reduction was arrived at.


James Alexander Robb: The reduction in duty?


Henry Lumley Drayton: Yes.
Mr, ROBB: It was estimated on the basis of the experience we have had in the department. My hon. friend knows that 47 per cent of the automobile business in Canada last year was an export business, and we can check that up fairly well by the refunds we have to make when the machine is exported. We give them a refund of 99 per cent, and from what we make the calculation arriving generally at the cost of the machine and the general production in Canada. My hon. friend knows that in the automobile business, as well as in the liquor business, cigarette business, the silk business, and some other businesses, the high duties have made it CSir Henry Drayton.]
profitable for smugglers. There was an expression of opinion in this House a year ago, and I am bound to admit that I opposed it, although I thought at the time I was wrong. I happen to live in a county where I could observe the smuggling and could hear the complaints of my neighbours of the dangers along the road from the smuggler, who drives along rapidly, with no regard for the farmer's wife who may be on the road. I made up my mind that if the smuggling was so profitable it was worth while looking into the observations made last year. I observed there was a general sentiment throughout Canada that the automobile industry was taking full advantage of the duty. I am bound to say, in all fairness to some other industries that were supplying parts in the automobile business, that after having looked into the matter I made up my mind that these people were not taking full advantage of the protection, but the automobile people were taking the very last farthing they could get out of the-protection, and we considered it was reasonable that there should be a reduction of the duty. I think that sentiment prevails not only on this side of the House, but on the other side, and I am satisfied, having listened: to all the arguments for and against, that the government are dealing pretty fairly and: generously with the industry, and that they are receiving now sufficient protection to make the industry profitable.


Henry Lumley Drayton: I want to understand my hon. friend and to be absolutely fair with him. Has the minister come to any conclusion as to what protection the industry should have?


James Alexander Robb: As we proceed with this discussion I will have something to say.


Henry Lumley Drayton: But we are on it now. Has the minister any idea of what protection the industry should have? I think the question is perfectly fair.


James Alexander Robb: After looking into the automobile industry I was confirmed in my opinion that we were absolutely right in putting in the clause that 50 per cent of the car should be manufactured in Canada, because I discovered that some of these concerns in Canada were not manufacturing plants, but were simply assembling plants, and that they were in Canada, not so much for the Canadian business, but on account of the advantages they enjoyed in the export markets of the world, under the export treaties we have with: other countries. My hon. friend asks what protection they should have. Well, they are getting a rate of 274 per cent on cam over

Ways and Means-Drawbacks
the value of $1,200 and 20 per cent on cars under that value. Now my hon. friend is going to ask what is the net protection-


Henry Lumley Drayton: Yes.


James Alexander Robb: Because the manufacturers of parts come in there. When the manufacturers of parts can sit down and agree among themselves, I will be in a better position to discuss this matter with them. I can quite understand why hon. members in this House are divided in opinion over this automobile duty, but I can assure them that the division of opinion here is not any greater than the division of opinion among the manufacturers of automobiles and automobile parts.


Henry Lumley Drayton: Am I correct
then in gathering from what the minister says that I was right in the assertion I made during the debate on the budget, to which I understood him at the time to give assent, namely, that at the time these budget proposals were made the government had no information whatever as to the net protection the industry was receiving?


James Alexander Robb: No, I would not admit that.


Henry Lumley Drayton: If not, let us get the facts. I think I am right, but the minister may not want to admit it. I know he agrees I am right; he did before.


William Duff: I would make the suggestion that we might as well consider items 438a and 438b together, if there is no objection.


Henry Lumley Drayton: Better take them separately, they are entirely different.


James Alexander Robb: I have the figures of the drawback on automobiles. Does my hon. friend wish me to put them on record. I have a statement of the drawback paid on automobiles and their exported value. This is the sworn statement of the manufacturer. I suppose we can accept that statement. It is as follows:
Drawback
Make of car	Sworn value claimed
Chrysler four (after July, 1925).	$697	56	$145	01Chrysler coupe	
732	50	180	21Chrysler coach	
758	00	188	62Chrysler sedan	
808	00	202	85
We will take another car which does not come quite in this class, but it will give an idea of the run of them:
Dcdgs touring (after September
1924)	$ 801 04	$ 125 88Dodge sedan	
1,202	32	173	95Ford runabout	
282	00	19	29Ford tudor sedan	
494	00	62	73
If there are an3'- other cars that hon. gentlemen are interested in I have them here.


Peter McGibbon: Has the minister those in percentages?


James Alexander Robb: No. Let us come now to the General Motors:
Make of car		Drawback
(After 26th November, 1923)	Sworn value	claimedChevrolet sedan	. $ 604 54	$ 83 03Chevrolet coupe	. 540 54	131 91Buick sedan, No. 50	. 1,674 16	376 56Buick limousine sedan	. 1,755 34	317 44(After 12th June, 1925)	Studebaker phaeton	. 870 00	228 41Studebaker brougham	. 1,113 00	298 76Studebaker Berline	. 1,254 00	326 50(After 15th September, 1924)	Willys-Overland, 91 touring.	. 378 00	65 10Willys-Overland sedan	. 474 00	98 98


Mr. EVANS:: Was that drawback given on the raw material or on the manufactured
parts?


James Alexander Robb: On imported material. It may be imported raw material or imported parts, but not only automobile manufacturers but all trades are entitled under our act to a drawback of 99 per cent if the goods are exported.


Henry Lumley Drayton: The minister must have come to some conclusion on these figures. What conclusion did he come to as to the net amount of protection enjoyed by these companies, or was that ever put down as a percentage? One hon. gentleman asked the minister a moment ago if he had any percentages and he said: No. Surely that was considered.


James Alexander Robb: I have no wish to injure or to affect adversely the automobile industry of Canada. I want this industry to grow and I am glad to know these manufacturers are doing such a large export business. But I want them to do a reasonable business in Canada and looking into the matter I am bound to say that some of these people have been enjoying in Canada a protection of about 100 per cent.


Henry Lumley Drayton: We are glad to get the figures. We all want to see this business carried on properly and we cannot come to a conclusion on a few general statements. It is a mere matter of calculation to find out the percentages. W'hat was the result the minister came to or did he come to any result?


James Alexander Robb: I came to the conclusion that they were receiving too much protection and I decided to reduce it. I came to the conclusion that I was wrong last year in opposing some of my hon. friend's friends. I thought

Ways and Means-Drawbacks
a protection of 27J per cent on the higher priced cars and 20 per cent on the lower priced ones was a pretty fair protection. I am still of that opinion.


Henry Lumley Drayton: I only want to know what the fact is. At the time that these figures were either decided upon or received by the government from the hon. Laird of Pipestone, am I right in assuming that really the government did not know what the net tariff protection was. I have been trying to get it and I cannot.


James Alexander Robb: I am not surprised that my hon. friend cannot get it because I have not been able to get it. Each manufacturer of automobiles seems to have a different idea and I have not yet been able to have them checked up uniformly.


Henry Lumley Drayton: My hon. friend did not have it then and he does not have it now. Not only did he not know what he was doing when he first made the change, but he has been unable to find out. In that case I am going to turn to what was said by Mr. Russell in Montreal and ask my ihon. friend whether he has checked this up yet and whether he can tell us whether it is correct or not. Mr. Russell said:
In 1925 the domestic production of motors cars amounted to $67,000,000 in value; that if all those motor cars had been imported at 35 per cent the duty so collected would have amounted to $17,000,000.
Are those figures correct?


James Alexander Robb: I have not checked them.


Henry Lumley Drayton: My hon. friend has his expert with his figures in front of him. On the other hand the motor manufacturers themselves paid in duties less the drawbacks they received more than $7,400,000. Is that right? Does the government yet know whether that is right or hot? That is apparently one of the first things one would want to know before one could come to any conclusion. As apparently it is not yet known by the government there is still something for this committee to do. Again he said part makers from whom we received data paid $1,250,000 more in duties. Will my hon. friend tell me whether that is true or not? Did the department ever make that inquiry. I pause for an answer.


James Alexander Robb: I have not checked that.


Henry Lumley Drayton: Mr. Russell goes on:
A conservative estimate establishes that our car manufacturers and those supplying material and parts to them paid to the government $10,000,000 of duties as compared with a gross duty that would have been collected had all the cars been imported of $17,000,000.
IMr. Robb.]
I take it from what my hon. friend has already said that he has not that information because that is a summary of what we have had before. These figures, which go to the vital question as to what protection the industry actually receives, show that there has been a protection, not of $17,000,000, which is the full extent of the tariff, but only of $7,000,000, that being the difference between the $17,000,000 and the $10,000,000 in duties paid by the automobile manufacturers in connection with the parts they buy, and by the parts makers themselves. That works out at a net protection of 14J per cent. Now, is the minister in a position to say whether that statement is correct or not? He does not answer. He cannot say whether it is or not.


Mr. MacLEAN (Prince):: How does the
drawback affect that point?


Henry Lumley Drayton: The hon. member will see that it does not enter into the question at all. This is over and above what was exported. These are cars used locally, and with this the drawback has nothing in the world to do.


Alfred Edgar MacLean: That is a point on which we want to be clear.


Henry Lumley Drayton: The manufacturers do not receive a drawback in connection with local business, and we are here referring to local cars. And it is in connection with local cars that the whole of the reduction is supposed to be recommeneded.


Mr. McLEAN (Melfort):: Is it not a fact that the manufacturer's get the full amount of the protection on the portions of the car manufactured in Canada, while they pay the duty on those parts manufactured in the United States or elsewhere?


Henry Lumley Drayton: It is not only
a question of what is manufactured in the United States. Now, here my hon. friend is asking a pertinent question in regard to which he is entitled to information; and I am going to ask the minister at ,this point to tell the committee what parts the Canadian automobile manufacturer must of necessity buy from the United States or some other foreign country. That question arises immediately out of the question my hon. friend has just put to me. Perhaps the minister will tell us, from his experts, what parts our manufacturers have of necessity to purchase abroad.


James Alexander Robb: I could not tell my hon.
friend what parts they must buy "of necessity." The hon. gentleman knows as well as I do that this week it might be necessary to buy certain parts outside the country be-

Ways and Means-Drawbacks
cause they were not obtainable here; the local industry might not be able to supply those parts at the time. On the other hand, next week they might get at home all the parts they required and the following week, again, they might be short. It depends on the run of the business. Later on I propose to give a list of certain parts which are said not to be manufactured in Canada and to give an additional reduction on them.


Henry Lumley Drayton: My hon. friend from Melfort is interested in this matter and he evidently wants some information. The minister will agree with me that, apart from local production, there are parts not manufactured in Canada such as speedometers, carbureters, speedometer cables, ammeters, ignition switches, clocks, horns and similar accessories. These things have to be got from outside.


James Alexander Robb: Not made in Canada? What does the hon. gentleman suggest then?


Henry Lumley Drayton: At the moment I am trying to elicit the facts. The hon. member for Melfort has asked a question, and his point is that the Canadian manufacturer gets the benefit of the full protection on whatever he made in Canada, whereas, if he bought parts from the United States, his protection is reduced to the extent of the duty paid on those parts. Now, I am stating, indeed the minister has admitted as much, that some parts must of necessity be purchased from the United States or elsewhere. And it is not only parts that must be so obtained but certain steel that cannot and is not yet produced in this country, as everyone knows who has paid any attention to the subject. We have the raw materials but these things have not been produced here, although they ought to be.
These are concrete figures that I have given to the House, and I do not think that the automobile people would give away profits which they would retain if they could. The minister is not in a position to quarrel with the figures I have submitted, inasmuch as he does not know anything about the subject; at least, he has himself no figures to offer. These concrete figures having to do with the business the minister is not possessed of, but he was able to say that there was smuggling going on. Am I to take it from his statement that one reason that a cut was made in these duties was the fact that automobiles were being smuggled into Canada?


James Alexander Robb: Not exactly; but that influenced me to change my views since last year.


Henry Lumley Drayton: It did, and it
did not-" not exactly." My hon. friend in groping around to find some possible excuse for what he has done pulls down this cobweb from the ceiling. The fact of smuggling may have had something to do with the change! Now I really do not think that the minister believes that, for he knows very well that if there is one thing that cannot well be smuggled into Canada, that is to say if we have a customs force which is doing what it ought to do, it is an automobile.
In view of the fact that the minister did not know what the net protection was, nor that these people were paying to the government in connection with customs duties alone the sum of $10,000,060, why does he say, how indeed can he say, that they were taking the full advantage of the duty? Perhaps he will explain that point later on. Over and above these duties collected from the trade in 1925, Mr. Russell stated that the excise, sales and stamp taxes amounted to $7,400,000? Did my hon. friend have that figure before him, or is that too a matter of news to the government? The minister does not answer. Evidently it is a matter of news to him. So that in respect of these items alone the federal government collected from the motor industry $17,400,000. Did the minister ever calculate how much tax the government was placing on the cars sold in Canada under its taxation?


James Alexander Robb: Under the taxation of my
hon. friend.


Henry Lumley Drayton: The minister is wrong there. I know he wants to be fair, but he is driven from one hole to another in his attempt to find a sure footing. He ha* challenged the duty, as he had every right to* do, but surely he did not make his reduction* without the slightest information upon which to base a scientific tariff. Here we have reductions that can only be described as drastic and the minister in his vain endeavour to find an excuse says that the taxation which the trade has to pay is something for which I am to blame. Surely he recollects that the former luxury taxes were all taken off and that there were no such taxes on the automobile when this government assumed office. Surely he knows that. If he does not, I think my hon. friend alone is ignorant of a fact to which a great deal of publicity was given at the time. Surely he will recollect that he voted for a budget which put these luxury taxes on at a higher rate, 5 and 10 per cent. Now I point out to him that this form of taxation which makes the production of cars more expensive in this country than in the States is not, as he says, a matter for which
T-Foys and Means-Drawbacks

I am to blame. But it would not make any difference if I were. The fact as those taxes make it more expensive to manufacture motor cars here. Does my hon. friend object to that statement?


James Alexander Robb: I admit that.


Henry Lumley Drayton: Of course. I
should like my hon. friend to do a little figuring and ascertain a little more about this subject. I think he will find that on every car manufactured and sold in Canada in 1925 the federal government received a tax which averaged $207. When he was so exercised about the price paid by the public he should have looked into that.


Charles A. Stewart: What is
paid in the United States on the same car?


Henry Lumley Drayton: Three per cent.


Charles A. Stewart: No, what is the total taxation in the United States?


Henry Lumley Drayton: My hon. friend did not have even that information before him.


Charles A. Stewart: Yes, I knew
it.


Henry Lumley Drayton: Then why ask the question? Then is the minister really to blame for it all. He really does not know anything about it. When the Minister of Finance came to the conclusion that motor cars were costing a great deal too much in Canada-and they were costing too much-did he realize that his government was causing them to cost too much by an average of $207 for every car made and sold in
5 p.m. Canada in 1925? Mr. Chairman, it is idle to go on further in that connection. But just take another matter which is absolutely basic to any question of tariff. Does my hon. friend not agree with me that in any scientific tariff you have your duties lowest on the least processed article?


James Alexander Robb: That is sound.


Henry Lumley Drayton: Why is it sound, Mr. Chairman? For the simple reason that as an article is further processed we get a greater percentage of Canadian labour in it, and that is what we want to look after.


Mr. FORKE:: Has my hon. friend ever
seen a scientific tariff? Is there such a thing?


Henry Lumley Drayton: My hon. friend will find there is such a thing if he ever seriously looks into it. I admit that the present tariff is not at all scientific. fSir Henry Drayton.]


James Alexander Robb: When my hon. friend admits
that lie is admitting his own negligence, because he had an opportunity of improving it.


Mr. CASGRAIN:: Hear, hear.


