1926-05-18

VICTORIA DAY ADJOURNMENT

Right Hon. W. L. MACKENZIE KING (Prime Minister):: By leave of the House I
beg to propose the following motion which, if it does not meet with unanimous approval, may stand as a notice:
Tha' when this House adjourns on Friday, the twenty.first instant, it shall stand adjourned until Tuesday, the twenty-fifth instant.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the Orders of the Day:
Sir HENRY DRAYTON (West York):: Mr. Speaker, I should like to ask my right hon. friend the leader of the House whether
[Mr. Robinson. 1
he has noticed the statement contained in this morning's papers to the effect that New York interests are seeking to make a very large development of power on the St. Lawrence, and that the consent of the government of Canada would first have to be obtained for any such development. Has any application for consent been made to the government?


William Lyon Mackenzie King: Mr. Speaker, my hon.
friend has been the first to draw the matter to my attention. I am not aware of any application of the kind having been made to the government. If any should be made, it will be dealt with in accordance with the policy laid down by the government at a previous session.


Mr. G. B. NICHOLSON (East Algoma):: I would like to draw the attention of the government to a despatch from New York appearing in yesterday's Ottawa papers, as follows:
Licenses for the development of water power on the St. Lawrence river involving an expenditure of more than $200,000,000 will be granted soon to the Frontier Power Corporation of America, the Herald-Tribune learns. Although no official announcement has been made, the paper says that members of the state power commission have decided to ignore the threat of Governor Smith to make public development of water power the greatest issue in the state, and are ready to support the project of the Frontier Corporation which is a subsidia/ry of the Aluminum Company of America, the Dupont De Nemours Company and the General Electric Company.
Having regard to the very great importance of the question of development power on the St. Lawrence, has this matter of the proposed development in the state of New York been brought to the attention of the government, and are the government taking any steps to protect Canadian interests in this connection?


William Lyon Mackenzie King: This has been brought to the attention of the government by my hon. friend (Sir Henry Drayton) who is now leading the opposition. He mentioned it a few moments ago and the member for East Algoma will find my reply in Hansard tomorrow. It will, I think, answer his question.



HOME BANK DEPOSITORS

[Stage Direction]
On the Orders of the Day:
Mr. PETER McGIBBON (Muskoka-Ontario):: Mr. Speaker, the Toronto Star contains an article to the effect that the Home Bank depositors have not been able to get their 35 per cent because some of them have not enough influence with this government. I should like to ask the Prime Minister if the statement is true; and, if so, will he see that this condition is remedied?

Tariff Advisory Board


William Lyon Mackenzie King: Mr. Speaker, I can assure my hon. friend that influence or the absence of influence will not have any effect in this matter. I understand that recently some of the depositors met to consider the position in which they find themselves, and that they are coming to Ottawa to make certain representations as to their claims. As soon as those representations have been heard I shall be in a better position to tell my hon. friend their substance.



TARIFF ADVISORY BOARD


[Stage Direction]
On the Orders of the Day:
Mr. GEORGE SPENCE (Maple Creek):: Mr. Speaker, I desire to draw the attention of the government, and particularly that of the Minister of Finance (Mr. Robb) to an article which appeared in the Ottawa Citizen of yesterday, headed, "Tariff board to hear plea of steel firms." This is the article:
Of several appeals already before the advisory board on tariff and taxation, the first to be considered will be those originating from two Canadian steel companies-the Algoma Steel Corporation and the British Emipire Steel Corporation Limited. These applications will be taken u,p by the board at a meeting to be held in Ottawa on Wednesday, May 26, at 10.30 a.m.
The applications from the two companies named are based upon the incidence of tariff on various phases of the Canadian sted industry, with special reference to drawbacks, unequal costs, depreciated currency and several other factors.
Manifestly, Sir, this is only the forerunner of many such applications, and what I want to know is this: As a humble citizen and one of the great consuming public of this Dominion, how am I going to 'be represented before that commission? Has the government made provision for such purpose? If not, why not?


Hon. J. A. ROBB (Minister of Finance):: The department received applications from two steel companies, if I remember correctly, desiring to be heard before the tariff board. I referred these applications in the regular way to Right Hon. Mr. Graham, chairman of the board, who told me that he was going to fix a day when there would be a general hearing, and all the steel interests of Canada and those interested either for or against a higher tariff would have an opportunity of coming before the board and making their representations. I am sure Mr. Graham wili be as glad to hear my hon. friend as to hear any other citizen of Canada.
14011-220|



SENATE VACANCY-MR. LOGAN

[Stage Direction]
On the Orders of the Day:
M'r. G. T. MacNUTT (Colchester):	In
view of the statement made by Mr. Logan of Cumberland, Nova Scotia, at a meeting a short time ago in the town of Parrsboro, to the effect that he had received an appointment to the Canadian Senate, at which meeting he received the congratulations of the mayor of that town and others, I would like to ask the Prime Minister if that statement is correct.
William Lyon Mackenzie King: I am not aware of any such statement having been made. Mr. Logan has no^ made that statement to me. When he does so I will give my hon. friend a further answer.
REPORT OF CIVIL SERVICE COMMISSION On the Orders of the Day:


Hon. H. H. STEVENS (Vancouver Centre):: I would like to ask if the long awaited report from the Civil Service Commission to the government is ready for publication, and if the government have come to a decision in regard to the matter.


William Lyon Mackenzie King: As my hon. friend knows,
Mr. Speaker, a sub-committee of the council was appointed to consider the report from the Civil Service Commission, and a number of representatives of the civil servants, both of the inside and outside services, asked to be heard before that committee. They were heard, and requested that the report be not acted upon at present, but that it be referred back to the Civil Service Commission in order to permit them, the civil servants affected, to make further representations. They contended that they had not had the opportunity to make' the representations they would have liked to make before the Civil Service Commission, and asked that this opportunity be now given them. The government has thought it advisable to meet their request in that regard and the report is being referred back to be dealt with when the commission is reconstituted.
PROPOSED NEW LINE TO PACIFIC On the Orders of the Day:
Mr. A. DeWITT FOSTER (Hants-Kings): On May 14, after drawing attention to an article appearing in the Canadian Gazette of London regarding a new line to the Pacific coast, I asked whether representations had been made by the Canadian Pacific looking
C.N.R.-Operation

to the acquisition of that line. The Prime Minister referred the question to the Minister of Railways, who on Monday said that the department had no information. Am I to understand that he speaks for all the departments of the government in making that reply?
Hon. CHARLES A. DUNNING (Minister of Railways and Canals): I have not had an opportunity of consulting all my colleagues in regard to the matter. I answered the question so far as it related to the Department of Railways. I do not find around me anyone who has more information than I have in connection with this matter.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the Orders of the Day:
Mr. A. DeWITT FOSTER (Hants-Kings): I asked another question in reference to the purchase by the Canadian National Railways of an electric line running from about Moreau street to Bout de File, to which the minister replied that the railway has been acquired for general railway purposes, but that the management considers it not in the public interest to publish the price. Am I to understand that information as to the price will be given at a later date, in committee or at some other time, or is this a final refusal to give the House this information?
Hon. CHARLES A. DUNNING (Minister of Railways): It is my practice, and has, I believe, been the practice of former ministers to refer inquiries relating to Canadian National matters to the management of that company. Many questions have been asked and are being asked about which it has not been considered in the public interest to give detailed information. I think the House is fairly familiar with past practices in that regard. However, I have on the order paper a notice of motion regarding the appointment of a special committee with respect to government railways. When that committee is sitting the officers of the Canadian National Railways will be present and any question which has not been previously answered satisfactorily may then be directed to the officials of the railway. I cannot guarantee that an answer will be returned in every case, because everyone knows that in a great business institution it is not always the part of wisdom to make public all information and details regarding its operation. I feel sure the committee will straighten out matters of that kind, and my hon. friend will be satisfied.
Henry Lumley Drayton: I realize very well that we cannot discuss this matter at present, but I would hesitate very much in believing that the minister is now stating the considered policy of the government. So far this House has never been refused in the answers to questions on the orders of the day information as to capital purchases. It will be a very startling proposition indeed if that policy is to be carried on in the future.


Some hon. MEMBERS:: Order, order.


Mr. SPEAKER:: The hon. gentleman is out of order.


Henry Lumley Drayton: But I think this is really a matter of some public importance, and I therefore put it-


Some hon. MEMBERS:: Order.


Henry Lumley Drayton: If my hon. friends insist I will move the adjournment of the House in order to discuss this matter of public importance.


Hewitt Bostock: The hon. gentleman must be allowed to conclude his question.


Sir HENRI:: DRAYTON: I would have thought so. Having pointed out the importance of this matter I was about to ask if that is the considered policy of the government. Are proper questions, properly put, involving no question of management or of operation but relating to capital account, not to be answered in this House? That is the question.


Mr. DUNNING:: My hon. friend is surely making a mountain out of a mole hill; I made no such statement of general policy on behalf of the government. I told the hon. gentleman who asked the question how he might get the information with which he has not already been supplied. So far as the general question is concerned I think probably something is to be said for the position taken by the hon. member for West York (Sir Henry Drayton). Speaking offhand, I cannot think of a circumstance which would involve the refusal of information as to capital purchases. Perhaps my hon. friend will take my assurance that there is no intention on the part of the government to introduce a change of policy in regard to this matter.


Mr. O. B. PRICE (Westmorland):: Just in this connection, I would like to direct the attention of the Minister of Railways to the fact that within the last two or three weeks I had a question placed on the order paper regarding the amount of tonnage handled by the Canadian National Railways at St. John,

C.N.R.-Operation
New Brunswick and at Portland, which I wished for comparative'purposes. The answer given was that it is not in the interests of the railway to divulge that information. Now I wish to point out that the Prime Minister of this country, speaking at Moncton, New Brunswick, on October 13, 1921, promised that if returned to power-


Some hon. MEMBERS:: Order, order.


Hewitt Bostock: Order. The hon. gentleman is out of order.


Otto Baird Price: I want to ask-


Hewitt Bostock: No debate can take place at this stage. The hon. member is out of order.


Otto Baird Price: I would like the privilege of asking the Minister of Railways (Mr. Dunning) if he proposes to continue the attitude which he has assumed with regard to this matter and also with regard to other matters which are coming up concerning the people's railway. I would like to know if it is his intention to give this House the information to which it is entitled and to which the country is entitled, or if he proposes to continue to refuse-*


Some hon. MEMBERS:: Order.


Otto Baird Price: I want to know, are you going to give me the information or are you not?


Charles Avery Dunning: I have no intention, Mr. Speaker, neither has the government any intention, of withholding from this House any information to which it is entitled upon any matter whatsoever. This particular matter has been attended with difficulty ever since this country entered upon the railway business. Previous ministers of railways on both sides of the House have had the same difficulty with it, as the records of Hansard will demonstrate.
As to how far it is wise to make public through the medium of this House the details of the business of the Canadian National Railways, for the benefit of the competitors of the government railways, is a question which I have constantly to endeavour to decide, just as previous ministers of railways have had to decide it in relation to all matters of this kind. I may make errors, but they will be honest errors.


Some hon. MEMBERS:: Order.


Mr. BOYS:: This is a speech, not an answer.


Hewitt Bostock: The hon. minister is quite in order. Three questions have been put to him, one by the hon. member for Kings-
Hants (Mr. Foster) another by the hon. member for West York (Sir Henry Drayton) and another by the hon. member for Westmorland (Mr. Price), all bearing on the relation between the government and the Canadian National Railways. The minister is trying to convey to the House what was the policy followed by previous ministers with regard to such matters. But I would suggest, if the House will take it from me, that it stop this debate at once and proceed to business.


Charles Avery Dunning: May I be permitted, Mr. Speaker, to finish my answer?


Henry Lumley Drayton: Commence it.


Charles Avery Dunning: I may err in judgment as to what it would be against the interests of the railway to make public, but I can assure the House that it will be my endeavour at all times to make public the maximum of information which can be made public without detriment to the real interests of the Canadian people and their interests in this railway.


Otto Baird Price: Mr. Speaker-


Hewitt Bostock: Order.



INQUIRY FOR RETURN


[Stage Direction]
On the Orders of the Day:
Mr. ROBERT K. SMITH (Cumberland): I should like to inquire from the Acting Postmaster General in this House with respect to a motion I placed on the order paper early in tihe session calling for the production of documents in connection with the dismissal of Mr. Alex. D. King, postmaster of Oxford, in the county of Cumberland, Nova Scotia. This order was passed by the House on the 15th of March, but the papers 'have not yet been tabled. May I inquire when I may expect them?
Hon. ERNEST LAPOINTE:: I shall be
pleased to make the necessary inquiry, but I should not be surprised if the papers had already been tabled.


Mr. SMITH:: They have not been tabled
yet.


Ernest Lapointe: We will see.



THE BUDGET


[Stage Direction]
The House resumed from Monday, May 17, the debate on the motion of Hon. J. A.
[Stage Direction]
The Budget-Mr. Macdougall
Robb (Minister of Finance), that the Speaker do now leave the chair for the House to go into committee of Ways and Means and the proposed amendment thereto of Hon. R. J. Manion.
Mr. I. D. MACDOUGALL (Inverness):: Mr. Speaker, there was a time in Canadian politics when the attitude of government and opposition was so partisan, so uncompromising, that neither could predicate any virtue of the other. Both were agreed that so far as the other was concerned "no good could ever come out of Nazareth." In those days it was considered an unpardonable political crime for a member sitting in opposition to think that the government could ever be right, and it were veritable treason for a supporter of the government to imagine that the government could ever be wrong. For my part, Mr. Speaker, I subscribe to no such view. In this House I give my allegiance to the Conservative party, because I have faith in that party; in its policies and its principles, and because I have faith in its leader, who, for constancy of purpose, and rare gifts of intellect, has certainly no equal in this parliament, and perhaps has had no peer in any parliament that Canada has had since confederation. But these considerations shall deter me never from discussing questions of great national importance in a manner devoid of prejudice and with an eye single to my country's good, as it is given me to discern that good. For this reason, Mr. Speaker, I feel that I am guilty of no serious political heresy when my first words on the budget are words of sincere congratulation to the hon. Minister of Finance (Mr. Robb) upon the masterly manner in which he presented his budget to parliament. I am happy to be able to add that my congratulations may properly extend beyond the mere external form in which that budget was presented, for there are many things in the budget itself with which I am heartily in accord.
We are told, for example, that the financial condition of this country has improved. I do not question that statement; I do not desire to dispute it. As long as it is my privilege to occupy a seat in this House, any information to the effect that our country's finances are in an improved state wil be received by me with genuine pleasure and acclaim, no matter of what political stripe the Finance minister may be who makes that announcement.
The present budget also gives promise of a somewhat substantial reduction in taxation. This laudable and desirable end is to be ob-
tained, in the main, by the reduction in the sales tax and the abolition of certain other nuisance taxes, for the most part imposed by the present administration upon the Canadian people. In taking this step the government but does belated justice to the Canadian taxpayer. It but removes from his path a few of the 'snags and thorns with which this administration has bestrewn his path since assuming office in 1921. When the administration led by my right hon. friend (Mr. Meighen) who, unfortunately, due to illness, is unable to take his place in this House at the present time, went out of office in 1921, the sales tax in this country stood at li per cent to the manufacturer and 1\ per cent to the jobber. In the first year of the King administration that tax was increased to four and a half per cent. In the second year of their administration the King government, not content with that increase, further increased the sales tax to six per cent. This unwarranted and unjustifiable increase served to seriously hamper and impede Canadian business in this country. So numerous were the protests against this excessive increase that in 1924 the King administration reduced the tax from six to five per cent where it remained until the present reduction was announced. There can be no doubt that the serious, the heavy, increase in direct taxation imposed by this administration upon the Canadian people since 1921 constituted one of the major grievances of the people against the King government during the last federal election and, perhaps, Sir, in the salutary and chastening effect of the last election we may seek and find the real explanation of those reductions in taxation now so tardily announced, for verily, in the case of all governments, the fear of the people is the beginning of wisdom.
The budget proposes that after the first of January, 1927, the benefits of the British preferential tariff shall apply only to goods conveyed direct without trans-shipment into a sea or river port of Canada. I am in hearty accord with this proposal. It is a step in the right direction, and I commend the government for taking it. I point out, however, that trade statistics for 1924 show that in that year we imported British goods to the amount of $153,586,000. Of that amount $152,586,000 worth came directly through Canadian ports. If these figures are correct this proposal will apply to substantially less than one per cent of the goods coming from Great Britain to Canada, consequently it will not mean a great revival in

The Budget-Mr. Macdougall
trade or commercial activity through Canadian ports. However, it is a step in the right direction, and since it is not often that this government takes a step in the right direction, I heartily commend it.
We had a protracted and somewhat heated discussion over the proposal to reduce the duty on automobiles. Let me say, Sir, that I hold no special brief for the automobile industry in Canada. My attitude towards that industry is essentially the same attitude that I take towards every other great and useful industry. My desire is that it may prosper and develop, returning fair dividends to those who have invested their money in it, providing a continuity of employment and living wages for Canadian workmen, and giving fair prices to the Canadian public. What measure of protection will enable that industry to perform these functions I am unable to say, and no other member in this House, whether he be opponent or supporter of the government, can so determine without first having a full knowledge of all the facts relating to that industry. The only way these facts can be ascertained and a just and intelligent decision arrived at is by referring the question of the protection to be accorded that industry to a competent and impartial fact finding commission endowed by the government with all the necessary powers to investigate, and to furnish parliament with a report based on such investigation. Even in ordinary circumstances this would have been the proper course for this government to pursue, but, Sir, I submit that in the present instance the government can adopt no other course without forfeiting its dignity, its honour and its self respect. For in the Speech from the Throne the government adopted the policy of investigation by a tariff commission. I quote from the publicly declared policy of the government, incorporated in that speech -and perhaps the right hon. leader of the government will recognize this quotation:
__that in the interest of industrial development every
effort should be made to eliminate the element of uncertainty with respect to tariff changes; that changes in the tariff should 'be made only after the fullest examination of their bearing upon both primary and manufacturing industries and that representations requesting increase or decrease of duties should be made the subject of the most careful investigation and report by a body possessing the necessary qualifications to advise the ministry with respect thereto.
This language, Mr. Speaker, is not ambiguous; there is seemingly here no equivocation; there is certainly no qualification and no limitation. The policy of the government, namely, investigation by a tariff board, was to apply to all the industries in Canada enjoying any benefits under our protective
system. By taking the course outlined in the budget with respect to the automobile industry the government completely stultifies itself, ignores its publicly promulgated policy on the fiscal question, and shamelessly breaks faith with the Canadian people. By proposing this reduction without investigation this government singles out one industry from the hundreds in this country enjoying benefits under our protective system, sits in judgment on that industry, and renders an adverse verdict without giving those affected an opportunity to be heard or to call witnesses in their own behalf. How can we square that action with our much belauded sense of British justice and of British fair play?
Now, Sir, I wish to make my stand on this question absolutely clear. Let me candidly assert that had the case of the automobile industry been referred to a tariff commission, and had a full and impartial investigation revealed that the duties should be reduced by ten or fifteen per cent-aye or. by twenty per cent-I would, certainly under those circumstances have supported such a recommendation in this House. But, Sir, I shall not sanction, and I never shall support, a blind step that may seriously dislocate and perhaps ruin an important and useful Canadian industry, especially when such a blind step is taken in direct contravention of the government's publicly declared policy on the fiscal question. I may point out that those who aid and abet this administration in violating its plighted word to the Canadian people do no very great credit to themselves; and no real service to this government. Nothing will more effectively destroy respect for all constituted authority in this or in any other country than for a government, the very embodiment of that authority, to treat with wanton disregard its plighted word and deliberately break faith with the country. These, I might say, are testing days for constituted authority, not only in our country, but the world over. Men are to be found even in Canada who would desire to bring all constituted authority into popular contempt. Whoever else may assist these misguided souls in their nefarious work, they certainly should not have their cause advanced by the actions of the government of Canada. Whatever else a government may or may not do, it certainly should not violate its plighted word, or disregard its publicly declared policy. Faith must be kept with the people if constituted authority is to be respected by the people. I commend that proposition to the present government.
There is yet another aspect of this question, and one that I approach with very

The Budget-Mr. Macdougall
great diffidence and reluctance. I apprehend that the attack on the protective system made in contravention of the government's fiscal policy, on an industry located in Ontario, a province having no effective voice in the government, may cause a repetition of those lamentable provincial and racial prejudices from which Canada has suffered in the past, and which all true Canadians must deplore. I might say, without wishing to re-open old sores, that there was a time, when the great English-speaking province of Ontario, and the equally great French-speaking province of Quebec were separated by a gulf created by misunderstanding and prejudice. We all know something of the difficulties which statesmen from both of these great provinces experienced in their efforts to reconcile differences in the legislative union of upper and lower Canada. It was to overcome an impasse created by prejudice that the statesmen from both provinces conceived the idea of effecting the larger union of 1867. Even after confederation was achieved the greatest difficulty which confronted Canadian statesmen was to reconcile the rival claims of the different provinces, different races and different creeds. To accomplish this great ideal Sir John A. Macdonald laboured long, faithfully and successfully. Shortly after he passed from the political stage in this country his work was taken up by a no less distinguished Canadian, a French Canadian, the great and gifted Sir Wilfrid Laurier. W'e know well with what reluctance Sir Wilfrid Laurier accepted the leadership of his own party. He feared that his race and creed might interfere with his party's chances for success at the polls, but Sir Wilfrid Laurier triumphed over prejudice. He had not advanced far on his brilliant career before his name became respected in all, and revered in thousands of, English speaking homes in every province of this Dominion. Sir Wilfried Laurier won and retained the confidence of English speaking Canadians, because he was ever willing to concede to other provinces, to other races and to other creeds that same 4 p.m. measure of justice that he desired for his own. If he were alive to-day and leading this government- and I imagine in their hearts hon. gentlemen must feel that they are experiencing a great loss because he is not here, and sometimes when they contrast Sir Wilfrid with their present leader, they must "sigh for the touch of that vanished hand and the sound of that voice that is still"-if he were alive today and leading this government, would he advance or sanction a measure, the effect of 
which is to deny to one of Ontario's important industries the same treatment which this government concedes to all other protected industries in all other provinces of Canada? He certainly would not countenance such a thing, and I appeal to the representatives of Quebec, you who followed and revered him, not to sanction by your support an injustice which Sir Wilfrid Laurier would certainly have scorned to perpetrate. I do not say, Sir, nor do I believe that it was the voice of Quebec which compelled the government to mete out unequal treatment to an Ontario industry. We may shrewdly guess from whence the pressure came. It probably came from a small coterie of wellmeaning theorists in the Liberal and Progressive ranks who preach free trade in respect to all commodities, but show their good sense by limiting its practical application to a single ingredient of a rich man's cocktail. Now, Mr. Speaker, it is alleged by those who support the government in reducing the duty on automobiles that public sentiment favoured such a reduction. If public sentiment is to determine the fiscal policy of this country, then it follows, as necessary corollary to that argument, that in cases where public sentiment favours an upward revision of the tariff, such increases should also be made without reference to the tariff board.
This brings me directly to the case of the two great 'basic industries of my native province, steel and coal. There is a strong public sentiment in Nova Scotia, I might almost say that there is complete unanimity among the Liberals and Conservatives in that province, in reference to the need of increased protection for both of these industries. In respect of the steel industry, the steel workers of Sydney, who number among them Liberals, Conservatives and Labour men, recently passed a resolution calling upon this government to grant increased protection to the steel industry; nor has the Liberal press in the province been silent on the subject. The Sydney Record, a very estimable paper, which is looked upon as the accredited organ of the Liberal party in the island of Cape Breton, has been printing for the last three months editorials pointing out the urgency and the desirability of increasing the duties on steel and iron products. In doing this that Liberal paper is but adopting the same editorial policy which the Conservative journals in the province of Nova Scotia have steadfastly maintained for a long time. Next to coal the steel industry is one of the most important industries in that province. Around it the city of Sydney has sprung up. That city, with a population of 25,000 souls, depends entirely

fT"	3469
The Budget-Mr. Macdougall
upon the steel industry. If this industry should cease to operate, in a few months time grass would 'be growing on the streets of Sydney, and the same is virtually true of New Glasgow and Trenton in the county of Pictou. So anxious were the people of Nova Scotia to establish this steel industry that they personally subscribed about one and a half million dollars to the capital stock of the steel companies operating in that province. For the most part this stock was subscribed by men and women of limited means. It represents the accumulated earnings of years of hard work. If the government does not come to the assistance of the Nova Scotia steel industry at the present juncture to protect it from the unfair competition of foreign countries, where the currency is depreciated and labour is cheap, then that industry will in all probability go into bankruptcy. At this moment it stands trembling upon the very brink of financial collapse. Now if public sentiment permitted the government to make a departure from its fiscal policy in respect of the automobile industry, public1 (sentiment should also allow it to make an upward revision in the tariff in the interests of iron and steel products.
I was amazed a few months ago to hear the Minister of National Defence (Mr. Macdonald, Antigonish) telling the House and the country from his place in parliament that he was opposed to any further increases in the duties on iron and steel products. I know, of course, that the hon. gentleman is not now representing the industrial county cjf Pictou; I am fully aware of the fact that he is a political exile from the county of his birth. But surely he still cherishes that fond regard for his native county which we all cherish for the place of our birth. I appeal to him, therefore, to join with the Nova Scotians who aje making an, effort to save the industry, even if he has to repudiate the stand which he took in this House on a certain occasion when he was making a plea for Progressive support to keep the government in power.
I do not intend to discuss at any length the coal industry of Nova Scotia and of the Dominion generally, having dealt with it_ex-tensively on previous occasions. I have discussed the subject dispassionately and have adduced irrefutable facts to show that the industry is suffering from unfair competition from the American bituminous mines. I may point out that, because of geographical advantages which they enjoy, the coal miners of the United States can turn out an average of 5.7 tons of coal per man per day while in Nova Scotia our miners can produce only 1.7.
In a great many instances the United States miners can put coal on board the cars at the pit mouth in the bituminous fields at less than $1 per ton, and in almost every case they are putting coal on the cars at a lower cost than the industry in Nova Scotia pays for labour alone. When we entered confederation we were promised a market for our coal in central Canada, and that market is there. Central Canada imports easily over 15,000,000 tons of coal per annum, sending out 120,000,000 Canadian dollars to pay for its supplies obtained from the American fields, thus providing work for American miners. That market in central Canada rightly belongs to the provinces of Alberta and Nova Scotia. I say, therefore, that we need a fuel policy inaugurated and kept in force by the Dominion government to enable us to have ready access to the market that should undoubtedly be supplied by our mines.
I was interested in the speech of the hon. member for Shelburne-Yarmouth (Mr. Hatfield) last night. It was one of those beautiful canned speeches which the Minister of National Defence probably sent to every Liberal candidate in Nova Scotia at the last general election. I recognized in it the fine ' Italian hand of the minister. I could almost visualize our opponents in the last federal election standing up in the little country schoolhouses and delivering an address substantially of the same character. Perhaps that accounts for the fact that in counties traditionally Liberal, Conservatives were elected by substantial majorities. The hon. member said that we could not look to central Canada for a market for our products. I should like the leader of the government (Mr. Mackenzie King), who made the same statement in the Maritimes, to tell this House to-day where we could sell our coal and steel products if not in the markets of central Canada. I have gone thoroughly into the question and I may assure the government that if we are precluded from the markets of central Canada we shall be able to work our coal mines only two days a week while our steel industry will operate for just a day and three-quarters in the week. Central Canada is our natural and rightful market for the steel and coal products of the province of Nova Scotia, and it is upon these two industries that the prosperity of agriculture in that province depends. If we are given an opportunity to develop these industries we can provide an ample home market for the farm products of Nova Scotia.
I shall refer now for a moment to a matter that interests my own constituency peculiarly,
The Budget-Mr. Macdougall

and having discussed it I shall have done. Some hon. gentlemen think that all the coal areas in Nova Scotia are owned and controlled by the British Empire Steel Corporation. For their information let me say that in the county which I have the privilege and the honour to represent in this House, however feebly, we have extensive virgin coal fields. We have, it is estimated, over 2,000,000,000 tons of coal available in the county. At present capitalists cannot be induced to undertake the development of the industry for the simple reason that we have not enough protection to induce them to invest. The result is that in my county we have only one small mine working, employing about 450 men and producing about 600 tons of coal a day, whereas if we had an adequate measure of protection and cheaper transportation which would enable us to take advantage of the markets of central Canada we could produce in that county, not 600 but 20,000 tons daily. One reason why we have so far been unable to develop these coal areas is the fact that we have been denied, both by Liberal and by Conservative governments, adequate transportation facilities in the county. We have had in this parliament during the present session a discussion on the Hudson Bay railway. Prom my place in this House I told the representatives of western Canada that if I were convinced that the railway would assist in developing that great western country it would certainly have my support. I still maintain that attitude, and I intend to support the measure on the terms which I suggested. But I think I am within my rights in asking these same people, in view of my sympathy with their transportation requirements, that they take the same attitude towards the transportation needs of the county I represent. We require the construction of a railroad of some sixty miles from the town of Inverness to Cheticamp to open up one of the most highly mineralized sections of Nova Scotia and, indeed, of the Dominion. I know it would be useless to ask the government to provide a million dollars in the estimates to construct this road inasmuch as I have no Progressive support to offer them; but I am going to appeal to the leader of the government, who, however much we may disagree wTith him and his government on his policies, is after all a Canadian and wants to see every section of the country prosperous. He has appointed a commission to investigate Maritime rights. That commission will be going to the province of Nova Scotia and I would ask that it be instructed to visit the county of Inverness to look into the trans-

portation needs of that district. It is only a small thing I ask of him, and I think that in justice to the people whom I represent he will certainly not deny it.
Now, Mr. Speaker, I have given expression to my objections to the budget. I agree with some of its features, but I cannot bring myself to support the budget because it gives no material assistance to the basic industries of the province of Nova Scotia-the industries of steel and coal.