Henry Lumley Drayton: The chief whip does not do himself justice when he hear, hear's and bangs his desk. He knows that that retort is old and worn out. He knows perfectly well the reason why the former administration could not touch this question. Everbody knows it. My hon. friend admits it. So we have the principle admitted, Mr. Chairman, that in a proper scientific tariff as you go further up in your processes your tariff increases for the purpose of protecting Canadian labour. I am going to give a few figures just to show how, when you take a jump in the dark and know absolutely nothing of what you are doing, as we have clearly shown the government acted, disastrous results are bound to follow. I can take any single basic material going into this manufacture and show that my hon. friend has absolutely violated the principle that he upholds.


Mr. POULIOT:: My hon. friend is speaking seriously?


Henry Lumley Drayton: Oh, yes.


Jean-François Pouliot: Why does he have such
a nice smile on his face all the time when he says that?


Henry Lumley Drayton: I am quite sure my hon. friend's suggestion is a great help to the debate. But does he think it is possible for me to portray in my face just what I feel when I see mirrored before me such appalling ignorance in dealing with this subject? I cannot do it. The position is laughable.


Jean-François Pouliot: I said smiling.


Henry Lumley Drayton: Well, it is really laughable to think that people who are supposed to have serious responsibilities placed upon them-other than the one responsibility of hanging on to office .as best they may- would with the information before them take the step which is here taken. It is sad, but at the same time it is laughable. Now then, I am going to take cotton. The raw material is of course free. When it gets to cotton yarn the tariff is 25 per cent; cotton cloth and yarn the same; cotton cloth, not dyed, 25 per cent; cotton cloth dyed, 32i per cent. Rubber-coated cloth, 30 per cent; top material 30 per cent. These items all go into tops, and there is a good deal more Canadian labour in the tops than there is in the cotton cloth dyed, which is given to-day a duty of 32i per cent, while tops are given a duty of 20 per cent. That is how it works out.

Ways and Means-Drawbacks


James Alexander Robb: I notice my hon. friend is well posted on the cotton trade. Will he tell me what percentage of a dollar's worth of cotton is labour?


Henry Lumley Drayton: My hon. friend gets my point, but the trouble is he will not take his medicine in the way it should be taken. He is perfectly right, there is far less Canadian labour to be found in a yard of cotton-which when it is dyed cotton cloth gets protection from my hon. friend of 321 per cent [DOT]-infinitely less labour than is to be found in the completed tops of automobiles, yet he maintains the one at 321 per cent and he cuts down the other to 20 per cent-against the very principle which he himself has to admit.
Suppose we take something else. Suppose we take iron. That is part of your materials again. The free iron ore you convert into pig iron. Then there is a duty of $2.50 per ton. Then you are going to do something with this iron in connection with your cars. You have to have wheel hubs and wheels. Your wheel hubs are metal. There is a 30 per cent duty on the wheel hub, which the Canadian manufacturer has to pay. The next thing you have in connection with your iron is malleable castings which you put into your axles. When it takes the form of malleable castings it gets a protection of 271 per cent. It goes a little bit further and becomes rear axle housings-a little more Canadian labour in that, and the duty then becomes 30 per cent. It goes on and becomes a rear axle- a bit more Canadian labour in that, if they are made here-and it gets a protection of 35 per cent, while the protection to the whole automobile is put at 20 per cent, with infinitely more Canadian labour upon it.
Take iron and steel billets. When they get in the form of springs, you have again the same story. On iron and steel billets the duty is $2.50 a ton, but when rolled into alloyed steel the duty is twelve and a half per cent. When you get them down to the cold rolled steel the duty is 30 per cent, and when it gets down to the chassis springs and screws the duty is 35 per cent. There you have that 35 per cent, in defiance of all rule and of all principle as admitted by the minister himself, while the duty on the finished article is put at 20 per cent-35 per cent on the raw material and 20 per cent on the finished article.
We have learned this to-day, Mr. Chairman, that a serious mistake has been made in not referring this matter to somebody who knew something about it. We have learned
that there was no expert sitting in as the Prime Minister said, that there were no figures before the government that have any-think whatever to do with the question. We have it from the minister himself that the whole of this reduction is just simply a leap made in the dark by a government that does not apparently know what it is doing.


James Dew Chaplin: I should like
to inquire from the minister what he had reference to a few minutes ago when he spoke of the makers of automobile parts not having got together, and that they did not themselves understand exactly what they wanted, and he could not tell them until he had found out what it was they wanted. I do not know that I understand just what he meant by that, and I should like him to explain that statement.


James Alexander Robb: That is a fair question. I
would not betray the confidence of any of the parts men, any more than I would betray the confidence of my hon. friend if he came to see me-


James Dew Chaplin: Which he has
not done yet.


James Alexander Robb: No, I admit that, although
he has said a number of times that he is going to give me that pleasure. The parts men, as my hon. friend knows, met the government in a delegation and presented certain representations to the government. The following day-I do not recall how many of them there were exactly-but I remember that there were at least three or four different fellows who came in to see me at different times, and they said:	We were there
yesterday and presented our case, but listen, we want to tell you this thing; and another fellow would come in and say, listen, I want to tell you this thing. My hon. friend can quite understand irow bewildered a minister becomes when he meets men who are in the business and discovers that they really cannot agree among themselves as to what would be fair. That is what I meant.
My hon. friend the former Minister of Finance has presented certain figures. He asked me a few moments ago about the records as to automobiles and automobile parts. I have here a long statement, which I shall not read to the House, but will ask permission to have put on Hansard, so that hon. gentlemen may see it, giving a summary of the exports and imports of automobile and automobile parts, as follows:

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DOMINION BUREAU OP STATISTICS-EXTERNAL TRADE BRANCH Summary of Imports of Automobiles and Automobile Parts into Canada (Fiscal Years 1917 to 1826)
Automobiles, Freight	Automobiles, Passenger	Automobile Parts, n.o.pQuantity	Value	Quantity	Value	Years ended March 31:-	No.	s	No.	$	$1917	327	423,824	12,037	7,981,177	7,200,0171918	964	1,275,179	16,118	11,317,245	6,671,4191919	1,744	2,274,748	6,473	5,326,510	6,660,7701920	2,274	3,831,084	10,805	11,204,461	12,674,8231921	1,706	3,578,938	5,907	8,399,537	11,760,3671922	806	1,537,765	7,181	9,501,362	10,211,7911923	1,082	1,889,105	11,402	11,857,165	14.134,8741924	1,340	1,910,80S	9,549	9,532,350	16,808,3231925	934	1,364,664	8,835	8,726,714	14,188,7151926	1,189	1,772,414	14,935	14,022,814	23,111,109
DOMINION BUREAU OF STATISTICS-EXTERNAL TRADE BRANCH Summary of Exports of Canadian Automobiles and Automobile Parts from Canada
(Fiscal Years 1917 to 1926)
Automobiles, Freight	Automobiles, Passenger	Automobile PartsQuantity	Value	Quantity	Value	Years ended March 31:-	No.	$	No.	s	$1917	(a)	(a)	9,766	4,604,899	1,007,2071918	(a)	(a)	8,447	3,807,278	1,557,7121919	2,567	1,313,770	11,613	5,989,90S	1,552,2961920	4,133	2,211,342	20,373	12,672,265	3,097,4661921	4,290	2,602,853	15,620	11,376,268	4,262,3251922	1,296	611,185	13,428	7,421,619	1,151,4531923	3,720	1,444,549	45,108	25,606,350	2,355,0661924	15,396	5,496,272	54,522	27,246,025	4,162,7871925	11,773	4,018,419	44,317	22,011,970	4,911,7361926	19,224	6,283,080	61,499	29,434,358	7,121,747
(a) Included with "Automobiles, passenger" prior to 1919.
Let me take just one year, 1917. The value of the passenger automobiles imported into Canada in that year was $7,981,177, and the value of the automobile parts, n.o.p., $7,200,017, or almost the same figure as for the automobiles. When we come down to 1926, we find that the value of the passenger automobiles imported was $14,022,814, and the value of the automobile parts imported was $23,111,109.


Mr. CLARK:: What was the total production in that year?


James Alexander Robb: I have not got the production. Now I will give the exports for 1926. The exports of Canadian passenger automobiles in 1926 amounted to $29,434,358, and the export of automobile parts to $7,121,747.
The desire and the policy of the government is not to injure the manufacturers of parts, but to compel the manufacturers of

automobiles to cease having simply assembling plants in Canada. If they are in Canada to enjoy the advantages of the trade treaties that we have, and of the British preference-and the British preference has recently been stabilized for ten years-then we submit that it is only fair that they should manufacture at least 50 per cent of the products in Canada to be entitled to that concession.
New Zealand has recently ruled that no industry can enjoy the advantages of the New Zealand preference unless they come up to the 50 per cent basis. Canada has the advantages of the New Zealand preference if the automobile industry here comes up to the 50 per cent British material and labour basis. Under the New Zealand tariff the rate under the British preference-I am only quoting this as an example-is 10 per cent, and the general tariff is 25 per cent, so the

Ways and Means-Drawbacks
Canadian industry has an advantage of 15 per cent in that market. But how does it work out? The New Zealand government has ruled-and I think it is a pretty fair rule, one that we might very well adopt- that for duty purposes the assessment shall be made on the fair market value in the country of origin. What is the result? Because the Canadian car is sold higher in Canada than the United States car is sold in the United States, the whole advantage of that 15 per cent is practically wiped out on some Canadian cars, and the United States car gets into	the	New	Zealandmarket at as low a	rate	of duty,	forjust as many dollars	of	duty, as	theCanadian car. Now we propose to correct that position, and to	see	that	the	fair
market price in Canada shall be lower than it has been, and consequently the industry here will be in a better position. Consequently the industry will |be in a better position; they will enjoy to a greater extent the advantages they now have in other countries because they will come in under a lower duty, but if they continue as at present they will be under a disadvantage.


Henry Lumley Drayton: To which you
contribute $204 per car, on the average.


James Alexander Robb: There is a good deal in what my hon. friend says, that because of the war conditions and the necessity for revenue, with the government groping about to find that revenue, we imposed the excise tax and sales tax on cars. But my hon. friend will notice, if he looks at this year's estimates, that we have to correct some of his own troubles in the matter of taxes. It is all costing money; no one knows better than does my hon. friend that it is not so easy to fix up a tariff to satisfy every person. My hon. friend says the Canadian tariff has many inequalities, and I think he is absolutely right.


Henry Lumley Drayton: I quite agree.


James Alexander Robb: But he carried on an investigation throughout all Canada; he must have looked into the matter pretty carefully, and he had ample opportunity at the time to correct some of these inequalities, but he said a moment ago that he could not do it. And why? Because it is hard; it is dangerous to start changing tariffs, but this government has had the courage to do so, and I think we are receiving the support and approval of the Canadian people.


Henry Lumley Drayton: I think the
Canadian people to-day would very much rather see this question put upon a fair and proper basis. My hon. friend knows very
well why, at the end of that former investigation, nothing could be done. Every hon. gentleman knows that having regard to the United States market and to the invasion of our markets by the United States, this matter had to be looked after very carefully with especial regard to that nation. Everyone knows that at that time taxes which were then temporary, and which bore very heavily upon our people, were in effect in the United States. These were at the balancing point as to whether they should be repealed or should become permanent, and we were told that if we took any action we might perhaps provide an excuse for making those taxes permanent. We therefore held our hand, and whether we were right or wrong, everyone knows why that was done. They know very well we did not do it for any dishonest political purpose; we did not do it for the purpose of catching votes in this House.


Ernest Lapointe: May I ask a question?


Henry Lumley Drayton: Certainly.


Ernest Lapointe: Why is it that in the
Speech from the Throne at the opening of the session of parliament after my hon. friend had held his investigation, it was announced to the Canadian people that there would be a revision of the tariff?


Henry Lumley Drayton: For the very
reason I just finished stating. If my hon. friend had paid attention he would have known. At the time that investigation took place and when that statement was made the intention was to do what I thought should be done, namely, put this tariff upon a business basis. I have just said so, but I will repeat my statement. There were taxes in the country to the south, temporary taxes, which we thought bore very hardly on our people. These were emergency measures, of which hon. gentlemen all know if they, would only admit it. At that time, while this House was in session, the question of whether these temporary taxes should be repealed or made permanent was in the balance; it might fall one way or the other.


Ernest Lapointe: And all this happened
between the delivery of the Speech from the Throne and the bringing down of the budget?


Henry Lumley Drayton: Yes. My hon. friend knows that that was a most critical period. But however that may be, there is surely no good in going back all the time to these vain recriminations.


Ernest Lapointe: It is better not to.

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Henry Lumley Drayton: I do not know what my hon. friend is laughing at; I did not raise that point. My hon. friend thinks recriminations better than Canadian business?


Ernest Lapointe: No.


Henry Lumley Drayton: That is the
effect of his remark. I suggested that it would be a good thing for us to try to do business in this chamber upon business principles, and my hon. friend thinks it better to get back to recriminations.


Ernest Lapointe: No, I say it is better
not to do so.


Sr HENRY DRAYTON:: Then I apologize for misunderstanding my hon. friend. He agrees that the minister should not have raised this point and he is right. Now the minister refers to the 'Canadian people, and what the Canadian people would want. I rose to say that the Canadian people would like to see this House know what it is doing before anything is done. We should know all the facts about what we are doing before we attempt to do it. That is not the case now. Take the words of the minister himself; he says that they were groping here and groping there for revenue. Yes, and he is groping to-day to learn what on earth he is to do when answering the call of others in this House.


Mr. BOIVIN:: My hon. friend who has just taken his seat has used as a very strong argument against the reduction of the duty on automobiles the fact that on all the automobiles made and purchased in Canada the government received $207 in taxes. There is no doubt that the Dominion government did receive approximately that amount on every car produced and consumed in Canada, but my hon. friend did not say that that amount included excise and sales taxes.


Henry Lumley Drayton: My hon. friend is wrong; he could not have listened to me. 1 did say that the duties amounted to about $10,000,000, and the excise and sales taxes to about $7,000,000.


Georges Henri Boivin: But my hon. friend did not say how much of the $207 was made up by each tax.


Henry Lumley Drayton: I gave the
figures; my hon. friend was not paying attention. The duties amounted to approximately $10.000,000 and. the sales taxes to about $7,400,000.


Georges Henri Boivin: So that almost fifty per cent of the taxes collected, according to my hon. friend's statement, were collected in

excise and sales taxes. On every car imported from the United States the same amount of sales and excise tax was imposed. This government has a double duty to perform. It must live u,p to the obligations of the Dominion of Canada and honourably pay the interest upon the debt incurred during the recent world war for the benefit of civilization. That can only be done by imposing taxes. The second duty of this government is to make the cost of every commodity required in this country as low to the Canadian consumer as possible. It might be all very well to follow the suggestion of my hon. friend and reduce the cost of automobiles by removing the excise and sales taxes, but if we do that what happens?


Henry Lumley Drayton: I did not make that suggestion; I merely stated that we should know what we are doing before we start.


Georges Henri Boivin: My hon. friend said that if we wanted to reduce the price of cars it could be done by reducing the tax. We all know and admit that if we reduced the sales tax and the excise tax we could reduce the price of automobiles without hurting our manufacturers and without hurting those who export their cars to this country, but it is our duty to pay our debts, and it is absolutely necessary to maintain that tax, at least for some time, in order to do so. Now my hon. friend says, "But you did not look into the question; you know nothing about it. You have indiscriminately removed the protection to our automobile manufacturers without knowing exactly what that proportion of protection was."


Henry Lumley Drayton: It is a pity the hon. minister did not give the information to the Minister of Finance; he did not have it.


Georges Henri Boivin: The Minister of Finance had all this information.


Henry Lumley Drayton: He said not a
few minutes ago.


Georges Henri Boivin: He said he did not verify
the list of figures which was placed in the hands of my hon. friend on the other side by some automobile manufacturer.


John Arthur Clark: Will the minister permit a
question?


Georges Henri Boivin: I will endeavour to answer
it.


John Arthur Clark: I do not expect the minister will be able to answer it, but the Minister of Finance might be able to do so. Will my

Ways and Means-Drawbacks
hon. friend tell the committee whether he can state the net protection enjoyed by any one of the companies named by the Minister of Finance?


Georges Henri Boivin: The net protection enjoyed
by each of these companies depends upon the amount of raw material and the amount of manufactured parts which they import from the United States. There is no doubt about that.


John Arthur Clark: Has the minister or t'he
government worked it out mathematically, in connection with the production of any manufacturer in Canada, to show what net protection is enjoyed by any one of them, or the average protection of the industry?


Georges Henri Boivin: Yes, the net protection
enjoyed by the automobile manufacturers of Canada up to the present time has been almost 10 per cent greater than it appeared in the tariff. Instead of being 35 per cent, it 'has been approximately 45 per cent or even more.


John Arthur Clark: My hon. friend's colleague
the Minister of Finance stated that some manufacturers enjoyed as much as 100 per cent protection on their Canadian production. I ask the Minister of Customs to give us the details of the 45 per cent protection enjoyed by many of the manufacturers. Will he give the names of the companies and so on?


Georges Henri Boivin: I shall be glad to do that.
Although I have no right to speak for the Minister of Finance, I wish to point out in the first place that the Minister of Finance did not say that any Canadian automobile manufacturer enjoyed 100 per cent protection. He said the profits of some automobile manufacturing concerns in Canada were as high as 100 per cent.


John Arthur Clark: He did not say anything
of the sort.
Some 'hon. MEMBERS:	Order, order.


John Arthur Clark: He said they enjoyed protection as high as 100 per cent on t'he portion manufactured in Canada.


Georges Henri Boivin: I do not know what my
hon. friend means by 100 per cent on what was manufactured in Canada. The tariff is there and speaks for itself.


George Brecken Nicholson: What does the minister mean by 45 per cent?


Georges Henri Boivin: I will explain, if the hon.
member will fallow me, and he will see where it comes from. In the case of a car the list price of whidh in the United States is $3,500, the list price to the Canadian consumer of the same car is $5,414.36. We all know that the list price of a car in Canada is based upon the American price of that same car, plus the duty, plus the sales tax, plus the excise tax, and plus a certain amount of freight, which I am willing to leave out of t'he calculation.


George Brecken Nicholson: Not at all.


Georges Henri Boivin: That was shown during the course of the debate on the budget, and if my hon. friend will take any of the official motor magazines of the United States and make a comparison between the prices mentioned therein and the official list prices of the same cars in Canada, he will find it is not only the amount mentioned, 'but a little bit more. On a car which is listed at $31,500 in the United States you will find that the duty at 35 per cent on the list price, plus the excise tax in the United States, amounts to $1,250.73; the sales tax on that car is $241.21. The excise tax on the first $1,200 is $60 and the excise tax on the balance is $362.42, forming a total, leaving aside all freight charges, of $5,414.36. When that same car is imported into Canada, as it is generally imported by subsidiary distributing companies-I am speaking of American cars, not cars manufactured in Canada-the company receives a reduction on the list price of 30 per cent for duty purposes. They pay the duty on $2,450 plus the American excise tax of $73.50, so that the duty is SSS3.40; sales tax at 5 per cent is $170.36, excise tax at 5 per cent is $80, and the excise tax at 10 per cent on the balance over $1,200 is $220.69, making a laid down cost on this side of the line of $3,784.44. When the American manufacturer pays his dealer 20 per cent for selling the car he receives $3,500 less $700. or a net price of $2,800. When he sells that same car in Canada for $5,414.36, he pays in duty and taxes the sum of $1,334,314 and he and the dealer to-gether get the balance of $4,080.02. If the dealer gets the same price for selling the car as the American dealer, or $700, the American manufacturer gets the balance of $3,380.02. In other words he gets for every car he sells in Canada $580 more than he receives for the same car when it is sold in the United States. If the American manufacturer gets an additional profit of $580 I claim the Canadian manufacturer enjoys not only the protection of 35 per cent, but also the additional profit made by the

Ways and Means-Drawbacks
American manufacturer on a similar car, because the price is based upon the American list price plus that duty and other taxes. That is why I do not consider it necessary, in order to enable the Canadian manufacturer to live thrive and prosper, to maintain a protection of 35 per cent on his product.


Thomas Erlin Kaiser: What car?


Georges Henri Boivin: Any car which costs $3,500
in the States and is exported to Canada by the United States manufacturer.


Thomas Erlin Kaiser: Are cars similar to that
made in Canada?


Georges Henri Boivin: There are cars of that price which are supposed to be made in Canada, but they are not always made here.


James Dew Chaplin: The minister
knows very well that they are not made here.


Georges Henri Boivin: The Cadillac car made by
General Motors of Canada is assembled in Canada, but-


James Dew Chaplin: I do not want
the minister to get away from that car. Tell us how much of that car is made in Canada?


Georges Henri Boivin: I do not think that many
of the parts are made in Canada. A great many cars that are presumably made or assembled in Canada are not made here at all, but are imported from the United States and sold to us as Canadian assembled cars.


John Arthur Clark: And they pay duty on all
the parts that come in?


Georges Henri Boivin: Yes, at the rate of duty
which the parts carry.


John Arthur Clark: Would the minister prefer
that the cars should be assembled not in Canada, but in the United States?


Georges Henri Boivin: I would prefer that they
be assembled in Canada. I would like to see them all assembled in Canada and I would still better like to see the parts made in Canada. That is the reason for the present change.


John Arthur Clark: The minister and I are at
one as to having the parts made in Canada. Has the minister now come to the end of his answer to my question as to the net protection enjoyed by the automobile industry in Canada?


Georges Henri Boivin: I have told my hon. friend that it is absolutely impossible for any minister or any member of His Majesty's loyal opposition to say exactly what protection is

enjoyed on any car because the different cars are not always manufactured with the same quantity of parts purchased in Canada. Sometimes more parts are imported than at other times. Sometimes it is possible to secure a certain number of bodies from a Canadian body manufacturer and at other times the output of that plant may not be sufficient to meet the demand and bodies have to be imported from the United States and duty paid on them. For that reason it would be absolutely impossible to give the exact net protection on any particular car.
Further the interests of the different car manufacturers are not all alike. The more parts that are imported for one car and the fewer that are imported for others cause a difference of attitude on the part of these manufacturers. Some want one thing and ,some another. Many of these men came to the Minister of Finance and said that it would be a terrible calamity if a 25 per cent drawback were given on parts imported from the United 'States when at least 50 per cent of the car was manufactured in Canada. There were other part manufacturers who were begging with both hands for that conditional concession. The representations of the different part- makers had to be carefully weighed and the benefit given to the majority.
Some automobile manufacturers asked us for free parts; some asked us to put on the free list certain parts not manufactured in Canada and others stated that they were quite .willing to pay duty upon all imported parts. They did not explain the reason but it is evident that there are a certain number of manufacturing interests in this country who have different views. Their views were all heard, weighed and considered, but in weighing and considering those view's, one thing was not lost sight of, and that was the cost of the finished car to the great consuming public of Canada. So long as these automobile industries are able to carry on, so long as they are able to show a fair profit and increase production, they should not ask for more. The government does not desire to do serious injury to any industry. It has listened to the representations of every one of the automobile manufacturers in Canada and of the great majority of manufacturers of parts in this country, and it has endeavoured to meet their views and wishes.


John Arthur Clark: May I ask a question?


Some hon. MEMBERS:: Order.


John Arthur Clark: I understood from the Speaker that when we were in committee it was the privilege of every member to inter-

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nipt and ask questions. I understood that the Minister of Customs was only too glad to have questions put to him. Before he goes on with another part of his argument I wanted to know from him-


William Duff: I think it would be better to let the minister finish his argument. The hon. member speaks of interrupting.


John Arthur Clark: I certainly will not interrupt the minister when he goes on with his argument, but I wanted to know for information whether he had finished answering my question.


Charles Avery Dunning: He will be finished when he sits down.


John Arthur Clark: Just now I have the floor.


Some hon. MEMBERS:: Order.


Mr. BOYS:: The minister courteously gave him the floor.


John Arthur Clark: I presume the minister has at any rate finished his statement as to the industry having 45 per cent net protection. I would like to ask him this question. Taking the case of a motor car imported from the United States paying a duty of $136 and the company which manufactures the same car in Canada paying a duty of $74 on the imported parts, I would like to ask the minister whether he agrees with me that the net protection enjoyed by that company on the car produced in Canada amounts to $62.


Georges Henri Boivin: If it is going to please my hon. friend I will say this. If a manufacturer gets $136 protection and pays a duty of $74 on parts imported from the United States, his protection is exactly $62.


John Arthur Clark: What percentage would that
be?


Georges Henri Boivin: I do not know what car my hon. friend has in mind. It all depends on the price of the car.


John Arthur Clark: It does not matter what car. I could name probably four or five models, such as the Essex, Overland, Durant, any car with a United States valuation around $400. What I suggest to the minister is this:	If it
is enjoying a net protection of $62, that would mean that the net protection for that particular car, instead of being 35 or 45 per cent as the minister suggests, would not be more than 16 per cent.


Georges Henri Boivin: Possibly, but in order to
arrive at the 16 per cent protection to which my hon. friend has just referred, he would have to admit many things. He would have
to admit in the first place that the top or the body or the wheels purchased for that car would be imported subject to the same rate of duty that they are paying at the present time. He would have to admit further that on the parts which it is impossible for the manufacturer to buy in Canada and which he must import from the United States, he will continue to pay the same rate of duty that he is paying at the present time. Perhaps, if all those things are taken into consideration, that manufacturer would be protected on that particular car to the extent of 16 per cent. In other words he would have the right to charge 16 per cent more because he made his car in Canada than the United States manufacturer would have the right to charge for the same car in the United States.


John Arthur Clark: Surely the minister is not serious when he says there is a right to charge that much more. I think he will admit that the cost of manufacturing has something to do with the matter.


Georges Henri Boivin: I am willing to admit all that. I am willing to admit that owing to the enormous production and the consequent smaller overhead in the United States the cost of production there is less than it is in Canada.


Mr. BEAUBIEN:: Wages are higher in the United States.


Georges Henri Boivin: Yes, but mass production there makes the cost a little less. But what my hon. friends sometimes forget is that not all the ears made in Canada are sold at home, and that on cars the manufacturer makes in this country for export he is not obliged to pay the duties referred to. He gets the drawback on all parts imported and incorporated in cars shipped out of Canada, and on an average 47 per cent of the cars made here are exported. On that 47 per cent the manufacturer is very well able to compete with labour conditions on the other side.


John Arthur Clark: The minister will admit that the cars exported from Canada are sold very much lower than the cars sold here. There is a difference of about 16 or 17 per cent equivalent to the drawback.


Georges Henri Boivin: That is what we have always contended on this side of the House. These cars are sold at much less than the same cars when sold in Canada and the Canadian people ought to get some of the advantages enjoyed by the foreign purchasers.


John Arthur Clark: But my hon. friend forgets-
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Some non. MEMBERS: Order. Sit down.


John Arthur Clark: I understood that the minister had given me permission to ask a question.


Georges Henri Boivin: My hon. friend, a moment ago, said he was not aware whether or not I had finished my remarks. I thought I was speaking sufficiently loud for him to hear me. In case he does not, I may tell him that when I have concluded I shall take my seat and will not. do as an hon. member did a few years ago, when he insisted on keeping the floor without speaking.


John Arthur Clark: When was that?
M'r. BOIVIN: If my hon. friend has a question to ask I shall be glad to endeavour to answer him.


John Arthur Clark: All I wanted was to ask a question. I want to know whether the difference between the price the manufacturer charges abroad and that which the home consumer pays is not equivalent to the drawback allowed under the Customs Act.


Georges Henri Boivin: The manufacturer sells his car cheaper abroad than he does in Canada because he pays a lower duty on parts imported for use in the cars he exports. If therefore he pays a lower duty on such parts for the cars	sold at	home, he ought	to beable to sell	his	cars	in Canada	at a	lowerprice. There is of course one possible objection in that respect: it may be said that because of these lower duties in the form of a drawback on imported parts we shall wipe out the parts industry entirely. But this argument is of no force inasmuch as the only drawback which the manufacturer gets in connection with	the	cars	he exports	is a	drawback, not on	the	cost	of the car,	but on the
duty paid on American material or parts entering into the manufacture of the car when it is made in Canada. And is it not a fact that there are Canadian wheels and bodies on many cars that are exported? I am glad that my hon. friend and I are agreed on one point-that the more you reduce the duty, the cheaper can the manufacturer sell his car.


Thomas Erlin Kaiser: As regards the selling
of cars abroad, the reduction in the sales and luxury taxes that must be paid in Canada should be fairly set forth. That is where the difference comes in.


Georges Henri Boivin: That of course makes a
considerable difference, but in the present debate I do not think the question of the sales and luxury taxes has been taken into

consideration by anyone except the former Minister of Finance (Sir Henry Drayton) who referred to them in order to present what appeared on the surface to be a very good case. The hon. gentleman is an able parliamentarian. He submits his views in convincing language, and I am sorry that any hon. member should reproach him for putting them forward with a smile. He used the argument that $207 is paid to the government on an average, on every car manufactured in Canada, and of that $207 he admitted that about 45 per cent consisted in excise and sales taxes. That 45 per cent does not apply to the car that is exported, in connection with which neither sales nor luxury taxes are collected. I want the committee to understand that for the purposes of my argument I have no intention of introducing the sales and luxury taxes, which after all are taxes imposed upon our own citizens, to meet the obligations of the country. I want to consider the cost of the car in Canada in comparison with the export cost without taking these taxes into account. In my opinion the automobile manufacturers made a grievous mistake when they published the list prices of their cars and included therein the sales tax and the luxury tax. This was unfair to themselves. I am prepared to admit that if the manufacturers in Canada had not included in their list prices the sales and luxury taxes, they would not perhaps be so severely censured for the high cost of cars in this country. They have done so however and it may have been for the purpose of making the buyers of cars forget that they had these taxes to pay. I know that the automobile manufacturers are great friends of the party in power.


Some hon. MEMBERS:: Oh, oh.


Mr. MORAND:: Is that why the duty was reduced?


Georges Henri Boivin: We did not consider that
when the tariff was discussed.


Raymond Ducharme Morand: That is the trend of the minister's argument.


Georges Henri Boivin: The tariff was reduced for
a reason which I have already given to the committee and which I shall state again. It was reduced in order to bring down the prices of cars in Canada, and put them within reasonable reach of the consumer.


John Arthur Clark: Without regard to those
employed in the industry.

Ways and Means-Drawbacks


Georges Henri Boivin: My hon. friend and I agreed a few moments ago that the manufacturers of Canadian cars were selling their exportable surplus at lower prices than they were charging the Canadian consumer.


John Arthur Clark: Because they got a drawback.


Georges Henri Boivin: Because they got a drawback, yes. Now if instead of a drawback they get permission to import free the parts not manufactured in Canada-


Raymond Ducharme Morand: Thereby putting the other factories out of business.


Georges Henri Boivin: What factories?


Raymond Ducharme Morand: The parts factories.


Georges Henri Boivin: May I ask my hon. friend
how we are going to put any parts factory out of business by admitting duty free into Canada any part not manufactured in this country?


Raymond Ducharme Morand: There is no objection to
that.


Georges Henri Boivin: My hon. friend has no
objection to that? Well, I can assure him that it is not the intention of the government to go a step further. We do not intend to ruin any parts factory in this countiy.


John Arthur Clark: It is enough to ruin the
automobile factories.


Georges Henri Boivin: We do not intend either
to ruin the automobile factories, and as a matter of fact they will not be ruined. Far from that, the manufacturers will sell their cars at a lower price and on that account will sell more cars, making a bigger profit, increasing production, lessening overhead and paying dividends to their shareholders. That will be the result of this tariff change. Whether the part comes in free or whether it gets the 99 per-cent drawback makes very little difference; in one case or in the other the reduction in tariff is going to be passed on to the Canadian consumer. It is not our desire to ruin any manufacturing -industry. The Minister of Finance and the government have one desire in mind in all the proposals submitted to parliament-to encourage production in Canada, and instead of having merely assembling plants, to have fully equipped plants for the complete manufacture of automobiles and other commodities and so employ more Canadian workmen. That is the reason why while some parts may be placed on the free list other parts will not be; but a drawback of 25 per cent on those parts will be given only upon
condition that the manufacturer applying for the drawback shall prove to the government that more than 40 or 50 per cent Canadian labour and Canadian materials have been incorporated in the car.