William Lyon Mackenzie King: Mr. Speaker, may I say at once how much I regret that the right hon. leader of the opposition (Mr. Meighen) is prevented through illness from being in his seat to-day. My right hon. friend is not one who lightly abandons any duty which pertains to his office, and I am sure it is very much against his will that he is not now in the House. I sincerely hope that his indisposition may be of brief duration, and I know I speak for all on this side of the House when I say that we shall be glad indeed to join with his friends opposite in extending to him a very hearty welcome back at the earliest possible moment.
Perhaps my hon. friend who has just taken his seat (Mr. Macdougall) will not deem me guilty of discourtesy if I do not attempt to comment seriatim upon the various points he made in the course of his address, but rather deal with them incidentally as I develop what I have to say this afternoon. May I say to him, however, in passing, that notwithstanding some personalities, which I do not think added at all to his speech, his presentation this afternoon was very worthy of one who comes into this House as a new member and addresses it for the first time.
I am not sure, Mr. Speaker, that the absence of say right hon. friend is as significant at this moment as it might have been had this debate not now been in progress for over a month. I believe that everything which could be said by my right hon. friend has already been expressed by those who sit around him. 1 admit that he w'ould probably have added some pointed and pungent remarks which would have lent zest to the course of the debate, but so far as the argument itself is concerned I think everything that could be said against the administration has been said by one or other of hon. gentlemen opposite, and I doubt if anything could be added from their point of view with reference to the merits of their side of the case as they may see it.
In the absence of my right hon. friend I shall attempt this afternoon to address my

The Budget-Mr. Mackenzie King
remarks especially to those criticisms which have been made against the government in a general way, and against myself in particular.
I might as well begin at once by referring to the speech which I made in North York in September last, and which has been referred to so frequently in the course of this debate. Listening to the remarks of my hon. friends opposite, I take it they feel that because, in appealing to the country on September 5 last I ventured to express the hope that the government would be returned with a larger majority than it then had, and because my hopes and expectations in that particular were not realized as fully as I had wished they might be, they should now be sitting on this side while I and my party should be occupying their seats. That seems to be the essence of the criticism with reference to the remarks I made at that time. I do not think my hon. friends opposite have fully appreciated the real point of my speech in the particular to which they have so frequently referred. I was explaining to the electors of North York the reason why it seemed advisable to the government not to proceed to hold a fifth session of the then parliament, but rather to seek the return of a new parliament at an early date. I pointed out that there were strong reasons why in the national interest the government with the small majority we then had should not attempt a last session of an expiring parliament; that anything of the kind would certainly prove to be an expensive business; that the government would find it very difficult to bring forward any measure which would not be controverted by hon. gentlemen opposite and its purpose misconstrued. I also pointed out that another very serious consequence of attempting to carry on for a fifth session would be the continuance of the detraction to which, despite the improved and improving conditions in the country, we had been obliged continuously to listen during the last two sessions of that parliament. The result of further misrepresentation of conditions would, I contended, inevitably have been that the prosperity to which we were all looking forward so earnestly in the interests of our country would be impeded and delayed.
That was the theme I sought to develop, I was dwelling entirely upon the difficulty which anv administration must encounter by holding on with a small majority through a last session of parliament. Indeed, as I recall the facts, at the moment, I stressed the point that in that particular Liberal administrations had taken a different attitude to that followed in previous years by Conservative administrations. I cited the fact that when the
old Conservative administration of which Sir John A. Macdonald was leader had been in office for a period of eighteen years, notwithstanding the death of their great leader, hon. gentlemen of the Conservative party of the day contrived to hold on to office until the very last hour of the last day of his last parliament-that the Right Hon. Sir John A. Macdonald was succeeded by the Hon. Sir John Abbott, that Sir John Abbott was succeeded by Sir John Thompson, who in turn was succeeded by Sir Mackenzie Bowell, and that Sir Mackenzie Bowell was succeeded by Sir Charles Tupper, who continued to hold office until the clock struck the last minute of the last day of the last session of that parliament. I drew attention to the fact that the Liberal party did not think the best interests of the country could be served by continuing to hold office in that way. I further drew attention to the fact that when Sir Robert Borden succeeded to the leadership of the Conservative party he held office for the complete five years, and that when the term was extended by mutual agreement for a year beyond that permitted by the constitution as originally drafted, he continued in office until the very end of the period alloted. That was the point which I was seeking to bring to the attention of the electors. I stated it to be my view that the country was entitled to have an opportunity to pass upon the questions of the day and return a new parliament, which coming fresh from the electorate would be able to deal with important questions in accordance with the national will as then expressed.
During the course of the general election there was another point on which I laid a great deal of stress, and I should like to remind some hon. members of it this afternoon. I took occasion, wherever I spoke, to point out what seemed to me a very great mistake that was being made by some of those who were opposed to the policies of hon. gentlemen opposite. It seemed to me that forces which should have been united were divided, and as a consequence of their division that there was a weakening of their position in the face of a common political foe. Since I have had the honour of leading this party I have stressed the importance of all groups having great interests in common joining closely together on the principles they hold in common rather than emphasizing minor differences which in turn lead to divisions that not only serve to weaken their own ranks but correspondingly to increase the strength of those whom they commonly oppose. That was my position, and I think the result of the election has shown very clearly that the position then taken, in the interests of those who have at heart some

The Budget-Mr. Mackenzie King
of the great, fundamental principles of Liberalism as it is known in a broad way, was amply justified1. Happily, since the election I think the principle I was then emphasizing has come to be appreciated more widely throughout the country and in this House. Those who are opposed to hon. gentlemen opposite on a great question such as that which we have been discussing during the past month have seen very clearly that the interests which they have in common are much greater than the minor differences which divide them, and I must thank hon. gentlemen opposite for having helped in a most effective way to make clear the line of cleavage.
Now, Mr. Speaker, may I come at once to the amendment which is before the House. In doing so I must say that I think the House was entitled to have bad from hon. gentlemen opposite, in the form of an amendment to the budget, something which would be at least expressive of their own fiscal policy, that is to say, if they are really serious about it. We heard a great deal during the last election of hon. gentlemen opposite fighting for increased tariff, for higher protection, for the maintenance of an all round protective tariff and the like. The right hon. leader of the party took the position that that was the only outstanding question, and a large number of his candidates in different parts of the country stressed that point very strongly. All through this debate most of the hon. gentlemen opposite who have spoken have laid particular emphasis on the need of a consistently maintained protective tariff, to put it in its mildest form, while some have spoken of the need for higher protection. I submit, Mr. Speaker, that in a budget debate where a great issue of this kind is being discussed, hon. gentlemen opposite might have been expected to frame some statement in the form of an amendment which would have expressed an attitude they have in common. The fact that they have not done so, it seems to me, makes it perfectly clear that despite. all their professions and protestations on the subject, hon. gentlemen opposite are not united on the question of all round protection.
My hon. friends opposite have been fond of pointing over to this side of the House and saying that there were members seated here who favoured protection, and they sought to have it appear that this side of the House is not of one mind on these questions of the tariff.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: My hon.
friends say "hear, hear.' At all events I

would say that we had the courage to state our position regarding higher protection in no uncertain terms in the Speech from the Throne, and we are stating it in no uncertain terms in the resolutions which the Minister of Finance will bring in when this debate is concluded. We have unhesitatingly stated our position in a very clear and emphatic way.
But I can imagine what has happened, Mr. Speaker. The Minister of Finance introduced his budget on a Thursday afternoon. On the following Tuesday afternoon the hon. member for Fort William (Mr. Manion) brought in the amendment now before the House. May I describe it at once as a milk and water amendment, one portending neither good nor ill, to any of the hon. gentlemen opposite, in so far as the different constituencies they represent are concerned. The amendment does not touch the vital question of tariff at all; it relates solely to a matter of procedure, nothing more or less. It leaves absolutely alone the great question in virtue of which hon. gentlemen say they should be in office.
In the days intervening between the Thursday and the following Tuesday of which I spoke, hon. gentlemen opposite had their caucus, as everyone knows. It is not for me to say what went on in that caucus; I do not pretend to know and I do not wish to know, but I can imagine very well that the right hon. leader of the party-and in this I will say that I think he is consistent and fearless in his stand-would have liked to have a resolution brought in as an amendment to the budget declaring for a consistently maintained protective tariff. No doubt he and some of his friends so expressed themselves, but when they began to look over the field and take a census of their members, they found that many gentlemen from the Maritime provinces, though they were prepared to talk about Maritime rights and to take their seats in this House on the cry of Maritime rights, were not prepared to include all round protection in the list of Maritime rights. And I think they also found that my hon. friend from South Winnipeg (Mr. Rogers) and some of his friends from Manitoba and others from Alberta, when they were confronted with the thought of introducing an amendment on what has been claimed to be the main issue, namely, the question of a protective tariff consistently maintained, shied away from anything of the kind, and that after a while, the more the matter was discussed the fewer they found in their ranks who were prepared to stand

The Budget-Mr. Mackenzie King
up and support an amendment to the budget declaring for a consistently maintained protective policy.


Mr. ROGERS:: My right hon. friend is
entirely mistaken.


William Lyon Mackenzie King: I would go
further, and say that I believe what I have said in regard to the Maritime provinces and in regard to Manitoba and Alberta is true also of a number of constituencies in Ontario represented by hon. gentlemen opposite.


An hon. MEMBER:: Is Kitchener one?


William Lyon Mackenzie King: I will have a
word to say about Kitchener a little later on.
Now may I say, Mr. Speaker, that the attitude of hon. gentlemen opposite in presenting this milk and water amendment is all the more remarkable in view of the emphatic declarations made by the leader of the Conservative party during the last campaign. I will not attempt to quote these at any length, but I would like to read from the speeches delivered a few positive statements made during the recent campaign by the right hon. leader of the opposition as to the position of his party. Speaking at Wing-ham on September 9 my right hon. friend is reported in the Toronto Globe as having declared that-
The (basic, underlying policy whioh must be adopted if Canada was to recover and grow was an immediate revision of the tariff on a definitely and consistently protective basis.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: The applause to which you have just listened, Mr. Speaker, emphasizes the truth of what I have said. These gentlemen are prepared loudly to applaud a sentiment of the kind, but they are not prepared to bring! in an amendment which gives expression to that view.
Let me quote another statement. On September 11, speaking at Leamington, the leader of the opposition is reported, through the Canadian Press, in the Ottawa Citizen, as follows:
The first tariff he would raise if he got into power would be the (tariff on agricultural products. It was absurd that early fruits et cetera should come into Canada without contributing to the revenue.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: Hon. gentlemen opposite say, "hear, hear." Then why is there no amendment to that effect? Why this milk-and-water resolution on a matter of procedure and the vital principle of the tariff left untouched?
At Halifax, as reported in the Halifax Herald, of September 15, Mr. Meighen said:
I say now that the tariff on coal should only be increased as a part of a general policy, a real definite protective policy such as the United States have adopted, and I would stand in the way of any increase in the coal duties as a single step by itself.


An hon. MEMBER:: Hear, hear.


William Lyon Mackenzie King: The "hear,
hears" are getting fewer, I notice. Then coming to Amherst, on September 19, as reported in the Montreal Star:
Mr. Meighen told his audience that he would put the tariff on products up to that of the United States In the first three months after he was returned to power, if successful at the polls. A protective tariff was the "dominant essential in the conduct of Canadian affairs."


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: Hon. gentlemen say, "hear, hear." We have been in this House four or five months, and as yet they have not brought forward an expression of view along the lines their leader said he would adopt in the first three months after he was returned to power.
On September 1, speaking at Moncton, the right hon. leader of the opposition said:
This Dominion has no chance for its industrial life save under a protective tariff.
On October 5, speaking at Edmonton, as reported in the Edmonton Journal, he said:
The only way to secure to Alberta coal the great market of Ontario and the east generally is by the placing of a tariff against foreign coal, which with the additional aid of federal absorption of part of the freight rate on the long haul, will definitely put Alberta coal into the Ontario market. If elected to power I pledge myself to see that this is done.
May I draw the attention of hon. members to that statement? The right hon. leader of the opposition, speaking in Alberta, said: If elected to power I pledge myself to see that that is done, namely, that a duty is imposed which will permit Alberta coal to get into the market in this part of the Dominion. He did not say-and I have read the report with as much care as possible-he does not appear to have said in Alberta what he said in the Maritime provinces, that he would stand in the way of any duty being put on coal unless it was part of an all-round protective system. It was in that respect a very different statement he made to the people of the western province. To quote further:
The first thing to be done is to place a duty on foreign coal which would effectually prevent it from competing with Canadian coal in its own home market.
After the United States raised their tariff, I would have raised the Canadian tariff to the same height.

The Budget-Mr. Mackenzie King
Then on October 7, at Vancouver, as reported in the Vancouver Province, he said: We will first address ourselves to framing a tariff policy. We will put our tariff wall right up to the level of the American tariff wall.
At Calgary, on October 10, as reported in
the Calgary Albertan, he said:
My pledge to the farmers is that the tariff on farm products coming into Canada will be just as high as the protective tariff on farm products going into the United States.
At Moose Jaw, on October 12, he is reported in the Regina Leader, as follows:
It had been said that Mr. Meighen would put the tariff on implements back where it was. "I will do that," declared Mr. Meighen. .
Where are the "hear, hears" now? Not one that time. On October 20, at Woodstock, as reported in the Woodstock Sentinel Review, the right hon. leader of the opposition said: Canada must have a protective tariff, not only for the farmers and the manufacturers, but for every class of production in this nation.
On October 21, at <St. Mary's, he is reported in the Montreal Star as follows:
He announced his intention of imposing a tariff which would bring the Canadian duty on agricultural implements at least nearly as high as in the United States.
Then at Dunnville, on October 22, as reported in the London Free Press:
Mr. Meighen gave assurance that "the first thing the government will do after the 29th of October, just as soon as it can do it under the rules of parliament, will be to raise the farm products tariff right up to the American level."
Then at Toronto, on October 26, as reported in the Mail and Empire:
He (Mr. Meighen) agreed that a tariff could not be placed on coal except as part of a general policy. Second, regarding the output of the farm, he advocated a tariff right up to the height of the American level.
Again in Toronto, on October 26, as reported in the Star, he said:
It was only reasonable that a protective tariff system must be consistent, and the coai mines of Nova Scotia and Alberta would be given an opportunity to cultivate the home market.
Now we come to Kitchener, to which my hon. friend has referred. I notice that at Kitchener, speaking of the tariff, the right hon. leader of the opposition is reported to have said-I quote from the London Free Press, October 27:
We will take the tariff of farm products in this Dominion and the first thing we will do we will raise the tariff right up to the American level.
He touched not only on the duties at Kitchener, but also touched on the question of the British preference, and what did my right hon. friend say'at Kitchener, speaking

on the British preference? The Toronto Globe of the same date reports him as having said:
I believe the British preference is wrong in principle and unjust to the workers of Canada.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: Hon. gentlemen opposite say, "hear, hear." I wonder what they would have said if I had made an utterance of that kind in Kitchener? I wonder what they would have said if I had selected the one community in this country that has the largest number of German citizens in it, to go there and say: "I believe the British preference is wrong in principle, and unjust to the workers of Canada."


Some hon. MEMBERS:: Oh!


William Lyon Mackenzie King: I confess I experienced some surprise when I read those remarks of my right hon. friend.


Some hon. MEMBERS:: Oh!


William Lyon Mackenzie King: What are my hon. friends moaning about? I say I did experience some surprise when I read those remarks. I really thought that my right hon. friend, while I have no doubt as to his sincerity in what he is there expressing, would have carefully avoided making that particular remark in Kitchener, that he would have confined such remarks on the British preference possibly to the city of Toronto or some other city in this country.


Mr. EDWARDS (Frontenac):: Did my right hon. friend keep that in mind some years ago when the proposition to build a navy was up?


William Lyon Mackenzie King: Yes, he had it in mind. There were a great many remarks attributed to me that were never uttered by me, if my hon. friend will do me justice in the matter.
Now I come to the last quotation, which I am making only for the purpose of illustrating what I have said already. On October 28, at Alexandria, as reported in the Montreal Gazette, my right hon. friend the leader of the opposition said:
The United States tariff on farm products should be met point far point, in the Canadian customs duties.
Now, Mr. Speaker, I say, after all these declarations made through this country, from one end to the other, in the course of a general campaign, appealing to the people of this Dominion to return him to power in order that he might form an administration to put

The Budget-Mr. Mackenzie King
the protective policy into force, it does come indeed as a matter of surprise that when there has been such an opportunity as that presented by the budget now before us to introduce an amendment that would give expression to these views with respect to a protective policy, no amendment of the kind is made by hon. gentlemen opposite. There can be only one explanation, and that is that despite all their professions they are not, as I have said, themselves united on that question.
May I add, further, that the surprise is the greater inasmuch as a direct challenge was made to hon. gentlemen opposite on this very subject in the Speech from the Throne. The hon. member for Inverness (Mr. Macdougall), who was speaking a few moments ago, read a paragraph from the Speech from the Throne which is quoted in the amendment that is before the House. I need scarcely say that hon. gentlemen opposite had the Speech from the Throne before them when they were drafting the amendment. The beginning of the paragraph from which the quotation in question has just been made reads as follows:
My ministers are of the opinion that a general increase in the customs tariff would prove detrimental to the country's continued prosperity and prejudicial to national unity. In their view the incidence of this form of taxation should bear as lightly as possible upon the necessaries of life and on agriculture and other primary industries.
Now, if hon. gentlemen opposite felt that was an expression of view which was not in accord with their own why did they not say so? Why did they not move an amendment challenging a statement of that kind? Very little was said as to this expression of view, however. I can see nothing in criticism of that declaration even in the debate on the Address; I do not know that it has been challenged during the entire debate on the budget. The government stated its position clearly upon the matter without any fear, and hon. gentlemen opposite could readily have stated their own position in as complete a way.
Now may I add this: The action of hon. gentlemen opposite in evading the whole question in their amendment is the more extraordinary and remarkable when one considers their professed solicitude for the manufacturing industries of this country and in particular for the automobile industry. May I point out this fact to those who are manufacturing automobiles, making motor trucks and the like: Hon. gentlemen opposite knew what the resolutions of the Minister of Finance were, and the cut he proposed to make in the duties. They knew of the proposed reduction in the duties when they had their caucus,
and when they were considering this matter. Therefore, had they been really sincere in their professed opposition, they could have brought in an amendment to the budget expressing regret that the [DOT] automobile duties were being reduced to the extent that they were. Did they do that? No, not a word was expressed in that amendment in reference to the customs duties. The amendment brought in related to a matter of procedure. And why was it drawn in that way? It was so drawn in order to avoid giving any expression of opinion on the tariff itself. That is perfectly apparent. Last year when the duty on automobiles was being debated half a dozen or more hon. gentlemen opposite voted in support of a resolution to reduce those duties. Those half dozen, I presume, could hardly have been counted upon to stay with the rest of the party on a motion which dealt with the question of the reduction of duty. I point these matters out in order that the manufacturing interests of the country, and in particular our friends in Oshawa and some other places whom some hon. gentlemen opposite were ready enough to introduce to the government that they might make representations, should understand that hon. gentlemen opposite had it in their power to propose a specific amendment to the budget on the question of the reduction of the duties. But they did not do it. They merely brought in this amendment which deals, as I have already stated, simply with a matter of procedure, and does not touch at all the reduction of duties of which we hear so much.
May I go a step further and say this: I do not believe that hon. gentlemen opposite have been prepared at any time to introduce an amendment to the budget for a. consistently maintained tariff when debate thereon was possible in this House. In the several sessions of the last parliament you have an exact parallel, Mr. Speaker, to the tactics we are now witnessing anew. In the campaign of 1921 the Conservative party, under the able leadership of the right hon. leader of the opposition, told the people over and over again in different parts of the country, that the question of a protective tariff was the all important question. If time permitted I could read dozens of statements, even more emphatic than those I have already read pertaining to the campaign of 1925, advocating an increased protective tariff for Canada as the great necessity of that time. Such was the nature of the announcement made in the campaign. What was done afterwards? In the session of 1922, the first session follow-

The Budget-Mr. Mackenzie King
ing the election, my hon. friend who is leading the opposition this afternoon (Stir Henry Drayton) brought in an amendment to the budget. And what was the nature of that amendment? Another milk and water affair, that was all. It was an amendment that expressed regret that the Liberal party had not carried out all at once all the pledges that it had made at a Liberal convention that had previously been held. That was the substance of it. You could get anyone on either side of the House to vote for an amendment like that; it could not do him any harm or any good in his particular constituency. Hon gentlemen opposite found then, as they have found now, that they could not unite their party on an amendment for a consistently maintained protective tariff to the budget. That is what happened in 1922. What happened in 1923? What action did those gentlemen, who are so fond of having the country and the manufacturers believe that the manufacturers' interests are peculiarly their own, take in 1923? Why, in 1923 the Conservative party never brought in an amendment to the budget at all.


Mr. HOCKEN:: They were shut out.


William Lyon Mackenzie King: No, they were not shut out. As the official opposition they had the opportunity and the right to move the first amendment and I can assure my hon. friends, if I had time to turn to the records, that several days elapsed before any amendment was moved. The amendment that was brought forward at last was moved by the leader of the Progressive party, but hon. gentlemen opposite had not the courage to stand up and show where they stood on this great tariff question. They were prepared to let the Progressive party make their statement of tariff policy but although they had the opportunity they were not willing to move an amendment to the budget showing where they stood on the tariff.
I have just spoken of the session of 1923. Now let us take the session of 1924. What did they do at that time? They allowed the opportunity to pass, and again they failed to introduce any amendment. This time an amendment was brought in by the hon. member for Winnipeg North Centre (Mr. Woods-worth), an amendment relating to the cost of living. Hon. gentlemen opposite who profess to be such protagonists for a protectionist tariff policy did not even attempt to bring in an amendment. They left it to the hon. member (Mr. Woodsworth), whom they are particularly fond of denouncing, to

bring in an amendment at that time in connection with the cost of living. The day after the amendment had been introduced, to show the courage of hon. members opposite, some one of their number raised a point of order with respect to it which anyone familiar with parliamentary practice would know that you, Mr. Speaker, could not rule as having been properly raised. While the point of order was under consideration hon. gentlemen opposite came ailong with an amendment declaring that there should be a consistently maintained tariff policy. Hon. gentlemen opposite actually brought in an amendment on the subject of protection but knowing all the time that when the Speaker declared the point of order was not well taken their own amendment would be ruled out and there would then be no chance to discuss it. That is what happened on that occasion. What followed in the session of 1925, just before the general election? There again my hon. friends opposite came along with an amendment. Was it for a consistently maintained protective policy? They could have taken the same amendment that had been ruled out the year before and have presented it. But they did not. My hon. friend the member for West York (Sir Henry Drayton) presented the amendment. It was another milk and water affair. It declared there was still too much in the way of taxation, and expressed regret that the public debt was not a little lower than it was.


An hon. MEMBER:: Was that a milk and water amendment?


William Lyon Mackenzie King: Milk and water,
I should think it was. It was very thin milk and very poor water at that. That was the best amendment hon. gentlemen opposite could move and at the same time .carry with them a united party. I have outlined the position of hon. gentlemen opposite at every session of parliament since 1921. Not once did hon. gentlemen opposite during the course of any debate on the budget bring forward their so-called policy of protection so that at the proper time they might stand and fight for it in the parliament of Canada. They refrained from doing so just as they have refrained during the present session.
To-day we are confronted with the amend-nent before us, on which hon. gentlemen lope to unite their party, and in favour of which they invite the House to vote. The amendment, moved by the hon. member for Fort William (Mr. Manion) and seconded by the hon. member for Vancouver Centre (Mr. Stevens), reads as follows:

The Budget-Mr. Mackenzie King
That all the words after "that" be struck out and the following substituted therefor:
In the late general election campaign assurances were repeatedly given by the Prime Minister and other ministers of the crown that before further tariff changes were made an opportunity would be given industries affected thereby to be heard before an advisory board.
That such assurances were officially incorporated by the government in the Speech from the Throne of the present session in the following words:
"Changes in the tariff should be made only after the fullest examination of their bearing upon both primary and manufacturing industries and that representations requesting increase or decrease of duties should be made the subject of the most careful investigation and report by a body possessing ih# necessary qualification to advise the ministry with respect thereto. A tariff advisory board will accordingly be appointed forthwith."
That such tariff advisory board was accordingly appointed.
And this. House regrets that in the case of drastic changes announced in the budget such assurances have not been fulfilled.
Now, Mr. Speaker, may I say in the first place that the government did give assurance at the last general election that a tariff board would be appointed. It is perfectly true, as the quotation from the Speech from the Throne says, that in the Speech from the Throne it was stated that a tariff advisory board would be appointed, but I need not go further than the amendment itself to prove that the government has carried out its pledge in respect to the appointing of that board. The amendment quotes from the Speech from the Throne the statement that a body possessing the necessary qualifications to advise the ministry with respect to the tariff will be appointed. It says:
A' tariff advisory board will accordingly be appointed forthwith.
Then what is the next line?
That such tariff advisory board was accordingly appointed.
There, Mr. Speaker, is the statement that the government has carried out the broad policy-


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: -carried out the broad policy of appointing a tariff board which it stated to the people of Canada it would carry out. It has appointed a tariff advisory board, and the amendment of my hon. friend states that the government had promised that such a board would be appointed and that such tariff board was accordingly appointed.


Mr. RYCKMAN:: Does the government
intend to submit anything at all to the board?


William Lyon Mackenzie King: Let my hon. friends be patient. They are beginning to see the force and effect of their amendment. Let



HOll-221

[Stage Direction]
me make this clear; in all the discussions that took place in the general elections, and in the declaration in the Speech from the Throne, the government was setting out a broad policy, was discussing general policies. If my hon. friends will look at the speeches that were made at the time this declaration of policy was announced they will also find that on each occasion that reference has been made to the tariff advisory board care has been taken to state that the government did not intend, on the subject of tariff matters, to tie the hands of parliament in any particular. I desire to make that perfectly clear. A direct statement was made that in the last analysis the tariff had to be settled on the floor of parliament, and that the government did not intend, by appointing a tariff advisory board to advise the minister to tie the hands of parliament in any way.
Having said that much, may I come to the point which I know is in the minds of hon. members opposite. They have overlooked altogether the significance of the broad statement of policy, and they have concentrated their minds on two words in the amendment:
That before further tariff changes were made an opportunity would be given industries affected to be heard before an advisory board.
They are concentrating their minds on the two words "before further". I challenge hon. gentlemen opposite to find any place where those two words appear in any declaration made by myself on behalf of the government. There was no statement that before this tariff board was appointed no tariff changes would be made in this parliament. When hon. gentlemen opposite are prepared to raise a debate on those two words "before further", while allowing the whole question of the actual tariff changes, which after all is the vital thing, to go by the board, I confess I cannot but feel that they are prepared to strain at a gnat and swallow a camel. May I say in perfect frankness to the House that I would have very much preferred, before the changes proposed by the Minister of Finance were made, that the matter should have been referred to the tariff board. That is what I wished and that is what every hon. member of the administration wished might have been done.
Edmond Baird Ryckman: Who drove you to it?


William Lyon Mackenzie King: We are dealing
with a practical situation, and I hope my hon. friend will allow me to conclude. I say that the government would have preferred to have had the tariff board appointed in time to deal with these matters, if that had been possible.



The Budget-Mr. Mackenzie King
It was no fault of the government that we were unable to get the tariff board consituted sooner than we did.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: Hon. members opposite, who know a good deal more about the difficulties the government had in getting a tariff board appointed than some of them would care to confess, know that the government did its utmost to get the tariff board appointed fully a month and a half before it actually was appointed, that we hoped and did our utmost to secure a certain personnel that we believed would commend itself to the House and the country. After very considerable effort, and some reasonable expectation, we were unsuccessful in obtaining the services of a certain gentleman we sought for the position of chairman of the board. We were fortunately able to obtain the services of another gentleman, whose appointment commands public confidence throughout the country, but it was with the greatest difficulty we finally persuaded him to accept the position. Only as a patriotic duty, and with a knowledge of the difficulties confronting the administration, could the Right Hon. Mr. Graham be persuaded to accept the post. The government did its utmost to get the tariff board constituted in time to refer the motor industries customs tariff to that board, but we were unable to get the board constituted in time to permit an investigation before the Minister of Finance brought in the budget. We had then to consider a very practical question, and that was whether we should wait for another year before making any changes in the duties on automobiles and motor trucks, simply because we had been unable to get the tariff board constituted at the time we hoped it would be possible to constitute it.
There is a further point I desire to make perfectly clear. While it is true that, so far as the letter is concerned, we were unable to place before the tariff board for consideration the matter of the present duties, yet so far as the spirit of our pledge is concerned it has been fulfilled to the last degree. The spirit of the pledge respecting the appointment of a tariff advisory board,-and hon. members opposite know it-is that there should be careful investigation concerning the effect of any change in the tariff before it is made. That is the purpose of the advisory board. That has been done with respect to the duties-


Some hon. MEMBERS:: No, no.


William Lyon Mackenzie King: Yes, it has been done with respect to the reduction of duties which the House is called upon to 
consider. When my hon. friend (Sir Henry Drayton) was Minister of Finance he had, I think I am safe in saying, advisers around him in the Department of Finance who were able to give him the benefit of their experience in so far as tariff matters were concerned. They could tell him what in their view might be the effect of any changes that might be proposed.


Henry Lumley Drayton: The Prime Minister has not those advisers. The one gentleman who was competent to advise him is not there now.


William Lyon Mackenzie King: I beg my hon. friend's pardon.


Henry Lumley Drayton: I happen to know..


William Lyon Mackenzie King: Possibly the gentleman whom my hon. friend has in mind may not now be in the department, but I may tell the hon. member that there is one gentleman who has been in the Department of Finance for some thirty or forty years and who is more conversant with tariff matters than anyone else in the Dominion. He knows more about the tariff in Canada than any other individual, and he is at present in the department, having associated with him others who are also quite competent to offer advice.


Mr. CHAPLIN (Lincoln):: He was superannuated ten years ago.


William Lyon Mackenzie King: My hon. friends may have been anxious to effect his superannuation, but what this government was concerned with was to retain the services of an officer who had proved himself invaluable.


Henry Lumley Drayton: I must rise to deny that statement. The gentleman himself asked for superannuation. I did not want to superannuate him and his retirement was not forced upon him. On his first seeking superannuation no effort was made to hasten his departure and he stayed.


William Lyon Mackenzie King: I am glad my hon. friend retained him as an adviser.


Henry Lumley Drayton: The Prime Minister is wrong again; I did not say I had him as adviser. He is of course an estimable man who knows the details, not of Canadian business, but of the customs tariff, and he is exceedingly good on statistics.


William Lyon Mackenzie King: There may be differences of opinion as to the special qualifications of the gentleman in question, but I think I may safely say that the country has

The Budget-Mr. Mackenzie King
always placed implicit confidence in the judgment of Mr. Fielding in relation to fiscal matters.


An hon. MEMBER:: Hear, hear.