Thomas Erlin Kaiser: In the car or in the parts?


Georges Henri Boivin: In the car or in its component parts.


Thomas Erlin Kaiser: There is quite a distinction. Take the case of a man making a part, and that part goes into a car, how is he to prove that the car contains 50 per cent Canadian labour and materials? If it read ''50 per cent of Canadian-made parts" it would be clear.


Georges Henri Boivin: A few moments ago I stated that in the case of cars exported in which Canadian bodies, Canadian wheels, Canadian springs and other Canadian parts were used, the manufacturer exporting will get a drawback of 99 per cent on everything American whether imported direct by himself or by the maker of the parts sold to him to be embodied in the completed car. The 25 per cent drawback which is to be granted by the government under another item of the tariff will be administered in absolutely the same way. That is, if the Canadian car manufacturer buys a part from a Canadian parts manufacturer, he will get a credit of 50 per cent for the Canadian labour and materials in that part.


Henry Lumley Drayton: My hon. friend
I think has cleaned it all up. Take, for example, rims. As my hon. friend knows, we have not the steel in this country for the manufacture of rims, therefore we have to import the rims which are used by our wheel manufacturers. For the purpose of administration, will my hon. friend say that if the Canadian automobile manufacturer buys his wheels from a Canadian wheel manufacturer, notwithstanding the fact that the rims had to be imported from the United States, those wheels will be looked upon as a Canadian product? I so understood from my hon. friend's statement.


Georges Henri Boivin: Then I do not think my
hon. friend understood me exactly. I said that everything Canadian in those wheels would be considered as part of the 50 per cent of Canadian manufacture and materials contained in the car. It is absolutely the same as the regulation that applies to export at the present time. If those wheels are embodied in a car which goes to a foreign country, a drawback is paid upon the duties paid in respect of all parts included in the car.
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Henry Lumley Drayton: In the case of
the wheel it would be the duty on the rim?


Georges Henri Boivin: The duty on the rim would be considered to be duty paid by the Canadian manufacturer of the Canadian content in the car. The drawback of course would not be on the full cost of the wheel; it would be 25 per cent of the duty paid on the rim when imported.


Henry Lumley Drayton: It is six o'clock.


James Alexander Robb: Mr. Chairman, I was wondering if we might not pass this item which we have been considering all the afternoon.


Henry Lumley Drayton: We are really discussing both items.


James Alexander Robb: I had intended before six o'clock to make a statement of certain amendments so that hon. members might have an opportunity to consider them. On 438b I propose to offer as an amendment after the word, "only", the words, "n.o.p., valued at retail when new."


Henry Lumley Drayton: That is new cars of a retail value of $1,200?


James Alexander Robb: That applies to cars of $1,200 and over when new. To that item we shall also add what has been added to the other items, "chassis for motor vehicles specified in this item."
Then there is another item:
Customs tariff-438c. Tops, wheels and bodies, n.o.p., for motor vehicles enumerated in tariff items 438a and 438b: British preferential tariff, 20 per cent; intermediate tariff, 37J per cent; general tariff, 30 per cent.
That is to make them the same rate as the others, and when the discount comes off it will equalize them. They will get the 25 per cent rebate.
I was glad during the discussion this afternoon to find my hon. friend from West York and myself were in agreement, as we oftentimes are. He argued at considerable length that there were many materials that were not manufactured in Canada upon which duty was paid. A new item will be introduced placing on the free list a long list of items, some of which were mentioned by my hon. friend this afternoon, with the safeguarding clause, "of a class or kind not manufactured in Canada."


Henry Lumley Drayton: Has my hon. friend copies of those resolutions?


Robert James Manion: What will be the rate there?


Georges Henri Boivin: Free. I think you should read them.


James Alexander Robb: 438d-


Henry Lumley Drayton: The usual thing, Mr. Chairman, is to supply members with copies of such changes.


James Alexander Robb: I expected my hon. friend would make that statement. I have read Hansard containing his budget, and I would advise him during the dinner hour to refer to it. He will find that he brought down about three pages of changes.


Henry Lumley Drayton: Everyone knew about them, and Mr. Fielding had copies. We made lots of changes in committee, but we had the idea that "parliament was supreme".


Ernest Lapointe: Hear, hear. My hon. friend is becoming converted.
At six o'clock the Speaker resumed the chair and the House took recess.
After Recess
The House resumed at eight o'clock.



PRIVATE BILL


[Stage Direction]
Bill No. 113, respecting the Bronson Company.


[Stage Direction]
The House in committee of Ways and Means, Mr. Duff in the chair.
Customs	tariff-438a. Automobiles and motor
vehicles of all kinds, n.o.p.: British preferential tariff, 15 per cent; intermediate tariff, 25 per cent; general tariff, 27£ per cent.
Peter McGibbon: I notice that the Minister of Customs is not in his place, but he made some statement this- afternoon in respect to which I should like some information. Probably the Minister of Finance can supply it. The Minister of Customs made the definite statement that Canadian made automobiles were being sold in other countries cheaper than in Canada, excluding the sales tax and the drawback. I would ask the Minister of Finance, in the absence of the Minister of Customs, to give us details in that regard. This is a very important question, to my mind, because it is one in which the consuming public are vitally interested. If it is true, the public should know it; if it is not true, I do not think a wrong impression should go out.

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James Alexander Robb: The Minister of Customs will be in, I imagine, before we get through with the next item. He has the papers with him, and I am sure he would not have made that statement had he not known it to be true. Does my hon. friend say it is not true?


Peter McGibbon: I do not believe it is true. I do not see how it could be possible for a Canadian manufacturer to send an automobile to England, pay the duty on it, and sell it over there cheaper than it would be sold in this country. I am only asking for information, because I think this is a question on which the people of this country should know the facts.


James Alexander Robb: That statement is not limited to automobiles. We have heard it frequently made in this House regarding other commodities. My hon. friend has been here almost as many years as myself, and he must have heard that argument applied to other goods.


Peter McGibbon: But I have never had any proof that it is true.


James Dew Chaplin: The allegation has been made in reference to agricultural implements especially, and it has never been proved. It was always denied.


James Alexander Robb: And in regard to flour.


James Dew Chaplin: The hon. minister knows more about flour than I do. He probably knows how it is done.


Robert James Manion: It has often been stated that flour manufactured in Canada is sold more cheaply in other countries than in Canada, and just as a matter of information I should like to know if that is true.


James Alexander Robb: I have heard the statement.


Robert James Manion: I have heard the statement too, but I want to know if it is true.


Mr. COOTE:: I submit, Mr. Chairman, that this is entirely out of order, and I would ask you to try to keep this debate to the point.


William Duff: If there is no further discussion of item 438a we might pass on to the next, on which the hon. member for Muskoka-Ontario cpuld ask his question.


Henry Lumley Drayton: We have been discussing this matter at large, and I think we might as well discuss this item and 438b together, because the subject matter is about the same.


REVISED
William Duff: Then I will read 438b as proposed to be amended:
Customs tariff-43Sb. Automobiles for conveying passengers only, n.o.p., valued at retail, when new, with standard equipment complete at not more than twelve hundred dollars each; motor cars or motor trucks (not for railways or tramways) for carrying goods only'; motor cycles; chassis for motor vehicles specified in this item: British preferential tariff, 124 per cent; intermediate tariff, 171 per cent; general tariff, 20 per cent.
The new item 438c reads:
Customs tariff-438c. Tops, wheels, and bodies, n.o.p., for motor vehicles enumerated in tariff items 438a and 438b: British preferential tariff, 20 per cent; intermediate tariff, 27J per cent; general tariff, 30 per cent,	!


Henry Lumley Drayton: I think, Mr. Chairman, we should discuss the two main automobile items together, and deal with 438c when we reach it.


James Alexander Robb: I think so.


Robert James Manion: Would the minister explain what he means by that phrase in 438b, "valued at retail when new"?


James Alexander Robb: This applies to automobiles
where the duty is 20 per cent. As every hon. member knows, there are men who sit up nights planning how they may beat governments and customs house officers, and it was represented to us that a car coming under the 274 per cent rate might be run around for two days and then represented to the customs as not a new car, and that it should be allowed to come in under a lower valuation.


Robert James Manion: This is just taken at the retail price?


James Alexander Robb: Yes.


Henry Lumley Drayton: I have been
waiting for the Minister of Customs to come into the chamber; he gave us a very interesting illustration of how the Canadian manufacturer exploited the tariff by using the goods of the American exporter here instead of the Canadian product. It was very interesting, but not at all illuminative of the point. Perhaps we can get a case where we are dealing not with an importer of American goods, some agent here who, through the tariff, is enabled to get ahead of the Canadian public, but with a Canadian manufacturer who is doing what the government have alleged, although I do not think they meant it, they have done; that is, exploit the Canadian people. It would be so much better if we could have an illustration of the charge made. The figures given by the Minister of Customs may be absolutely right, but they have noth-


EDITION
[Stage Direction]
3G54
[Stage Direction]
Ways and Means-Drawbacks
ing to do with the case. The question here is whether or not the Canadian manufacturer was exploiting the tariff; I do not know whether he was, but the statement was made, and illustrating that statement we have something the American importer is doing. I would suggest that if the government really has anything, they should let us have it.
James Dew Chaplin: According to
the figures given by the Minister of Customs an American manufacturer of cars provides a car at an American list price of $3,500. He is allowed to discount that price in here, as the minister says, by means of a fake company. I would like to know why the minister and others are not preventing this fake business. Whose business is it to look after that sort of thing? Just look at the figures; it seems to me there is something more than smuggling that needs to be taken care of in this country, if those figures are correct. A car valued at $3,500 is discounted to bring it down to $2,800; it pays duty into this country and is sold at $5,400. That, on the face of it, shows incompetency on the part of the customs, if nothing else. That illustration is provided to show that the Canadian manufacturer is doing the same thing, but does it explain it? No. But the minister says the Canadian manufacturer is allowed to compete with that sort of thing and does not compete with it; he is allowed to charge the same price because the other man does it. That is the lamest argument I ever heard of, and I would like to hear the Minister of Customs explain it.


James Alexander Robb: I expect the Minister of Customs to be here in a few moments. I have no quarrel with the statement just made by my hon. friend. When we began going into this automobile question I discovered for the first time-and it was also a surprise to the present Minister of Customs-that that method had prevailed for some years under previous governments. They made this arrangement; they had a ruling on it, and some of them had a discount of as much as 35 per cent. It was not only the dealers, but we discovered that some of the manufacturers were taking advantage of that and were bringing in cars and reselling them.


James Dew Chaplin: That is the
fault of the customs.


James Alexander Robb: Surely; I will admit that at
once; I will admit that that should not prevail. It is not fair.


James Dew Chaplin: I have heard
of similar cases. For instance,, we have a Jaw on our statute books providing for the

goods to be entered at the fair market value on the other side. How do they find out the fair market value? They do it by making a sale to somebody. In other words, a manufacturer in, the United States will go to New York and give a whole district comprising three or four states to one firm; they will make that firm responsible for the district and give them the outside discount. That is the discount used, to come into Canada, and these very people, by means of what the minister describes as fake companies, are allowed to sell these cars at 20 per cent off another list. On the very face of it that shows that the customs is being robbed, but how on earth the minister can blame the Canadian manufacturer for this same thing I cannot understand.


James Alexander Robb: I do not blame the Canadian manufacturer.


James Dew Chaplin: I am speaking
of the Minister of Customs. How he can conclude from that that the Canadian manufacturer is to blame for this condition is something I cannot understand. The Minister of Finance told us he did not want to injure either the automobile manufacturer or the manufacturer of parts, that in fact what he wanted to do was to have more cars and more parts made in this country, and he was going to accomplish that by this reduction. And he said that in respect to the Cadillac car he expected to have them or their parts made here. That shows at once that the minister and his advisers do not know the question at all. The Cadillac car, in the quantities used in this country, could not be made here; it is an absolute economic impossibility. This is not the kind of car that can be made in Canada. The duty on these cars should be kept higher, because they are for the rich people who can afford to pay and should pay for them. Nothing can be done by this or any other government to have that car manufactured in Canada.
I am not an automobile manufacturer, but I have something to do with the parts business and I know something about it. The minister says that he is not going to hurt the parts people at all, and he would like to know how he is doing so. First of all, as I pointed out before, in order to conserve this parts business, you must have the automobile industry conserved; the parts people are simply out of luck if the automobiles come in from the United States as such. How can you expect me, as a manufacturer, to supply a rim or a wheel or a hub or any other part of that car if the car comes into

Ways and Means-Drawbacks
Canada fully manufactured? It cannot be done. Now the minister brings in a new resolution in respect to wheels and parts of cars. We have not reached it yet, but in it the duty is made a little higher than on the finished car. That is not practical.


James Alexander Robb: There is a drawback of 25
per cent.


James Dew Chaplin: But even if that is taken off, this is worth nothing. In other words, everyone knows that you cannot charge a higher rate of duty on the parts than on the finished car. That is unbusinesslike and impracticable, and I will show the minister why, under his very resolution. Let us assume that 50 per cent is made by the automobile manufacturer in the way of the body, the chassis, the frame, or otherwise. Then he sets out to buy the other parts of the car. There are some small accessories that must be brought in. The manufacturer of the car looks around to see where he cam get his parts. He has to buy his wheel, he may have to buy his engine, and may have to buy the body and top. Some manufacturers make these and then buy the remainder of the car. He comes to me as a wheel manufacturer, and what does he say? He says, "If I import those wheels from the United States I can bring them in on that duty less 25 per cent. How much can you save me of this duty?" Now that is the business end of it. These wheels have to be supplied, therefore, at less than the American price plus the duty, saving the manufacturer of cars probably one-half the duty. I ask the minister, what good to me is the 20 per cent tariff on wheels? It is not worth a snap of the finger.


Charles A. Stewart: Surely my
hon. friend does not argue that he must sell the wheel at the American price plus half the duty or he will not get the business? He does not contend that the Canadian manufacturer would force him into that position?


James Dew Chaplin: The hon. minister has not been in the business and does not know the practical side of it. In the first place, every one of the manufacturers are exporters of wheels. We as manufacturers of wheels, or of the bodies or tops or anything else, try to get as much of that export business as we can, and by getting the rebates of duty we must, if we want the business, meet the American price. Having done so on part of the export business, they say to us, "Now we have given you so much of the export business you are able to make your whole article for less money, we expect you to do it, and we are doing it by means of the export 14011-232J
business and the volume of trade." You could not do it otherwise, and if by any chance any of the export business is lost to us we could not make the article that we are making, even at the price we are. It is impossible to do it. I do not know whether I have made that clear or not.


Charles A. Stewart: No, I do not follow my hon. friend.


James Dew Chaplin: As a matter
of fact the process is this: when we make goods and the American manufacturer comes over here he says to us, "You must show us some reason why we should not buy these goods in the United States. If we buy them in the United States we pay a certain rate of duty, but on that wheel we are making in the United States we have a profit, and if we give that business to you we lose the profit we are making in the United States," so that we have got to come down below the American price plus the Canadian duty.


James Alexander Robb: Before we get too far away
from the observations of my hon. friend, who is in the business and understands it, I may say I was impressed with his argument when he first started. He quoted the case of a car similar to the Cadillac and said it was impossible that that type of car could be made profitably in Canada, and for that reason we should put on a higher duty.


James Dew Chaplin: Not on account of the type of car, but on account of the quantity of production.