William Lyon Mackenzie King: Hon. gentlemen say "hear, hear." Well, it was Mr. Fielding who brought back to the Department of Finance, to advise him on fiscal matters, the gentleman to whom I am now referring-Mr. Russell. And he was brought back for the very reason that, as I have said, he is regarded from one end of the country to the other as the outstanding authority in Canada on questions relating to the tariff. But the matter has not been considered by Mr. Russell alone, but by others as well. The Minister of Finance (Mr. Robb) himself has given unflagging personal attention and a great deal of time to the consideration of the whole subject.
Now may I point out to the House this difference between the automobile industry and any other industry that might be mentioned. The question of the duties on automobiles has been the subject of debate, not in the course of one session only, but in two consecutive sessions of parliament. It was discussed very fully in the last session and it has been carefully considered in parliament again this year. I think I am perfectly correct in the statement that it was generally understood that there was to be a reduction in duties so far as motor cars were concerned. An impending change was in the air, so to speak; one of the main considerations that influenced the government in this matter was the possible effect, upon the industry, quite as much as upon the consuming public, of a decision to leave the matter in abeyance. Knowing that the question was very much in the air, the government had to consider this point very carefully. Had we decided to make no change at the present time but to refer the matter to the Tariff Advisory Board it would have meant that the people from one end' of the country ro the other, knowing that the whole question would be discussed at a subsquent session of parliament, and being convinced that some reduction in the duties would inevitably follow, would have declined in the meantime to purchase automobiles in the expectation of the advent of cheaper cars. What would have been the effect on the motor industry itself, if matters had been left in that state of uncertainty? I venture to suggest that the same result would have ensued as was witnessed prior to the reduction in the duties on agricultural implements. Purchasers of those implements, in the expectation that a
14011-221J-
reduction would be made in the tariff, refrained from purchasing agricultural machinery and implements for a considerable time, and when the tariff was reduced and they saw just where they stood, they gave their orders. As a matter of fact the agricultural implement industry is in a better position in Canada to-day than it has been at any time. Now, I venture to say exactly the same sort of thing will happen in connection with automobiles. When this matter is settled by parliament the public will be able to secure motor cars at lower prices and will be prepared to make their purchases at once. Consequently, as I have already said, the industry as well as the country will prosper. There can be no doubt that obviating, as we are, any interval of uncertainty, the motor industry itself will thereby stand to gain.
I hope I have made clear the position of the government in this matter. Certainly I have had no other desire than to take the House into the fullest confidence of the administration in regard to the whole question. We should have preferred to have had the matter referred to the tariff board, if such a course could have been followed without probable injustice to the consuming public as well as injury to the industry itself. But we felt that the motor industry was in a different position from others in that its whole position had been fully discussed during the course of two sessions of parliament. Every phase of the situation had been considered, and we felt that we were carrying out the spirit if not the letter of our obligation and pledge in having the subject carefully investigated by the officers of the department and those associated with thlfn. Then, coming to the. practical question as to what was the wisest thing to do under the circumstances I have: described, we took the course which we believed to be in the interests alike of the manufacturers and of the purchasers of automobiles.
I may add this further word: we are prepared to assume full responsibility for the step we have taken. If there is any doubt in the minds of hon. gentlemen opposite whether this government did the right thing in dealing with the motor industry in the manner I have stated, I ask them to consult public opinion from *' - 'Uantic to the Pacific. There can be no oueswoa whatever that public opinion must govern in the long run; public opinion must decide whether a government has been right in its actions or not. And I submit that no single enactment has ever been proposed by any government which has more completely met with popular favour tha" the action of this gov-
3480	COMMONS
The Budget-Mr. Mackenzie King
eminent with respect to the reduction in duties on automobiles and motor trucks.
All that we have heard in the discussion of the automobile industry, since the changes proposed in the budget were announced, finds a complete parallel in what transpired with respect to other changes that have recently been made in our tariff. I might cite in particular the reduction in the duties on agricultural implements. When the government made a slight change in 1922 and another change in 1924-it mattered not how slight or how considerable the change was-the language of hon. gentlemen opposite was just as extravagant in predicting ruin to the industry. We saw organized propaganda carried on to persuade the people that the government was destroying an industry which it had singled out for harmful discrimination. The statement was made that the government was attacking that industry in order to curry favour with the Progressive party-the same sort of talk precisely as we have heard during the past month in connection with automobiles.


Mr. OLARK:: We pointed out that-


Some hon. MEMBERS:: Order.


William Lyon Mackenzie King: What occurred in connection with the agricultural implement industry will I believe take place in the motor industry as a result of the action which the government now proposes should be taken by parliament.


Robert Rogers: That will mean that motor cars will go up in price.


William Lyon Mackenzie King: But agricultural implements have not gone up in price. My hon. friend may be living in a part of the country which is identified with agriculture,
but evidently he has been paying attention to something else.


Robert Rogers: No, indeed.


Henry Lumley Drayton: Is the Prime
Minister referring to the remission of the sales tax?


William Lyon Mackenzie King: I am referring to the remission of the customs duties.


Henry Lumley Drayton: We claim that the agricultural implement industry was left in a better position owing to the fact that raw materials had been put on the free list. Is that what my right hon. friend is referring to here?


William Lyon Mackenzie King: No. Now let me ask my hon. friend a question: In what year did they have the full government programme?


Henry Lumley Drayton: I am speaking
of 1924 in connection with the amendments then made.


William Lyon Mackenzie King: I am going
back to the year 1922.


Henry Lumley Drayton: 1924.


William Lyon Mackenzie King: I will take
1924 too, but for the moment I am referring to 1922. In that year we made certain tariff changes and I should like the House to note what hon. gentlemen opposite said would be the effect of those slight changes. I have in my hand the statement made by the right hon. leader of the opposition in regard to the reduction made in 1922 of 2J per cent on agricultural implements, and I ask the House to listen while I read this to see if it does not sound very much like what we have heard in the course of this debate. The right hon. leader of the opposition was addressing his remarks to the then Minister of Finance. They will be found in Hansard of June 6, 1922:
I believe he will find in relation ito implements he has done something which very probably will injure the manufacturer and his employees, very probably will turn workingmen on the streets in various cities of this country; but will not reduce by one cenit the cost of the implement to the consumer in Canada.
That was in 1922. In 1923, speaking at Lachute, Quebec, on December 29, as reported in the Montreal Gazette, the leader of the opposition said in reference to this 2-J per cent reduction on agricultural implements:
There had been a reduction of 2\ per cent on agricultural machinery, and thousands of artisans had been driven from the country.
Then on March 3, 1924, when the larger reductions were thought of, the same kind of expressions were used. Speaking on the Address-this was even before the change was made, when it was simply suggested there might be a change as the country had attained a position where the government felt they might well relieve the public of a certain amount of taxation-the leader of the opposition said:
It-
That is, a reduction on agricultural implements.
-writ merely remove the manufacture from one country to another, it will merely dispose of it to the United States instead of holding it in Canada, and in a very short time the farmers' last state will be even worse than the first.
I am reading these extracts, Mr. Speaker, in order to let the House and the country see how much weight should be attached to the extreme statements of hon. gentlemen

The Budget-Mr. Mackenzie King
opposite with respect to tariff changes, because fortunately we have the agricultural implement industry as an object lesson. It is not a matter of conjecture; we know what the effect of tariff changes has been on that industry, as I intend to show in particular a little later on. Now, listen to this:	I do
not think it has been surpassed by anything that has been said in the course of this debate.
I should like the House to measure the value of all the utterances of a similar character of our friends opposite by the value that is to be attached to this particular utterance. Speaking on May 15 in regard to the changes then proposed in the tariff on agricultural implements, the right bon. leader of the opposition said:
There is alarm, there is dismay, there is a stoppage
of expansion, there is depression	To-day
every member of this House knows that the feeling through Canada is anything but wholesome or hopeful. The barometer of migration is ominous. From the city, from the town, from the factory, from the farm, the procession is distressing. A year ago its volume suddenly rose to three times its normal dimensions. And still they go. Their numbers may diminish with the saturation of the United States-but are we making work for them in Canada? We are circumscribing the area of employment every day. The inevitable consequences are upon us. Capital alarmed, business harassed, production dislocated, agriculture unassisted, labour contracted, tens oif thousands of our children exiled, the debt heavier, taxation multiplied, the budget juggled, these are the reapings of thirty months of this government, the cruel cost to date of its brief and inglorious career.
And then, as though that were not peroration enough, there follows this:
Almost anything would be better than what we have now. We are in a condition of anxious enervating suspense, industry-
Listen to this gem:
.-industry crouching under a sword tossed between two leaders an this House, a state of perpetual premonition, a sort of endless 'thunder and lightning, betokening a destructive storm.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: It is Mr. Speaker, charitable to assume that that kind of language was the result of this continual pounding of desks by hon. gentlemen opposite while their leader was speaking-this "thunder and lightning'' that was betokening the coming storm. That is how the changes in the budget were then characterized by the right hon. leader of the opposition. Leaving the atmosphere of parliament and speaking at Montreal on August 27, 1924, the right hon. gentleman said:
Every farm implemen>t was higher in price than it was-
That is, as a consequence of the tariff reduction.	I !	! .
-that 24 farm implement factories had closed with the workmen thrown into the streets; .... and that over the whole range of Canadian industry 1,000 plants and factories had been "boarded up" since the tariff cutting bid for Progressive support in parliament was commenced in 1922.
What are the facts? Let us take first of all the prices of agricultural implements. Perhaps my hon. friend from South Winnipeg (Mr. Rogers), who was talking about these prices, wih listen to this list which I have had carefully prepared by the statistical branch of the government:
Prices of Agricultural Implements The cost of a selected list of agricultural implements in Ontario on certain dates was as follows:
January, 1924	
$928	50May, 1924	
880	50January, 1925	
860	00
This list includes walking plow, disc, rake, binder, mower, drag barrow, disc harrow, wagon, and sleigh. Now let my hon. friends opposite listen to the western prices in Regina
territory:
January,	1921	
$1,525	00January,	1924	
1,358	00May, 1924	
1,291	00January,	1925	
1,244	75
The western list includes walking plow, disc drill, hay rake, binder, mower, drag harrow, disc harrow, lift gang, wagon and sleigh.


An hon, MEMBER:: What is the price today?


William Lyon Mackenzie King: Possibly about the same.


Henry Lumley Drayton: I wonder if my hon. friend would be good enough to give those figures to Hansard.


William Lyon Mackenzie King: The figures
will appear in Hansard all right.


Henry Lumley Drayton: I want to see the results of the sales tax.


William Lyon Mackenzie King: My hon. friend can figure that out for himself at any time.


Henry Lumley Drayton: That is the whole point.


Hewitt Bostock: Order.


Mr. FOSTER:: Will my right hon. friend be good enough to give the comparative prices in 1921 and 1925 on the different kinds of mowers, seed drills, rakes, hay loaders, hay tedders and so on? Perhaps he has the information at hand.


William Lyon Mackenzie King: No, I have not; but if my hon. friend will take the trouble to read the speech I made on the budget
3482	COMMONS
The Budget-Mr. Mackenzie King
last year he will find, I think, most of the information he desires.


George Eulas Foster: I thank my right hon. friend.
Mr. MACKENZIE KING Now, let me make a statement that perhaps will not be questioned. The right hon. leader of the opposition said that every farm implement was higher in price than it had been. I think what I have just quoted answers mv right hon. friend on that point conclusively. The next statement was that twenty-four implement factories had been closed, with the workmen thrown into the streets. Let me give the House a statement of the number of persons reported on the pay rolls of thirty-seven manufacturers of agricultural implements.


Mr. LADNER:: Are those wholesale or retail prices?


William Lyon Mackenzie King: These are not prices at all that I am now giving.


Leon Johnson Ladner: I am referring to the agricultural implements, just for information.


William Lyon Mackenzie King: They are the prices as they appear in the price list.


Hewitt Bostock: I do not think it is fair
to the right hon. Prime Minister or any other gentleman who has the floor, to be interrupted like this. When we have reached the com-mitteee stage questions may be put, but when the House is sitting as such and the Prime Minister or the leader of the opposition addresses the Chair he should not be subjected to these interruptions; it is not fair.


Leon Johnson Ladner: Mr. Speaker,-


Some hon. MEMBERS:: Order, order.


Leon Johnson Ladner: I am addressing my words to Mr. Speaker, whose observations were particularly directed to me. I merely wanted some information which was not given by the Prime Minister. I did not intend to be impertinent, nor did I expect an impertinent reply.


Hewitt Bostock: No one thinks the hon.
gentleman was impertinent; he never is, and could not be. But- I say it is not proper that the Prime Minister or any other hon. member who has the floor in a budget debate should be constantly interrupted in this way. It is turning his speech into a cross-examination, which is not fair to the hon. member who addresses the House.


William Lyon Mackenzie King: I thank you, Mr. Speaker, for allowing me to proceed. I will now give the total number of persons on the pay rolls of thirty-seven manufacturers of agricultural implements, as shown in the re-
turns made to the statistical branch of the government. On April 1, 1922, there were 5,205; April 1, 1923, 6,580; April 1, 1924, 6,176; April 1, 1925, 5,793, and on April 1, 1926, 8,257. That shows the extent to which working men were thrown on the streets and driven out of the country. At the time the right hon. leader of the opposition made that statement, April 1, 1924, there were 6,176 persons on the pay rolls of these thirty-seven manufacturers of agricultural implements. On April 1 of this year there were, not 6,176, but 8,257; so much for the effect of the changes in the tariff. Now I would like to come to this year, as an indication of how matters are now prospering. On January 1 of this year 7,084 persons were employed in the manufacture of agriculture implements; on February 1, 7,494; March 1, 7,859, and on April 1, 8,257. I have no doubt that during the rest of the year we will find the number increasing, for the reason that the business itself is not only prospering within this country, but in competition with foreign nations as well.
That is the next point I wish to come to. We were told that we were ruining industry and sending people out of the country, but what do we find? We find not only that conditions have improved with respect to domestic sales but that, as a matter of fact, in the export of agricultural implements there has been an increase of very material proportions. Let me read the values of the exports of farm implements and machinery by years:
1921-22		
1922-23		
1923-24		
1924-25		
1925-26		
In 1924-25, after our budget changes were made, the exports amounted to 111,342,712 and for the complete twelve months of 192528, $13,628,341. In other words, from the time the change was made the exports increased from $9,330,519 to $13,628,341. These are the facts which may be cited in reply to the assertions made at the time as to what the effect of the government's action would be. If more is needed to make clear the position of the implement manufacturers I would quote for just a moment from the reports of one or two of these companies. We find that so far as the implement manufacturing business is concerned, the companies are beginning to pay dividends, for practically the first time in their history, and that not only on preferred stock but on common stock as well in some instances. I have here the report of the Cockshutt Plow Company, appearing in the Financial Post of February 19, 1926. I

The Budget-Mr. Mackenzie King
will not read the whole of the report, but just one or two statements:
The annual report of the Cockshutt Plow Company for 1925 shows profits from operation after providing for depreciation of $313,501, compared with $64,347 in 1924.
That is what the report of this year shows. The vice president of the company, outlining the position of the industry, said:
Referring to the year's operations and the outlook, vice-president F. Perry says:
The improvement is encouraging, and it is to be hoped that prices of agricultural products are emerging permanently from the depression in relation to other prices into which they have been sunk since the war. The success of the company's business, he says, is directly dependent on the prosperity of the farmers. While business in eastern Canada has also improved, the increase was by no means so marked as in the western provinces. Foreign sales, however, have reached a higher figure than in any previous year.
Collections, on the whole, have been good, and the shorter terms of credit which were introduced some time back are now beginning to show a beneficial effect in the reduction of the amount of dealers' and farmers' paper carried by the company, and a corresponding reduction in the company's borrowings from its banker. On December 31, the company's bank loan was entirely paid up, and its trade liabilities reduced to a minimum.
That the company is now in a position to take advantage of improved conditions, including the Russian orders for tractors which have been received, has been reflected in the action of the market and the substantial advance in the quotations for the shares of this company.
That is a pretty good record for two years; improving business in eastern Canada; increases even more marked in the west; foreign sales reaching a higher figure than in any previous year; collections good; reductions in the company's borrowings from its banker; trade liabilities reduced to a minimum, and substantial advance in quotations for shares. What more could you possibly wish for any industry anywhere?
Now take another great company, namely the Massey-Harris. The report of that company appears in the Financial Post of February 12 of this year, and is headed as follows: Massey-Harris Company. A great Canadian industry which stands second in its field in world trade. Big improvement in business is now being experienced.
The article goes on to say:
Speaking of the farm implement industry in general and of the Massey-Harris Company in particular, Thomas Bradshaw, general manager of the company referred to, states that the implement business is in a better position to-day than it has been since 1920. Sales during 1925, especially in the home market, increased considerably	Mr. Bradshaw estimates
that farm equipment sales in Canada during 1925 were from 60 per cent .to 75 per cent in excess in 1924.
There is a statement which has a direct bearing upon the motor industry at the moment.	I said a little while ago that the
moment the country knew that the question
of duties had been settled, purchases immediately began to be made. I would like to read that sentence again:
Mr. Bradshaw estimates that farm equipment sales in Canada during 1925 were from 60 per cent to 75 per cent in excess of those in 1924.
I contend that that is very largely to be accounted for by the fact that many farmers were waiting until the question of the tariff was settled, and until they were in the best position to make purchases. The article goes on to say:
Exports likewise showed a healthy increase. Farm implements were exported to practically every grain growing country of the world, with Great Britain, France, Germany, Russia, New Zealand, Australia, Argentina and the United States as their chief destination.
As to 1926, the prospects are for still further improvement in the implement industry. The demand for goods should he greater and plants more fully occupied. Mr. Bradsihaw makes the point that perhaps never before has the feeling between the implement manufacturer and the farmer been so harmonious.
I will just add this further statement as to the company's report for the year ending November 13 last:
The company's report for the year ending November 30th last, showed net income of $2,346,543, compared with $1,065,180 for 1924, while an addition there was $661,139 .made available by recovery of assets previously written off. This indicates a splendid recovery of the company's affairs. A few years ago the company owed its bankers a sum between $12,000,000 and $13,000,000, representing implements sold on credit. Not only has this debt been liquidated, but recently the company has been able to show a substantial cash surplus.
May I add this further word? After it became apparent that the agricultural implement industry was going to improve, we were told that it was not so much the implement industry that hon. gentlemen opposite were concerned about as it was some subsidiary industries from which raw material had to be obtained, and particular mention was made of the steel industry. Now what is the position of the steel industry, a manur facturer of parts of agricultural implements? The Financial Post of December 11, 1925, has an article headed:
Steel of Canada crosses par for first time since merger organized in 1911. Investment history made as well-managed steel enterprise makes good visions and promises of promoters oif pre-war days.
Here is the paragraph that bears on the point:	'
This week the common stock of Steel Company of Canada sold over par for the first time in its history. This event is of importance for investors because it indicates that the public is now beginning to recognize Steel of Canada as one of the basic securities of Canada, a security that is bound to reflect business conditions in general and that may, in
3484	COMMONS
The Budget-Mr. Mackenzie King
time, be regarded as a barometer of Canadian business just as United States Steel is regarded as a barometer of business in the United States.
Then within the past month the Financial Post, which keeps track of these matters, has two further references to the financial position of these implement companies, one on May 14 referring to the Cockshutt Plow Company.
It is being credited that dividends will be increased on Cockshutt shares before the end of the year, probably at 4 per cent.
The item with respect to the Massey-Harris Company says:
The preferred issue is now regarded as being on a sound dividend basis, with good prospects for a moderate dividend on the common in the not far distant future.
There, Mr. Speaker, in a word is the answer to the assertions made by hon. gentlemen opposite as to the effect of the government's reduction of customs duties on the implements of agriculture. At that time the government stated that it felt secure in the action which it was taking, that it believed the result of the changes being made would not only be of assistance to the farming community, but would prove beneficial to the companies as well. In every particular the position taken by the government at that time has been implemented to the full. Now I venture to say, Sir, when we are permitted to consider a couple of years hence the effect of the changes we are making to-day in the duties on automobiles, we shall find this whole situation with relation to agricultural implements paralleled' in all the particulars I have mentioned' with respect to the motor industry in Canada.
May I say just a word about the manufacturing industry as a whole in this country? To hear hon. gentlemen opposite talk, one would think they were the only persons concerned about the well-being of manufacturing in Canada, and they never cease to stress the point that manufacturing in Canada is suffering under this administration.
Mr. BENNETT, Hear, hear.


William Lyon Mackenzie King: My hon. friend says, "hear, hear.'' I want this noted, because it bears out how much reliance one can place on "hear hears" or statements of the kind that are made. I want to bring this point to the attention of my hon. friend who has just interrupted, and he may be surprised to know it. Will he be surprised if I tell him that this year for the first time in the history of this country our exports of manufactured goods exceed our imports?


Mr. BENNETT:: It is mostly paper and that class of raw material.


William Lyon Mackenzie King: It is exports of fully manufactured goods.


Richard Bedford Bennett: Paper.


William Lyon Mackenzie King: Paper may be imported' too, if my hon. friend insists on thinking only of paper. Let me give to the House statistics that cannot be controverted as to our exports and imports of manufactured goods.
Mr- BENNETT: Our imports would be steel, principally. We are the second customer of the United States in steel.


William Lyon Mackenzie King: 
Henry Lumley Drayton: Not in 1921. If my hon. friend wants to take a war year, or any year where-we have not got stagnation in the buying countries, he would not take 1921.


William Lyon Mackenzie King: That was a post-war year, in which a number of contracts were being carried on, and the total export of manufactured goods in 1921 amounted to $665,087,939. The year following is the proper one with which to begin making com-

The Budget-Mr. Mackenzie King
parisons. There is disclosed a steady increase in exports. I would like hon. gentlemen opposite and the House to get the significance of the figures presented in this table. Let me give the excess of imports over exports or the excess of exports over imports for the different years. In 1921 the excess of imports over exports was in round figures $264,000,000; in 1922, that had dropped to $120,000,000; in 1923, it had dropped to $59,000,000; in
1924,	it had dropped to $47,000,000; but in
1925,	the exports exceeded the imports by $15,000,000. There is the proof that manufacturers in Canada have prospered under this administration. Consider for a moment the significance of those figures.
Under the late government, the official statistics show that the Canadian market was on balance invaded by imported manufactured goods to the tune of $264,000,000, or considerably more than a quarter of a billion, in 1921. This government, they say, has been pursuing a policy of tariff reduction inimical to the interests of our manufacturing industries, yet in each succeeding year the manufacturers of Canada, taken as a whole, clearly have more and more occupied the home market, if we balance the exports against the imports of manufactured commodities. Finally, after our 1924 budget, which the opposition declared was going to ruin the Canadian manufacturers, our manufacturers, taken as a whole, won out on balance against their competitors from abroad, and exported $15,000,000 more manufactured goods to other countries than other countries sent to Canada. This showing will undoubtedly be better in 1926, in view of our enormous favourable balance of total trade, but apart from that, the table shows conclusively that under the present government, Canadian manufacturers are more than holding their own, not only in the markets of Canada, but in the markets of the world. The record shows dearly that the great body of Canadian manufacturers are more completely holding the Canadian market than they were four or five years ago. The facts given in the table are a complete refutation of the blue ruin utterances of the opposition.
May I give one other brief reference which I think will be illuminating as to the manufacturing industries of this country and the state of Canadian trade. Hon. gentlemen opposite are continually comparing conditions in Canada with conditions in the United States to the detriment of their own country. They cannot deny that; they are continually doing it in their public utterances, and yet the available statistics disclose that instead of there being reason to belittle our country there
is the strongest reason in the world why we should make it plain to everybody that we are in a much better position than our neighbours to the south.


John Arthur Clark: In that case why are our people going to the United States?


William Lyon Mackenzie King: They continue to go, in so far as they may be going, because of the propaganda in which hon. gentlemen opposite indulge.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: I venture to say that of the people who have left Canada for the United States more have done so in consequence of the talk of hon. gentlemen opposite than 'because of any other reason. I go further and I say that in addition to this fact it is also true that thousands of people who otherwise would have come to Canada, have been led to locate in other countries because of the utterances of hon. gentlemen opposite. My hon. friends seem to delight in keeping up a propaganda aimed at depreciating Canada; they seem to delight in deriding and belittling their own country-


Ernest Lapointe: Slandering it.


William Lyon Mackenzie King: Yes, "Zander" is not too strong an expression to use. Such conduct as that cannot be indulged in without having very serious effects upon this country. Now, this policy of belittling Canada is shown to be without justification when one considers the total trade of the Dominion, that is the import and export trade and realizes that for the year ending March, 1926, there was a favourable trade balance of $401,134,000. That is a figure that has never been reached before in the history of this country, excepting possibly, when munitions of war were being exported. Even the United States, notwithstanding the immense trade which it enjoys, does not begin to have as favourable a trade balance as Canada enjoyed for the last fiscal year. In proof of that may I offer the following figures. For the twelve months ending March, 1926, the visible trade balance of Canada amounted to $401,134,000, and that for the United States to $352,364,000. The trade of Canada and the United States for the twelve months ending March 31, 1926, was:
Imports	
Exports:
Domestic produce.. .. Foreign produce.. .. Total exports	
Canada $ 927,403,000
1,315,193,000
13,344,000

United States $4,412,293,000
4,667,166,000
97,491,000

Favourable trade balance $ 401,134,000	$ 352,364,000
3486	COMMONS
The Budget-Mr. Mackenzie King
Recently published figures of the United States bringing its trade statistics down to the end of March show that for the first nine months of its fiscal year ending June its favourable trade balance or excess of exports over imports was $187,000,000. Adding to that figure the favourable trade balance of the United States for the three months, April, May and June of last year, namely, $165,000,000, we find that the total favourable trade balance of the United States for the period included in the last Canadian fiscal year was $352,000,000, or a cool $50,000,000 less than our favourable trade balance in the same period. This fact is a remarkable demonstration of how' Canada is holding her own in the markets of the world. The policy of the present administration, of cheapening the instruments of production, has operated to increase the volume of Canadian exports.


Mr. SUTHERLAND (South Oxford):: Will the right hon. gentleman be good enough to give us the trade balance between Canada and the United States for the same period?


James Alexander Robb: We are trading with the world.


William Lyon Mackenzie King: The trade
balance between the two? I have not the figures here, I am sorry to say. In what I have said to-day and I must apologize if I have taken up an undue amount of time, I have endeavoured to show that the blue ruin representations in which hon. gentlemen opposite have indulged are not justified by the facts, but that as a matter of correct record this country has really gone steadily ahead in the manufacturing industry, not only absolutely in its own accord but relatively in comparison with its neighbour and chief competitor.
I should like to say something further with respect to some of the features in the budget. During the course of this debate so much has been said about the need for protection and the like, which is not borne out by the facts, that I am afraid the House and possibly the country have lost sight of the budget itself and what it discloses-what it discloses of improved conditions in our own country, and what it promises of reduction in taxation to the people. If it may be permitted I should like to say a few words on that aspect of the question and therefore as this is a convenient point of departure, Mr. Speaker, I ask that you call it six o'clock.
At six o'clock the House took recess.

After Recess
The House resumed at eight o'clock.



PRIVATE BILLS SECOND READINGS

[Stage Direction]
Bill No. Ill to incorporate the Executive Council of the Free Methodist Church in Canada.-Mr. Ross (Kingston).
Bill No. 112, respecting certain patents owned by the Sealright Company, Inc.-Sir Henry Drayton.


[Stage Direction]
The House resumed the debate on the motion of Hon. J. A. Robb (Minister of Finance) that Mr. Speaker do now leave the chair for the House to go into committee of Ways and Means, and the proposed amendment thereto of Hon. R. J. Manion.
William Lyon Mackenzie King: In the course
of my remarks during the afternoon, referring to the fact that hon. members opposite failed, in the last parliament during the course of any debate on the budget, to move an amendment declaratory of their professed advocacy of protection, I omitted to make mention of one incident to which I had intended to refer, but which helps to illustrate the truth of what I was seeking to have the House appreciate, namely that the hon. members in one way or another contrived to avoid a full discussion of the question of protection which would place the House in relation thereto definitely on record in any budget debate. The point that I overlooked referring to-I had it before me but overlooked it- was the circumstance that on the eve of the assembling of parliament at its last session there appeared in the Ottawa papers and other papers throughout the country a statement in the nature of a manifesto of the Conservative party in respect to its views on protection, and when the House assembled members discovered that this manifesto was in the form of a resolution on the order paper in the name of the right hon. leader of the opposition. That resolution did contain in it a statement that:
This Dominion requires an immediate revision of the Canadian tariff, on a definitely and consistently protective basis.
That resolution appeared on the order paper on February 5, 1925. It remained there day after day, but was never taken up in the course of the debates in the House. It remained there, I would like to point out to

The Budget-Mr. Mackenzie King
the House, through the whole of the discussions on the budget. If the right hon. leader of the opposition and members of his party had been really anxious to test the feeling of the House on a declaration of that kind, that was the appropriate time to do it. As a matter of fact the debate on the budget last year lasted altogether, I think, forty days and forty nights, the longest debate that ever took place in this House on any single question. During all that time this motion of the right hon. leader of the opposition remained on the order paper. It continued on the order paper until about the end of the session. I think, to be exact, it was on June 2 that this resolution was moved as an amendment to the motion to go into committee of supply. It was on the order paper until the day before, and a good many hon. members were taken by surprise when they found it had been withdrawn from the order paper and was being introduced as an amendment to the motion to go into supply. However, the House had had enough of discussion on the tariff question and dealt pretty summarily with this motion. It was debated a few hours, I think, and ifinally was disposed of on division, by a vote of 147 to 37. In other words a majority of 110. in the House as then constituted, voted against a resolution declaring that this country required an immediate revision of the Canadian tariff on a definitely and consistently protective basis. The interesting fact in regard to the debate that took place on that resolution was that not only every Liberal member of the House of Commons, but every Progressive member, the Labour members, the Independent members, and the only lady member in the House, voted against it. It was virtually on this resolution that hon. members opposite conducted the recent campaign.


Richard Bedford Bennett: Hear, hear.