James Alexander Robb: He said that they could not
be built in Canada, and for that reason we should keep up the tariff and get the revenue. I do not agree with my hon. friend, but he is in the business and knows better than I do.


James Dew Chaplin: I am not in
the business. That is my own personal opinion.


James Alexander Robb: If my hon. friend is right,
why not take off the duty altogether and put on an excise tax of 50 per cent; then the government would get all the revenue? I do not say my hon. friend's argument is right, but if it is, why should we not do as I suggest?


James Dew Chaplin: That is for
the government to decide. I have given my own opinion. So far as that particular car is concerned, the only work you get out of it if you bring it into Canada in parts is the assembling cost. But the hon. minister knows right well, and the gentleman sitting

Ways and Means-Drawbacks
in front of him can tell him, what the assembling cost of a car is. It is a very very small item, and if it is to assemble the car only, I simply say that so far as the employment of labour goes it does not amount to a hill of beans.


James Alexander Robb: I do not agree with my hon. friend. I believe Canadians can do this work as well as they can in the United States, and it is to their advantage to manufacture in Canada because of the export business. They would not get the advantages they have in Canada if they were shipping from the United States. I will admit at once that they are under a little handicap because of the fair market value in the country of origin. If they get their fair market value down a little lower in Canada they will be in a more advantageous position to export. I know that the fly in the ointment was the clause providing that they must manufacture 50 per cent in Canada, but some of them had frankly admitted that they had no objection to that. Another matter which I have not mentioned before is that for the first year we are going to put them on a 40 per cent basis in Canada and give them up to March 31 next year to get up to the 50 per cent basis. That will give them leeway enough, and I have the assurance of the automobile men-Mr. Russell and Mr. McLaughlin; I forget the other gentleman's name, representing one of the other companies-that they think they can come to that figure within that period. I am told the Ford people are over that; they are quite satisfied and are not finding any fault. The policy of the government is to encourage the additional manufacture of these goods in Canada, and we believe this measure will help us.


James Dew Chaplin: The minister has confidence that Canadians can do this work. So have I. But they cannot work against impossibilities. They cannot manufacture a few cars of a certain type at any cost on the basis of which they can sell them. Surely that must be clear. No matter what the minister does; whether he makes it 50, 60 or 70 per cent, we are not going to make this range of high priced cars in this country. The tooling cost of one of those cars is so immense that it would never pay to make them in Canada. The matter is one of dollars and cents. To put out an absolutely new model car the tooling cost is more than half a million dollars. If you spread that over a thousand cars made on this side, what do you have? You have an impossible proposition at once. Such a car can never be made in Canada and if the minister has any expectations along that 
line he is going to be disappointed. Any arrangements made regarding the smaller car are sound, but any arrangements regarding the higher priced cars are absolutely unsound. I would not undertake to make a wheel for a car like the Cadillac. You would not get your tooling cost out of the profits on it in five years. What applies to that article will apply to every other article about the car.


Georges Henri Boivin: If that be the case why does my hon. friend object to allowing those cars to come into Canada at a reasonable rate of duty?


James Dew Chaplin: On those high priced cars I think the rate of duty should be as high as it can be placed. A man who can afford to buy a Cadillac or any other car at $4,000 or $5,000 should be taxed to the limit.
^Mr. BOIVIN: That man is already taxed 27i per cent of the value of his car plus a 5 per cent sales tax, a 5 per cent excise tax on $1,200 and a 10 per cent excise tax on the balance over $1,200. What more protection does the hon. member advocate for a high priced car?


James Dew Chaplin: As regards
luxuries I would impose a tax as high as possible. They were brought in under a duty of 35 per cent and people who can afford to buy a high priced car will import it even if the duty is 50 per cent.


Georges Henri Boivin: Then my hon. friend gets away entirely from his argument of protection.


James Dew Chaplin: The question is one of revenue, not protection at all.


Georges Henri Boivin: This is the first time that I have heard my hon. friend agree with us that the tariff should be for revenue and not only for protection.


James Dew Chaplin: I never argued that.


Some hon. MEMBERS:: Oh, oh.


James Dew Chaplin: Hon. gentlemen are very easily pleased, but if they will look over my addresses in this House on the French treaty they will find that I have advocated consistently a duty as high as possible on all imported luxuries. A high priced car is a luxury if there ever was one. There is not a bit of protection in such a duty.


Raymond Ducharme Morand: Surely there is an element of protection. If you raise the duty to 75 or 100 per cent you are going to force a certain number of people in Canada to buy cars

Ways and Means-Drawbacks
manufactured in this country. Those who can afford it will pay the higher rate of duty, but those who cannot will buy cars manufactured in Canada.


Georges Henri Boivin: I shall be glad to answer my hon. friends opposite when they can agree amongst themselves. One argues that it is tariff for revenue only-


John Arthur Clark: Nobody argues that.


Georges Henri Boivin: 1 heard that argument of my hon. friend from Lincoln just a few moments ago.


William Alves Boys: The minister misinterpreted it. Mr. CLARK: The minister did not hear all the argument this evening.


Georges Henri Boivin: I am sorry I was not here early enough to hear the whole argument, but if I wait to read it in Hansard I shall have to wait until to-morrow afternoon.


James Dew Chaplin: The hon. member understands perfectly what I mean. I give him credit for more common sense than he is trying to make out he has.


Peter McGibbon: I should like to ask the Minister of Customs the question I asked the Minister of Finance a few minutes ago. The Minister of Customs stated this afternoon- and his confreres nearly smashed the tops of their desks in applauding his statement- that -Canadian manufacturers were selling their automobiles in foreign countries at a lower price than they were selling them in Canada less the drawback, sales tax and all other taxes. That means that the manufacturers were exploiting Canadian consumers. I should like to ask him now to give us the details, the price of any particular car he wishes after deducting all the taxes, and the price that it is sold at in this country and any other country he likes.


Georges Henri Boivin: I am afraid my hon. friend did not exactly understand me this afternoon.


Peter McGibbon: I understand the minister perfectly.


Georges Henri Boivin: I said that for the purpose of my argument I was willing to eliminate the sales tax and the excise tax. It is well understood by all of us that the sales tax and the excise tax are not collected on cars exported. I further said that when a car manufactured in Canada is exported to a foreign country, the Canadian manufacturer charges a lesser rate than he charges in Canada and the difference in the rate is the amount of the drawback which he receives on the United States parts and materials
which go into that- car. I have tried to follow and carry out my argument by saying that if parts upon which at the present time a duty is paid and a drawback given should oome in free and if other parts should come in with a reduction in duty, the Canadian consumer can get the benefit of that reduction just as well as the consumer in New Zealand, Australia or any other country to which those cars are exported. In every case the same amount of Canadian labour is used and the same wages are paid. I claim that the government by reducing the duty on the car and at the same time reducing the duty on some of the parts and putting on the free list a number of parts that are not made in Canada-that cannot by any stretch of the imagination hurt Canadian	industry-will
reduce the price of the car to the Canadian consumer. If my hon. friend wants me to tell him the exact difference in price in regard to any particular make of car I will admit frankly I have not that information before me. I have seen it; I can get in the department copies of the orders in council passed by the government fixing the exact amount in dollars and cents which is allowed to every Canadian manufacturer as drawback upon the special make, special model and special type of car exported to a foreign country.
I do not happen to have the information before me, but that is the difference between the cost of that car to the foreign consumer and the cost to the Canadian consumer. Once more I say that except in so far as it is necessary to protect to a certain extent the part manufacturers in Canada, there is no reason in the world why the Canadian consumer should pay any more for his car than the foreign purchaser of the same car.


Peter McGibbon: The minister has now given us an entirely different version from what he said this afternoon.


Georges Henri Boivin: It may appear to be an entirely different version to my hon. friend. Perhaps I was not clear this afternoon. I want to assure my hon. friend that if I did not say that this afternoon, I surely wanted to.


Peter McGibbon: I am glad to hear that, but the Minister of Finance received the same impression that I did. It is a statement that has been made in this House and on the hustings almost from time immemorial in regard to not only automobiles but agricultural implements and everything else. In fact the Minister of Finance asked me a few moments ago if I disputed it. I am glad to have

Ways and Means-Drawbacks
the minister state now that when I disputed it I was correct, that is that there is no more reduction than the drawback that is received on cars exported from this country.


Georges Henri Boivin: I am told that when I was absent from the chamber there was perhaps a little misunderstanding concerning a statement made this afternoon, namely, that a United States manufacturer of a motor car actually received more for his car sold to a Canadian consumer than he did for the same car sold to a United States consumer. I understand some hon. members said that if that was the case the Department of Customs and Excise was to blame and the matter should be corrected. While that condition exists- and it does exist as we all know-it has existed since long before this government came into power. It is carrying out that provision in the Customs Act, that the value for duty of an automobile shall be the value in the country of origin when sold in like quantities to dealers of a like class. It is true that there is a clause in the act giving the Governor in Council authority to change that provision by order in council, but the power has never yet been invoked by this or any other government.


John Arthur Clark: Was it not invoked in connection with agricultural implements in 1924? Was there not passed at that time an order in council such as my hon. friend' refers to?


Georges Henri Boivin: An order in council may
have been passed changing the dutiable value of agricultural implements; I was not a member of the government at that time. But I was referring to automobiles.


John Arthur Clark: The minister said that the power to change the value by order in council was never exercised.


Georges Henri Boivin: What I said was that we had the power to make the change by order in council but that it was never taken advantage of by this or any other government. There, again, there seems to be a misunderstanding. What I had reference to was the value for duty of automobiles imported into Canada.
I am referring to the American automobile manufacturer. He has a subsidiary company in Canada and in most cases that subsidiary company is represented only by a customs broker.


James Dew Chaplin: That is what
you refer to as a fake company?


Georges Henri Boivin: 
James Dew Chaplin: 
Robert James Manion: The minister says that
there is some regulation in the Customs Act by which the government by order in council may fix the value of goods being imported into this country. I take it therefore that this is a matter that need not come before parliament. If therefore the government desire to do so they can, after this budget

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is adopted and the House prorogues, fix byorder in council the dutiable value of automobiles coming into Canada, say 50 per cent higher than it otherwise would be, and this without submitting the matter to parliament.


Georges Henri Boivin: I am glad that my hon.
friend has asked that question. Let me tell him frankly that the government have not so far considered applying section 42 of the Customs Act.


Robert James Manion: I was merely asking the
question for information.


Georges Henri Boivin: Section 42 of that act
reads:
If any difficulty arises in determining the fair market value for duty of goods imported into Canada, which are the manufacture or production of foreign countries or Great Britain, such as musical instruments, sewing-machines, agricultural machines or implements, medical preparations, commonly called patent medicines, and other goods, the prices of which are published iby the manufacturers or producers, or persons acting on their behalf, the governor in council may, from time to time, fix and determine a certain rate of discount which may be applied to such published prices of any such manufactures or productions, and such published prices, subject to deduction of the amount of discount according to such rate, shall be deemed and taken to be the fair market values of any such manufactures or productions respectively as are specified in such order in council.
That is the authority and I interpret it as a provision intended to prevent abuses. It was never the intention of that clause to enable any government to decide by order in council that the duty should be collected on the retail price of an article, and so long as I remain Minister of Customs the clause shall never be so interpreted. If however I do find that there is abuse, if I find that any American corporation is bringing cars into the country on a 35 per cent discount and then disposing of them, to the Canadian dealer at a discount of only 20 per cent, I shall ask my colleagues to pass an order to ensure that they pay the duty on the price of the car, less the discount they give to the Canadian dealer.


Robert James Manion: The idea is to prevent
*	dumping.


Georges Henri Boivin: Yes.


Robert James Manion: I have no quarrel with
that; I simply want to have the point cleared up. The other evening, in conversation with a gentleman who was on a visit to the city, I gathered that the government could fix for customs purposes the retail price, if you will,
*	or could alter the whole valuation of the car.
I understand from the minister, however, that unless any dispute arises or some such eventuality as he suggests, this will not be done.


Georges Henri Boivin: The intention is to prevent abuses.


Malcolm McLean: With regard to the point raised by the hon. member for Muskoka-Ontario and which has been discussed a good deal this evening, I hold here a piece of specific information which I think I should submit to the committee. It is an article taken from the Lethbridge Herald of April 27, 1926. The Lethbridge Herald is, I think, a reliable paper, and under the caption "Protection that protects" it states editorially:
It is little wonder that Canadian motor car manufacturers have been wailing loudly about some of their protection being taken away from them: why shouldn't they when an Oshawa-made automobile which costs $2,090 in Oshawa, can be bought for $1,295 at Nassau in t-he Bahamas, British West Indies?
Gerald A. Sweeting, now living in Toronto, who formerly lived in Nassau, ordered a 5-passenger McLaughlin sedan there. He could have bought it for $1,295. When he tried to buy the same car in Oshawa, where the factory is located, he was asked $2,095. Both cars were from the Canadian factory, the Nassau car being made for export.
In explaining how this $800 difference in a $1,295 car comes about, the factory officials explain that there is a 5 per cent sales tax and a 10 per cent luxury tax which are not paid on the export cars.
It is also pointed out that, to 'help the export trade, a 90 per cent drawback of the duty on imported parts is allowed. But with these figures in mind, the general public will still be left with the impression that the Oshawa manufacturers will be able to get along very nicely with 27$ per cent protection on higher priced cars as against the old import duty of 35 per cent.
Now, Mr. Chairman, the old saying is that where there is smoke there is fire. It is not always true, but generally it is.


Raymond Ducharme Morand: Oh, oh.


Malcolm McLean: The hon. member for East Essex laughs, but when so many intelligent people in this country are firmly convinced from their own knowledge and from the knowledge of their friends that certain articles, highly protected in Canada, are sold in foreign markets at lower prices than are available to the domestic consumer, there is some reason for their contention that the duty should be reduced so that Canadians should not be compelled to pay higher prices for a Canadian product than those at which it is sold to people in other countries. We are all familiar with the argument that if we have not high duties to protect the domestic market, foreign manufacturers will dump goods on us at lower prices than those at

Ways and Means-Drawbacks
which they sell those goods at home. If it is fair to assume that German, American and other manufacturers do this, we may also assume that Canadian manufacturers will also follow the same course.


George Gibson Coote: No, no.
M. McGIBBON:	Will the hon. member
tell us what proof there is for that statement?


Malcolm McLean: There is no proof in this statement, but here is a reputable newspaper circulating-


Peter McGibbon: And members of this House are doing so.


Malcolm McLean: I am quite satisfied there is as much truth in this statement as there is in many of the statements that have been put on Hansard this session.


Raymond Ducharme Morand: The hon. member referred to my laughing. I laughed because he said he could give a specific instance, but what there is specific about the statement he read is beyond my comprehension. There is nothing specific on the face of it, it is simply a general statement.


Malcolm McLean: There is a statement that a Canadian citizen living in Toronto went to Nassau, in the B_ahamas, British West Indies and could have bought a five-passenger McLaughlin sedan for SI,295, but when he tried to buy the same car in Oshawa, where it is manufactured, he was asked $2095. Could there be anything more specific than that?


Ernest Lapointe: What is the meaning of "specific "?


Robert James Manion: In medicine it has a bad meaning.


Raymond Ducharme Morand: But to that price you have to add taxes, freight-


An hon. MEMBER:: Freight!


Raymond Ducharme Morand: Well, there is a luxury
tax and there is also a sales tax. But what I am referring to is that the writer of the article makes no mention whatever about the taxes and difference in equipment; he simply makes the statement that there is a difference in the two prices. Of course there is, we all admit that; but the difference is made up by reason of other conditions which do not enter into the price of the exported car.
If there was anything specific about the statement it would specify what the taxes were and the amount of freight on that car.


Charles Avery Dunning: What about freight?


Mr. ROSS (Moose Jaw):: Would the Minister of Finance tell us the amount of the excise tax and luxury tax on a $2,095 car in this country.