William Lyon Mackenzie King: My hon.
friend says, "Hear, hear". I believe he is following me in this debate. And yet we come to the first session of the new parliament and that resolution is entirely discarded, and instead of having anything declaratory in regard to the necessity for an immediate revision of the Canadian tariff on a definitely and consistently protective basis, we have the resolution now before us dealing with a matter of procedure.
Hon, members opposite have sometimes expressed surprise that, in view of their campaign last election, and in view of the fact that as a party they were returned with the
largest number, they should not be sitting on this side of the House conducting the affairs of the country. Let me say to the House frankly that after the election of October last, when I called to confer with His Excellency on the question as to what course should be followed as a. result of the situation that had been created by that election, I took the position that in my opinion the right hon. leader of hon. gentlemen opposite could not command the support of a majority in this House of Commons, and I took that position largely because of this resolution which had been defeated in the House by a majority of 110 in the previous parliament, and by reason of the attitude which hon. gentlemen themselves had assumed during the campaign when they told the people that the one great issue, so far as they were .concerned, was the tariff. I said quite frankly that I did not see how members of the Progressive party, or of the Labour party or independent members of the House, any more than members of the Liberal party could endorse the fiscal policy of the right hon. the leader of the opposition (Mr. Meighen). I was prepared however to leave it entirely to the House of Commons itself to declare its views on the matter, and I think hon. gentlemen will credit me with having endeavoured in every possible way to allow that expression of opinion on the part of parliament to be altogether unprejudiced and untrammelled. The House of Commons did declare itself on the question of majority support, as it will be called upon again to-night to declare itself; and I would say, in all seriousness, to my hon. friends opposite that after parliament has recorded its vote, upon the conclusion of this debate to-night, the country will take little stock in further references to the alleged inability of the government to function or to the assertion which has been so strenuously put forward, that the government has no right to continue in office.
I said that I desired to offer a few remarks regarding the budget itself and to remind hon. members, before they came to cast their votes, just what the budget discloses and what is proposed in the resolutions which the Minister of Finance (Mr. Robb) will move in due course. In the first place, Mr. Speaker, may I take this occasion to join with others who have spoken on both sides in extending heartiest congratulations to the minister on the budget which he has been able to bring down as a consequence of the financial position in which the country finds itself to-day? If he has succeeded, as I believe he has, in presenting to this House what
3488	COMMONS
The Budget-Mr. Mackenzie King
is unquestionably a more popular budget than any that has ever before been submitted to parliament, a budget that means more in the way of reduction in taxation than any other which it has been the good fortune of this country to receive, the credit cannot be too largely attributed to the minister himself, for the manner in which he has presided over the finances of the country, the great caution and care he has exercised with respect to expenditures, and the eminently capable way in which he has furthered the financial policies which this government has deemed most in the interests of Canada.
The minister last year in presenting his budget said that he wished to err on the safe side. He preferred to over-estimate any expenditures that might be made, and to underestimate the revenues of the country. He came to parliament this year and was able to show that as a matter of fact that was what he had done; the surplus of last year was shown to be greater than he had assumed it would be when he made his statement to parliament. I am sure hon. members will be pleased to learn that the Minister of Finance has followed the same cautious course at this session. In presenting his budget a month ago he underestimated the revenues of the country for the last fiscal year while he overestimated public expenditures, with the result that the surpluses which we have to declare to the country to-day are very much greater than were anticipated when the 'budget was brought down last month. Fortunately we are now in a position to submit the complete statement for the last fiscal year and the facts disclosed therein will, I am sure, be received by the country with the greatest satisfaction. The minister estimated in his budget statement that the increase in revenue would be $29,965,520; as a matter of fact, it is $32,900,000 odd. He also over-estimated expenditures, for, as the facts now show, the surplus of revenue over expenditure instead of being $55,000,000 odd, as the minister stated then, is $58,404,060, while the surplus over ordinary and capital expenditure instead of being $38,065,000 is $41,594,000. The surplus on government services is also higher than the minister had predicted: Instead of being $33,910,000 as he estimated it is $37,526,000. The net public debt on March 31 my hon. friend estimated would be $2,395,000,000 odd; as a matter of fact it is considerably lower than that, being $2,391,000,000. The public debt reduction during the past year, instead of being $22,353,000, as the Minister of Finance anticipated, is $25,969,000, or very nearly $26,000,000.
These are some of the features of the budget which the Minister of Finance has presented

to parliament and the country on this occasion, but there are other aspects of the situation which are equally noteworthy. He pointed out that through the management of the finances under his direction the bonded indebtedness of the country had been very much reduced. The bonds held in the United States have been paid off in part, while the rate of interest which we were obliged to meet on bonds has been considerably lowered, by the refunding of loans effected. An appreciable saving has been effected in that way. With respect to the Canadian National Railways the minister was able to report that instead of the railways being any longer a liability they are rapidly becoming a national asset. In addition to that he was able to report progress in the right direction so far as the Canadian Government Merchant Marine is concerned. He was able to point out that through the removal of the cattle embargo, brought about under the present administration, the number and the value of cattle being exported from Canada to the British market had largely increased, while he was able to make the gratifying announcement that trade through Canadian ports had made material progress. The hon. member who spoke this afternoon (Mr. Macdougall) observed that the trade coming through Maritime ports under the British preference was almost within one per cent of 100 per cent, and he credited the government with arranging to include that extra one per cent. What he failed to notice, however,- possibly he may not have been aware of the fact-is that the reason the 99 per cent of that trade is coming through Canadian ports is to be found in the action taken by this government three years ago providing that on the trade coming through our ports a discount of 10 per cent on existing customs duties under the British preference would be allowed, the effect of that policy having been to divert practically the whole of the trade enjoying the preference.	1
In addition to these unmistakable and unquestionable evidences of the growing prosperity of the country the Minister of Finance was able to announce to the House a reduction in taxation in many directions. In the first place there was the reduction in taxation in customs duties on automobiles, motor trucks and motorcycles, then the reductions in income tax, certain reductions in the sales tax, and the abolition of the receipt tax. Then, too, there was the announcement of the return to the penny postage. These are all a part of the budget which the minister has presented to the House and which hon. members will be asked later on to declare themselves upon as

The Budget-Mr. Mackenzie King
either favouring or rejecting. I think it is well that these points should be emphasized, because hon. members are apt to lose sight of them in the course of a long debate such as we have had on this occasion. May I, by way of further confirmation of what I have already said, draw the attention of the House to the fact that the earnings of the Canadian National Railways for the calendar year 1925 will show an excess over all operating and income charges of S30,433.852.	But the figures have
since come in with respect to the other three months of the present year, so that the fuli return is now available for the fiscal year 1925-26. This will show earnings in excess of operating and income charges, not of $30,443,000 but of $38,000,000.
I have already spoken of the favourable balances of trade which have been referred to by the Minister of Finance. Our favourable balance of trade now stands at $401,000,000 odd. This is an increase in our export trade during the year of $247,000,000. The favourable balance this year has increased from $284,000,000 to the $401,000,000 already mentioned. Of this increase no less than $104,000,000, or 90 per cent, is accounted for by trade within the empire. Hon. gentlemen opposite sometimes assert that the government has effected little by its policies. I am seeking not to indulge in generalities but rather to give to the House concrete and exact evidence with respect to our achievements.
One of the important strokes of policy which the government effected, and which previous governments had failed to bring about, was the removal of the British cattle embargo.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: Hon. gentlemen opposite may exclaim, but for twenty-five years the embargo was on, and our friends of the opposition were in office at that time.


Some hon. MEMBERS:: Oh no.


William Lyon Mackenzie King: Well, part of
the time. It was unquestionably due to the efforts of our High Commissioner, the Hon. Peter C. Larkin, supported by the present administration, that that embargo was removed after we came into power. Let me give the House a statement of the effect of the removal of that embargo on April 1, 1923. For the fiscal year ending March 31, 1923- to give the figures before the removal-25,758 head of cattle, valued at $2,809,796, had gone into Great Britain. In 1924, after the removal of the embargo, our exportations of cattle to Great Britain had increased to 59,486 head, valued at $6,287,815. In the next year, 1925, that
business had increased to 86,245 head, valued at $9,125,667. This last fiscal year ending March 31, 1926, instead of the 25,758 head of cattle that went into the British market before the embargo was removed, 117,819 head were landed there at a valuation, not of $2,800,000 odd, but of $12,432,954.
Now a word in regard to the reduction in taxation. As hon. members know, in addition to the miscellaneous small, changes to meet growing conditions, there is a reduction of the tariff duty on automobiles valued at not more than $1,200 and on motor trucks and motorcycles from 22^, 30 and 35 per cent to 12i, 17) and 20 per cent, while on automobiles valued at more than $1,200 the tariff duty is reduced from 30, 32 and 35 per cent to 15, 25 and 27) per cent, being the British preferential, the intermediate and the general tariff respectively. I quote these figures that hon. members may have clearly in mind the extent of the reduction in duties that has been made.
In regard to the income tax, the Minister of Finance was able not only to announce a reduction, as he described it, "all along the line," but he was also able' to inform the House that the act is now being presented in a less complicated form than heretofore, and that the reductions which he was proposing -this is something that I believe has never been paralleled before-would take effect during this present year, on the incomes of the year just concluded. From one end of the country to the other there is scarcely a home which does not appreciate the fact that it has less to pay out in taxation to the federal treasury than was the case a year ago. To emphasize the importance of the reductions effected, Mr. Speaker, let me cite a few specific instances. On an income of $3,000 the tax was $40; that income is now completely exempt. On an income of $6,000 the tax was $178.50; it will now be $70. On an income of $12,000 the tax was $871.50; it will now be $460. On an income of $18,000 the tax was $1,753.50; that has been reduced to $1,210. There can be no denying the saving which these reductions mean to individuals, to business interests and to future investments in this country. But in order that hon. gentlemen may see that the government's exemptions extend even further than what I have indicated, may I remind the House that in previous budgets the government granted certain exemptions based on the number of children in a family and increased these exemptions on one or two occasions.
The hon. member for South Winnipeg (Mr. Rogers) the other evening, referring to the income tax, pointed out that there seemed
3490	COMMONS
The Budget-Mr. Mackenzie King
to be less gathered' into the treasury from this source than formerly, and he deduced from that the thought that the country was in some way going behind. What he failed to recognize was that the exemptions I have referred to were reaching out in the directions which it was hoped they might; that is, that large numbers of families which were formerly obliged to pay income tax were now exempt. Under the present budget a man with an income of $4,500 and a wife and three children is entirely exempt, but in 1921, when hon. gentlemen opposite were in office, he had to pay $76, and last year he contributed to the treasury $40. There is a showing, Sir, which I think will be appreciated by every family in the Dominion.
I omitted to mention that there are also certain sales tax exemptions on a number of articles; that on canned1 fish for example, the sales tax has been reduced from 5 per cent to 24 per cent; I did mention that the receipt tax has been completely abolished; and that penny postage will come into force again after July 1 of the present year. Altogether my hon. friend estimates that by his budget he is relieving the people of $25,000,000 of taxation.
Now, Mr. Speaker, I wi^h to quote two paragraphs from the speech which my hon. friend made when introducing his budget and to ask the House for a moment to consider seriously their significance. He had drawn attention to the fact that great as are the exemptions in taxation which he was prepared to ask the House to make at the present time, he believed1 they would have been greater still, and that our prosperity would have been still more pronounced, if some of the citizens of the Dominion, rather than knocking conditions in this country, had instead been doing something in the way of boosting them. This is what my hon. friend said in that regard:
The Canadian people, in poping with the era of depression which followed'iThe collapse of the postwar boom, have been unnecessarily hampered by a plague of gloom which shrouded the thoughts and utterances of too many Canadians, and but for which the prosperity of the moment would be even greater than it is to-day my privilege to record.
But he closed with this optimistic note, which is the other side of the picture:
This era of depression has been overcome:	all
statistical compilations which mirror the year to year business of Canada prove it. Canada to-day is steadily growing more prosperous; there is less unemployment; the influx of settlers is growing; and with a hopeful spirit manifesting itself throughout Canada from coast to coast, the year 1920 is full of promise.
Had1 the right hon. leader of the opposition been present I would have quoted at con-

siderable length from some of his utterances which, I think, indicate the shroud of gloom to which my hon. friend may have had reference, but in his absence I will defer all but one or two brief quotations. I hope hon. members will acquit me of any discourtesy in giving these quotations in the absence of my right hon. friend; I give the quotation and the source in each case, only because I am referring to my right hon. friend as the leader of hon. gentlemen opposite, and naturally his expressions gain wider currency than those of any other member of his group. Let us see, in view of what we already see and know to be the case in regard to the figures which have been quoted:	to-night,
whether there really is or was justification for expressions such as these. In the Toronto Mail and Empire of August 19, 1925, just when we were beginning the campaign, I find my right hon. friend quoted as follows:
Why are we stalemate, why are we in a state of semi-paralysis, bleeding at every pore .... the reason is the government's failure to provide adequate tariff protection....
Then in Saskatoon on October 3, as quoted by the Saskatoon Daily Star, the same graphic language is used1:
Don't ask for anything in the way of assistance because it cannot coine. No one can show benefits to Canada, but at any turn our life blood is leaking out and our resisting (powers are shattered.
Then in this city on October 28, speaking in the arena, my right hon. friend used these words:
We ask the .people to consider the facts.
I would like my hon. friends to consider those words, "the facts."
The debt higher,


Some hon. MEMBERS:: Hear. hear.


William Lyon Mackenzie King: But the debt is not higher; that is the point I am trying to make. What I want to illustrate to my hon. friends opposite, if possible, is that they have got into the habit of making assertions which are not correct but which are doing an infinite amount of harm to the country and no good to themselves. As Canadians, What is to be gained in seeking to make out conditions in this country to ibe bad', when we know them to be good? .


Henry Lumley Drayton: Is my hon.
friend addressing himself to me?


William Lyon Mackenzie King: No, I am
looking at the hon. gentleman; but I am addressing myself to all hon. gentlemen opposite.
We ask the people to consider the facts. The debt higher, taxation higher,-

The Budget-Mr. Mackenzie King


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: Well, it is not; taxation is lower, and I will prove it to my hon. friends.
*-our country shunned by immigrants,-
And no wonder, if they were to believe that the things hon. gentlemen opposite say were true. I have already stated that any persons intending to emigrate to Canada would soon go elsewhere if they were to read the speeches of hon. gentlemen opposite.
-our life blood draining away. We trace these defects not to any blight of Providence,-
That was a kind thought.
-but to the misdirection of public policy, to the substitution of party barter for political principle,-


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: Well, that is also untrue.
-to the impotent and blundering legislation of a group of men who call themselves the government of Canada.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: I thought that would give my hon. friends a lot of pleasure, but when they think of it, these are mere words, mere assertions, unfortunately not one of which is true. Now listen to the statement in regard to the Canadian National Railways and see how true it sounds. This statement was made at the same time.
If they-
That is, the members of the present administration.
-had designed to wreck the system (Canadian National Railways) they could not have pursued a more effective course than that which they have pursued during the
last four years	they have poured capital
moneys in ... . for purposes non-essential, for purposes wholly of luxury to maintain a scale of competition between the two great systems beyond the financial capacity of the people of Canada to sustain. By so doing they have inundated the system with hundreds of millions of debt, and the struggle for the next four years will be to rescue it from the mire and the swamp into Which by this policy they have plunged it.
I venture the assertion, Mr. Speaker, that language of that sort cannot be exceeded. Hyperbole is a figure of speech, but this goes far beyond hyperbole.
With this statement on the one hand, which I think I am justified in characterizing as a picture of gloom, let us take the facts on the other side, facts which cannot be controverted, with respect to the actual prosperity of the country. Here I would like to quote from sources which I think my hon. friends opposite will agree are authentic. -I take first of all the statement of the Royal Bank of
Canada, which is a conservative organization in more respects than one. In its bulletin issued in March, 1926, the latest I could get, I find the following paragraph:
The generally favourable annual reports issued by the leading Canadian corporations, combined with the excellent position of all statistical indices, and a general increase in the volume of forward buying, indicate a more encouraging outlook for Canadian business in 1926 that at any time in the past five years.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: Why do not hon. gentlemen opposite also say "hear, hear"? This relates to our country; it is not a matter of party politics. This is a statement of actual facts, indicating a condition in this country of which every Canadian should be proud.
The annual statements recently published by the leading industries and public utilities, with few exceptions, show an improvement in earnings over 1924.
Commercial failures continue to decline, both in number and volume of liabilities. The seasonal curtailment in general empoyment was the smallest yet registered for January, the index standing at 89.6, the highest for the month since the rcord was begun in 1920.
Speaking of failures in business, the right hon. leader of the opposition was fond of quoting from Dun's Review. Let me give the House the figures from 1922 to 1925, taken from Dun's Review. The number of failures is as follows:
1922		 1923				
1924		 1925				
This indicates a steady reduction in the number of failures since this government has been in office. Now let us take the liabilities represented by these failures. The figures are as follows:		
1922		 1923		 1924				
1925			
This shows a reduction of nearly twenty millions in 1925, proving that the business conditions of the country are very rapidly improving.
Now I would like to say a word in regard to bank deposits. On March 31, 1926, the savings deposits in the chartered banks of this country totalled $1,337,500,00, the highest figure in Canadian history, and I would draw attention to the fact that these deposits represent a dollar worth one hundred cents and not depreciated currency, as was the case when my hon. friends opposite were in power. Then let us take the matter of life insurance, which is another index of
3492	COMMONS
The Budget-Mr. Mackenzie King
the prosperity of the people. The aggregate amount of policies in force at the end of 1921 amounted to $2,935,000,000. At the end of the fiscal year 1925 they amounted to $4,159,000,000, or an increase in four years of 42 per cent.
Take the building permits issued in sixty cities in Canada. During the first four months this year they amounted to over $41,000,000, the highest figure for these months in any year since the records were kept by the government of Canada.
Take the ownership of automobiles, another index. It is estimated that the number of automobiles owned in Canada in 1921 was 465,000; at the end of the last fiscal year the number was 728,000 or an increase in four years of 56 per cent, indicating considerable prosperity on the part of the people of this country.
But take the basic facts of production- agricultural production, mineral production, water powers and the like. In agricultural production the total value in 1923 was $1,350,000000; in 1924, $1,443,000,000; in 1925, $1,708,000,000 or a gain in two years of $358,000,000 in our agricultural production.
Our mineral production in 1923 was $214,000.000; in 1924, $210,000,000; in 1925, $225,000,000.
The water power developed on March 1, 1922, amounted to 2,763,000,000 horse power; in 1926, 4,290,000,000, or an increase of over 55 per cent in less than four years.
The favourable balance of trade I think I have already given. When hon. gentlemen opposite were in office, the balance of trade was against us. At the end of the fiscal year March 31, 1922, it had changed to a favourable balance of $6,000,000. That has run up year after year as follows:
1923	 $142,000,000
1921	 165,000,000
1925		  284,000,000
1926		 401,000,000
I could take up further time, but I shall refrain, in quoting from financial papers to show that with respect to any of these matters that I have referred to, in a comparison of basic production between the United States and Canada, the position of Canada is infinitely better and sounder than that of the United States.
In regard to immigration, as hon. gentlemen opposite are inclined to raise the question now and then, may I direct their attention, by way of giving them a cheering note, to the figures for the present year:
1925-1926	1924-1925
January	
2,324	2,007February	
4,396	2,210March	
15,229	6,57521,949	10,792
In the first three months of this year 21,949, as against 10,792 for previous year. So much for the present government being retained in office.
May I cite a few figures with regard to returning immigrants from the United States? The number of Canadians returning from the United States continues to show an increase. The total for the last fiscal year was 47,222, as compared with 43,775 for the previous fiscal year. These were persons who have resided for over six months in the United States.
Now, Mr. Speaker, I wish to say just one word about the significance of the figures which I have just quoted and in particular as to the significance of the reduction in taxation which has been effected by the present budget. That reduction in taxation is due to the policies of this administration, persistently and consistently pursued during the last four years.
When this government came into office it was confronted with a very difficult situation. We started out to try to meet that situation by introducing policies which we hoped would further production, would lead to wider markets, would !be of service to industry generally, and we also sought in a very drastic way to reduce public expenditures so that we could cut down taxation. Now we have succeeded in reducing expenditures to a very considerable degree. But hon. gentlemen opposite, being possessed of the habit of criticising not fairly, but rather of saying anything which might be detrimental to the present administration, have even during the course of the present debate undertaken to say that this government has not cut down expenditures. The hon. member for South Wellington (Mr. Guthrie) who was acting as financial critic in the absence of the hon. member for West York, made a very positive statement in that regard, a statement which was followed, I notice, by one or two others who spoke after him. At page 2459 of the Hansard of April 15th, he is reported as saying:
So that the government year by year is progressing on an ascending scale in the matter of national expenditures.
He is also reported as saying:
On the other hand, in the public services of Canada, there has been year by year under this government an annual increase in our expenditure. I make that statement without fear of contradiction.
Now, Mr. Speaker, I say that statement is contradicted by all the official records and the facts that we have; I say that without any fear of contradiction. In charity to my hon. friend who made the statement, I must say that he came into the breach rather

The Budget-Mr. Mackenzie King
quickly and did his best to meet the obligation customarily assumed by the hon. member for West York, who is the regular financial critic of the opposition, and I think he must unintentionally or unwittingly have made the statement that he did.
iHon. gentlemen may say that we are referring to one set of figures while they are referring to another. There are three comparable sets of figures so far as expenditure is concerned. There is, first of all, the total expenditure of the country, including everything-the grand total. In the second place, there is the expenditure which is the ordinary expenditure so classified, together with the expenditure on capital and special accounts. That leaves out of account any expenditure in the way of advances to the Canadian National Railway or to the Canadian Government Merchant Marine. Finally, there is the ordinary expenditure so classified in the public accounts of the country. Now I say without any possibility of being contradicted from official sources, if you take any one of these three groups of comparable expenditures, you will find that there is not a time since this government came into office up until the present moment when the expenditure has not been reduced every year, year by year, excepting this last year, where there is a slight increase that I shall account for in just a moment-a slight increase which, when explained, will help to show to the House that the record which the government has been making in reducing the expenditure has been kept up all along the line.
Perhaps I may explain at once what the additional expenditure is that has increased the total somewhat. Last year there was an expenditure for the general election of about a million and a half dollars; I shall give the exact figure later. That was an expenditure of an exceptional character. It cannot properly be regarded as indicating any lack of effort on the part of the administration to continue reducing the expenditure.
But there was another item which was very much larger, and that is the amount paid by the government to the Home Bank depositors, which is an exceptional expenditure and which cannot be considered as coming within the ordinary expenses of government.
In the third place, there was considerable increased expenditure incurred in payment of pensions to the returned veterans, due to the policy which the government adopted of permitting appeals to a pensions board. A considerable amount of increased expenditure was incurred on that account. These three
items together will account for from one to two times the difference that exists between the expenditure of this and of the previous year. But let me give the House, so they will be of record, the exact expenditure under these three heads. The total expenditure of Canada for the fiscal years 1920-21 to 192526, both inclusive, including advances to the Canadian National Railways and the Canadian Government Merchant Marine, are as follows:
1021	 $528,302,513
1922		 463,528,389
1923		 434,735,277
1924		 370,589,247
1925		 351,169,803
1920	(estimated)	 355,928,000
I say these figures show a substantial reduction in the total expenditure year by year, with the slight increase that I have accounted for in the last year. Now take the total ordinary, special and capital expenditures of Canada for the fiscal years 1920-21 to 1925-26, both inclusive, not including advances to the Canadian National Railways and the Canadian Government Merchant Marine. These figures will be found on page 44 of the Public Accounts of Canada for the year 1925. Under the total disbursements I will quote from the Public Accounts as they are here:
1921	
$418,620,544	481922	
365,701,790	851923	
350,608,546	721924	
344,021,786	751925	
339,902,775	941926	(estimated)	
342,228,000	00
There i3 a steady decrease year by year, excepting for the last year, where the estimated figure is $342,000,000. Then you have on the first column of the same page the expenditures chargeable to consolidated fund, what is known as the ordinary expenditures, and you find these reductions:
1921	
$361,118,145	211922	
347,560,690	631923	
332,293,732	091924	
324,813,189	751925	
318,891,901	251926	(estimated)	
321,350,000	00
These figures have been checked up by the Auditor General of Canada, and I hope that from now on hon. members opposite will not make the assertion, which helps to destroy the credit of this country, that expenditures have not been reduced in the manner I have described, because the Public Accounts make perfectly clear exactly what has taken place in the way of reductions.
Now I will give the figures in reference to the extra amounts that I said accounted for the increase of the past year. Payments to pensioners increased over the previous year by 12,273,752. The Home bank depositors received

3494	COMMONS
The Budget-Mr. Mackenzie King
$2,521,000, and the cost of the general election is estimated' at $1,652,000, or a total increase accounted for by these three items of $6,446,752. Now, may I make this assertion, which I challenge any hon. gentleman opposite to correct? It is that the difference between the grand total expenditure to-day and the expenditure in 1921-22-and in that year we had only been in office three months- amounts to $107,000,000. That represents the difference this year as compared with the expenditure in 1921-22. But if the comparison is made with the year 1920-21 when the right hon. leader of the opposition was in office, the difference will be found to be $170,000,000 instead of $107,000,000. In other words during these two years $277,000,000 in the way of additional expenditures were added to the obligations of this country over and above our rate of expenditure in the fiscal year 192526. Now if we have succeeded in bringing down taxation in the way we have it has been due to the fact that we have consistently and persistently pursued a policy of reduction in expenditure.
There is one other observation I would like to make. Hon. gentlemen opposite say that we have increased taxes. The statement was made by an hon. gentleman (Mr: Macdougall), who spoke this afternoon. He said the sales tax during the period his leader was in office, and before, was less than it was after we came into power-that we added to the sales tax and some other taxes. Why were these additional taxes imposed? It was 'because of the financial situation that had developed under hon. gentlemen opposite which was bringing this country to a state of ruin and bankruptcy and which had to be stopped at all costs. Hon. gentlemen opposite when in office-and this is apart altogether from war expenditure,- went on increasing the total expenditure of the country at a very considerable figure. But they did not meet that additional expenditure by taxation, they met it out of borrowing. Now every dollar borrowed means so much in the way of future taxation, and all the money hon. gentlemen opposite borrowed during those years to meet current expenditures instead of raising it by taxation is properly chargeable to themselves rather than to this administration by way of taxation. When we got into office what did we find? We found that the credit of this country had depreciated to a point that the country had to pay seven per cent interest at New York to finance the very best securities, government guaranteed securities of the Canadian National Railways, and we found the dollar worth only 82 and 83 cents.


Henry Lumley Drayton: My right hon. friend is surely wrong there.


William Lyon Mackenzie King: Not at all.


Henry Lumley Drayton: I simply wish to say that what my right hon. friend has stated is incorrect.


William Lyon Mackenzie King: Wherein is it incorrect?


Henry Lumley Drayton: My right hon. friend should know that the discount at that time was five per cent. He has quoted the extreme rate of discount during the period to which he alludes.


William Lyon Mackenzie King: I say to my hon. friend, and I challenge him to correct me, that he himself was responsible for borrowing money at seven per cent on government securities.


Henry Lumley Drayton: My right hon. friend has invited some challenging and I tell him this: During the period that we borrowed money in New York we got it on as favourable terms as any other country in the world-in fact more favourable.


Some hon. MEMBERS:: Oh, oh.


An hon. MEMBER:: Sit down.


Henry Lumley Drayton: Furthermore, as I showed in this House two years ago, at the time of the hundred million loan in New York we then got a higher price.


William Lyon Mackenzie King: I direct the attention of the House to the fact that the hon. gentleman has not challenged my statement.


Henry Lumley Drayton: I have.


William Lyon Mackenzie King: It remains perfectly true that he himself was responsible for paying seven per cent on government guaranteed securities in New York, and we have been obtaining loans on those securities at four and a half per cent, and certainly under five per cent when the last loan was made.


Henry Lumley Drayton: My right hon.
friend must think that he makes the money market.


William Lyon Mackenzie King: Let me make
the position clear. I say we found the country in the position I have described when we came into office. We discovered that if we were to save the credit of Canada, if we were to prevent this country from drifting into the position of other countries in the world whose currencies were completely depreciated and whose credit was going from bad to worse, we would have to balance the

The Budget-Mr. Mackenzie King
budget instead of having deficits year after year as hon. gentlemen opposite had. We started out to balance the budget. We made that our first effort, and although we had to deprive ourselves of the opportunity of doing much in the way of public works and aiding other enterprises, we nevertheless believed that the patriotic thing, the right thing, to do was to effect the most rigid economy and to retrench as much as possible, and that was and is our policy.
Now, may I say this so that there shall be no mistake about it: Hon. gentlemen opposite came into office in 1911.
9 p.m. They found the revenues and the expenditures of the country fixed within very definite bounds. By 1914 they had increased the expenditure of Canada very considerably. When the war came on-


An hon. MEMBER:: What about the
revenues?


William Lyon Mackenzie King: The revenues had not. increased proportionately. When the war came on, instead of increasing taxation hon. gentlemen opposite during the first couple of years raised less money in taxation from the people that remained at home. I wish to make a further statement, which I challenge any hon. member to deny-and I think it is the most astonishing statement that anyone could find it possible to make- and that is that the whole capital cost of the war and of demobilization, during the four years of war and the two years of demobilization-every dollar of that remains to be paid. Not a single dollar was raised in taxation by hon. gentlemen opposite to meet the capital cost of war, not a single dollar was raised by the conscription of wealth, although men were being conscripted. These are the facts.


Henry Lumley Drayton: My right hon.
friend has again thrown out a challenge. I do not think his statements are true. I think my right hon. friend is entirely wrong. Further than that, he is wrong in the judgment of a gentleman in whom he has great confidence. I refer to the Right Hon. George P. Graham who, from his place in this House, denounced the late government for overtaxing the people.


Some hon. MEMBERS:: Order, order.


William Lyon Mackenzie King: My hon. friend is entirely mistaken. The Right Hon. Mr. Graham agreed absolutely with the statement I made to the House. My hon. friend will find figure for figure in the Public Accounts. He will find figure for figure in the statistical year book. Any hon. member who will look 14011-2221
up the facts will find that with respect to the capital cost of the war and demobilization every dollar of it was met by borrowed money.


Henry Lumley Drayton: My right hon. friend, Mr. Speaker, says that I will find I am wrong, and makes his reference to Hon. Mr. Graham. I will state what I am referring to, so that my right hon. friend will be sure to find out that he is absolutely incorrect, as the fact is. Exception was taken-


Some hon. MEMBERS:: Order, order.


Henry Lumley Drayton: There was a
challenge given; is the right hon. member afraid to hear it? The fiscal policy of the then government was objected to strenuously by Hon. Mr. Graham, or, as he is now, the Right Hon. Mr. Graham, on the ground that it was absolutely too heavy a burden for the people of Canada to carry, and it was also objected to by the present Minister of National Defence. In so far as the cost of the war is concerned my right hon. friend's figures are incorrect. I pointed that out two sessions ago. Sir Thomas White made his calculation of five hundred million dollars odd.


William Lyon Mackenzie King: I direct attention of the House to the figures I quoted in the previous debate. They are on Hansard, and I am ready to submit the matter to the Finance department, to the statistical department of the government, or to any authoritative body. I stand by the statement I made that it is absolutely correct with regard to the cost.


Henry Lumley Drayton: Will my right hon. friend-	.


Some hon. MEMBERS:: Order. Sit down.


Hewitt Bostock: Order.


Henry Lumley Drayton: Will my right hon. friend go a little bit further?


Hewitt Bostock: Order.


Henry Lumley Drayton: I am trying to-


Some hon. MEMBERS:: Order.


Henry Lumley Drayton: I am trying.
Mr. Speaker, to put a question to the right hon. Prime Minister. He has offered to refer the whole question to any department, or to some authority or other. I am' quite willing that that should be done if he will refer the whole thing-if he will refer for example the whole amount of the addition to the capital debt of $90,000,000 not shown, and if he will also refer the whole question of expenditure as given at page 3256 of Hansard.
3496 ^	COMMONS
The Budget-Mr. Mackenzie King


William Lyon Mackenzie King: I should not wish to refer anything unless I referred the whole of it. But let me go a step further. Not only is what I have said about the capital cost of the war quite correct, but hon. members, in placing this colossal mortgage on the back of the country-because that is what it is

increasing thereby the interest on the public debt that has to be carried year by year, made it more difficult for subsequent governments to collect taxation to help to meet that great obligation. They issued a large proportion of their bonds tax exempt. When they were carrying on the finances of this country by issuing tax exempt bonds and were increasing the public debt of this country in that way they were laying up an obligation which subsequent governments had to meet and which we had to face. That is why we had to put on extra taxation-because hon. gentlemen opposite had borrowed instead of taxed and robbed us of the opportunity of getting in the form of income tax what we should have had and what any government should have had as a source of revenue.
I am taking more time than I should, but it is better that the country should know the exact facts, and I think hon. members will acquit me of the charge of having taken up too much of the time of the House this session. I certainly did not take up much of the time during the first month. Let me supplement what I have just said by an accurate statement of the figures. I will deal with the revenue from taxation only, since that revenue constitutes the real binder upon the taxpayers of Canada. The revenue raised in the pre-war fiscal year ended 1914, after hon. members opposite had been in office three or four years, amounted to $126,143,275, or $16.40 per head of officially estimated population. In 1911, when hon. members opposite came into office, the revenue from taxation was not $126,000,000 but $88,000,000 odd, or $12.31 per head of population, instead of $16.40, showing that as soon as my hon. friends came into office they began to increase the expenditures Of the country. In 1915 the revenue from taxation amounted to $97,000,000 odd, or $12.40 per head of the population. In 1916 the revenue from taxation was $124,000,000 or $15.51 per head of the population. Those were war years. Hon. members will notice that less was raised in taxation during the war years than was raised in taxation in 1914, the year before the war commenced; at a time when the financing should have led to increased taxation, less taxation was being imposed. Then in the year 1921 the government raised from taxation the sum of $368,-
770,498, but they added to the national debt $92,000,000, a process which implies future taxation. If they had sought to balance the budget as we have sought to do, they would have had to raise $460,780,858. In 1922 the revenue from taxation was $319,926,013, but they added to the national debt 881,256,817. To balance the accounts for the year they would have had to raise $401,182,830. It was this ruinous and spendthrift course which in two years added $173,000,000 to the national debt, more than one-half the total pre-war debt of Canada. This had to be stopped, and that is what this government sought to do. We set out to do it first of all by seeking to cut down expenditure and by introducing policies which would lead to increased production. In 1923 we raised in taxation $335,453,431. That was not enough to balance the budget and we were forced to add to the national debt $31,641,067, but that was the last addition we made to the national debt; since that time we have been reducing the national debt rapidly. In the three latest fiscal years combined, 1924, 1925 and 1926, this government raised by taxation in the aggregate $962,913,325, but at the same time we wiped out the national debt to the extent of $62,308,183. The current taxes of the country during the three years were something like $900,600,000, on the basis of a tax revenue of about $300,000,000 per annum. Yet those who in 1921 imposed on the people in current taxation $368,770,498 and in future taxation $92,010,360, or a total of $460,980,858, and in the year 1922 in current taxation, $319,926,013 and future taxation $81,256,817, making a total of $401,182,830, have such short memories that they now accuse us of excessive taxation.
With the permission of the House I desire to place on Hansard a carefully prepared comparative table showing taxation necessary to balance the budget, actual total taxation and consequent addition or subtraction to the public debt. The statement covers the years from 1921 to 1926, both inclusive, and shows that in 1921 there was added to the public debt over and above taxation levied the sum of $92,000,000 odd. In 1922 there was an addition of $81,000,000 and in 1923, $31,000,000. In 1924. 1925 and 1926 there were subtractions of $36,000,000; $345,000; and $26,000,000 respectively. In other words, there was a saving to the taxpayer in present taxation or future taxation arising out of debt of over $100,000,000 as compared with 1922, and over $160,000,000 as compared with 1921.