Malcolm McLean: Mr. Chairman, for the satisfaction of the hon. member who did not hear me read this article, I said it went on to explain that there is a 5 per cent sales tax and a 10 per cent luxury tax, which taxes are not paid on the export car. Figuring that roughly,-I do not pretend to give the amount to the exact cent, it would amount to $183. Add this to $1,205, and you have a total of $1,478, which would still leave a difference of $600 odd, to which should be added freight.


An hon. MEMBER:: There is no freight at Oshawa.


Malcolm McLean: I know. The
freight to Nassau should be added to the $1,295.
An lion. MEMBER:	No, it should be
taken off.


Malcolm McLean: It should be
taken off the $2,095 and added to the $1,295.


An hon. MEMBER:: No.


Malcolm McLean: Mr. Chairman,
hon. gentlemen are convinced that the freight should not be added to the price of the car
at Nassau.


Some hon. MEMBERS:: Oh, oh.


Malcolm McLean: Perhaps I am a little thick-headed to-night, Mr. Chairman. The car goes to a foreign port, and I take it the freight charges should be added to the price.


Some hon. MEMBERS:: No, no.


Malcolm McLean: Wait a moment,. I' take it the freight should be added to the Canadian price, that is, the freight charged on the carriage of the car to the foreign port.


Robert James Manion: You are right this time.


Malcolm McLean: There is still, a difference of $800.


An hon. MEMBER:: More.


Malcolm McLean: Anyhow, the statement is specific that the taxes amount to $183. If that $183 should be added to the $1,295-


George Brecken Nicholson: What about the draw-back?

Ways and Means-Drawbacks


Malcolm McLean: To find out what that car cost in Canada you must add the taxes from which the export car is exempt to the price of that car at Nassau. Putting these taxes at $180, and adding this amount to the $1,295, the relative price would be approximately $1,475.


George Brecken Nicholson: What about the drawback in duty?


Malcolm McLean: Deducting that
$1,475 from the $2,096 would leave a difference of over $600. Now, the car sold in Oshawa at approximately $600 more than the similar car could be obtained for in Nassau. To that price you must certainly add the freight to Nassau, for undoubtedly the car did not get. there by itself.


Robert Forke: The Nassau car was sold
for $1,295?


Malcolm McLean: Yes. There is
a specific case of a commodity made in Canada, apparently under a high tariff, being sold abroad at a lower price. The same is true ail along the line. We are told that we must have a high tariff in Canada to enable our manufacturers to sell their goods in the foreign market. As I say, if the American, German and other manufacturers sell their * goods abroad at a lower price than they charge for them at home, is it not reasonable to assume, in spite of the denial of my hon. friends opposite, that the Canadian manufacturer might be tempted to do the same?


Thomas Erlin Kaiser: I think if the hon. gentleman would take the trouble to investigate he would learn that a car made in Oshawa for export differs materially from the car intended for the domestic home market. Our manufacturers have to study the requirements of the foreign market. I asked Mr. Keller why it was that some of his cars sold for less in the south, and he replied: 9 p.m. You must remember that the southern country is a cotton country, and the linings are put up in cotton, which is much cheaper, whereas in a northern country your linings must be made of different materials costing two and a half or three times as much as the cotton linings. I am certain that if my hon. friend would investigate all the details he would be satisfied that there is no misrepresentation on the part of the manufacturers.


Malcolm McLean: But this car was made in the same factory.


Thomas Erlin Kaiser: I tell my hon. friend that they make a different car for every market.


An hon. MEMBER:: You do not get mass production that way.


Mr. STANSELL:: Mr. Chairman, I am
quite satisfied that quotations even from the editorial columns of reliable newspapers are not sufficient proof to make this discussion valuable. For example, I have on my desk a copy of a reliable publication-at least I presume so, for it supports my friends opposite-and it has some glaring headlines and speaks in no complimentary terms about certain members of this House. I want to know if my hon. friend is willing to be judged by the statements in this reliable paper.


Malcolm McLean: Read it. I cannot give an opinion on something I know nothing about,. What is the hon. member referring to?


[Stage Direction]
Item agreed to.
Customs tariff-438c. Tops, wheels and bodies n.o.p. for motor vehicles enumerated in tariff items, 438a and 43Sb: British preferential tariff 20 per cent; intermediate tariff, 374 per cent; general tariff 30 per cent.
James Dew Chaplin: Before the
Minister of Customs was in the House I made a few remarks in reference to a statement he made before six o'clock. He referred to what I supposed was the hypothetical case of a car which was invoiced into this country at $3,500, was discounted at a certain manufacturers' discount-


Georges Henri Boivin: At 30 per cent.


James Dew Chaplin: At 30 per cent, and was landed here, or paid duty, at $2,800


Georges Henri Boivin: At $2,450.


James Dew Chaplin: Paid duty on
$2,450, and it sold at $5,414.36. The minister says that the law on our statute book allows us to accept as a fair market value the lowest price at which these cars are sold in the United States. He admits that in order to reach this low price a fake company has to be established in this country in order to enable these people to come out on the same basis as a large corporation in the United States, and that these men are allowed to sell these goods to our people on this side so that a tremendous profit is made, and that the customs must necessarily on that basis be beaten out of thousands of dollars.


Georges Henri Boivin: I did not say that.


James Dew Chaplin: That is the
effect of what the minister said, because undoubtedly due to the under-valuation it cannot be otherwise. If a man who establishes a fake agency on this side is allowed to go
3662	COMMONS
Ways and Means-Customs Tariff
out and market goods at pretty nearly double the price he ought to charge, there is evidence on the face of it of something wrong. But the minister does not stop there. He says, forsooth, that the Canadian manufacturers avail themselves of that price and sell goods on equal terms, and consequently are just as bad. Will the minister, after having made that statement-he must have had a specific example in mind-tell us of one or two cars made in this country that sell at a price equal to this $5,414.36?


William Duff: Before the minister
answers, let me call the attention of the committee to the fact that we are now discussing item 438c:
Customs tariff-438c. Tops, wheels, and bodies, n. o.ip.,,for motor vehicles enumerated in tariff items 438a and 438b.
We are not dealing with the automobiles now.


James Dew Chaplin: Mr. Chairman,
these items were to be discussed together. I brought this matter up, you will remember, before you declared the previous item carried.


William Duff: I might say to the
hon. member that I asked the committee to allow the four items to be discussed together, but the hon. member for West York said no, that we would discuss together items 438a and 438b, leaving items 438c and 438d to be discussed separately. We have passed items 438a and 438b after a long discussion, and I must ask the committee to keep to the item under discussion.


Henry Lumley Drayton: Are we discussing tariff items, Mr. Chairman?


William Duff: Yes.


Henry Lumley Drayton: Are we discussing the effect of tariff items, their relationship and their reactions on Canadian business? Then can we discuss intelligently the effect of a tariff on tops, wheels and bodies, when at the same time we are not permitted to discuss the basis of valuation of the completed car which comes in in competition with those bodies? It is impossible properly to consider the duty which is to enable Canadian manufacturers of parts to compete with what is their competition, namely, completed American cars coming in here, unless we can refer to the practices which have to do with those American cars. I think the Chairman will see, when he considers it, that he cannot eliminate the discussion of the other items.
I Mr. J. D. Chaplin.]


James Alexander Robb: If you will permit me, Mr. Chairman, I quite appreciate that you want to be fair with us all, and that your ruling is intended to expedite business, but inasmuch as items 438a and 438b are automobile items, may I suggest that you allow pretty wide latitude in this discussion?


William Duff: I think some hon.
members are jumping too hastily to conclusions. I did not make any ruling as tc what should be discussed. All I called attention to was the fact that we are discussing this particular item, and that we should endeavour to keep as closely to it as possible. I think the committee will agree that I have given as wide latitude as possible, both yesterday and again to-day, and I intend still to do so. But we must not get too far away from the item under discussion and repeat matters that have already been discussed, and pretty well decided, on previous items.


Robert James Manion: If you will remember,
Mr. Chairman, the Minister of Customs was not in the House when the hon. member for Lincoln first brought this matter up, and it was remarked that when he came in he would answer it.


Georges Henri Boivin: I agree entirely with your
interpretation of the rules, Mr. Chairman, but as the question has been asked, I would not like to have it appear that the minister was unable to answer it. So I hope the committee will be indulgent and allow the answer to be given, and then wye can take up the next item in the regular way.
If I understood the question correctly, my hon. friend asked me to give the name of some specific car that came in in this way, or of some specific car where the Canadian manufacturer got the same protection, or the -improper protection, that I have pointed out.


James Dew Chaplin: If the minister will allow me to interrupt, he is very skilfully putting my question in his own way. I prefer very much to put my question in my own way. The minister gives the House a hypothetical case of a car being brought in from the other side. I do not question that; I believe that it can be established. Now I ask him, in view of the fact that he said the Canadian car was taking advantage of a similar price for a similar car, to name a car made in Canada that approximates this car sold at $5,414 36. I asked him to name two cars; I will ask for only one.

Ways and Means-Customs Tariff


Georges Henri Boivin: I told my hon. friend that before six o'clock; I gave him the answer. My hon. friend well knows that there are two cars on the market to-day, one, which is supposed to be a Canadian car, known as the Cadillac limousine sedan, which was priced in Canada just previous to the change in duty at $5,600, and the other a Pierce-Arrow seven-passenger limousine sedan. The car imported direct from the United States, costing $3,500 in that country and $5,414.36 here, plus $180 for freight which brings it up to $5,600, is a Pierce-Arrow. The Cadillac limousine sedan, which is supposed to be a Canadian car-I do not know whether it is assembled here or imported from the United States, but it is sold here as a Canadian car-* is sold at exactly the same price as the other American car. They both sell in the United States for $3,500 and in Canada for $5,600.


James Dew Chaplin: If the minister will say that either of these cars is a Canadian car in any sense of the word I will admit that he is right. There may be some force to his argument, but neither of these cars can be classed as a Canadian car, and I defy the minister to name one solitary car made in Canada against which company the claim he made a few moments ago can be substantiated.


Georges Henri Boivin: I wish my hon. friend were so absolutely right every time he defies anyone on this side of the House. He knows very well that I cannot name a Canadian car which is sold in this country at $5,600, because there is no Canadian car made in Canada which is sold at that price. But if my hon. friend wants me to start my calculations all over again and take a $1,200 car or an $1,800 car, he will see that the proportions work out in exactly the same way. The American manufacturer, instead of putting $500 into his pocket on a $5,000 car, will put $100 in his pocket on a $1,000 car.


George Gibson Coote: I wonder if the minister could explain something to me. The price of the Ford coupe in the United States is given as $500, while in Canada, since the new prices have been published it is listed at $625, an increase of $125 or 25 per cent. The Tudor sells in the United States at $520 and in Canada at $650, an increase of 25 per cent, while Fordor sells in the United States at $565, and in Canada at $710, or an increase of 25.6 per cent. The tariff as fixed in the new schedule is only 20 per cent, and yet these cars are sold in Canada at an increase of 25 per cent, 25 per cent and 26.6 per cent respectively over the United States price. Possibly the Minister of Customs can explain that.


Georges Henri Boivin: Yes, I think I can explain that to my hon. friend. It may be that the published price of the Ford car in Canada includes sales tax and excise tax.


George Gibson Coote: I am quoting from an advertisement appearing in the 'Grain Growers' Guide, which says:
Ail prices at Ford, Ontario, Freight and government taxes extra.


Georges Henri Boivin: I still think I can explain :t to my hon. friend. The reason is that the American Ford car must be imported by the original purchaser who goes to the United States, buys it, and brings it to Canada. In ether words I am informed that there is a business undertaking between the Ford Motor Company of Detroit, Michigan, and the Ford Motor Company of Ford City, by which the United States company will not sell cars to Canadian dealers, and for that reason the Canadian consumer cannot buy an American Ford car from a Canadian dealer. Therefore the company manufacturing Ford cars in Canada are not obliged to limit their price exactly to the difference in duty; they can afford to charge, and they do charge, a little bit more, because they take advantage of the inconvenience to a Canadian citizen in going to the United States and making a purchase, and of the increased rates of freight the Canadian purchaser would be obliged to pay if he bought his car in the United States. They claim that the Canadian car is of better quality, but that explains the difference between the 20 per cent provided for by the tariff and the 25 per cent difference charged by the Ford Company.


George Gibson Coote: Will the minister admit that instead of having a 20 per cent protection under the new schedule, the automobile men really have a protection amounting to 25 per cent?


Georges Henri Boivin: 
George Gibson Coote: Will the minister tell us how much that is? Is it not practically 24 per cent?


Georges Henri Boivin: No, it is exactly 20 per cent on the retail price of the car. Then there is a. five per cent sales tax on the price of the car jilus the duty and there is a five per cent excise tax on the price of the .car plus the duty as well.

Ways and Means-Customs Tariff


George Gibson Coote: But is there not in the United States a three per cent excise tax which the buyer of the car must pay? That certainly makes 23 per cent, and the 20 per cent is charged on that total, which makes practically 24 per cent. In addition to that, if a Canadian buys a car in the United States he must provide himself with a license of the state in which he buys the car before he can drive that car out of the United States. So the point I would like to bring out-and if I am wrong I hope the minister will correct me-is that thg manufacturers of these cheaper cars in Canada to-day have a protection of at least 25 per cent.


Georges Henri Boivin: My hon. friend is certainly right when he says that the individual Canadian consumer going to the United States has to pay a 3 per cent excise tax, and the retail value of that car in the United States is the cost of the car plus the excise tax, so he has to pay duty on that price. When my hon. friend says that aimounts to a protection of 24 per cent or 25 per cent I would hesitate to agree, because I would hardly call protection the amount of excise tax the purchaser is obliged to pay to the United States government before he brings his car across the line. But it means practically what my hon. friend says. The reason Why in my argument a moment ago I did not take into account the excise tax is that when the car is exported from the United States to Canada, the excise tax is not collected by the United States government. It is used for the purpose of determining the retail value of the car for duty purposes, but it is not collected when the car is sold for export from the United States.


Henry Lumley Drayton: By the dealer.


Georges Henri Boivin: By the dealer or by the
distributor. I think if it were possible for the consumer to prove export of a Ford car from the United States, that tax would not be collected even from the consumer. But I agree with my hon. friend that it is impossible for the purchaser of a Ford car in the United States to prove export of that car, because the Ford dealers in that country are forbidden to sell cars to Canadians. They can buy them as individuals, pay the American excise tax and bring them across the line themselves, but if the Ford dealer knows the car is to be exported to Canada, he is instructed by the Ford Motor Company not to sell it, owing to the agreement existing with the Ford Motor Company of Canada.


Peter McGibbon: I would like to ask the hon. member what class of Ford car he was referring to.


George Gibson Coote: I named them all. I started with a coupe.


Peter McGibbon: Very well; that is a
closed car. I would like to ask the minister if it is not a fact that you must take from the protection which the customs duties give, the duty on imported parts, for instance; the duty on coal, or the duty on steel. Would that not be a fair reduction from the amount of duty which is placed upon the imported article complete?


Georges Henri Boivin: Oh yes. My hon. friend is quite right when he says that from the protection given on the car we should deduct the duty paid on coal and the duty paid on parts which are necessarily imported from the United States. But I say that with the amendment which was announced by my hon. friend the Minister of Finance just before six o'clock, and which we will reach in a moment, the Ford people will no longer have to pay any duty on any of their parts. They will come in absolutely free, because they are the most complete manufacturing plant in Canada. Everything that is made in Canada is either made by them in their own plant or purchased from a Canadian manufacturer, and all the Ford company imports is the parts which they cannot possibly obtain in Canada. They will derive perhaps more benefit than any other plant from the provision placing parts on the free list, but of course when my hon. friend from Macleod made the statement concerning the Ford car imported by the consumer and made the comparison between the 20 per cent duty mentioned in the tariff and the 20 or 25 per cent absolute protection which the Ford plant had in Canada, he was absolutely right. But that is a special case which relates only to the Ford car.


George Gibson Coote: Would that not apply to the Dodge car, the Buick, and almost any other car assembled in Canada?


Georges Henri Boivin: Not exactly, because the
Dodge dealers, the Buick dealers and the other dealers in cars assembled in Canada are not bound by contract and there is nothing in any written agreement between the Canadian and the American companies which prohibits Canadian dealers from buying American cars. If the car is bought through a Canadian dealer, it will escape the payment of the 3 per cent excise tax.

Ways and, Means-Customs Tariff


George Gibson Coote: My hon. friend will admit
they will hold the consumer up the same as the Ford people are doing.


Georges Henri Boivin: I have been arguing all
afternoon that the Canadian consuming public has been held up by these manufacturers-


Henry Lumley Drayton: And also has
made it plain that what he is doing is not making much difference. He laughs, but he knows it is true. The greatest thing behind the agitation has been the Ford car, and anybody who knew anything about it knew the whole situation. It has always been the same, there never was any change. All the different statements about everything being tariff was just so much nonsense. Here we have the exact figures and a confession.


James Dew Chaplin: And the complaint is that it is not going to be worth much.


Georges Henri Boivin: Did my hon. friend say the complaint was that it was not going to be worth much?


James Dew Chaplin: The complaint that the duty of 20 per cent is inactive; instead of that there is a duty of 25 per cent.


Georges Henri Boivin: My hon. friend pointed out to hon. members opposite that the cut in duty was not quite so great as they imagined, but at the same time I think we will all admit that the 25 per cent duty is very much better than the 40 per cent duty which they previously enjoyed.


Henry Lumley Drayton: Just in the
same way, we have lots of things oovered by patent. Our cream separator business is on the same basis. True, we have absolutely no tariff at all on that article; the whole thing is covered by patent right. The best protection for anybody in the world is the patent protection with agreements from the parent company. My hon. friend has been quite interesting to-night. He has been giving us an honest confession. Frauds have been committed on the country and on the customs, and they are continuing. Frauds are being committed with reference to automobiles coming in, on his own statement. Then he refers to bogus companies. He says they are within the law. I do not know that a bogus company can ever be looked upon as being within the law.


James Dew Chaplin: Or fake company.


Henry Lumley Drayton: Or fake company.


Georges Henri Boivin: I may perhaps have used a word I should not have used.


James Dew Chaplin: All right, we
will accept that.


Georges Henri Boivin: I do not pretend for a
moment that the company does not exist. It is a Canadian subsidiary company, the stock of which is owned and controlled by the American parent company, and without that company operating in Canada to act as a distributor there would be nobody here to import the cars. The dealers would import them direct subject to the discount they are entitled to receive.


Henry Lumley Drayton: Paying at a
higher value.


Georges Henri Boivin: Well, they use a subsidiary company as a distributing company. It is a Company which has a legal existence, which does not ask for one cent more reduction in the price of the car than the reduction which is given to distributors of cars in like quantities in the United States; so that it is pretty hard to say it is a fraud that has been perpetrated on the Department of Customs. If it is a fraud, it has been perpetrated on the Customs department for many years, and those who brought it to the attention of the Minister of Customs are precisely the same motor car manufacturers my hon. friend is defending to-night.


Henry Lumley Drayton: Your hon. friend is not defending anyone to-night. I do not know why my hon. friend should say that, unless he wants to draw out some of the arguments which I do not think are at all conclusive which we have been favoured with this afternoon.


Robert James Manion: He wants to draw out
applause from behind him.


Henry Lumley Drayton: I do not see
why the clapping does not materialize when he makes that statement. He will have a complaint against his back benchers; they are not running up to form. My hon. friend says this was drawn to his attention by a Canadian manufacturer. I do not wonder at it. I would have thought they would have drawn it to his attention and would have been insistent upon getting rid of it. But he says it is an evil; he does not like the word "fraud."


An hon. MEMBER:: Fake.


Henry Lumley Drayton: I do not distinguish between fraud and fake. The fact is

Ways and Means-Customs Tariff
that the Canadian Customs department have been losing a lot of money which they should not have lost. My hon. friend will agree that if we had in this country a different basis of valuation this fraud or fake could not take place. Am 1 right?


Georges Henri Boivin: No, I certainly will not
admit my hon. friend is right. He is so seldom right that I do not think he can be right this time.


Henry Lumley Drayton: My hon. friend has answered the question. Is he at all aware of the suggestion-it was more than a suggestion, it was put into legislation-that the valuation for customs purposes should be a valuation based on the cost of production, plus manufacturers' profits and distributing expenses? Is the hon. minister aware of that?


Georges Henri Boivin: That that request was made?


Henry Lumley Drayton: No, that there
was a provision to that effect.


Georges Henri Boivin: No, I am not aware that
there is a clause to that effect. I have been told by the officials of my department who have been there for many years administering the Customs Tariff that at one time there was such a clause. It is not in existence now.


Henry Lumley Drayton: The clause was struck out in 1922, rendering it possible for this sort of thing to go on. Instead of making a complaint against the Canadian manufacturers and instead of making a complaint against the tariff with which it has nothing to do, it would have become my hon. friend very much better if he had brought in something to enable him to stop this kind of fake business in Canada, these fake companies, these schemes of beating the customs. I might go back to the valuations which we had in 1921, which would have prevented those frauds, but I suppose that is a course of action that it is idle to seek any progress on from this government.
I want to address myself to the particular item under discussion having regard to it as such and not to its relation to the valuation of motor cars for customs purposes. The Minister of Finance admitted this afternoon that as the processing went on the rate went up. The Minister of Customs did not admit it, but it was a sound argument and I suppose he will admit it.	'


Georges Henri Boivin: I also admit it.


Henry Lumley Drayton: Then we have both ministers agreeing; we are all agreed on that, and therefore the rate on the parts ought to be always less than the rate on the whole because there is just that much Canadian labour to be looked after as the processing is carried on further and further. The Minister of Customs nods his head. I assume he means that is correct. He again nods his head. Very good. Under those circumstances, I seriously ask the government in view of their own statement: How do they think this item is proper? On parts such as tops, wheels and bodies which are the chief parts that go into automobiles we have rates of 20, 271 and 30 per cent. Of course, the 30 per cent rate is really the one in which we are interested. 1 am quite aware that it is proposed to give a rebate of 25 per cent in connection with that rate. I understand from the Minister of Finance that that is correct. That would reduce the rate of 30 per cent in which we are interested to 22J per cent. Is my hon. friend going to leave it in that way?


Georges Henri Boivin: Yes.


Henry Lumley Drayton: In other words, against the principle which they laid down, the rates on the parts are to be greater than the rates on the completed article, because that is the effect of this section as I read it.


Georges Henri Boivin: When the government had the intention of reducing the duty on motor cars from 35 to 271 per cent on the high priced car and from 35 to 20 per cent on the car valued at less than $1,200, those parts that are mentioned in this particular item were not taken into consideration by the government. It was in the minds of the officials of both departments that the intention of the government was to reduce the rates on the parts to absolutely the same rate as that on the motor cars themselves.


Henry Lumley Drayton: That was the old law.


Georges Henri Boivin: Yes, because under the
original item 438-there was then only one item-an appraisers' bulletin had been issued on the 21st November, 1919, under a ruling of the Board of Customs, that those four component parts, chassis, wheels, tops and bodies, would pay exactly the same rate of duty as the completed car. There were many reasons for that, the principal one being to prevent people from dismantling cars, importing them in portions and then putting them together. Relying upon that old bulle-

IFa?/s and Means-Customs Tariff
tin, the Department of Customs, after consultation with the tariff advisers in the Department of Finan'ce but without referring the matter to the government, issued an appraisers' bulletin on the 17th April, the day after the budget came down. The bulletin reads as follows:
In conformity with the ruling in appraisers' bulletin No 2018, tops, wheels, chassis or completed bodies, for use on automobiles or motor trucks, are rated under tariff item 438a and 438b.
Those articles are to be rated under tariff item 438b only when the following certificate is subscribed to on the face of the sworn to entry; otherwise, they are to be rated under tariff item 438a.
Then the bulletin contains the form of a certificate which is to be signed by persons importing those- parts for the cheaper cars. When that bulletin was issued parts makers from all parts of Canada came to Ottawa and asked the government to do something to meet their needs and requirements, pointing out that if the duty on their parts was reduced to 20 per cent and if, in addition to that 20 per cent, there was to be a 25 per cent drawback on the same parts when imported from the United States to be placed in cars the content of which was 50 per cent or more Canadian, they could not remain in business. They interviewed the Minister of Finance; many of them came to see me; they saw nearly all the members of the government. It was explained to them very frankly-and this is the only change that is being made now in the budget and it is not a substantial change-that we intended that the duties on parts would remain as they were, but that they would be reduced by 25 per cent when the parts were imported from the United States to go into Canadian made cars. Parts men and automobile manufacturers met and in their meetings-and one of those meetings took place in my room- they came to the understanding that the duty on parts should be reduced to 30 per cent. The present tariff is 35 per cent and the reduction is therefore from 35 to 30 per cent. My hon. friend says that there is only one thing wrong; that it would be perfect if that rate was not higher than the duty on cars; that as the part is a component part of the entire automobile, the duty should be less instead of more. The duty is not less, but it is also not more and I am going to show my hon. friend how that happens. He saw the point at once and he admitted a moment ago that this 30 per cent was subject to a 25 per cent drawback which reduced the rate to 22J per cent. The part makers told us that
it was absolutely impossible to have two rates on parts; that the same material entered into the wheels, bodies and tops, and that they would prefer a uniform rate.


Henry Lumley Drayton: That is right.


Georges Henri Boivin: 
Henry Lumley Drayton: On the average.


Georges Henri Boivin: Yes.


Henry Lumley Drayton: Cars are not sold on the average.


Georges Henri Boivin: But still we must meet the demands of the parts manufacturers and try to meet their wishes by finding an average. That is the plan which they proposed to us. They said: Seeing that you are going to impose a uniform rate on parts, we would like to have you average the rate on the parts to the average rate on the cars sold. The average rate on cars will be 22J per cent and the average rate on parts will be absolutely the same.


John Arthur Clark: Does the Minister of
Customs consider tires a part of a car?


Georges Henri Boivin: Yes.


John Arthur Clark: What duty is now assessed on tires?


Georges Henri Boivin: The duty on tires at the present time is 35 per cent, but I am glad to say that there is no tire factory in Canada to-day taking advantage of the full protection.


John Arthur Clark: The minister said that there would be no higher duty on parts imported for further manufacture. Any Canadian manufacturer importing tires or any part which bears 35 per cent duty-and there are many such parts-will now have a protection of 27^ per cent, w'hereas if I, say, want to import a car carrying tires or parts of the same value, I shall have to pay a duty of 20 per cent. I do not think the minister can question the truth of this statement. In other words, the minister in this budget says to me: "If you want to buy a Canadian car I am going to charge you 27J per cent on every American
366S

Ways and Means-Customs Tariff
part that enters into the manufacture of that car; 'but if you import an American car made by American labour I will charge you, in respect of those parts, only 20 per cent." Is not that the situation?


Georges Henri Boivin: Is my hon. friend anxious to reduce the duty on tires to 20 per cent?


John Arthur Clark: No, but I am anxious to have the matter scientifically investigated. Andl to prove my contention that it has not been studied on that basis I will quote two observations made by the Minister of Finance this afternoon. In the first place he declared that he was bewildered when confronted by the manufacturers with their problems, and then he talked about having to grope around to find a solution for certain difficulties. These two admissions alone constitute a sufficient evidence that diue investigation has not been made into this industry. I do not pose as an expert on the automobile question, but I am asking for fair treatment for the industry and I claim that it is unfair to expect a Canadian manufacturer to compete with American producers when we levy a duty of 27| per cent on parts imported by him while every other Canadian citizen is encouraged to go to the United States and buy a finished car on which he will pay only 20 per cent in respect to these particulars parts.


Georges Henri Boivin: When my hon. friend makes a plea for the tire manufacturers of Canada-


John Arthur Clark: I am not making a plea for the tire manufacturers or for anyone else. I want the minister to understand that I am speaking in behalf of the industry as a whole, and particularly in the interests of the workmen. The great bulk of the automobile manufacturers are Americans who have branch factories here, and so far as they are concerned it is not a matter of very much moment to them if you do kill the industry in Canada, because in a very few months, almost anyone could absorb the capital lost in the Canadian factories. But my point is that for the sake of the tremendous pay-roll and of our Canadian people who are employed in the industry, the matter is one that should be scientifically investigated and not left to the decision of a government which has to grope around in a bewildered state.


James Alexander Robb: We have had a fair discussion of this item and I think the committee is satisfied that we are trying to deal fairly with all industries. I suggest that we might now pass the item and proceed with the three

I mentioned at six o'clock. We could clean up this sheet and get through, seeing that many hon. gentlemen are anxious to catch the train.


John Arthur Clark: The minister has said that in New Zealand the regulations provide that for duty purposes the assessment shall be made on the fair market value in the country of origin, and he went on to suggest that it would be advantageous to Canada to adopt the same principle here. I would ask him, first, whether he proposes to make a. change in the present valuations for duty purposes; and, secondly, what in his opinion is the difference between the principle applied in New Zealand and that applied in this country.


James Alexander Robb: Why should we go over that ground again to-inight? The Minister of Customs explained the point fully.


John Arthur Clark: The Minister of Finance made the statement a moment ago that the duty of 20 per cent would be assessed on the retail value of the car. Is the duty so assessed to-diay?


Georges Henri Boivin: At the present time the duty on a car imported by the ultimate consumer who buys it in the United States is assessed on the retail value, but in respect of all cars imported from the United States by dealers or distributors-and my hon. friend will readily recognize the difference between a dealer and a distributor-the duty is charged, not on the retail, but on the wholesale price.


John Arthur Clark: Charged to whom?


Georges Henri Boivin: To the distributor, if imported by him.


John Arthur Clark: On the first sale from the manufacturer.


Georges Henri Boivin: On the first sale from the manufacturer to the distributor, and if it is imported by a dealer he also is entitled to a discount.


John Arthur Clark: In what way does that differ from the practice established in New Zealand now?


Georges Henri Boivin: When goods are imported into New Zealand the value for duty is calculated on the retail value in the country of origin. At the present time they have a duty of 10 per cent on cars imported from Canada as against a duty of 25 per cent on cars imported from the United States. As the Minister of Finance pointed out this afternoon, every time we do anything by our tariff to reduce the retail value of motor cars manufactured in

Ways and Means-Customs Tariff
this country we are giving an advantage to our manufacturers in the New Zealand market by widening the difference between the duty paid by our manufacturers and that paid by their United States competitors.


John Arthur Clark: Does the Minister of Customs
agree with the Minister of Finance that the New Zealand system would be preferable to the one in vogue here?


Georges Henri Boivin: I was not present when the hon. Minister of Finance referred to that matter. I am not sure that he made the statement, because I know that our automobile manufacturers have for the last month been asking him to incorporate that system in our tariff and make the duty payable on the full retail value of the car. So far as I know he has not granted their request.
(Mr. CLARK: He stated this afternoon that in his opinion it would be advisable.


James Alexander Robb: I stated this afternoon that the New Zealand method was worth considering in view of the situation that had developed in Canada of a 35 per cent discount.


James Dew Chaplin: Mr. Chairman, how can you ever expect to be able to export Canadian cars to New Zealand under present conditions, where you have your excise tax that enlarges the retail value of your car, with the result that New Zealand imposes a disj criminating duty .because of that very enlargement of price? You never can do it.


James Alexander Robb: My hon. friend is trying to induce me to lose some of my excise tax.


James Dew Chaplin: No, I am stating *what is a fact. While that excise tax is continued you absolutely prevent the export of Canadian cars to New Zealand.


James Alexander Robb: There is very much to be said for that view.


John Arthur Clark: Does the Minister of Customs think the government has power under section 42 of the Customs Act to change the basis of valuation for duty by order in council?