The Budget-Mr. Mackenzie King


Sir GEORGE PERLEY:: Will the Prime Minister say whether the amounts guaranteed on behalf of the National railways are included in the statement?


William Lyon Mackenzie King: 
Richard Bedford Bennett: I rise to support the amendment. In clear and unambiguous language it is a challenge to the honour of the House, an appeal to the conscience of the nation. Anyone who has listened to the lengthy oration which we have heard this afternoon and evening must realize how truly, in the mind of the right hon. the Prime Minister (Mr. Mackenzie King), any appeal to honour is "milk and water." Milk and water! That appeals to the honour of this nation and this House; that promises made in the Speech from the Throne are not made to be disregarded but to be kept; that promises made to induce support are made for the purpose of being kept when you have the power to keep them and are not to be repudiated in the House you control. Milk and water? Of course, milk and water! Anything that savours of national honour is milk and water. The long series of misstatements tQ which for three or four hours we have listened to-night are simply calculated to mislead and indeed to discredit and dishonour parliament.


Some hon. MEMBERS:: Order.


Hewitt Bostock: Order. It is not parliamentary to say of an hon. member that his statements are calculated to mislead.


Some hon. MEMBERS:: Withdraw.


Richard Bedford Bennett: Mr. Speaker, I have a right to say that misstatements have been made. And misst itements are never made but for one purpose-to be believed. Therefore if they are to be believed they must be misleading.


Hewitt Bostock: The hon. member will find in Bourinot that even such an expression as "the hon. gentleman is not candid in his statement" is not parliamentary. I rule that the expression "calculated to mislead" should be withdrawn.


Richard Bedford Bennett: Certainly I withdraw the statement without hesitation if Your Honour so rules. But I desire to point out that the distinction between saying, "a man is not candid" and "what he says is calculated to mislead," is so clear that even a first year student-at-law would understand it.


Some hon. MEMBERS:: Withdraw.


Richard Bedford Bennett: There cannot be any
misunderstanding about that. Now, Sir, we will proceed a step further. The words, "glaring misstatements" have been held in the British House of Commons to be in order.
I did not characterize these statements as glaring misstatements, but' as calculated to mislead the House and the country.


Some hon. MEMBERS:: Order.


Richard Bedford Bennett: I withdraw the observations if they are ruled out of order, but I made them for the purpose of characterizing my appreciation of the statements that were made. As the right hon. gentleman proceeded with his speech I could not help but think, Sir, of the series of great debates in the British House of Commons that took place between Disraeli and Peel. You will recollect that Peel had been the leader of the Conservative party, and later he introduced a measure which resulted in the repeal of the Corn Laws, although he had appealed to the people for support to retain them. Mr. Disraeli, as he then was, attacked Peel and pointed out that such a course robbed parliament of its reputation and destroyed the honour of the institutions they were sworn to protect. During the course of his observations on one Occasion Mr. Peel made some reference to Mr. Canning, whom he had not treated very well. Thereupon Mr. Disraeli said he could not understand the right hon. gentleman ever mentioning the name of Canning in view of the way in which he had treated him.
This afternoon the House heard the right hon. leader of the government refer to a speech which he said was made in Kitchener
The Budget-Mr. Bennett

by the leader of the opposition. He is not in his place to answer for himself I veiy much regret to say, but I have before me the report in the paper published in the community in which the hon. member for North Waterloo (Mr. Euler) resides, and I find that next day in the Kitchener Record he summarized the observations made by Mr. Meighen in this way:
Mr. Meighen states correctly that he in parliament favoured giving preference for preference, which is exactly the attitude I repeatedly ascribed to him.
Those are the words attributed by the hon. member for North Waterloo to the right hon. leader of the opposition in the speech to which the right hon. leader of the government has referred. In that summary there are none of the terms to which we listened this afternoon. I have read the report of the speech made by the right hon. leader at Kitchener for the purpose of ascertaining if the language used in the local paper could be attributed to him. He did say:
We believe in preference for preference.
Those of you who read your Hansard will realize that when the then Minister of Finance, Mr. Fielding, introduced his budget in 1897, in which he gave, a preference to Great Britain without receiving any, Sir Charles Tupper, then leader of the Conservative party, protested. He said we could have had a preference without giving any at any time if we so desired, but that is not What we want. We want something for something and not nothing for something. We are not going to give away our heritage and our patrimony unless we get something in return. Therefore Sir Charles Tupper opposed the preference put forward by Mr. Fielding. And what is more, the Conservative party has steadfastly clung to that one conviction, that we must receive a preference if we give a preference. The right hon. leader of the opposition was upbraided, at least by the hon. member for North Waterloo, because he did not go far enough in his speech. He said:
That would be of no practical use whatever. If Canada gives a preference it must necessarily be on manufactured products, the very thing Canadian industry does not desire.
In that statement signed by the hon. member for North Waterloo there is no reference to the observations which are now attributed to the right hon. leader of the opposition. I go further. I have in my hand various statements made by him in other places in which-


Mr. EULER:: If I may interrupt my hon friend? I am sure he would not do me an injustice.
[Mr Bennett.]


Richard Bedford Bennett: Certainly not.


William Daum Euler: The mere fact of my statement in regard to the speech of the right hon. leader of the opposition at that time I think does not necessarily preclude his having said what the Prime Minister says he said.


Richard Bedford Bennett: That may be, Mr. Speaker, but in the report of October 28, 1925, of the meeting held in the town of Kitchener by the right hon. leader of tihe opposition there appears no language such as that attributed to him by the right hon. deader of the government.


William Lyon Mackenzie King: May I ask my hon. friend, will he say I quoted from a source which does not exist?


Richard Bedford Bennett: No, Mr. Speaker, I will have occasion before I conclude to refer to the erroneous impressions which the right hon. gentleman created. I did not say he was quoting from a source that did not exist, but I do say that his quotation was not correct. Let us go a step further in respect to that. The right hon. gentleman said he was greatly surprised that the 'leader of the opposition would make the statements which he was ailleged to have made at Kitchener. That is what brought the Canning incident to my mind. The county of Waterloo has a history. It was once represented in this parliament by the right hon. leader of the government. In 1911 he there sought re-election, and the nomination proceedings were reported by the Toronto Globe:
Hon. Mr. King read extracts from Mr. Borden's speeches in the House of Commons, in which the Conservative leader referred to the danger of war with Germany, and urged the government to go to Britain's aid with a dreadnought or a cash contribution.
These are the words of Mr. King:
Are the people of this country to place at the head of affairs a man who would be precipitated into such a position as this, who will take from the treasury, and who would have taken enough money to build two dreadnoughts and send that money to England, so that they could spend it as they please! and against what country? He was ready to send money to build warships to fight Germany.


William Lyon Mackenzie King: My hon. friend has just reminded the House that it is desirable to look in the local papers for accurate reports of what takes place.


Some hon. MEMBERS:: Order.


William Lyon Mackenzie King: Just a moment,
I have the right, Mr. Speaker,-


Richard Bedford Bennett: Mr. Speaker, I protest.
What is my right hon. friend's question? Let him ask it.

The Budget-Mr. Bennett


William Lyon Mackenzie King: I say to my
hon. friend that what he is reading at present-


Some hon. MEMBERS:: Order, order.


William Lyon Mackenzie King: I have a right to deny a statement. I say that the statement my hon. friend is reading is not a true statement; that has been repeatedly stated on the floor of this House. He will not find in any paper published in Waterloo county the words attributed to me which he is now reading. They were never uttered; the proceedings that are purported to be reported in the quotation he gives were held in camera and not in public.


Some hon. MEMBERS:: Order, order.


William Lyon Mackenzie King: I am making
a statement which I am entitled to make, when my hon. friend makes a challenge of this kind. This has been denied over and over again, and he comes now, in 1926, with statements which have been denied since 1911. I deny emphatically the statement read by my hon. friend.


Richard Bedford Bennett: The hon. gentleman has
denied that the report in the Toronto Globe is accurate. 'The Toronto Globe was then supporting him and his party. I am now quoting these further words from the Toronto Globe. The correspondent adds this:
A larger number of delegates were of German descent, and they loudly applauded Hon. Mr. King's statement.
Referring to the candidature of Major Weichel, he asked: How are the Germans of this country going to stand behind him, when he is supporting a man who is taking such a stand in regard to the defences of the empire?
These are not my words; they come from the Toronto Globe. The Toronto Globe supported my hon. friend's party at that time and the Toronto Globe correspondent was in the secrets, at least, of the Liberal party. I can understand the right hon. gentleman's memory being defective. I would not like to say, fifteen years later, that a particular incident was or was not correctly reported. I read this from the Toronto Globe for what it is worth, just as it appears.


William Lyon Mackenzie King: May I say
to my hon. friend that, far from my memory being defective, I remember distinctly that as soon as that report appeared in the Toronto paper I denied it emphatically and challenged anyone to prove it.


Some Hon. MEMBERS:: Order, order.


Hewitt Bostock: Any hon. gentleman may
deny a statement.


Henry Herbert Stevens: He did not rise to a question of privilege.


Hewitt Bostock: Order.


Mr. CANNON:: Give us some more of that stuff.


Richard Bedford Bennett: I am not now discussing the war with Turkey. I will reach the Solicitor General by the time we get to Mesopotamia, and possibly the flesh pots of Egypt; I do not know, we may discuss those subjects.


Lucien Cannon: I think you struck me
once before.


Richard Bedford Bennett: I have no memory of it. The hon. gentleman flatters himself, which is not unusual. Now, Mr. Speaker, may I proceed? I was observing that it is no wonder the hon. gentleman was somewhat surprised at the observations attributed to the leader of the opposition which were alleged to have appeared in the papers. I have no more reason to believe the paper was correct in its observations with respect to my right hon. leader than I have for disbelieving the observations which appear in the Toronto Globe with respect to the Prime Minister. *
So much for that phase of it; now let us proceed to the next point made by the right hon. gentleman. With great care and at considerable length he stated that this country had reduced its debt and reduced the burden of taxation upon the people of Canada since this government came into power. In making that assertion he placed on Hansard a mass of figures, and challenged anyone to controvert his statements. I hold in my hands the public accounts for 1925 and I ask hon. members to turn to page 46. There we find that on March 31, 1922, the debt was $2,422,135,801.73. The right hon. gentleman gave us the exact figures brought down to date, not the figures which were presented by the Minister of Finance but those figures corrected by him, and here they are, in order that there may be no misunderstanding: $2,391,000,000. So that to-day we are said to have a debt of $2,391,000,000, whereas on the 31st day of March, 1922, we had a debt of some $2,422,000,000. That is the real state of the public accounts as disclosed by the records and the speech of the Prime Minister. But it is not important to add together what the income may have been and deduct from it what the expenditures may have been; the cold facts are that in the next column it is shown that in the year 1922 the debt increased by $81,000,000 in round figures; in 1923 it increased by $31,000,000, making a total as you will
The Budget-Mr. Bennett

observe of $112,000,000. From that we deduct $35,993,593.86, the decrease in 1924; $345,589.29, the decrease in 1925, and this year's reductions, which are said to be some $33,000,000. Adding those together we get a total of about $69,000,000 against additions to the debt of about $112,000,000 leaving a net increase of $43,000,000. Those are the facts.


William Lyon Mackenzie King: Does my hon. friend dispute the accuracy of the figures I gave with respect to the reduction in expenditure, as found on page 44 of the Public Accounts? I was talking of the public expenditure when I quoted these figures.


Some hon. MEMBERS:: Order, order.


Richard Bedford Bennett: I must protest, Mr. Speaker; this is the second or third time the right hon. gentleman has interrupted in this way.


Hewitt Bostock: The right hon. gentleman will please put his question.


William Lyon Mackenzie King: Will my hon. friend-who is now speaking about the public debt; I was speaking of expenditure-say that the figures I quoted as to the revenue and expenditure are not exactly as set forth in the Public Accounts?


Richard Bedford Bennett: I hope the right hon. gentleman does not think we are as gullible as alll that. If, when the government came into power, the debt of this country was a certain amount, and to-day it is more than that, what is the result?


William Lyon Mackenzie King: May I ask another question?


Some hon. MEMBERS:: Order.


William Lyon Mackenzie King: I think I was courteous to hon. gentlemen opposite when they asked me questions, and I am entitled to the same courtesy. May I ask my hon. friend if the figures he is giving the House at present do or do not include the amounts paid out for the Canadian National Railways and the Canadian Government Merchant Marine?


Richard Bedford Bennett: Of course they do not, except to the extent that the direct obligations were included; they do not include the indirect obligations at all. I am coming to the railway situation in a moment, and when I get through with that I suppose the right hon. gentleman will! have some more questions. Let this country and this House be under no misapprehension. When the right hon. gentleman came into power the debt of this country was as I have indicated, 
and to-day it is greater. What interest have we in income and expenditure if at the end of the period of time the obligations of this country, apart altogether from its indirect obligations with respect to the railways, are more than they then were? Let there be no misunderstanding in that respect; these are the facts.
I do not propose to go into the question of income and expenditure except to point out that in the year 1920-21 the government of the day determined that at all hazards it would balance the budget. You will observe that for the first time in the history of Canada the government then collected more than $400,000,000 in revenue. That will be found at page 45 of the Public Accounts, the exact figure being $436,292,184.41. In 1922, in consequence of certain remissions of taxation, that was reduced to $382,000,000, but in the year in which this government had full control, in 1923, it exacted from the people $403,000,000, and the next year $406,000,000, so that of the three times in the history of this country in which over $400,000,000 was extracted by way of taxation from the people of this country, two of them were occasions on which the taxes were imposed by the government of the right hon. gentleman opposite. That is the position", and notwithstanding this fact, the condition of the national finances is as I have indicated from the Public Accounts, and not otherwise. So much for the national debt situation.


William Lyon Mackenzie King: May I interrupt my hon. friend for a moment? He has referred to page 46. Unfortunately I had not the opportunity to look at page 46. I do not think my hon. friend wishes to mislead the House, but will he say whether I am wrong in this? On page 46 of the Public Accounts, in the fourth column is given the net debt of Canada, and for the year 1922 that is shown as $2,422,000,000, in round figures.


Richard Bedford Bennett: That is what I say.


William Lyon Mackenzie King: In 1923 the net debt is given, in round figures, as $2,453,000,000; in 1924, $2,417,000,000; and in 1925, $2,417,000,000. Those are the figures that are given there, and the last two years show a very distinct reduction in the net debt of the country.


Richard Bedford Bennett: I said all that, but I am pointing out that if you take the national debt of this country for the year in which hon. gentlemen opposite assumed control in this country and the national debt to-day, and if you take the deficits on the one hand and the surpluses on the other, you will

The Budget-Mr. Bennett
observe that this country to-day is worse off than when they came into power.


William Lyon Mackenzie King: I shall not interrupt my hon. friend again, but may I make this one observation?


Richard Bedford Bennett: If it is a question.


William Lyon Mackenzie King: Was not the year we came into office the year when he and his friends were in office for nine months, and this government for only the other three months?


Richard Bedford Bennett: My right hon. friend is permitting his feelings to get the better of him.


William Lyon Mackenzie King: Not at all.


Richard Bedford Bennett: I said 1922. That, of
course, was the fiscal year for which we had control-at least, I was not here, as the right hon. gentleman knows. At any rate I tried to give my hon. friend the benefit of that. I took the succeeding years as well. I took the surpluses on the one hand and the deficits on the other, and took the debt, and showed what was the difference in the national debt of this country.
My right hon. friend has claimed great credit to the administration for having created what he called wider markets. Wider markets for whom? Will any hon. gentleman opposite deny that every trade treaty that has been negotiated by this administration since it came into power has resulted in increasing the trade of that country with us and decreasing the trade of this country with them? Wider markets? The United States, in their official bulletin issued in November, 1924, pointed out that every revision of the tariff in this country under the present government had been a revision downward, and that the effect of revising it downward had been to increase the trade in manufactured goods of the people of the United States with Canada, with a corresponding loss to our manufacturers in this country. Talk about your treaty with the West Indies, or about your treaty with France or Italy or Australia. The cold-blooded facts are these: We have increased the trade these countries have done with us, but we have lessened the trade we have done with them. That is the position. Hon. gentlemen opposite get up and tell this House that this government is widening markets in this country. Of course, you are widening them; you are widening them for our competitors, for those countries who are sending out commercial agents to every part of the world. You are widening them for the United States, increasing the sale of their products to us, and diminishing our sales to them, with corresponding loss of work for our own people. So much for that.
Then, arising out of that matter, my right hon. friend referred to the great reductions that had been made in the duties on agricultural implements, and to the decrease in prices with respect to them. That, he pointed out, is a wonderful thing accomplished for this country. But, Sir, I will point out that the prices of implements in western Canada at least are not any less than they were before this tariff was reduced if you deduct the sales tax and adjust your prices accordingly. What happened? Let us look this thing fairly in the eye. A colleague of the right hon. gentleman whom an informed electorate rejected in Durham cried almost in tears when the government reduced the duty on agricultural implements, and further, if the right hon. gentleman will induce Mr. Massey to withdraw the privilege that he attached to a letter he wrote to the right hon. leader of this opposition, so that the letter may be given to the people of this country, we shall have a clear understanding of what he thought of those reductions in the tariff. Why, Sir, what happened then? Mr. Massey, the president, and Mr. Bradshaw journeyed to this city when the duty was being removed, and told the government of the day what the situation was. Ruin staring them in the face, they said; workmen who had been with them for years thrown out of work. And the government did what? It took off the sales tax, and it made free the materials that they use in the manufacture of their machines. That is what the government did. And the Massey-Harris Company is better off to-day and actually is enjoying higher protection than ever before. I warn my friends to the left-Beware 1 The government that yielded to the importunities of Mr. Massey, the government that put upon the free list all the materials that are used in the manufacture of implements, the government that did these things is now playing with this automobile tariff, and the people of this country who have been made to believe that this government is going to strike a blow at protection will find out before very long that the automobile industry will have a higher rate of protection than it ever had.


James Alexander Robb: Then why delay the process?


Mr. POWER:: What are you complaining about then?


Richard Bedford Bennett: Because of the duplicity of this government.


Charles Gavan Power: The .people won't mind the duplicity if they get lower prices.
The Budget-Mr. Bennett


Richard Bedford Bennett: The hon. gentleman
thinks that national honour can be bartered and sold for dollars and cents. I say it cannot, and before I conclude I hope to show to this House, and peradventure to the people of this country, that to continue longer this form of hypocrisy is to put a premium on organized cant, and is saying to the people of this country: "We can fool you by buying you with your own money." There are some, I daresay, who will applaud that idea as being sound. I refer to my hon. friend from North Bruce (Mr. Malcolm) and to my hon. friend from Quebec South (Mr. Power).


Mr. MALCOLM:: I did not applaud.


Richard Bedford Bennett: You looked as though you would like to. Let me proceed a step further. What has been the result in Nova Scotia? The two great factors that are to be considered in the manufacture of implements are steel ingots and pig iron. Do you realize what the position of this country was before the right hon. gentleman passed his tariff and put these materials on the free list? I have in my hand the figures with respect to the iron industry taken from the Iron Age, with which I am sure most hon. gentlemen are familiar and you will observe that the way in which they compute is from an index number. They take 100 as representing the monthly average production of pig iron in 1913 in the United States and Canada. In 1914 the figure stood at 69 for Canada and 75 for the United States.
I will skip the years 1915 and 1916 when production went up, and will come to 1919, In that year the figure in the United States was 100 and in Canada 81. The next year the figure went up to 120 in the United States and in Canada to 96. In 1921 it was 54 in the United States and 60 in Canada. In 1922 the figure was 87 in the United States; in Canada it had shrunk to 38. In 1923 the figure in the United States was 130 and in Canada 87. In 1924 when this beautiful scheme devised to please Mr. Massey became effective I find that in the United States the relative number was 101 and in Canada it was 59. In 1925 it was 118 in the United States and in Canada 58. I have the various months right down to 1926. We find that in January of this year the figure was 130 in the United States, and that was 30 over par. In Canada the figure was 68 or 32 under par. In February the figure in the United States was 114, or 14 over par as against a figure in Canada of 60, or 40 under par. In the month of March the figure in Canada was 64. The figures in the United States for that month have not been compiled, but they were over par. That is what happened. We have an 
industry on the verge of bankruptcy, one of the very greatest industries that ever can be established in this country. Protection has been taken from it and as a result the United States blast furnaces and steel mills are running to capacity, while the Nova Scotia mills are being ruined and are on the verge of bankruptcy. These are facts from which there is no escape. It is pointed out that the result of this has been to remit $3,000,000 to the Canadian farmers, representing the sum which it is asserted the Massey-Harris Company unjustly extorted from the people of this country, nevertheless that same Mr. Massey is chosen as a leader in Israel and the colleague of the right hon. the Prime Minister.
Then I turn to steel ingots, and I find the same position relatively. Starting with the index number of 100 I come down to the year 1924 and I find that in the United States the number was 122 and in Canada 62. In 1925 the number was 146 in the United States and 72 in Canada. And if you take the record month by month you will find this is what happened: Just as soon as these materials were placed upon the free list just as soon as Canadian development stopped, just as soon as the tariff was remitted against the importations for these purposes, our production lessened. The index number in the month of June in the United States was 81 and in Canada 79, only two below. In July the number was 74 in the United States and 60 in Canada; in August 101 in the United States and 26 in Canada; in September 112 in the United States and 21 in Canada; in October 123 in the United States and 23 in Canada; in November 123 in United States and 26 in Canada; in December 141 in United States and 30 in Canada. We have 3teel ingots in January of this year in the United States at 165 or 65 over par; in Canada down to 79. In February the number was 150 in the United States and 61 in Canada. In March it was 165 in United States and 68 in Canada. There is the tale.


An hon. MEMBER:: There is the story.


Richard Bedford Bennett: Yes, there is the 3tory. And what do the people of Nova Scotia, what do the people of the lower provinces, get for it? What they receive is a royal commission. Massey gets a seat in the cabinet; and the Prime Minister dare not have made known to the people of this country the communications sent by Mr. Massey to my right hon. leader in which he stated what he thought of the right hon. Prime Minister and his government when they reduced the duty on agricultural implements.

The Budget-Mr. Bennett
Furthermore, paints and varnishes, materials that go to furnish employment for Canadians, are coming in free, and tending to reduce the number of people working in the agricultural implement industry in Canada. I point out that the number of these employees, greater though it is now than in 1921, is thousands less than it was in 1919. In the factory which the Massey-Harris Company owns at Batavia they are making more money than ever today, and this money is going into the exchequer of the Canadian company. But in order to accomplish that result manufacturing is being carried on in the American plant; the Canadian plant is becoming a mere assembling plant for American materials. They manufacture in their factories in the United States and buy in the open market the materials required for manufacturing purposes which are used in their factories in this country. These materials are shipped across to Canada and assembled here. That is the story with respect to the effort to reduce the duties on agricultural implements.	The price of
agricultural implements has not been reduced except to the extent of the sales tax. What has happened is that injury has been done to that great enterprise, the agricultural implement manufacturing business in Canada, to say nothing of the injury resulting from the destruction of our iron and steel industry, the lessened demand for Canadian paints and varnishes and all those other materials that enter into the manufacture of the finished product.
But that is not all. The right hon. Prime Minister stated a moment ago-I do not know what, induced him to do it-that the right hon. leader of the opposition had pointed out that the result was going to be tremendously injurious to Canada.. At column 2106 of volume 3 of the debates of parliament for 1924 I find these words from the Right Hon. Mr. Meighen:
Now I am going to make a few remarks on the present changes.
That was after the King government had swept away the sales tax and made various changes in the duty.
They embrace reductions on agricultural implements; reductions, however, far more serious in the case of those other manufactured .products which enter into the construction of such implements; reductions as well in mining and logging machinery. There is a reduction in implements of some four per cent on the main items, five per cent on some others, and as high as even ten per cent. Reductions are given however on what are called raw materials but what are really manufactured materials produced by other supplying plants. The importation of these materials is allowed virtually free, wholly free in so far as pig iron and steel are concerned, and almost free as respects all
other commodities. Just what the effect is to be on the agricultural implement industry I do not undertake to say; time will tell. I do not presume that very great change is made as respects that single industry; but the .penalty is heaped on others in order that hon. gentlemen to my left may be enticed.
Those were the words of the right hon. gentleman. He did not for a single moment raise a blue ruin cry or that the changes in the tariff would mean destruction to the industry. He said that he could not say just what the result would be, but he added: You strike at the whole fabric of protection, you destroy these smaller industries that are supplying component parts to the larger industries, and you are giving employment to thousands of workmen in foreign lands that they may be able to partly manufacture or partly process goods that are sent into this country to be completed and afterwards sold to the Canadian people. That is what has happened in the case of the agricultural implement industry. The manufacturing is carried on in the plant at Batavia. The plant at Toronto has become more and more an assembling plant. Let us look these facts squarely in the face; let us be under no misapprehension with respect to the situation. That is what is being done in the case of one of our greatest industries. In the United States it is said that steel is king. That means that the steel industry is so important to the people that there is a direct relation between the prosperity of the steel industry and the prosperity of the country as a whole. And in the United States to-day you will find the prosperity of the steel industry reflected in the prosperity of the people themselves.
But in this country the pig iron
10 p.m. and steel industry has fallen to the condition I have mentioned, with the result that in Nova Scotia the desire has been expressed for a plebiscite on secession.
The right hon. gentleman closed his speech with a plea for national unity.


An hon. MEMBER:: What a joket


Richard Bedford Bennett: National unity! While with one hand destroying our industries and with the other giving our raw materials to the manufacturers of the United States and permitting them to come in here with their finished products. That is what they call national unity. National unity in their dealings with the Maritime provinces which have made such a contribution to the country with their vast resources! Do hon. gentlemen realize that the people of the great republic to the south of us regard those deposits which are capable of making pig iron and steel as

The Budget-Mr. Bennett
case of all these partly processed materials, has not the time come for us to consider what our exports mean to us? Then there is a point that should never be lost sight of when we are shipping out of the country these vast quantities of pulp and paper, namely that we are denuding our lands of their forests .and, vihat is more, destroying capital that cannot be replaced. This is a serious matter. What is the reason our friends from the United States come here and establish industries? Because Canada is the greatest depository of raw material now available on the continent. Should we not therefore carefully ponder the situation and try to understand why it is that other countries are preserving their forests while we are allowing ours to be exploited to our very serious disadvantage? These are questions that call imperatively for consideration. When I say that the major part of our exports consists of the two items I have mentioned, let me add that it looks as though the limit will soon have been reached so far as our exports of wheat are concerned. This is a grave matter and one that is of vital moment to the country from which I come. The limit of the absorbing power of the purchasing countries of the world to which we ship our wheat and cereals is nearly reached; how nearly I do not know, but I do know that from an analysis of the figures made by men in the trade it is quite clear that with the effort being made to stimulate the production in European countries, and with the possible come-back of Russia at no distant date, we have nearly attained the maximum so far as our exports of grain in Western Canada are concerned. If that be so, then at once there arises a question of the first magnitude which demands the serious consideration of the government. I mention this in passing, because it must be clear that in Great Britain, France, Germany, Spain and other countries a most determined effort is being made to-day to do all that can be done to stimulate production and to obviate as far as possible any reliance upon other peoples for food supplies. The effect of shipping out all this grain rather than manufacturing it into flour in our own country, and the present condition whereby the foreigner gets the benefit of these exports to the extent he does, is reflected in the invisible claims that are made upon us. I will not argue this point to-night, but I may tell the Prime Minister that if only he will look closely into it he will be forced to a conclusion wholly different from the one he has expressed.


Charles Gavan Power: Does the hon. member suggest that the present government could prohibit the exportation of pulp?


Richard Bedford Bennett: I am satisfied, in the language of Mr. Gladstone, that the resources of civilization are not yet exhausted against its enemies, and it would be easy for this government to pass legislation controlling the exports of raw material from Canada


Charles Gavan Power: What resources does my hon. friend refer to?


Richard Bedford Bennett: Again, with Mr. Gladstone, I decline to prescribe until I am called in. So much for immigration and trade, and so much for the public debt.
Now let me consider questions more immediately dealt with in the budget. One of these is the income tax reduction and the reduction in the duty on automobiles. The Prime Minister this afternoon challenged the opposition in reference to its amendment, and rather questioned the sincerity of the motion. He suggested that the amendment did not ring true to the principles the opposition espoused and the principles it enunciated during the election. He added that at least during this session we had not endeavoured to indicate our reliance upon the maintenance of a general protective policy in this country. I find by reference to Votes and Proceedings No. 17, at page 58, that the leader of the opposition (Mr. Meighen) moved in amendment to the Speech from the Throne the following motion:
That the following words be added to the said Address:
"We desire respectfully to express regret that the Speech from the Throne gives no indication of policy designed to enlarge the volume of employment in Canada, and particularly to give to the producers of farm products, coal and other primary products the advantage they are, under present world conditions, entitled to enjoy in the market of this country."
Could anything be clearer than that? I will admit that my right hon. friend at that time was inadvertently absent from the Jlouse, but at any rate the fact is that the journals of this House show that by this amendment the party on this side of the House asked for protection. The amendment was negatived by a vote, I think, of 115 to 125.


William Lyon Mackenzie King: May I say to my hon. friend that nothing could be clearer than that the word "protection" does not appear in the amendment?


Richard Bedford Bennett: I know it is quite unnecessary to use the word "protection" to carry its meaning to the right hon. gentle-

The Budcjet-Mr. Bennett
man. In England, for instance, it is called what? The safeguarding of industry. We desire that Canadians should have an equal opportunity to work out their destiny and develop the resources of their country. You may not use the word "protection", but the only method by which you can secure that growth of trade, by which you can safeguard the industrial life of this country, is by the adoption and the maintenance of a uniform principle of protection. It is perfectly true that the word "protection" is not there, and yet every speech made upon that amendment was a plea to the government to embark upon a policy of defined and maintained protection. Those speeches were made alike by members from Ontario and from British Columbia, by members representing the fruit growers of Nova Scotia and the lumbermen of New Brunswick, by members representing the artisans in the industrial centres, by members representing all walks of life and all trades-they made speeches upon that amendment in which they pleaded for the safeguarding of the industrial and agricultural life of this country, for the protection of the fruit industry and the vegetable industry from the encroachment of our neighbours, in order that we might be able to bring back those 500,000 people from the States, and, bringing them back, to keep them in this country. The greatest problem that confronts Canadian men of thought and vision to-day is to keep in this country' the people we have here and to add to their number. That, Sir, can be done in one way, and one way only-by giving our men and women work to do. You cannot give them that work unless you protect them against the unfair mass production of their richer and more powerful neighbours.
Let us go a step further and look at what happened with respect to our balance of trade with the United States. My hon. friend referred to the balance of trade in this country. I am getting away from the main line of my argument, but I left out something a moment ago, and my remarks must necessarily be disjointed because I did not have any time to collect information while my right hon. friend was speaking. What happened? Last year we sold to the United States $474,890,000 worth of goods, and we bought from them $609,820,000 worth. And as was pointed out in official documents issued by the government of the United States, our tariff reductions have meant an increasing demand in this country for their manufactured goods. The result is that that balance of trade adverse to us represents over $100,000,000 in money that we gave to our powerful
mass-producing neighbours to the south and that we could have spent at home in making Canadian goods. Until that fact is ground into the hearts and minds of the Canadian people and they realize it- as I believe they are beginning to-and until a government sits on the treasury benches which will give effect to that principle, the movement of our people south will continue. It is bound to. It is simply the attraction of the large body for the small. The great industrial hive of Montreal is affected by it. Ontario, our foremost province industrially, has felt it as no other province has. This afternoon my friend referred to what had taken place in the city of Branford. The best answer to that is the absence from this House of the member who formerly represented the city of Brantford. I am sure my friend was wrong in what he said respecting the Cockshutt Plow Company. They are going to make a first payment on the arrears of their preferred dividends, not on their common stock. And according to the record in the Secretary of State's office the Massey-Harris Company recently underwent a recapitalization by which its 250,000 shares were converted into 125,000 preference and 125,000 common-very greatly, it is alleged, to the detriment of some of the smaller shareholders; a matter about which I express no opinion, being without any knowledge respecting it. But I think my friend must be entirely mistaken if he assumes for a moment that industrial activity in Canada is spelling any form of prosperity for those engaged in it, for reasons which I shall presently point out.
I was proceeding to discuss the question of the reduction of duty on automobiles, upon which the right hon. Prime Minister laid a great deal of stress. It is a perennial subject; it was discussed in this House last session and the session before. I ask hon. members to bear with me while I point out two or three observations that I think worthy of their attention. I ask the House for a moment to look at what transpired in the course of the debate upon this subject. I find that the same motion made last year was again moved this year, and I notice that the Minister of Finance on that occasion made some very pertinent observations. He said:
If his statement to-night is correct it would seem that there has been some United States capital invested in the business since then. But without going into that feature, I would remind the hon. gentleman that no matter where the capital comes from, the industry gives employment to Canadian labour. There are 78 plants engaged in the manufacture of automobiles and their accessories in Canada, employing Canadian labour,



The Budget-Mr. Bennett
and subject to Canadian taxation, a considerable amount in taxes finding its way into the Canadian treasury.
He went further, he added:
I submit to hon. gentlemen that the automobile is a fair source from which to collect revenue.
As I said in opening it is on the eve of the budget, and the government must have revenue from some source. Demands come to the government from those who desire expenditure for new railways, the extension of existing railways, harbour improvements, bridges, grain elevators and other public works-these alternating with requests that we part with various sources of our revenue. If we are to meet our national obligations-the interest on the national debt, the pensions that we owe to our soldiers and the widows and orphans of those who will never come back, and the cost of administration, we must have revenue from some source, and if you take away the revenue we are getting from automobiles we must secure it by imposing duties upon some other commodity.
I ask my friends to the left to keep that in mind. Rejoicing though you are to-day on the reduction of the duty on automobiles, remember what the Minister of Finance said on that occasion-and he is still holding that portfolio-that if the duty on automobiles was lessened he would have to get the revenue from some other source. He is not getting it this year; he is going to fool us and get it next year. That is the position. The hon. member for Mackenzie (Mr. Campbell) in the course of some observations said that a 10 per cent reduction in duty might be reasonable on the lower priced cars, leaving the duty unchanged on the higher priced cars. Then the vote was taken on March 16, 1925. This is an interesting matter. The House, unable to get more detailed knowledge with respect to this matter, having in fact no detailed knowledge, groping in the dark, some members believing the duty too high and some believing it to be too low, and all desiring to receive further knowledge, were implored by the Minister of Finance to wait until the budget came down. That was what he pleaded for. The right hon. Prime Minister this afternoon said that the Conservative party in caucus assembled had not dared to frame a resolution with respect to automobiles. He also said that the reason the government had not proceeded with the tariff commission in advance of the budget was because they were unable to get the gentlemen they desired and therefore had to deal with the matter before it could be referred to the commission. I will tell the House why this reduction in the automobile tariff took place. It did not take place because they could not refer it to the tariff commission; it did not take place because the Progressives alone wanted it; it took place because those who supported it could not trust the Prime Minister and wait for the budget. They did
LMr. Bennett.l
that last year and were deceived, so they insisted on it this year. That is what happened, if hon. gentlemen would like to know, and I venture to say that the Minister of Finance was not any too strong on incorporating the reduction in the automobile duty into his budget without a reference to the tariff commission.
The Prime Minister referred to what took place in the Conservative caucus. So far as I know the matter was not discussed, but there are rumours which seem to be fairly well founded, in view of what happened, that those from Saskatchewan and Quebec and other parts of Canada who desired a reduction in the automobile duty said, "We will not wait for the budget; we were asked to wait last year and nothing happened; we are taking no chances this year, but we will insist upon it in the budget itself," and that is the reason it is there.
Now let us go a step further. The right hon. Prime Minister this afternoon gave as a reason for not'submitting this to the tariff board the fact that he had not time to do it before the matter had to be dealt with in the budget. Let us look at the facts. I find the Minister of Finance reported in the Montreal Gazette of October 13, 1925, as having said:
We say that neither those who ask higher tariffs, nor those who ask lower tariffs should be ignored, but we do say that before ruling for or against either, a case must be made out, and proof given to a board of competent advisers. . . .
Then I find that the right hon. Prime Minister used practically the same words, only in his case he promised to have a woman on the board. He said:
If someone comes from the prairies and says we sell in a free trade market and buy in a protected market and ask for a policy of free trade, no government could do it, because it would create discontent in Ontario and Quebec. Similarly if a group of men came from these provinces and asked the government to shut out outside goods by a high protective tariff, could a government listen to that?
He says they could not do so, and then continues:
We are not a cabinet of supermen,-
That is news.
-but we can get together men who are experts. We have decided to form a board to consider all tariff schedules, and to call for advice to the board representatives of manufacturing, of commerce, of agriculture, of labour, and also of the women, so that the homes would be dealt with fairiy. We will consider the tariff with the advice of this board.
That is what the Prime Minister said when seeking the support of the electors of this country. Then again, speaking in Montreal, he said:

The Budget-Mr. Bennett
The government believed that since many technical matters were involved it was well that there should be formed a body composed of the experts in the government's service, with an advisory board of representatives of the various interests, and including a woman, who would study tariff matters, and whose recommendations would be brought to the study of the cabinet. He did not believe the government should seek to be arbitrary or be governed by dogma in such a matter.
In the city of Quebec he repeated the same thing.
That board would be above partisan appeal or sectional interest. It would study the situation on its merits and its recommendations would be made to parliament direct. . . .
Then further:
It was his intention also to see that a woman was named because he thought it only meet and proper that the growing importance of women's interests in the life and work of the nation should be given the recognition it deserved.
I could read more of the same thing but, Mr. Speaker, as in many other matters of this character, the Prime Minister has seen fit to forget his promises and has remembered only the power which he has attained by making these pledges and then repudiating them.
There was a distinct promise to the electors of this country that there would be a tariff board. The Conservative party promised the same thing in the speech made by my right hon. leader in 1925.' Not only was a tariff commission promised, but one in which the evidence would be open to the public, in order that the public might have the fullest information with respect to changes in the tariff. That was the promise given by the Conservative party. We realize, as every man in this House must realize, how difficult it is to understand fully the complex operations of the tariff, and to come to an adequate and proper conclusion with respect to how far-reaching its ramifications may be. For instance, during the recent election I told the electors of the constituency in which I live, that, in my private opinion, the tariff on automobiles was higher than it should be, but I said I did not pretend to be able to speak with authority because I had not the requisite or necessary knowledge. But I said I knew that the party to which I belong had pledged itself, if returned to power, to obtain the appointment of a board to receive the evidence and place it before parliament in order that its recommendations might be understood fully in the light of all the evidence adduced, and in order that parliament might arrive at proper conclusions. What happened? The people realized that that was so; they believed the statements made by this government when they said that was what they proposed to do. This govern-14011-223J
ment promised the tariff board before parliament met, and when parliament assembled the Speech from the Throne indicated that a tariff board would be appointed.
This afternoon my hon. friend pointed out that the words "not before" were used in the amendment, but I point out to him that the Speech from the Throne contains stronger words than those. It says that changes in the tariff should be made "only" after the fullest examination of their bearing upon both primary and manufacturing industries, and that representations requesting increase qr decrease of duties should be made the subject of the most careful investigation and report by a body possessing the qualifications to advise the ministry with respect thereto. "A tariff advisory board will accordingly be appointed forthwith." You will notice that it says "only"-


William Lyon Mackenzie King: After investigation.


Richard Bedford Bennett: Surely, by an advisory
board. That investigation has not -been made because tihe board was not appointed, it is said, in time to conduct it.
Now let us go a step further. Surely my right hon. friend knows that in the United States there exists a similar advisory board. He also knows that when the first tariff was passed after the Republican party last came into power a duty of 30 cents was imposed against Canadian wheat. Then, when the new tariff was prepared, the duty was increased to 35 cents, and the fanners of the western states said it was not high enough. What happened? An investigation was held in Alberta, Saskatchewan and Manitoba, and -as a result of that investigation the President increased the duty to 42 cents. There was no necessity to call -congress together to do that. I wonder if anyone in this House thinks for a moment, or if this country will be deluded into the belief, that this government could not have passed legislation to reduce the duty on automobiles without calling parliament? Is anyone fooled by that sort of cant, or deluded by that talk? What was done when we reduced the duty on wheat? An order in council was passed reducing the duty on American wheat, and automatically our wheat went there free. How is it done in England? After an investigation has been made it is carried out by parliament in some instances, and in others it is not. This country -could have passed legislation by which power would have been given the Governor in Council to reduce the duty on automobiles if the investigation held by the advisory board so warranted. That is the position.
The Budget-Mr. Bennett


James Alexander Robb: Willi my hon. friend say that under the order in council affecting the duties on wheat, passed by the previous government, there was no Canadian wheat shipped into the United States?


Richard Bedford Bennett: Why, no. What I am
saying is that under the War Measures Act at that time we passed an order in council the effect of which was to let wheat come into this country from the United States free, and as a result of a reciprocal arrangement ours went in there free.


James Alexander Robb: I am asking my hon. friend
if any Canadian wheat went into the United States, or if any United States wheat came in here?


Richard Bedford Bennett: No United States wheat came in here so far as I know, but some of ours went in there, in the vicinity of $10,000,000 worth. I am pointing out to my friend that surely this parliament could devise legislation to provide for a reduction in the duty on automobiles if the investigation warranted, and no member of this House should be put in the invidious position of being called upon, without adequate investigation, to arrive at a conclusion on a question of such serious moment to the people of this country.


James Alexander Robb: Let us be clear. If during
the interval after prorogation, between now and the next parliament, the tariff board should recommend to the government that we reduce the duty on cotton, would my hon. friend endorse that proposition?


Richard Bedford Bennett: Not unless the legislation so provides. II pointed out that existing legislation does not confer that power upon the Governor in Council, and my hon. friend chose cottons in order that he might strike terror, I suppose, into the heart of some people whom he is very anxious to placate, and has always been very desirous of doing so. It is something he understands fairly well. It was very astute of him to suggest cottons, but I do not think it will have the desired effect. If this parliament so desires, it can do what has been done in the United States. I have the statute under my hand. The Governor in Council could be clothed with the same powers as the president of the United States, and upon a report made to the Governor in Council, upon the evidence being submitted, the government could either increase or reduce the duties if they so desired. That is the point I desired to make, and I desire to make it abundantly clear that any excuse given for breach of faith, for breaking a solemn promise made by the represents-
IVIt. Bennett.]
tive of the sovereign in this country, is wholly without warrant and without merit in view of the use of the word "only."


James Alexander Robb: Does my hon. friend advocate that we should follow that policy?


Richard Bedford Bennett: My right hon. friend this afternoon said that we were simply raising a matter of preeedure. That reminds me of tire story of the Irishman who was condemned to death, that being the penalty fixed by the statute for his offence, and he complained that he was being hanged merely as a matter of form. I am not advocating any course. I am giving the answer which must be in the mind of every man to the paltry excuse given by the Prime Minister, that we could not have this board function because it was not appointed in time. Anybody knows that if the necessary legislation had been desired, the thing could have and would have been done; the legislation could have been passed.


Mr. YOUNG (Saskatoon):: Does the hon.
member, or does the Conservative party advocate that such legislation be passed?


Richard Bedford Bennett: I have pointed out to
the Minister of Finance that it was not the function of an opposition, in answering the statement made by the Prime Minister, in answering the excuse he gave-which was absolutely without merit-for not referring this matter to a tariff board, to state what one would do. But I say this: If the Conservative government had been in power, it would have neither increased nor reduced the duties without first referring the matter to the tariff commission as had been promised.
I put this to the hon. member for Brandon (Mr. Forke). He has farmers in his constituency upon whose homes mortgages are being foreclosed, I am sorry to say. That is going on in the provinces of Alberta and Saskatchewan. If the mortgagee made a promise by which he said, "I will not foreclose your mortgage until next year. I will leave the matter in abeyance until then, and will not take any proceedings in the meantime," and then all of a sudden he violates his solemn word, goes to the judge, gets an order against the mortgagor and takes possession of the farm, what would you think of him? By a series of subterfuges, and by the use of language for disguising thought, you may endeavour to make the Canadian people believe that you made no promise to them, but in the Speech from the Throne you said that these changes should take place "only" after the fullest examination by this new advisory board. In the most solemn way known to our institutions you made that

The Budget-Mr. Bennett
promise to the people of this country, and in the face of that promise you have violated your pledged word and introduced a measure for reducing the duties without the question having'first been heard by the tariff board at all. You may argue as much as you like, but stripped of everything, the cold facts are there and speak for themselves. Then you go about and endeavour to arouse the passions of the people by making them believe that these rich manufacturers are profiting at their expense, that the people are 'being exploited. You do that in order to make them forget the main issue, in order to make them forget the broken word, the broken faith, the broken promise, and remember only the material benefits. Since when was honour to be sold for dollars?
Let me quote to you, Sir, a word from the hon. member for North Waterloo (Mr. Euler), who is good enough to listen to me. This is what he said in the town of Waterloo as reported in his own paper on the 26th of September last:
I voted against the government on the budget of last year, not because of any great injury from the slight reductions in tariff (for no industry in Kitchener or Waterloo was injured), but because I did not like the adoption of a policy of haphazard changes.
Those words I commend to my hon. friend the Minister of Finance and to this government. I ask the Minister of Finance now, on what considerations, on what investigation, in view of the promise given in the Speech from the Throne, did he arrive at the conclusion he has stated? The great Gladstone-and whatever else may be said this at least has always been true, that the expositions of financial matters by Mr. Gladstone are still treated as models upon which Chancellors of the Exchequer pattern their deliverances-had something to say about public sentiment in a speech he made in 1860. My hon. friend the Minister of Finance, in moving the new automobile duties referred to public sentiment, and I desire particularly to direct attention to the exact words he used in that regard, because they are all important. He said:
There is a pronounced sentiment in this country in favour of a reduction dn automobile duties.


An hon. MEMBER:: So there was.


Richard Bedford Bennett: Assume there was. Is
it a government at all that yields to sentiment? Such a one is not worthy of the name of government. Listen to the words of Mr. Gladstone when delivering his great budget proposals in 1860, when he proposed to reduce the income tax:
Fot that public feeling we have not only respect, but sympathy; while we do not admit that it is our duty, as persons charged with the conduct of
public affairs, to shape our measures according to any feeling or sentiment whatever, until we have examined the practical form which they are to take, and tried it in the best light of our understanding.
I commend that to the Minister of Finance. I saw many thousands, at least two thousand men and women, gather in front of this parliament building. The practical operation of these tariff changes so filled them with fear of the ultimate result upon their lives, in their homes and in their factories, that they journeyed to this city to present to the government their case. This government heard them, gave them fair words, and they departed. Since then we know that a great effort has been made in many sections of this country to induce the government to reconsider its proposals. It has been said that the government does not propose to do so. I recall history again. Mr. Disraeli pointed out to the farmers of England, to the country squires, that Mr. Peel was getting ready to let them down. Now, in the case of agricultural implements in Canada, remember what happened. The government was adamant. Mr. Bradshaw and Mr. Massey pointed out the ruin that confronted them. No change resulted, but finally, not directly but by removal of the sales tax, by making free the materials that enter into the construction of the machines, the government gave them a higher protection than they had heretofore enjoyed, and they are more prosperous by reason of it than they were before. I ask hon. gentlemen to my left who cheered so lustily when the reduction of the duty on automobiles was announced to pause and ask themselves whether or not they will be once more the victims of deception.


Mr. EVANS:: Will the hon. gentleman
permit me to ask him a question?


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: Certainly.


John Evans: I was going to ask the hon. gentleman a question. I see nothing to laugh at.


An hon. MEMBER:: You are so funny.


John Evans: Does the hon. gentleman know that this question was discussed in this House at the last session of parliament, and that it passed by the aid of his own party seeing that six hon. members in their ranks voted for it?
Mr, BENNETT:	My hon. friend the
member for Rosetown has not appreciated the question. I pointed out that because of the lack of definite information-obtained only through the methods the government sug-
The Budget-Mr. Bennett

gested and the opposition had also suggested -as to the effect of the operation of the removal of the tariff on automobiles or its reduction, that hon. members voted in accordance with their views without the information that might be forthcoming. I also pointed out that a promise was given by the government in the Speech from the Throne that this reduction would not be made until after investigation. In violation of that promise, and in breach of the plighted word of this country as represented by the government, the reduction has been made without an investigation. I say further that in private life no man would for a moment tolerate such conduct.
Yesterday I was in New York and picking up one of the newspapers there I read that a great statesman of that country was endeavouring to define national honour. He said that national honour consisted in having the same regard for the obligations of the nation that you have in private life as man to man. I ask:	Is there a man in this
House who, having given a promise such as that contained in the Speech from the Throne, would dare break that solemn promise and call himself a gentleman of honour? Is a pledge given by this government to stand on no higher ground that a scrap of paper or the treaty of Belgium? Let us look this thing fairly in the eye. Is there one standard of honour for individuals and another standard for the nation? The Prime Minister pointed out the other day that he had a duty as leader of this House-not as leader of the government but as leader of the House-representing, as he did, for the moment, the people of Canada. I ask you, Mr. Speaker, would the Minister of Finance in the conduct of his business stoop to sucn conduct as that?


An hon. MEMBER:: 
Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: Hon. gentlemen need
not laugh. I put this question to them: If the bank that took a three months' note from you and lent you a thousand dollars on it the next day said. "We are going to sue you because we have changed our minds; we are going to make this a day note instead of a three months' note," what would you think of such conduct? Might is right, that is the theory, the old Prussian theory. When we have a majority a pledge is a scrap of paper. Mi^ht controls the situation; let us do as we please in this matter regardless of our promises. Hon. gentlemen opposite have pledged their solemn word. The pledge is there, they cannot change it. But the word that under our institutions was placed in the mouth of the representative of the sovereign counts for nothing. That representative must now be told that it was all camouflage, that it meant nothing, that it was just a play on words. That is all.

The Budget-Mr. Bennett
I	have here a little information that I am sure would be exceedingly interesting at least to some hon. members. I notice, for instance, that the reduction of the duty upon automobiles is going to be greatly to the benefit of this country, just as was the reduction in the duty on agricultural implements. The argument advanced this afternoon was this: Reduce the duties and you get more people at work. The country is more prosperous and everyone is happy. My hon. friend from North Waterloo (Mr. Euler) said he is against that sort of thing because it is a haphazard way of proceeding. I hope he has not changed his mind. Now let us see what the argument was this afternoon. It was that because in the case of agricultural implements you have alleged benefits, therefore in the case of motor cars you will have similar results. That is the argument, that or nothing. Well, if it means anything at all it means that this House is going to take the sales tax off automobiles and let all the raw material come in free. If it does not mean that it does not mean anything. Now let us know what has
happened. There was a gentleman
II	p.m. named Clifford who once sat in this
House, and he came from Oshawa. He visited Ottawa last week. He went back home and gave an interview to the press and what did he say? This is what he said, and his statements appear between quotation marks:
L. O. Clifford, former M.P. for Ontario who has just returned from Ottawa, where he went for a special conference with lit. Hon. Mackenzie King, Prime Minister, states that he had a long talk with the Premier and has the assurance "that Oshawa will be looked after".
"You can go back to Oshawa, and tell the manufacturers to keep their industries going," Premier King told Clifford, "You may tell the people that their interests will be looked after."


William Lyon Mackenzie King: What date is
that?


Richard Bedford Bennett: The date given is May
17th. He was here last week.


William Lyon Mackenzie King: I may say
that I have not spoken to Mr. Clifford for a week or more. I shook hands with him the other day when he came into my office with some other gentleman, but I never discussed the question of automobiles with him.


Richard Bedford Bennett: I did not say it was on
that occasion. Do not be hair splitting. Mr. Clifford says he came up to have an interview; that he had one, and that the Prime Minister told him that Oshawa would be looked after. He said:
You may tell the people that their interests will be looked after and the manufacturers can keep their industries going.


William Lyon Mackenzie King: I think I told him to go back and read the nineteenth chapter of the Acts of the Apostles.


Richard Bedford Bennett: I am so glad to see that my right hon. friend has become scriptural, because I think he will have to do much reading of scripture before he will find justification for putting in the mouth of His Excellency a statement which in a few weeks is repudiated.
I think there is a statement somewhere in the Bible-it may not be in the Acts of the Apostles-that by their fruits ye shall know them.


An hon. MEMBER:: Something about
Judas?


Richard Bedford Bennett: Not for a moment would I suggest him. Judas was a man of great capacity. I desire to point out that since the reduction in the tariff has taken place there have been nine bankruptcies in Oshawa and a prominent lawyer in that city tells me that during the twenty years he has practised there he has not known so much depression. It does not end there. We find from a great American newspaper the net result of this upon the community:
Buick Gets Canadian Order as Result of Reduction in Tariff
The first direct result in the automobile industry from the reduction in the Canadian automobile tariff was reported by the Buick Motor Company, a division of general motors, in the nature of an order for immediate shipment of 50 Buick automobiles to McLaughlin Motor Car Company at Montreal.
H. H. Bassett, president and general manager of the Buick company, in making public the information, stated that this is the first order for a finished car ever received from Canada by the Buick company.
The new cars, Mr. Bassett said, provided the opening to establish a substantial business for American automobile manufacturers in the Dominion of Canada.
In other words for the first time, by reason of this tariff which was not considered by the government in the manner promised, you have completed automobiles imported into the country, and that means just that much less work for Canadians. I do not mean that it is the first time completed automobiles were imported into Canada, but the first time completed automobiles ordered by the manufacturers of cars in Canada were imported into Canada-that is, distinguished from cars in a partly manufactured condition. What does it mean? It means that without regard to promises, with wholly inefficient and inadequate information, without regard to the subsidiary or allied companies, a tariff is placed upon the statute book lower than would have satisfied the hon. member for Mackenzie (Mr. Campbell) or lower than the hon. member for Macleod (Mr. Coote) was willing to suggest should be imposed, or lower than the
The Budget-Mr. Bennett

Minister of Finance was prepared to suggest. In order to make what would be a popular budget, you have repudiated your promise and put under your foot the Speech from the Throne as though it were a piece of paper. That is my view. I have always advocated that these whole problems should be studied and the duties revised as the facts warranted, and upon that I now stand.


James Alexander Robb: May I ask a question?


Richard Bedford Bennett: Yes.


James Alexander Robb: The hon. gentleman just stated that fifty Buick automobiles had come into Canada. The duty on these cars would be 27-^ per cent under the reduction. Does he think that duty is too low?


Richard Bedford Bennett: All I know is that any duty which gives an unfair advantage over Canadians to the great people to the south of us is a duty which is not sufficient. By that I am prepared to be judged from one end of the country to the other. Any duty that sacrifices Canadians for foreigners, whoever they are, is not an adequate duty, because it does not safeguard Canadian industry, it simply leaves Canadians to become hewers of wood and drawers of water for our neighbours to the south.


An hon. MEMBER:: Does the hon. member advocate a prohibitive tariff?


Richard Bedford Bennett: Yesterday I observed an advertisement of the Dodge Motors in New York. They have reduced the price of Motors, and they point out how they are able to do it: they state that it was by increasing production, thereby lessening the unit cost. That is the whole story. This country can never become a competitor of our great mass-producing neighbours to the south until we realize that essential fact. My hon. friend asked me if I wanted a prohibitive tariff, and my answer is that I want a tariff that will enable the Canadian manufacturer to go on producing his goods cheaper every year by reason of increased volume of production. For example, we have a repair shop in Calgary, and the overhead is say $6,000 a year or $500 a month. If they repair 500 cars per month it costs $1 a car, but if they repair 1,000 cars it is only 50 cents a car. If we can increase production by preventing competitors from coming in, we will reduce the cost by decreasing the unit cost and in that way we benefit the consumer. There are times when it is more. This party realized that, and they placed in the resolution a provision that if the tariff were taken advantage of for the purpose of exploitation, then the govern-

ment of the day would, by excise or other forms of taxation, protect the consumer from such exploitation by the manufacturer, not only with respect to the effect on a particular industry, but with respect to the effect on others. With respect to that matter I have not the knowledge lo speak with authority, neither have hon. members opposite; but I do know the effect on allied industries, the industry, for instance, that produces the articles that go mto the manufacture. If you go into the pages of history, and if you recall the speech of the hon. member for Ontario (Mr. Kaiser) and consider the industries that are affected, producing the component parts of the motor industry, you will understand that the tariff is a structure. If you strike out one brick you may impair the whole foundation of the whole wall, and if the wall is impaired what becomes of it? . It is not the tariff on automobiles we are concerned about; it is the effect upon the industrial life of the country and upon the industries involved, the increase of unemployment, the destruction of investment of capital in Canada in any industrial enterprise. Men are already inquiring, what do we get next? I suppose that is the reason the Minister of Finance suggested cottons, in order that those interested in this industry shall keep quiet and not make observations, because they may be struck next. Who is to be struck next? Is it the furniture or the boot and shoe manufacturers? Which is it to be? Is it the artificial silk industry? I put these questions to the House because the destruction of these subsidiary interests in the manner indicated is something no Canadian can look at without having the greatest apprehension as to what the result will be.
My rigffit hon. friend has referred to the income tax reduction, and I shall make just half a dozen observations on that score before I conclude. I say without any hesitation whatever Chat the income tax reductions, of which the government has been making so mudh, are more apparent than real; they are not reductions at all. I do not suppose that any greater bluff was ever worked upon a people. The illustrations given this afternoon by the Prime Minister had reference to incomes earned or incomes treated as though they were earned. Mr. Gladstone once remarked that there were two classes of incomes, one, the lazy income and Che other the income derived from ski'll, enterprise, brains and the salary that one was able to command by reason of ability and acumen. The schedule which the Minister of Finance read to the House a few weeks ago is one in which

The Budget-Mr. Bennett
every dollar of income was put upon a basis of salary or earned income. My right lion, friend will remember that before the amendments were passed at all salaries were taxed to the fullest extent. Now, what has happened? Earned incomes and incomes from investments are all on the same level and the only man who is hit by this tariff is the man who invests his money in a Canadian industrial enterprise. Does the Prime Minister realize just what that signifies? Let us take an illustration. Before the statute was passed, the man who had money invested in American securities had to pay the full amount on his income, just as the salaried man was obliged to do. But if anyone had shares in a Canadian industrial enterprise he was relieved of the normal tax; and this on the old principle of taxation, that the same government should not tax twice the same piece of money. Under the present proposal if a company has $25,000 available for dividends the government takes 9 per cent or $2,250, and that leaves $22,250 for distribution among the shareholders. That money goes into the hands of the shareholders and is taxed on the same basis as the American income or any income that may come from England or Germany. Let us bear that in mind. Now what is the government discriminating against in this connection? It is discriminating against money derived from Canadian industry, so that the $2,250 of taxation which the company I have just suggested by way of illustration has to pay to the government, does not represent the full extent of the tax which is levied on that money inasmuch as every one of the shareholders must pay his private tax. In other words, that $25,000 pays alt the rate of 9 per cent and perhaps 10 pe.r cent more in the hands of the shareholders. Why should the government place such a handicap on Canadian industry? Do hon. gentlemen opposite think that any man would be inclined to invest money in industry in Canada under such circumstances? Yesterday a banker of international reputation said to me, "Mr. Bennett, that is certainly a fine budget which your government has introduced. It will be the means of sending a lot of money to New York for investment." Of course it will, and for three reasons: first, because the return on American investments is larger than on investments made in Canada; secondly, because the investments are more liquid and marketable; and thirdly, because of the assurance and stability due to the tariff policy in force in the United States. What, on the other hand, have we in this country? If a man invests
money in industry here he is taxed to such an extent as to be altogether discouraged from leaving his investment in that industry or adding to it. First of all the government taxes the corporation 9 per cent. Now it is true that in the United States the tax is 13 per cent, but we must remember that the shareholders there are free frjm the normal tax. The company having been once taxed, the government there considers that it would be eminently unfair to tax the individual shareholder a second time on the same money. But we have abandoned that sound principle. As a matter of fact, Mr. Speaker, this is a rich man's budget. Look at the schedule. The man with an income of $250,000 pays nearly fifty thousand dollars less than under the old act; the man with an income of half a million pays over $100,000 less and the man with a very much larger income pays some quarter of a million dollars less than before. But if an individual who has put by some money invests it in a Canadian enterprise yielding 7 per cent he will pay full tax on that $70 income from the thousand dollars of his investment, as he will not be free from the normal tax. The budget is a discrimination against incomes earned from Canadian securities. I could give the names of men and women to-day who have been realizing on Canadian securities and who are now withdrawing their investments and sending their money to the United States, to Great Britain and to France. To-day there is a steady stream of money going to the brokers of Wall street from Canada. It is estimated that as large a sum as $75,000,000 of Canadian money has been invested in government securities of Chile, Argentine, Italy and other countries. This, Mr. Speaker, is not a simple matter. It is one that strikes at the foundation of our whole industrial development, for if capital is to be twice taxed we shall find that people will refuse to invest in Canadian enterprises. I say, therefore, that instead of being a prosperity budget this budget is calculated to turn Class against class. The government will go to the country and say, "Look at what we have done for the poor mam." Well, I know of poor men who have saved money which they have invested in industry, and those men will suffer in consequence of this budget. During the last few years there has been considerable thrift in Canada and men have invested in industrial enterprises, drawing 6 or 7 per cent on preferred Shares. Now their income will no longer be free from the normal tax, and inevitably they will withdraw that money and invest it in the United States
The Budget-Mr. Bennett

'Where they will enjoy the protection of a stable tariff and other advantages to which I have referred.
There is one other matter which I desire
to mention and which arises out of the observations made with respect to the motion of the leader of the opposition (Mr. Meighen) regarding the tariff board and the question of protection. It was said by the leader of the government that my right hon. leader did not introduce his resolution into this House although he might have done so at any time before the budget iwas brought down. Let me read from the speech of the leader of the opposition:
It is a matter of regret to me, Hr. Speaker, that I am compelled to move this resolution, which has stood upon the order paper since the opening of the session, in -the form of an amendment instead of as a substantive motion. On private members' days, which, under the rules, were alone open to me for this purpose, the order never was reached except at so late an hour of night as to render it impracticable to have it moved and discussed, and the government saw fit to decline to give any special preference to the motion or to fix a day for its discussion as a substantive motion. That it now becomes an amendment to supply and on that account is open to the government to be accepted as a motion of want of confidence, is no choice of mine; it is the only alternative left. I avail myself of that alternative and shall present the reasons why I think the motion should be adopted, why at all events, if it cannot appeal to this House, it should appeal to the people of Canada.