Georges Henri Boivin: The hon. member for Fort William asked me that question early in the evening, and I answered him that we had never discussed the matter around the council table, but that my own interpretation of section 42 and that of my officers was to the effect that we could not take advantaget of the section to impose the retail price as the value for duty; that we could only apply the section 14011-233
to prevent abuses, for instance, to prevent a subsidiary distributing company from obtaining a higher rate of discount than it could legitimately obtain when cars were merely passing through its hands to be sold to other dealers.


John Arthur Clark: May I point out that in 1924 this government did pass an order in council in connection with agricultural implements under which they changed the basis of valuation for duty? That order in council provided that the American manufacturer must invoice his goods and pay duty on the basis of the price payable by the American purchaser.- So apparently the government have recognized that they have such power and have actually practised it in the past.


Georges Henri Boivin: If my hon. friend and those who surround him advocate that we should pass an order in council obliging any Canadian dealer importing an American car to pay duty on the full American retail value, I promise to give his request very serious consideration and to bring it to the attention of my colleagues in council. Possibly if it is within the law, and if everybody on the other side of the House desires that it should be done, it may be done, because it will make absolutely no difference whatever in the cost of the car to the Canadian consumer. What we are endeavouring to do by these changes in the tariff is to lift the load off the shoulders of the Canadian consumer by bringing down the price of motor cars.


Henry Lumley Drayton: I would have thought in view of what my hon. friend said to-day that he would want to stop fraud on the customs and secure proper valuations, irrespective of whether the act covers it or not. I would have thought that he would consider it his duty to see that proper valua-1 tions are made and render impossible fraud on the customs of this country by (fake companies. All such frauds ought to be stopped now.


Georges Henri Boivin: I said this afternoon that if my hon. friends on the other side would allow me to remain Minister of Customs a little while longer I would recommend to council the passing of an order whereby no importer of cars would be allowed to claim an unreasonable discount upon the list price of the car imported to evade the payment of fair duty.


[Stage Direction]
Item agreed to.
[Stage Direction]
3670	COMMON'S
Ways and Means-Customs Tariff
James Alexander Robb: The next is a new item:
Customs tariff-438d. Horns, distributors, ammeters, instrument board lamjps, oil gauges, gasoline gauges, thermostats, oil filters, carburetors, purifiers for oil, purifiers for air, clocks, monograms of metal and enamel, annular baJll bearings and parts thereof, lode washers, speedometers and parts thereof, vacuum tanks, gaskets of copper and of asbestos, rims for steering wheels, welded axle housings, electric terminals other than battery terminals, and fuses, all of a class or kind not made in Canada, when imported by manufacturers of goods enumerated in tariff items 438a, 438b and 438c, for use only as orignal equipment in the manufacture of motor vehicles enumerated in tariff items 438a and 438b: British preferential tariff, free; intermediate tariff, free; general tariff, free.


[Stage Direction]
Item agreed to.
James Alexander Robb: There is another one-


Raymond Ducharme Morand: Mr. Chairman, this afternoon the Minister of Customs very emphatically stated, and a few minutes ago the Minister of Finance also stated, that neither wanted the excise tax to be touched. In other words, they wanted this money for the purpose of paying off the war debt. I wonder if it has ever occurred to some other hon. gentlemen-I know it has to those ministers -just how much is now being taken off the revenue of the country by lowering the price of automobiles. Eleven per cent of the cars used in Canada are imported. Those cars used to pay 35 per cent; they are now going to pay 20 per cent. Two out of every three of them will pay 20 per cent, the balance will pay 27i per cent. Besides this, the price of all cars being lowered, the excise tax and the sales tax will be reduced upon the total amount of sales. Furthermore, the duty on parts that are imported is cut to 20 per cent in some cases, and many will be admitted free, which again will reduce the revenue very seriously. If hon. gentlemen opposite had taken the easy way and removed 5 or 10 per cent from the sales tax, instead of upsetting the whole country by these changes, I wonder if they would not have arrived at exactly the same result. What is going to happen now, with some exceptions, is that we are going to get a slightly cheaper motor car at the expense of the national revenue. The minister shakes his head, but that is the fact. Further than that, all these parts were absolutely parts upon which the tariff for revenue-much lauded by my friends across the way-applied, because none were manufactured in this country, such as horns, distributors, ammeters, instrument board lamps, oil gauges, gasolines gauges, thermostats, oil filters, carbureters, and so forth. That is taken out of the revenue of the country; there is nothing else for it. It is a straight reduction of the revenue of the country for
[Mr. Boivin.l
the purpose of reducing the price of automobiles. But it does more than that. Many of these items undoubtedly have been gone over by the experts, and it is only unfortunate that they were not gone over by the experts before the budget was brought down, instead of afterwards. It would have saved the government and the country a great deal of trouble and anxiety. There is this point. Some of these parts are new; they have just been put on cars recently, and there has been no chance for a Canadian manufacturer to develop an industry in these parts. This absolutely precludes the possibility of Canadian manufacturers entering into their manufacture.


Georges Henri Boivin: My hon. friend loses sight
of the fact that the moment any one of these parts is manufactured in Canada, it comes off the free list, and the duty presently paid on these parts goes on automatically. These parts will be free from duty only so long as they are not manufactured in this country. My hon. friend need not worry, because, after all, the duty paid by automobile manufacturers on these parts averages only about four dollars per *car. We are giving this reduction to the. automobile manufacturer to compensate him in part for the reduction of the duty, the advantage of which we are passing on to the Canadian consumer. I repeat, the duty paid on all these parts that cannot be manufactured in this country at the present time amounts to an average of $4 per car and possibly $8 on the higher priced cars.


Raymond Ducharme Morand: I do not know what is
the exact amount, but we will admit that it is $4 per oar. That means just that amount taken from the revenue of the country for the purpose of reducing the price of automobiles. The minister must admit that we shall not receive the same amount of duty per car imported into Canada as before, and 11 per cent of the cars used1 in Canada were imported up until a short time ago. So is not this going to reduce the amount of revenue you are going to receive?


Georges Henri Boivin: If my hon. friend desires
to have us collect the largest possible amount of duty on cars imported into Canada, we have been wasting our time arguing here this afternoon and this evening. I thought my hon. friend was not anxious that cars be imported into Canada. I thought he wanted them manufactured in this country.


Raymond Ducharme Morand: That is what. I want.

Ways and Means-Drawbacks


Georges Henri Boivin: Then why base his argument on the loss of revenue on cars imported into this country?


Raymond Ducharme Morand: That is very simple. I
have known the Minister of Customs for a long time, and I know that he can wiggle out of almost anything. But the fact remains that if you lower the duty to 20 per cent you are going to have more cars imported.


Georges Henri Boivin: Then there will be more
revenue.


Raymond Ducharme Morand: Yes, and fewer cars manufactured in Canada. You cannot eat your cake and have it.


Georges Henri Boivin: Seeing that my hon. friend has made his speech and my own, there is nothing left to be said.


[Stage Direction]
Item agreed to.
William Duff: Item 1055 as amended reads:
Customs tariff-1055. Materials including all parts: -When used in the manufacture of goods enumerated in tariff items 438a and 438b. Provided that before April 1, 1927, no drawback slhaill be paid under this item unless at least forty per cent of the cost of producing the finished article has been incurred in Canada; Provided that on and after April 1, 1927, no drawback shall be paid under this section unless at least fifty per cent of the cost of producing the finished article has been incurred in Canada;
And provided further that no drawback under this item shall be payable more than once on any article; portion of duty (not including special duty or dumping duty) payable as drawback, 25 per cent.


Henry Lumley Drayton: There seems
to be a complete change in the wording. What is the effect of the changes?


James Alexander Robb: I do not know whether my
hon. friend was out a moment ago when I explained that.


Henry Lumley Drayton: Oh, it is just the 40 per cent?


James Alexander Robb: Yes.


James Dew Chaplin: A few minutes
ago the Minister of Customs told us about the strenuous efforts he made and the time he had with the parts makers in order to bring their condition on a livable basis. He told us that the duty was adjusted, not on the basis of 20 per cent, but it was fixed at 30 per cent, 27^ per cent and 20 per cent on the parts of cars. I want to ask the minister, does he expect that the articles mentioned there will have the protection he speaks of, even less the 25 per cent of rebate, in the event of their being used by manufacturers of cars
14011-233i
who make the 50 per cent? Does he think, for instance, that a manufacturer of tops or bodies will have the benefit of that duty?


Georges Henri Boivin: I am not sure that the
manufacturer of tops, wheels and bodies in this country will be able to take advantage of the full 30 per cent. That will depend a great deal upon internal competition. That is the argument that is used by my hon. friends on the other side all the time, that if you put the duty high enough, you will have so many factories making the same line of goods that competition will keep prices down. That may be; I am not prepared' to argue against that tonight, but I do not exactly get the point that my hon. friend wants to make, and I would like to explain to him anything I possibly can, if I understand it myself. He says that by giving a protection of 30 per cent to the manufacturers of tops, wheels and bodies, the manufacturers will not get the 30 per cent.


James Dew Chaplin: Not at all.
_ Mr. BOIVIN:	I admit that; I admitted
it a little while ago. They will be getting 30 per cent less the 25 per cent of the duty provided in the drawback clause. That will reduce their protection to 22J, per cent.


James Dew Chaplin: Does the minister think that they will get the 22J per cent? That is what my question is.


Georges Henri Boivin: 
Henry Lumley Drayton: It is a trade
condition. My hon. friend must know it.


Georges Henri Boivin: That is what I say. I say that if they do not get that full protection it will not be the fault of parliament.


Henry Lumley Drayton: Oh yes.


James Dew Chaplin: It is partly the fault of the 25 per cent rebate.


Georges Henri Boivin: There are a great many
arguments that can be used against the 25 per cent rebate, and the principal argument used by the parts manufacturers is that every one who makes a car in Canada the material entering into the manufacture of which will be at least 60 per cent Canadian can go to each individual Canadian parts maker and say: "The part you are selling to me is the part that makes up the difference in my car between the 50 per cent and the 60 per cent Canadian content. You must sell

Ways and Means-Drawbacks
that part to me at 25 per cent reduction on duty paid on an American part or I shall buy it from the United States." Then he can go to some other part manufacturer and use the same argument with him. I am willing to admit, and I think the Minister of Finance will admit, that this drawback clause is almost tantamount to reducing the duty on parts to 22J per cent. But it has this additional advantage. It will prohibit people from importing all their parts from the United States and using Canada .simply for assembling plants to get the benefit of Canadian prices on their shipments overseas. It will oblige them to manufacture their cars in Canada. There is that advantage to the 25 per cent drawback; there are those who are assembling in Canada at present, such as the Dodge Brothers and the Durant people and others, who are not putting 50 per cent of Canadian content into their cars. Some manufacturers came to us and assured us that they wanted to develop their plants in Canada, and this 40 per cent provision is made to enable them to do so during the next year.


James Dew Chaplin: There is one
mistake the minister makes; he should refrain from mentioning names, because he does an injustice to the manufacturers. He mentioned the Durant plant, for example; I can tell him that already the Durant people make more than 50 per cent of their car in Canada, consequently they should not be referred to as people who are making less than that percentage here. What the minister says may be true in respect to others but it is an injustice to this particular firm.


Georges Henri Boivin: If I have doiTe any injustice to the Durant people, I withdraw the name at once and apologize most sincerely. If they are making more than 50 per cent of their cars in Canada at present, I am glad to be so advised and I hasten to add:	All
honour to them for it.


James Dew Chaplin: I know whereof I speak.


Georges Henri Boivin: I am sure the hon. member is right.


Henry Lumley Drayton: The Minister
of Customs has put his finger on the one thing this government is sure of and the one thing I think they are relying on as the reason why the manufacture of cars must continue in this country. I refer to the British preference, and other preferences with the British dominions. They must continue manufacturing, as he points out, in order to sell in these export markets, and I think there is a great

deal in what he says. But so far as the parts manufacturer is concerned I do not think my hon. friends quite realize the condition. In addition to what has been already stated we have a very large proportion of our business which is export business, calling for refunds. Take the case of a man manufacturing parts with a 50 per cent export business and a 50 per cent local business. What is the effect there? It is to cut down the duty to practically half. He buys for his output, and he knows what proportion of his business is export, so it works out to about 50 per cent net real protection to the part manufacturer.


James Alexander Robb: Just before the item passes- and I will hasten, because I know hon. gentlemen want to catch the train-I was rather pleased that the hon. member for Lincoln (Mr. Chaplin) reminded my junior colleague that we should be careful in this House in advertising different companies. It now gives me an opportunity of saying to him what I did not like to say earlier in the evening. It occurred to me that he was doing an injury to a certain industry in this country when he said certain cars could not be manufactured in Canada at all. I will tell hon. gentlemen why I mention that. While I was in Australia, trying to negotiate as favourable a trade agreement as I possibly could, the Australians said to us, "We cannot give you a preference on automobiles; you do not manufacture them in Canada; they are all United States concerns." So we should all keep in mind as members of parliament, whatever views we may have, that to say we cannot do things in this country injures our trade.


James Dew Chaplin: I think the
minister is inclined to be fair. It was not I who first mentioned the name of a company; I have absolutely refrained from mentioning company names. The minister mentioned that name first, as Hansard will show, and I stated that cars of that description and category could not be made in this country economically. I make that statement now; I am not afraid to repeat it, because I know it is absolutely correct.


Georges Henri Boivin: I do not like my hon. friend to get away with that. I do not want to start another argument but if you will look at Hansard to-morrow you will find that when I discussed the price of automobiles and the duty upon them, I took as an example a S3,500 car. I said that I referred to no particular make; I refused to mention any names, and it was only after I had been repeatedly urged and questioned by the hon. member,

Importation oj Celery
who asked me to give the name of any particular car in Canada selling at that price, that I told him there was a car in Canada known as the Cadillac that did sell at approximately this figure.


James Dew Chaplin: That is perfectly true; I asked that question, but the minister gave me the names of two cars which are made in the United States and not in Canada. He did not answer my question at all.


Georges Henri Boivin: Then I did no harm to any Canadian company.


[Stage Direction]
Item agreed to.
Customs tariff-1053. Cellulose acetate in powdered form imported after the thirtieth day of April, 1927 and prior to the first day of November, 1927: When imported by manufacturers and further manufactured in their own factories before the first day of December, 1927, portion of duty (not including special duty or dumping duty) payable as drawback, 99 per cent.
James Alexander Robb: Before this item passes, my hon. friend from Lincoln desired that I bring in a letter from Courtaulds Limited, dated February 3rd. I have that letter here. I also made a statement this afternoon that this industry would invest about $10,000,000 in Canada. I find that the estimated expenditure for buildings and plant will be in the neighbourhood of $8,000,000, while an ultimate expenditure of about $20,000,000 is expected. Within six months after breaking ground the company expects to employ between 500 and 2,000 hands, and when the plant is fully equipped the number is expected to be 4,000 in practically equal proportions, male and female. The letter from Courtaulds I shall be very glad to table, if my hon. friend has seen it.


James Dew Chaplin: Yes, I have seen it, and I shall be glad to have it tabled.


James Alexander Robb: As these are the originals, I will have copies made and tabled.


[Stage Direction]
Item agreed to. [DOT]
Customs tariff-1054. Yarns produced from cellulose acetate, dry spun, not more advanced than singles, when imported after the thirty-first day of October,
1926,	and prior to the first day of August, 1927, when imported by manufacturers and further manufactured in their own factories before the first day of September,
1927,	portion of duty (not including special duty or dumping duty), payable as drawback, 80 per cent.
Item agreed to.
James Alexander Robb: I will not ask the committee to pass any of the other clauses.


Henry Lumley Drayton: It is only the items that we have passed; the general resolution stands.


James Alexander Robb: I have agreed with the right hon. leader of the opposition to hold one resolution over until he could have an opportunity of discussing it, I should like to keep my word. We all hope he will be in the House on Tuesday next, and we will continue then.
Progress reported.
On motion of Mr. Robb the House adjourned at 10.23 p.m., until Tuesday, May 25th.
Tuesday, May 25, 1926.