William Lyon Mackenzie King: Was not the leader of the apposition perfectly free to move the resolution as an amendment to the budget had he so desired?


Richard Bedford Bennett: Only one amendment can be moved to the budget and the motion of the leader of the opposition embodied some matters that could not very well have been introduced in such an amendment. Surely the leader of the government must have overlooked for the moment the fact that the government declined to afford the leader of the opposition facilities to move his motion. There are gentlemen in this House who know that what I say is true.


William Lyon Mackenzie King: The order was .called on different occasions.


Mr. MANION:: At eleven o'clock at night.


Richard Bedford Bennett: 
Mr. HENRI BOURASSA (Labelle):: Mr. Speaker, undoubtedly it is cruel to tax the attention of the House at this hour of the night and after this protracted debate. I would certainly much prefer to avoid adding any observations; but in justice to the electors who have sent me here and to a certain category of people in the province of Quebec and elsewhere, whose views I think I fairly represent, I have a few things to say with regai-d to the budget which do not entirely coincide with the views expressed on either side of the House. I will endeavour to confine myself to those.
On the trade returns presented by the Minister of Finance (Mr. Robb) and so eloquently dwelt upon this afternoon by the Prime Minister (Mr. Mackenzie King), I need not insist. These figures are satisfactory in them-
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selves; 'but, on the other hand, the experience of the world and economic evolutions have demonstrated that an increase in trade is not always and under all circumstances an indication of standing prosperity. Increase in trade, either in imports or exports, may mean much or little, or very different things. Increases in imports may mean a decrease in home production or an increase in purchasing power. Increases in exports may indicate a decrease of purchasing power, a decrease in home consumption, or an increase in the foreign debt which is met by merchandise instead of by money. A favourable balance of trade has been many times discussed from various viewpoints. I will not indulge in any theorising on the matter, but I think I express the view of those people who are not particularly interested in the success of one party or the other by saying that the trade situation of the country is fairly satisfactory. It offers an indication of a safe recuperation from the crisis through which we, with the rest of the world, passed during and after the war. It certainly does not warrant the wailings of the Conservative party, expressed previous to the election, during the electoral campaign and since. On the other hand it cannot, be ignored that there is still uneasiness in the country and a disquietude in many spheres of our economic life. The emigration of our population to the United States is still going on, not to the same degree as in years past, but sufficiently to engage the attention of the government and of all people having the welfare of Canada at heart.
As to the primary cause of that situation, to confine it to a fiscal policy which, after all, has been practically the same for the last fifty years is, to my mind, disregarding the real facts of the case. The deeper and more permanent cause of that uneasiness, of that disquietude and emigration to the United States is to be found in our war follies, and this cannot be too much insisted upon in order that future generations may learn by the past. We should be thankful to the Prime Minister for having put his finger this afternoon on that element of the situation. What has been the main cause of the depopulation of our rural districts and the concentration of our people in the large industrial centres, and the volume of unemployment, at times larger and at times smaller, but always a problem since the war? It lays in the war itself, or rather in the exaggerated part we took in it. The enlistment of soldiers took away most of the able-bodied men from the farm and from industry in order to make them destroyers of life, destroyers of wealth and destroyers of economic balance,

instead of keeping them in this country to work for our future generations. Whether we did right or wrong I am not discussing at the moment, but I think we should acknowledge this fact. A further cause of the rural exodus was the building up of those temporary war industries which offered abnormal wages to young people who had no particular propensities for trade or for industry. It brought them to the cities, young women as well as young men, disgusted them with rural life; so that when the war was over and these industries closed, they did not go back to the land. They impoverished the rural part of Canada and kept up the volume of unemployment in the cities to an abnormal degree.
With regard to the balance of wealth, the hon. member for St. Lawrenee-St. George (Mr. Cahan) once quite rightly said on a public platform in Montreal, that while, on the whole, the war had not impoverished Canada, it had displaced wealth. Anything that tends to disturb the economic balance of a country does not make for the good of that particular country. You may have the same amount of money in the country, either deposited in banks, invested in industry, or employed in various ways, but if the apportionment of that amount, represented either by liquid money or by values invested in farming or industry, is not fairly balanced among the masses of the people, you have a poorer country than if you had less money better apportioned. That has been another result of the war.
Then there was created a derangement in the industrial life of Canada, I think it was the hon. member for West York (Sir Henry Drayton) who mentioned the other day a certain industry which, before the war, made carriage wheels. During the war it was transformed into a munition factory, and, following the war, turned into something else. What does that mean? Does it mean the putting of capital into an industry for the purpose of developing that industry normally? No; on the contrary, it means useless expenditure; it disturbs the industry, its machinery, its labour, and creates uneasiness.
Then, during the war fever and the period of folly which followed, our people fell into habits of extravagance, in the domestic life, in industrial pursuits, in trade enterprises and in the works and expenditures carried on by public bodies, manifesting itself to-day in the abnormal taxation. That is not only on account of the direct expenditures of the war but also results from the indirect expenditure grafted, so to speak, upon the war debt and inflated by the war spirit. It means an increase in the cost of living, an increase in

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the burdens, public and private, of the mass of the people, and therefore it means difficulty, uneasiness and emigration.
The hon. member for West Calgary (Mr. Bennett) has spoken of the 500,000 people who have gone to the United States from Canada, and he attributed that exodus to the fiscal policy of this government. He said the only way to call back those people was to confirm a policy of protection. Is protection really the remedy to all our evils? How can it be applied, and to what degree should it be applied? Let us -for a moment consider -protection, first as a means of fostering industrial activity, and then as a mode of taxation.
I was somewhat amused, and felt somewhat like Rip Van Winkle in listening to this long, debate on the respective merits of free trade and protection. It carried me back to -my boyhood1 days. When I first entered political life, I was sent as a delegate from my present constituency to the great Liberal convention held in Ottawa in 1893. The byword of the Liberal party then was that there should be no rest till the last vestige of protection had been destroyed; on that cry the elections of 1896 were carried and won; but, as was explained afterwards, while the rank and file of the Liberals crusaded against protection, the leaders made arrangements with the parties interested in protection, so that there was not much change.
Since then the fiscal policy of Canada has been about the same. In spite of the loud declamations in favour of protection, on the one hand, and the denunciations of protection, on the other, practically we have had the sarnie fiscal policy in this country for the last fifty years. Now, is that policy good or bad? I am beginning to feel somewhat disquieted and, I must say, a little disgusted at hearing always quoted the example of England, on the one hand, as proof that we should adopt free trade, and that of the United States on the other, as evidence that we should go in for a stiff protection. Canada is not England nor is it the United States. For the short time of my life in which I believed in the creed of free trade, even then I had already the habit of trying to understand what I said, which brought me many difficulties in my political life. So I began to study the question. I read Cobdem, Adam Smith, Frederic Bastiat, Moli-nari, and other authorities, and I became convinced that free trade was a great theory. But then, I also had another habit, which I have cultivated, of looking to the applications of theory; and to my great surprise I found out that -free trade.-or rather the policy of free importations, because free trade never
existed-produced, in England, economically and socially, the same results which high protection produced in the United States: concentration of wealth, depopulation of -the rural districts, industrialization of the country, to the same extent, and perhaps more so, in free trade England than in protectionist United States. Why? I think the hon. member for Shelbume-Yarmouth (Mr. Hatfield) told us yesterday: because the geographical, economic and industrial conditions of the two countries were so different that two different policies could produce the same results.
Canada cannot and never will be the shipping country which England is, and therefore can never expect from the exchange of her merchandise on all the seas the same results which a free importing country like England has obtained, thanks to her geographical position and to her search for foreign markets in all neutral lands and in almost all semi-civilized countries on the face of -the earth. Canada, on the other hand, cannot expect to be as self-sufficient a country as the United States. The climate is against us; the geographical configuration of the country is against us. There will always be more difficulty in creating a well balanced internal trade in Canada. There will always be greater difficulty in balancing the agricultural needs of the central provinces and the industrial development of the east. Instead of trying to hypnotize ourselves with the results of the policy obtained in England, under conditions which cannot exist here, or with the 'results obtained in the United States, under conditions which are different from ours, why not at last take an inventory of the real conditions of our country and think and act as Canadians instead of being mere copiers of England or the United States?
Especially am I always surprised at finding that the Conservative party, which boasts so much of its loyalty to -all British institutions and precedents. British -example and British traditions, should have become so thoroughly imbued with the Yankee spirit in matters of trade and economics. I am not prepared to say, as the hon. member for Nelson (Mr. Bird) said a short time ago, that the policy of protection necessarily makes for war and hatred between nations. There again -history would prove that free trade England has looked for more wars, has waged more wars, and provoked more wars, on account of her free trade policy, than the United States have ; and the United States -were more often at war before they became protectionist than they
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have been since they adopted the high tariff policy; but that, I think, proves nothing one way or the other.
Let us take protection as it has worked in Canada, for the last fifty years, and as applied by the protectionist party. Has it produced all the results which we are told it *would produce if applied now? And should" it be on a higher scale of duties than was established by the Conservative government previously? We have heard nothing as to that, except the famous " brick for brick " declaration. But as protection has been applied under the Conservative regime, by the party which invented protection as a gospel and a policy, what has it produced? It has undoubtedly created and developed some large industries. But it has also contributed to crush a great many small and local industries. Perhaps as the hon. member for Wellington once said, I lack the practical spirit. But, to my mind, not being interested in any industry whatever, I consider that a greater wealth and a more enduring prosperity would result in this country by the spreading and maintenance of small local and domestic industries, in every province of Canada, than by the concentration of large industries in a few cities of Ontario and Quebec. In that respect I ,am not only expressing the view of an unpractical French-Quebecker, but it is one of the main arguments made last year in the province of Nova Scotia by one of the leaders of the Conservative party, by a colleague, for a time, I think, of the hon. member for West York (Sir Henry Drayton), certainly of the hon. member for Calgary and of the present leader of the opposition (Mr. Meighen)-an argument made by the Hon. Mr. McCurdy, who pointed out that the National Policy, so-called, and as applied under both Conservative and Liberal governments, has destroyed all industries in Nova Scotia. I need not read the extract, I gave it during the debate on the Address. In Ontario and even in Quebec, the same result has obtained, to a lesser degree, but sufficient to drive the rural population from the farming districts to the urban centres. More so in Ontario than in Quebec, because the industries in Ontario are more even dispersed in various centres of medium size, whilst in Quebec, up to a few years ago, the large industries were practically all centred in Montreal, Quebec and a few other towns. But since a new impetus has been given to industry in the province of Quebec the same process is taking place. Four or five years ago, I was passing through that magnificent region lying north and south of lake St. Peter, those splendid rural districts which have been counted as the most

fertile producing parts of Quebec at least, if not of Ontario as well. Well, the population of these districts has diminished largely in the last ten or twenty years . Some of the people have gone to industrial centres such as Three Rivers, Shawinigan Falls and Grand'Mere. Many others-seeing their sons leave the farm and go to work as labourers in the city, seeing also their daughters follow them to become operatives in factories or to-adopt some other occupation-have abandoned the farm because they no longer had the family labour at hand to cultivate it. This has been one of the main causes of the migration of our rural populations to the United States. Thus the over-industrialization of Ontario and Quebec had begun this process of unrooting our rural population long before the war. The war simply gave a new impetus to the process. It also began to have this effect:	Producing wealth,
not properly balanced, impoverishing gradually the villages and the rural districts and enriching the industrial centres, it created in our cities, as in every other industrialized country, this double curse of modern times: plutocracy and pauperism. In spite of all statistics-large deposits in banks, stock exchange reports, et cetera, this does not mean wealth, still less prosperity and happiness.
But there is something more. Most of the industries in this country, created under the protective system, organized themselves without any state supervision, without any legal control as the real amount of capital invested therein, and the amount of water added to the real amount of capital. What is the result? To-day the purchasing people of this country are paying for the commodities they consume, for the goods they use, not only a fair remuneration upon the real amount of capital invested in the making of those goods; but are making returns to the financial sharks upon the amount of watered stock, of valueless paper, all called "capital." I do not believe in that. If you take these two things together, there is sufficient explanation to be found of the fact that the industrialization of this country has not benefited the whole of the Dominion, and there need be no surprise that some of our provinces should entertain a feeling of distrust, almost akin to hatred, against other provinces which they hold responsible for the state in which they find themselves.
But somethng more, and from a national point of view something of a more disquieting nature has occurred, especially since the war. I stood for protection, reasonable protection, for many years, because I thought it

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was one of the obstacles to the penetration of our country by American influences. But since the war, and largely on account of our war follies, our fiscal and economic regime is now tending to make Canada a field for the investment of American capital. Some people rejoice in that. I do not. I think there is more danger to the national independence of Canada in the purchasing of our w&iterpowers, and of our sources of wealth, either in the forest or an the mine, by American capital than there is from the fact that some of our industries suffer from the competition caused by American merchandise entering this country. It is all very well to say that American capitalists and industrialists are coming to this country because they find 'conditions here suitable to their purpose-that they would not advocate any sudh thing as political or economic union with the United States. So long as the social and economic conditions of Canada were sulch that it was to the advantage of the American investor to maintain this state of things, very well. But now that we have higher taxation in Canada than in the United States-because we were more foolish during the war than the Americans were, because we spent more money, because we ruined more people, because we uprooted more of our young population from the soil for war purposes than the Americans did-the economic and social Conditions in this country are getting to be such that it is becoming more advantageous, from a purely economic point of view, to invest and to live in the United States than in Canada. When the American investor finds out that his investment in Canada, that the development of his trade in Canada,- shut off from the United! States by the American tariff,-is less profitable to him than his investment in the country to the south, that he is running just as much risk, if not more, and reaping less profit than he would in the1 United States, it will not take a lifetime before he finds means-perhaps with the help of a portion of the Canadian press and a good many of our ultra patriots-to start a movemept that may take the form of independence, to begin with, but will have for its object economic union at first and afterwards political union with the United States.
There is more to be feared than the penetration by American capital. American capital does not ,come into Canada as English capital used to come, merely as an investment. Those great industries which are put up and developed by American capital, are also managed by American citizens with all their genius, their spirit of enterprise, their courage and
their energy,-no doubt a splendid thing from a purely material and economic point of view, and I am second to none in rendering homage to the genius and energy of the American people and their great cap-12 m. tains of industry. But they also bring with them, and naturally, without any effort or any propaganda, spread around them the spirit of Americanism. I have already noticed in the province of Quebec, where industries have been established by Americans and are managed by Americans, a new social spirit among the people working for them and living near them. With the penetration of capital, is coming the penetration of habits of work, the penetration of social habits. Over and above that, there is the penetration of the so called American literature, which the hon. member for Toronto West Centre (Mr. Hocken) mentioned the other day, in the form of American magazines, Sunday papers, and so forth; and again we bad ithe manifestation of that characteristic Yankee tendency which prevails on that side of the House in the suggestion !by him of a remedy in the shape of "protection" by way of a customs duty. He says that it would not prevent a better class of American publications from coming in, because people would gladly pay the duty, but that it would shut off the worst class. I believe the contrary. People who are looking for the worst class of American publications will gladly pay ten or fifteen cents more to have them and read them; but the seriously inclined people will perhaps hesitate before paying thirty-five or fifty cents for the serious American review. Here again I suggest that the remedy is not simply the imposition of a duty. The hon. member for West Calgary (Mr. Bennett) said. "Do not count honour by dollars." I say do not combat foreign influences by the mere imposition of a duty. If you want to counteract the influence of American publications in this country, you must develop in all spheres of life the spirit of Canadian nationalism. It is not by making the people more British that you will prevent them becoming more American but it is by making them more Canadian. The hon. member for Toronto West Centre (Mr. Hocken) had the courtesy of saying that the province of Quebec was better preserved from that penetration. Quite true. But why? The province of Quebec is better preserved on account of its language first; but a large and increasing number of our people read and learn the English language thoroughly. The language barrier itself would not be sufficient. Unfortunately, too large a proportion of that
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influx of American literature comes into the province of Quebec and penetrates Canadian homes; but it has less effect, not only because of the language but because of the religious spirit and social tradition inherited by centuries of attachment to the soil of Canada. It is because we are more thoroughly and exclusively Canadian. I am surprised that people who are so prone to denounce the penetration of American influences do not realize that the greatest moral strength we can use to counteract that penetration is by inducing as many French Canadians as we can to settle and live in the English speaking provinces of Canada, not as foreigners, but as Canadians, to help to stamp in those provinces that type of social life that has made the province of Quebec, and which still maintains in that province, the only real obstacle to Americanism which remains in Canada.
It has been stated several times that Quebec i3 protectionist, and that Quebec, had it not been for the conscription or other war issues, would have voted protectionist. I am surprised at the creation and the maintenance of tha-t legend. I take it for granted that many of those who express that view speak in good faith. Undoubtedly it is due to the fact that some newspapers in Quebec, with a large circulation, controlled by men of strong influence, consider themselves the whole of Canada, of the empire and perhaps of the world. Being protectionist they think and assert that the whole province must be protectionist. On this matter I will take the testimony of a good friend of our province, one who knows it well, who has lived in it for some years, who i3 a pronounced protectionist and an avowed Conservative. I refer to my excellent friend the member for St. Lawrence-St. George (Mr. Oahan). A year ago last fall, there was a byj election in the city of Montreal in the St. Antoine division, decidedly one of the most Conservative and protectionist ridings of tbu whole province. The election was fought purely and simply, as this debate has been, on what these gentlemen call the principle of protection, and the protectionist candidate was defeated, upon which the hon. member for St. Lawrence-St. George wrote a very interesting letter; I thought it was the most complete expression of opinion on the political situation at large, and especially in Quebec. It appeared in the Montreal Gazette on December 10, 1924, and in it Mr. Cahan stated:
I was especially impressed during the last election contest in St. Antoine division iby the number of former supporters of a protective tariff who expressed reluctance to vote for Mr. Birks. They recognized the personal moral worth and the commercial and industrial standing of the Conservative candidate; but they were not quite satisfied with that kind of pro-

tectron which Mr. Meighen seemed to advocate.
More or less casual conversations with my fe31ow-electors at (the clu/bs and on the street have clearly convinced me that the electors have now begun to discriminate between the general policy of protection and the incidence of the existing customs tariff; between the existing high customs duties which unduly favoured certain industries, and the existing low customs duties which tend to drive other industries out of existence. When invited to vote for a protective policy, (they instinctively enquired: "Protection to which industry, and to whom?"
In those conversations several industries were frequently referred to which, in the course of years, by corporate consolidations effected under the law or by commercial agreements formed within the law, had become infant prodigies and practical monopolies, which, by taking full advantage of the existing tariff, were thereby enabled to deal harshly with the consumers.
It is evident that the high cost of living, the imposition of income taxes and the existing precarious conditions of employment, have led thousands of voters to discriminate between -that kind of protection which would enable Canadian industries to withstand foreign competition and to create local employment, and that other kind of protection which would continue to enable a monopoly to oppress the local consumers.
I think I may take this as the full and candid expression of the reasoned' opinion pf the protectionist Conservatives of the province of Quebec generally. Now when you come to the mass of the rural population, to consider that they are protectionist by tradition or habit is to ignore the whole history of the province. The province of Quebec has never responded to an appeal for high protection but has voted against ail such appeals.


Mr. HANNESSON:: Is the hon. member ia favour of protection as a principle?


Joseph Henri Napoléon Bourassa: I do not see any principle in protection.


Hannes Marino Hannesson: If the hon. gentleman is not in favour of protection is he in favour of free trade?


Joseph Henri Napoléon Bourassa: No.


Hannes Marino Hannesson: Then what is -the principle he stands for in regard to the tariff?


Joseph Henri Napoléon Bourassa: If the hon. gentleman will wait, I will endeavour to express as shortly as possible what I think is the view of the great mass of the people of the province of Quebec on this issue: of the thinking man by reasoning, and of the mass by instinct and tradition. We do not make a religion either of free trade or protection-at least I do not. As I toid my hon. friend, for a couple of years I believed in free trade almost as much as in my creed.


Hannes Marino Hannesson: Free trade as it is practised in England?

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Joseph Henri Napoléon Bourassa: When I was a greenhorn I believed in free trade as it is practised there, but as I got to know something I believed in nothing. I think the best policy for this country is a policy suited to our needs and conditions, and for that reason I stand for no principle in tariff matters and for no stability, so far as duties are 'concerned.


Hannes Marino Hannesson: No principle?


Joseph Henri Napoléon Bourassa: No; it is purely a matter of business, which must be governed by the circumstances of time and 'locality and by geographical and climatic considerations. We stand in Quebec-at least, I do, and I think that in expressing my personal views I am voicing the opinions of a large number of people in that province-we stand, I say, for a reasonable measure of protection. We stand for home industries, by which term we mean industries that use our native products, mineral or animal.


Hannes Marino Hannesson: May I ask a question?


Joseph Henri Napoléon Bourassa: If my hon. friend will let me develop my point he will see better whether there is any necessity for him to ask his question. I am at one with gentlemen opposite in advocating a policy, not of embargo but of encouragement, aimed at inducing capitalists or industrialists who have money invested in our forests and mines to develop their industry, and so far as conditions will permit, to manufacture their products up to the finished state in this country. I believe in turning all Canadian wood into *Canadian paper, so far as we can possibly do so, rather than allowing our wood to go to the United States to enrich American manufacturers. I believe in converting Canadian minerals, nickel, asbestos, and so forth, into finished commodities, rather than allowing them to go to the United States to enhance United States capital; I prefer to have them developed in Canada and so afford employment to Canadian labour. I believe, again, in protecting the beet sugar industry, and in that respect I entirely agree with the hon. member for East Lambton' (Mr. Armstrong). But I certainly do not believe in a tariff policy which has succeeded in creating a sugar monopoly in the hands of a few men in Montreal and elsewhere in Canada and enabling them, by means of sugar duties, not only to receive incomes from the capital, they have invested in Canada but also to maintain the sugar plantations which they have purchased in Cuba and in the West Indies. In short, if "by encouragement to local industry we mean, as in this instance, protection for beet sugar .growing I am in favour of a policy that will 14011-224
assist our producers. But let that policy be one such as is in force in Germany, Belgium, and France. Let us encourage the growers of beets in this country rather than the producers of cane in Cuba and the West Indies, because all the genius of all the Conservative leaders and partisans will never make cane growing possible in this country. Likewise, I am opposed to protection on cotton in the degree and in the manner in which it has been afforded in Canada during the past forty years, forcing the masses of the people to pay from 25 to 50 per cent more for all their cotton goods than they would have had to pay for cottons produced either in England or in the United States. I am opposed to such protection for the reason that the soil of Canada will never produce raw cotton; and, for another reason, that the industry, in Quebec at least, has been over-capitalized. Its stock has been watered to the limit, so that every time we buy a yard of cotton in any form, we are making remunerative not only the legitimate capital invested in the industry, but the watered stock that has been added to it. For that kind of protection I have never stood and I never will stand. On the other hand, I am in favour of protection on woollens, because, in my opinion, if properly applied, such protection should be an encouragement, both to the makers of woollen goods and to the farmers who raise sheep and sell their wool. I was very much interested in the proceedings at a meeting in Toronto last-fall of an association of people interested in the woollen industry. I was struck not only by statements made by manufacturers but by the views expressed by farmers. At that meeting, Mr. Dryden, of Maple Shade farm, of Brooklin, Ontario, director of the Canadian Co-operative Wool Growers' Association, spoke as follows:
We can grow successfully in Canada every type of sheep, including merino. Sheep breeding in Canada is economically sound, because our flocks are not subjected to droughts which occur in other sheep breeding countries or suffer from the diseases which have to 'be faced by the sheep breeder in Great Britain. Yet in the small area of Great Britain they maintain 24,000,000 sheep, while in Canada we maintain only 2,500,000, while we now only grow same 15,000,000 pounds of wool. There are no climatic or physical reasons why we should not grow 50,000,000 pounds of the 70,000,000 pounds of wool consumed annually by the people of Canada. Sheep fit into the business of mixed farming as no other farm animal does and in any opinion the raising of sheep in this country is directly connected with successful farming. There should be a flock of sheep on each Canadian farm.
I entirely agree with that. Protection, so far as the woollen industry is concerned, should be applied in such a manner as to



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force the manufacturers to buy their raw material from [DOT]local producers. They should use wool grown in Canada and should not be enabled to import their wool from foreign countries, afterwards making the Canadian people pay unreasonable prices to swell their capital.
iWith regard to boots and shoes, the same reasoning holds good. This is an industry which to a very large extent has been implanted in Quebec. I do not want to jplead the case against them, but I desire to give to the House the testimony of one of the best informed men in that industry, the manager of one of the most successful boot and shoe factories in the province of Quebec. A few years before the close of the war he said to me: "After this war is over the boot and shoe industry will pass through the greatest crisis in its history." I asked him why he thought so, and he said that he was of this opinion because, carried away by the allurements of war profits, the operators of most factories were changing their equipment. They were leasing-they could not purchase them- from the American Shoe Machinery Company, machines specially adapted to the making of army boots. They were obliged to pay royalties on these machines and were engaging large numbers of new labourers, educating them in the use of this special machinery which would be absolutely of no use after the war. After the war, he said, the manufacturers would find their factories overequipped, while they will still be compelled to pay royalties to the American company. They will also have on their hands labour utterly unsuited to the trade on a peace basis. This is exactly what happened.
So far as woollens and boots and shoes are concerned, I think I may safely say that the industries to-day are suffering, not because the average duty is too low, but exclusively by reason of the application of the British preference and because of a lack of expert appraisal at the customs. There, again, I have received all my information at firsthand. Under the British preference as applied during the past twenty-five years by both Conservative and Liberal governments, not only do British goods enter into keen competition with the products of these two industries in Canada, but goods manufactured in France, Belgium and Germany, under depreciated currencies, are foisted upon the Canadian market in competition with our manufacturers. These goods are 90 per cent manufactured in these foreign countries; and after receiving a small finishing touch in 
England they are stamped as British and are imported into Canada in competition with Canadian labour, and, for that matter, with British labour as well. In other words, under that famous British preference policy, we are protecting not only British capital and British labour at our own expense, but French, Belgian and German labour and capital. The only profiteer within the British Empire is the British trader who, since the development of social and economic difficulties in England, finds it more profitable to have his goods made in foreign countries and shipped to Canada under the so-called British preference policy.


Mr. FORKE:: Does the hon. gentleman
know that there are many people in Canada who are unable to buy boots at the prices asked for them?


Joseph Henri Napoléon Bourassa: I quite agree with my hon. friend. I think during the war the boot and shoe makers prepared what happened to them afterwards by the extravagant prices they then asked for their product.. On the other hand, will the hon. gentleman go the length of saying that we should handicap industries established in Canada-always with the reservation that they be honestly capitalized and properly managed,-in favour of foreign articles made under conditions that cannot last, their price being depreciated by reason of abnormal conditions?


Robert Forke: Mr. Speaker, I do not wish to interrupt my hon. friend's address, 'but I should like to know how he would keep down domestic prices unless by some outside competition?


Joseph Henri Napoléon Bourassa: Oh yes, I want competition, but I want fair competition. I want, for example, absolute competition with regard to all those industries that go on the foreign market to purchase their raw material and come and manufacture it here. But when you have an industry which is a help not only to the capitalist, not only to the labourer, but also to the farmer, I say this is a national industry for which all classes of people should be prepared to make some sacrifice-not an undue sacrifice-just as I consider we should be prepared to make some sacrifice to help the western farmer to get his product more rapidly and more cheaply to the grain markets of the world. Likewise the western farmer Should be prepared to pay 25 or 50 cents more for a pair of boots-in order to keep up an industry which is national in its character and which makes use

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of goods produced in Canada and which will help their fellow farmers in the eastern provinces.
The disposition taken by the government with regard to the application of the British preference is a good one, and so far as it will apply only to goods coming through Canadian ports I could not be against what I advocated in this House some twenty-four years ago. But I think we should go further. In that respect I think we should imitate the example of the Australians and see that at least 80 to 85 per cent of these so-called British-made goods are really British-made, and that no foreign goods should be imported as so-called British-made goods.
Having said so much with regard to protection as an economic policy what about it as a mode of taxation? In this respect I must say that I am perhaps worse than I was twenty-five years ago! As a means of raising revenue I think it is absolutely indefensible. I believe much less in a so-called "tariff for revenue" policy than in a frank and open protective policy. If it is protective, then it is no revenue producer. If it produces revenue, then it is no protection, because when you get revenue you must import goods, and therefore you must eliminate the protective element. Then I am opposed to protection as a mode of taxation because it is essentially directed against the family, and because it is a mode of taxation which the taxpayer realizes the least. Hundreds of thousands of excellent people in this country would vote against any government which would tax them $25 a year, but who, without knowing it, ungrudgingly pay $200 indirectly, either to the government by way of customs duties added to the price of the goods they purchase, or by the higher price they pay for the goods of the protected manufacturer. I believe in the saying of John Morley, that the tax-gatherer is a great school master; but in order that the lesson taught to the taxpayer is not lost, he must realize the amount of money he pays to the state and for what purpose. Therefore I entirely agree with some of those gentlemen on the other side who have said they would much prefer increasing direct taxation and diminishing indirect taxation.
As regards direct taxation, this budget is in many respects an improvement. I will not refer to the Victory bonds exempt from taxation. That was a great mistake and an injustice to the people of Canada. Perhaps there might have been some excuse at the time those bonds were issued), but I consider that instead of decreasing the taxation the 1401}-2241
people have to pay in order to reduce our war debt, we should increase it. It is unjust to our children to lay upon their shoulders the whole burden accumulated by our follies during four years of war. Let those people who are responsible for the war, for the enlistment of men, for conscription, for war expenditure far beyond the normal means of this country, far beyond the moral or political obligations of this country, in order to keep up that military display which has been so scathingly described by Sir Andrew Mac-phail, let those people-.all of us, since we are all responsible,-let our generation pay for that folly, and at the same time let us have the courage and the disinterestedness to say to those who follow us: Do not repeat our folly. I say again, it is unjust to diminish war taxation as long as the war generation lives. I agree entirely with the member for Winnipeg North Centre (Mr. Woodsworthl that what strict social justice would have demanded would have been a capital levy immediately after the war, so as to reach the immoral, the abnormal and abominable profits made during the war, out of the blood and the blinded patriotism of this country, by warmongers who khouted "King and Country" while they were pocketing money at the expense of our people. I remember the excellent saying of Sir Thomas White, on one occasion in Montreal, that it was a crime for any Canadian to get rich during the war. Well, if that was the case, why has no government had the courage to apply proper punishment to that crime by levying a sufficient amount on those immoral profits so as to lift the burdens of the war from the shoulders of those who were not responsible for it?
With regard to other taxation, the receipt tax perhaps might have remained; but it was very much evaded and, as has been well said, was an annoyance rather than a source of revenue. I would maintain the tax on cheques and, indeed, increase it. I received the other day from a man in business a statement showing how this tax applied. He had a list of cheques he had either paid or received, I am not sure which, during a period of two or three months. By the accumulation of small cheques he had paid quite a sum of money, but on one single cheque of some $15,000 or $20,000 he had paid only $1. I think the limit of $1 on cheques is too low, and should be increased. The reduction in postage does not appeal to me; it was not a very heavy burden on the average' ratepayer and could have remained for a few years longer. I admit it is not popular to say so, but we must have the
352S

The Budget-Mr. Bourassa
courage to teach our people that we must pay our debts more quickly than we have been doing. \\ 'e must therefore preserve, I think, all the means of taxation and revenue which are not too burdensome on the average man.
With regard to the sales tax, there are certainly some corrections still to be made. I sent the Minister of Customs (Mr, Boivin) a statement the other day, showing the absurdity of the application of that tax in certain cases. A small lumber dealer with a small shop classed as a factory is obliged to obtain a license. Last year he sold to the farmers around him $2,300 worth of goods, out of which he and his family lived. He employs his son and one workman, yet he was taxed $110 on this $2200 of gross receipts, which included the cost of his material. That is nonsense. The sales tax on small industries of that nature which are local, belonging to the small social economic life of the village or parish, should be abolished.
It is different with the tax on profits. 1 read in the press that a delegation from Montreal came here requesting the government to abolish the tax on the profits of so-called public utilities. They made a very eloquent plea because of the difference in treatment accorded the Hydro-Electric Power Commission of Ontario and these so-called public utilities in Quebec. Let us understand each other. The public utilities in Quebec at present are, or in the very near future will be, one single monopoly composed of various corporations interlocked with each other in the hands of two or three men, one of whom is Sir Herbert Holt. Let us examine the position of that so-called public utility, and its service to the public. I am not taking my facts from a socialist organ, but from the Montreal Gazette of February 19, 1924, in which is reproduced an article appearing in the Financial Post. That shows how the genius of Sir Herbert Holt has developed this industry. I am not going to- read the article at length, but some parts of it are very interesting. It explains that Sir Herbert Holt began by taking the old Montreal Gas Company and the Royal Electric Company and [DOT]developing them with such ability, that at present the shareholders of the Montreal Light Heat and Power Consolidated, who had shares of $100 in these companies now hold, without having disbursed one cent of money, 7i shares of the new concern, equivalent, according to current market quotations, to $1,100. But, they say, all along the company has shown great consideration for the public, and the present dividend is limited	to	7 per cent.	But 7 per

cent, on a capital multiplied seven and a half times, means 52i per cent; so that, at the present time, the ratepayers of the city of Montreal, of the island of Mbntreal, and before long practically one-half the province of Quebec, will be remunerating the shareholders of these companies to the extent of 52| per cent, which perhaps will be multiplied by four before very long. That has come about through the high protective policy of the Taschereau government which has found such praise by hon. gentlemen opposite, and which the Montreal Gazette very properly qualified as "a T ory of a T ory " government. The " protection " afforded to the public utilities of Quebec means that the companies under Sir Herbert Holt have laid their hands on all the water power around the island of Montreal; they have prevented so far the development of the Long Sault by rival companies, all for the benefit of the people, of course! Now they come and ask, in the name of the people, to be exempted from taxes on profits. I hope this government will now be sufficiently informed of the situation to resist that demand.
With regard to the income tax, I approve almost unreservedly of the changes which have been made. The increased margin of exemption was called for; the government have eradicated the absurd and unjust discrimination between married people under the laws of the English speaking provinces and those under the laws of Quebec, which discrimination has existed ever since the establishment of the tax. It took nine years to get this reform, and I congratulate the government on having made the change. Respecting the exemption on children I repeat what I said at the beginning of the session, namely, that the exemption should be extended to the age of twenty-one years. \\ e pretend that we want to encourage higher education, and that we want to give inducements to all fathers of families to give as complete an education as possible to their children. I do not know how it goes in the English speaking provinces, but in the backward province of Quebec, with its antiquated system of education, we want our children to learn our own language and all that it carries with it, and we desire them also to learn the language of our fellow citizens of English origin. There we desire to carry on the education of our children as long as we possibly can, and I think this government should have lengthened the exemption to twenty-one years of age, as an inducement to fathers of families to continue the education of their children. It will certainly come in time; it

The Budget-Mr. Bourassa
took three years to get the first exemption, and it has been increased gradually.
The change which jmts the householder, unmarried but with family charges, on the same footing as married people, is also an excellent one. There are in our province many young men and, I will not say young girls, or old maids, but less-young girls, who carry on the heavy but sacred social duty of looking to the education of young children who have been left orphans, young brothers and sisters. It is proper, it is just, it is a social duty that they should be treated just as fathers and mothers of families are.
A point was made by the hon. member for St. Lawrence-St. George (Mr. Cahan) which I think was very well taken, and which I uphold entirely, as to the discrimination between the ratepayer who owns his home and the leaseholder under the present system. The owner of a house is not obliged to take into account the yearly value of his property as forming part of his revenue, while the leaseholder is taxed upon his revenue without any deduction as to the amount he pays in rental. The hon. member made a comparison with a farmer, but the comparison can be made the other way. I know people in Montreal who live in houses certainly worth $100,000 or perhaps $200000, representing a yearly value, let us say, of 5 per cent. They do not pay a cent of taxation for the enjoyment of that property, and I think that is not just. I think that there should be deducted from the charges as against income a yearly value of about $600, representing the average rental, which would go in favour of the property owner as well as of the leaseholder, and that the owners of expensive property should pay something on the yearly value of the house they inhabit.
As to the tax on dividends, well, I would
have bad grace to criticise that, because I asked for it; I have been asking for it for many years. It is called a duplication of taxes. I cannot see it that way. But suppose, first, that it is. There are many things upon which we pay taxation several times. Take real estate, for instance, bringing in revenue; we pay the municipal taxes, we pay the school taxes, and we pay the income tax. Why should the stockholder be more favoured than the owner of real estate? It has been said that we must encourage investment in industry, Very well, but I am more concerned with people who invest in homes and cradles than with people who invest in factories. If a company has made profits, after it has paid its taxation and the rest of its profits are distributed among its shareholders, if those shareholders draw an income from the company equivalent to a salary which is earned year after year, why should the man or the woman who enjoys an income of $5,000 or $6,000 from that investment pay less taxation than the man who earns $5,000 or $6,000 from his labour? The employees of these profit-distributing companies are taxed on their salaries; why should not the stockholders be taxed on their dividends? In many cases I am sure the managers or boards of directors of these companies will abject to giving salary increases to their employees on the ground of the taxation they have to pay. Therefore, as the income of the employee is limited because of the taxation levied on the company, why should not the stockholder also be limited in the profits he may draw, by reason of the taxation? I think that is essentially just and equitable.
It is also said that this tax is discriminating against Canadian -companies. I do not read the act that way. Any Canadian who invests in foreign companies is obliged under the present law to declare his income from foreign investments and to pay -according to the same scale of taxation as if he had invested in real estate or in a Canadian Company. Of course, I admit that there is more chance of evasion if you hold stock in a foreign company, but you have that in every country of the world. I was told the other day by someone who knows very well the functioning of the income tax in England that the amount of English capital invested abroad for the purpose of evasion of taxation is enormous. The same thing exists in France, Germany, Belgium, everywhere. You cannot stop it. But the idea of making of the stockholder a privileged ratepayer in -this -country, or rather of -preventing -him being a ratepayer, of not taxing him on his personal income apart- from the taxation levied on the profits of the company, that I have never been able to understand, and I think the government has made a wise readjustment. Of course, proper care should be taken to collect the tax upon income derived from foreign investments and upon debenture coupons. I do not know, but I have been informed by -people in Montreal who have a deep and intimate knowledge of financial operations that a very large amount of money invested in coupon bonds evades taxation-I do not agree with someone who spoke this afternoon against the idea of a stamp tax. If a stamp tax was imposed upon debenture coupons that are -collected through Canadian banks, and the holders of those debentures were -allowed to deduct that revenue from their tax bill in Canada, probably the result would be much more favourable to the Finance minister than it is at -the present time.

The Budget-Mr. Bourassa
With regard to the increase or the decrease, in the income tax, I am rather inclined to agree with my hon. friend from West Calgary that this is no decrease of taxation. It is better than that; it is a readjustment of taxation, and that is what we need. For the reasons that I have given, for reasons of morality, for reasons of social justice, and for reasons of sound business, this is not the time to reduce taxation. But this is the time, and it is always the time to readjust taxation from year to year, in order to maintain a sound economic balance as between country and city, as between farming and industrial life, as between the various portions of Canada. That is what I call a budget nationally thought out, a proper and socially equitable budget, I do not say that it entirely responds to ail requirements, but it is certainly a move in the right direction. It is certainly a budget that tends towards a better balanced application of taxes than we have had in this country since the war, and therefore, with the suggestions that I have made, and which I hope the Minister of Finance will take into account this year, and next year, and in all the years to come, readjusting the taxation from year to year, I propose to vote for this budget and to maintain the policy of this government, rather than to tie myself to the narrow policy of the Conservative party looking to protection, undefined, unbalanced protection, as the sole and only remedy for all the evils of this country. I did not believe in that remedy in years past. I believe still less in it under the present circumstances, and still less when all that great policy of upholding the principle of protection falls down under the four wheels of a motor car.


Mr. ROBERT GARDINER (Acadia):: Mr. Speaker, before I address myself to the question before the House, I should like to say that I feel very sorry indeed that the leader of the opposition (Mr. Meighen) is not with us to-day. I am sure that we would all have been delighted to have had him here and heard him address this House. Because of the circumstances under which he is absent,
I am sure we all hope that he will very soon be in a position to return again to this House.
Before I discuss the features of the budget I want to refer to some remarks uttered by hon. gentlemen during the present debate. The hon. member for Toronto West Centre (Mr. Hocken), in discussing the conditions in Canada, placed before the House a few days ago an idea to this effect: That industry in Canada had not been prospering during the last few years. He quoted certain figures and facts from the reports of the twro great Canadian railway companies to show that fMr. Bourassa.]
agricultural products had been moving in greater quantity than had industrial products, and because of that fact he maintained that Canadian industries had been passing through a very serious time. If I may I would read the quotation in question, and it is this:
My argument therefore is that the traffic arising from sources other than the carriage of farm -products was substantially lc6s in 1925 than in the year before so that in consequence we had a greater degree of general business depression last year.
On looking up the reports of these railway companies I found that everything he affirmed was true except the hon. gentleman's conclusion. With the permission of the House I will place certain traffic figures on Hansard, and I will merely refer to them to show the increase or the decrease in the volume of various commodities carried by our railway companies.
C.N.R. Freight Movement 1924-25
Tons
Products	of	agriculture,	1924	
11,769.288Products	of	agriculture,	1925	
11,624.809Decrease, 1925	
144,479Products of animals, 1924	
1,583,761Products of animals, 1925	
1,571,114Decrease, 1925	
12,647Products	of	mines, 1924	
17,426,522Products	of	mines, 1925	
18,097,528Increase 1925	
671,006Products of forests, 1924	
9,154,706Products of forests, 1925	
9,515,143Increase, 1925	
360,437Manufactures and miscellaneous, 1924..	12,564.337Manufactures and miscelllaneous, 1925..	14,190,663Increase, 1925	
1,626,326Grand total, 1924	
52,498,614Grand total, 1925	
54,999,257Increase, 1925	
2,500,643
Decrease of tonnage moved of agricultural
and animal products, 1925	 157,126
Increase of tonnage moved of products of mines, forests, manufactures and miscellaneous, 1925	 2,657,769
C.P.R. Annual Report Ending Dec. 31st, 1925 Freight forwarded
Flour-Decrease 1925	barrels	906,370Grain-Increase 1925	bushels	31,657 227Increase in tons	
949,716Five stock-Increase 1925	head	30.787Lumber-Increase 1925	feet	56,642,000Manufactured Articles-Increase	1925.. ..tons	502.464All ether articles-Increase	1925	tons	831,765
Taking the report of the freight movement of the Canadian National railways for the years 1924 and 1925, and considering that agricultural products were supposed to have moved in greater quantity in 1925 than in 1924, I find the hon. member was incorrect in his statement. I will not state the total amounts moved but will merely give the increases and the decreases as they are taken from the report. The decrease in the amount of agricultural products moved in 1925 as compared with the year 1924 was 144,479 tons.

The Budget-Mr. Gardiner
The decrease in animal products carried in 1925 as against 1924 was 12,647 tons. Of products of the mines there was an increase in the amount carried in 1925 over 1924 of 671,006 tons. Of products of the forest there was an increase in 1925 as compared with 1924 of 360,437 tons. Of manufactures and miscellaneous products there was an increase in 1925 over 1924 of 1,626,326 tons. The grand total of increases for 1925 amounted to 2,500,643 tons. In the case of agricultural products the decrease in movement in 1925 amounted to 157,126 tons. The increase in tonnage of products of the forests and mines, and manufactures and miscellaneous, in 1925 amounted to 2,657,769 tons. These figures dispose altogether of the statement which the hon. member made. It proves very conclusively that the Canadian National Railways moved a greater tonnage of manufactured goods than it did of agricultural products in 1925. In view of these facts it is unfortunate that the hon. member should have made the mistake he did.
Now taking the Canadian Pacific annual report for the year ending December 31, 1925 we find the movement of freight set out at page 35 and I quote from it the following figures: The movement of flour in 1925 was decreased to the extent of 906,370 barrels. There was an increase in the volume of grain moved of 31,657,227 bushels or 949,716 tons. There was an increase of 30,787 head in the number of live stock moved. The movement of lumber increased in the same year, that is 1925, by 56,642 thousand feet. In the movement of manufactured articles there was an increase of 502,664 tons. The movement of all other articles increased by 831,765 tons.
May I explain to hon. members who are not conversant with conditions in western Canada -what happened there during the last two or three years. In the year 1923 we had perhaps one of the best crops in the history of the west. Now, when a good crop is assured in western Canada there is a general movement of trade because the people of the west require many necessaries to enable them to handle their crops. In the year 1923 we had a "carry over'' of grain products to the following year and that was included in the tonnage moved in 1924. In 1924 we had a very light crop in western Canada, consequently there was a reduction not only in the quantity of grain but of manufactured products moved. In 1925 we had no "carry over" of grain which the railways move in the spring. That explains why the situation was of that nature which the statistics indicate. I repeat that the hon. gentleman misrepresented the
fact when he stated that manufactured goods had not been moved in an increased volume of tonnage.
The hon. member for Neepawa (Mr. Murphy) in his speech referred to the Progressive movement in western Canada. He stated that the Progeessive movement there was declining. He made a further statement with respect to a certain farmers' periodical, namely, the Grain Growers' Guide, which was challenged by another hon. member. The statement of the hon. member for Neepawa was to this effect:
Until the present time the subscription price has been $2 a year, $1 of which went .to .pay for the paper, the other dollar being the membership fee in the Farmers' Local.
And so on. Now, Sir, I have been a subscriber to the Grain Growers' Guide from the year it was first printed, and I have never known my dues to the Farmers' local to be paid by the Grain Growers' Guide. I know from personal experience that statement is absolutely incorrect, and it is no indication of the hon. gentleman's intelligence to have made such an assertion.
Now, I wish to say a few words with regard to the budget. In the first place I think the budget will be accepted generally by the people of this country. I sat in this House during the last parliament and in my opinion this is the best budget that has ever been brought down during that time. I believe I can support it with a good deal better spirit than any budget which has been submitted to parliament since 1921. Like the hon. member for Labelle (Mr. Bourassa) I regret very much that the government has seen fit, in a way, to reduce the special taxes for war revenue purposes. I think those taxes should be kept up as long as it is necessary to meet our war expenditures because personally I have not very much use for war. So long 1 a.m. as people feel they must pay for wars the less likely they will entertain any desire of supporting future wars if they can help it.
The Finance minister stated that the national debt at the present time amounts to $2,417,437,6S5. That is quite a large debt. Heretofore we have never made, any provision for the reduction of our national debt. All that we have done is to take the surplus we might have at the end of the year and apply it in reduction of the national debt. I think the time has come when we should make profusion for the reduction of the national debt, and that provision should be included in the budget. There should be an item of expenditure in the estimates to cover

The Budget-Mr. Gardiner
the actual reduction of our national debt, and personally I will not feel satisfied that we are handling that situation effectively until such provision is made. It is not enough to depend on the surplus each year for the reduction of that debt.
There is one omission in the budget which is rather surprising to me and that is that the Minister of Finance did not forecast the revenue for the coming year. I am quite ready to admit that it is a hard thing to forecast revenue, and any Minister of Finance who attempts to do it is more or less in the class of a prophet. But at the same time it gives a good deal of satisfaction to the people if they have some indication as to what the minister expects in the way of revenue for the coming year.
Referring to the income tax, I think it is now on a basis where it should be kept for some years to come unless something extraordinary happens. I would not like to see the income tax any further reduced, except perhaps in the lower incomes. As far as the higher incomes are concerned I think they should be kept as they are, because after all is said and done the people who have the income are those who should be the most heavily taxed, and the income tax in my judgment is one of the fairest taxes that we have. A good deal has been said with reference to the favourable balance of trade, namely to the extent of $402,000,000. The Prime Minister this afternoon referred to the fact that the balance of trade in Canada's favour was greater than the balance of trade in favour of the United States in her national trade, namely $402,000,000 for Canada and $352,000,000 for the United States. One thing which we must take into consideration is the fact that Canada is a debtor nation. We are paying out interest charges each year, and consequantly in order to meet those charges, we must export goods. That is the only way we can pay our interest charges and our debts abroad. By reason of the fact that we are a debtor nation it is necessary to be a tremendous exporter of goods to meet obligations incurred for what we import. The United States is a creditor nation, and consequently, because of that fact, she does not have to export a surplus of goods to pay for any liabilities she may have abroad. As a matter of fact the time is coming when we may expect the United States to have a balance of trade against her, on account of the payment of debts due to the United States.
The Prime Minister seemed to think that a good deal of this balance of trade was due in large measure to the methods of the govfVlr. Gardiner.]
ernment. There may be something in favour of that proposition, but do not forget that the people who make prosperity in this country possible, and who make it possible to have a balance of trade of $402,000,000, are the people who take off their coats and produce the wealth of the country. If the people of Canada had not been industrious, more particularly in our agricultural section of Canada, we would never have that favourable balance of trade, but we must always remember that any favourable balance of trade or any method of paying our liability can only be secured by producing goods and rendering service.
There is one item I should like to suggest to the Minister of Finance and to the government regarding our obligations abroad. At the present time Canada has no means of telling how much we owe abroad by way of liabilities or debt. I think it would be quite possible for the Bureau of Statistics to secure the information, and if we had it we would be in a position to know just how our trade balances stood. We may not be exporting enough goods at the present time, even allowing for the surplus we have had during the last year to pay our liabilities abroad, and if that is the case we should be in a position to know it and be able to tell how much we have spent by way of surplus to meet the liability. It seems to me the Bureau of Statistics should be taken care of to a greater extent than it is at the present time. I do not think they have been given the opportunity to obtain as much information as they might have, and there is much information we should have from that bureau which we have not got and which would be of great value in future in determining our future policy.
The Minister of Finance in his closing remarks made a statement I think we all approve of. He pleaded' for unity in Canada, and in that I agree with him, but let me say there can be no unity in Canada so long -as injustices remain in this country. The only method whereby we -can secure unity is to see that justice is rendered to all sections of Canada ; when that is done we will have that unity which is so much desired by all classes of the country.
Since this session opened our bon. friends to the right have been very much perturbed about the farmer and have expressed themselves very freely as to his condition. They maintain that the farmer is not receiving justice under present conditions, and they are quite right. But Itihey propose, in order that the farmer shall receive a greater measure of justice, to place a higher protective duty on

The Budget-Mr. Gardiner
farm products. That is their remedy and the only remedy they propose, so far as I have been able to gather up to the present time. Let us see where the farmer would stand under a protective system. Let me remind hon. members first of all that very nearly fifty per cent of the population of Canada depends wholly or indirectly upon agriculture. How has protection treated the farmer in the past? It is only necessary to look over the statistics carefully (to ascertain how the farmer stands under a protective system. In 1923 I went to a good deal of pains to find out how the farmer stood, and after the investigation I made I felt that the farmer was robbed at the point of exchange. That is to say, when he came to exchange the products of his labour for the products of the factory he was robbed, because he did not get a fair exchange; so much so that, taking into consideration the prices as they were at that particular time, 1923, the farmer had to incorporate in his products approximately two and a half hours of labour in exchange for one hour of factory labour. Under those circumstances no agricultural section of Canada can be prosperous. I do not think it is quite as bad to-d)ay, on account of the fact that the price of farm products have risen quite substantially during the past two years. There is also a greater degree of prosperity among the farmers than there was in 1923. But notwithstanding the increased price of products the farmers to-da,y are not receiving equitable treatment when they come to exchange those products for the things they require. That is readily understood when you examine the situation.' As has been stated on many occasions, we farmers buy in a protected 'and sell in an open market at world's prices, because we export large surpluses of farm products. Under our fiscal policy the manufacturers can control to a large extent the prices of the commodities they sell, and by reason of that fact the farmer is unable to compete with them in the interchange of products.
Our Conservative friends have been assiduous in trying to cultivate the affections of the farmers. Now let me say this: I do not care how high the tariff may be on agricultural products. The fact is that just so long as the farmers sell individually and compete one against the other, not only in the home market but in the markets of the world, just so long will they be absolutely at a disadvantage under protection. Unless, therefore, the farmers realize that their only hope is in selling co-operatively, then under no circumstances can they expect to be prosperous in a country in which there is a protective
tariff. Let me give the experience of Australia. I have gone to the trouble to find out just what the situation is there and I think the House will be interested to follow the trend of events in that dominion. Some time ago as the result of a general election the Australian people found themselves face to face with a situation very much the same as we have here at the present time. No party had a majority in the House and none could carry on except upon a basis of cooperation. There were three different groups in that parliament, one of which was the fanner party. This party made an alliance with the high protectionists, two of the farmer representatives going into the cabinet. Eventually they had to accept the protective policy of the group with the largest following who had formed the government. That government increased the customs duties and in the long run the Australian farmer demanded protection for himself. And he was protected. The result is that to-day in Australia there is a two-price system in connection with the sale of farm products. Consideration is first given the requirements of home consumption, and what is left is of course exported. Take for instance the sugar cane industry. They can tell exactly how much sugar is produced, and I am informed that during the last year it required about 60 per cent of the sugar cane grown in the dominion to provide for home consumption. 40 per cent being exported. What happened? The cane growers received $12 per ton for their product on that portion consumed at home, while on the 40 per cent which they exported they received only $3 a ton. I may remark here that there is in Australia a Labour Arbitration Board, and the moment the prices of farm products went up under that system, owing to the fact that the farmers were in control of prices in the home market, the workingmen demanded a higher wage. They went to the board, pressed their case and got an increase. What happened again? Up went the prices of farm products. So in Australia they are afflicted with this vicious circle. And that is what will happen in Canada if the policy advocated by the Conservative party is put into effect and the farmers ever control the selling of their own products.
Our friends on many occasions have brought to the attention of the House the fact that the farmers of the United States have high protection, and the leader of the opposition (Mr. Meighen) has said more than once that when he comes into power he will erect a protective wall brick for brick with the United States. One would naturally think

The Budget-Mr. Gardiner
that the protective tariff in the United States should have operated beneficially to the farmers, but as a matter of fact it has not, because of the fact, as I have pointed out, that they compete one against the other in selling their products. What is happening in the United States at the present moment? The farmers are telling the government quite frankly that it. has fooled them on the question of the tariff, and they are demanding that congress set aside $375,000,000 for the purpose of taking care of the exportable surplus of farm products in the United States, in order that this surplus may be taken off the market, leaving the farmers in a position to increase the price of the product to the home consumer. That is the position the farmers are in to-day in the United States, and I understand that congress is thinking seriously of applying that suggested remedy. Under the circumstances it strikes me as folly for the farmers of Canada to accept the policy laid down by the Conservatives. I admit that if we were selling all our products through one channel a protective tariff would be a fine thing, for we could then take advantage of it. But the fact is that we cannot and until such a co-operative organization is actually in operation we shall not be able to do so.
A good deal of criticism has been made with reference to the reduction of duties on automobiles. The only fault I have to find is that it is not great enough. I should like to see a further reduction made in these duties, and in. my opinion, judging from the profits which I have seen that these companies make, if a further substantial reduction were made the manufacturers would still be left with sufficient protection. It is rather amusing to hear our friends discussing the motor industry. One thing that has struck' me more forcibly than any other in this connection is the fact that not one of these gentlemen seems to know anything about the industry, for there is not a practical motor man in this House. Most of the arguments are based on supposition and supposition alone, and just so long as that sort of debate goes on it will be impossible for us to know what the actual facts are in relation to the motor industry in Canada. Some time ago, as we all know, there was a delegation here from the city of Oshawa and surrounding towns to interview the government with a view to securing the restoration of the reduced duties. Having given the question careful consideration I have come to the [DOT] conclusion that quite evidently there is an understanding between employers and employees in eastern Canada 
that while they can get a high duty on whatever commodities they manufacture, they are in position to exploit a large section of the Canadian people. And they are quite willing to carry on that exploitation if they can. It seems to me that this delegation was here merely for the purpose of securing from the government the privilege of exploiting the masses of the Canadian consumers for another period of time. That is how it strikes me at any rate. Under the circumstances I am glad that the government reduced the duty on motor cars, and, I repeat, I would have been ready to support a still greater reduction had they had the courage to propose it. I have heard it rumoured. I do not know with what truth, that the higher officials of the General Motors Corporation of Canada do not even use the 'cars they manufacture in Oshawa, but bring in their cars from the States because of the fact that even after paying the duty they can get them cheaper. As I say, I do not know whether that is correct or not, but the rumour is so strong that it seems to me there must be some modicum of truth in it.
I think in some former debate I drew the attention of the House to this circumstance. We have natural resources in abundance, we have also machinery of production second to none in the world, and to supplement these we have a virile manhood willing to produce the things we require for our sustenance. Yet notwitstand'ing that fact we find a very large proportion of our population to-day is on the verge of want. Why is it that in a country so wonderfully endowed with natural resources, the machinery of production and a virile manhood, 25 per cent at least of our people are on the verge of the bread line almost all the time. That is the real problem before us. I do not think the fiscal question is the most important that we have to deal with. It does not make any difference whether you go to a highly protected country or to a free trade country, you find a similar amount of destitution in either. It seems to me we have been waiting a tremendous lot of time in dealing with the fiscal question instead of applying ourselves to the- one essential problem. \\ e should see to it that we get enough purchasing power into the hands of the consumers so that they can buy what we produce. In other words, it is a question of effective demand. When we have sufficient purchasing power then we will have an effective demand, and when we have an effective demand then all our industries will be running at full speed. And until we have that effective

The Budget-Mr. Gardiner
demand through increased purchasing power we can talk ourselves black in the face regarding free trade and protection and never accomplish anything worth while.
The hon. member for West Calgary (Mr. Bennett) to-night made some reference to capital. He complained that under this 'budget people were selling their Canadian stocks and bonds and investing their money in Wall street in United States securities. I regret my hon. friend is not in his seat. I am afraid that he has not grasped even the first principles of economics. Had he done so he would not have made such a statement, for he is far too intelligent to make such an error. It is not possible for any great amount of money to be transferred from Canada to the United States or to any other country. We do not transfer money-we do not get money when new capital comes into this country. Money in the final analysis is merely a medium of exchange. It just measures values, or we express values by money. The only function of money is to facilitate the exchange of goods and services. We never export money unless we export bullion or gold when it is coined, and there is very little of that exported or imported. Now, what happens when we get new capital? For instance, if $200,000,000 of American capital comes into Canada it does not come in the form of American currency, because we do not allow that currency to circulate in this country. In the first instance that capital no doubt comes in by way of a 'bank credit, but just as sure as we get a bank credit of $200,000,000 of new capital from the United States, that will be followed by goods because that is the only way that capital can flow from one country to another. Some of our friends make the mistake of thinking that money is capital. Money is not capital. It never was and neve! will be. True, you can purchase capital if you have money, but money in itself is not capital. Capital is, for instance, factories, the machinery of production, raw material, and so forth; that is real capital, but money in itself is not capital at all. That is where many of our protectionist friends go wrong. For instance, our friends to the right say: You ought to treat capital a little better. If you would cut down taxes on capital we would get much more outside capital to develop our resources. But what about their high protective policy that they talk so glibly about? It is a direct tax on capital coming into this country because that capital, as I stated before, comes in in the form of goods, and those goods have to pay duty. Therefore our friends are very illogical in their reasoning. They want to see more capital come in.
All right, then cut down your customs duties and you will get capital more readily than under present conditions. That is the only way.
Our friends also seem to think that capital is of more value than labour; that is to say. they would give the preference to capital over labour. Let me give the House a quotation from Abraham Lincoln, which I think fits the situation exactly. This is what he said about capital:
Capital is the fruit of labour and could not exist if labour had not first existed. Labour therefore deserves much the highest consideration.
I quite agree with that. Greater consideration should be given to those who produce capital than to capital itself, and until we make up our minds to adopt that as our policy the workers of this country will be always shouting for higher tariff duties in order that they may be able to get work.


Mr. BELL (St. Antoine):: Would the hon. member tell the House whether Lincoln was a protectionist or not?


Robert Gardiner: I do not care what he
was. I am merely quoting his opinion because it fits present-day conditions. It is not material to my argument whether he was a protectionist, a free-trader or a tariff for revenue man.
I would like to say a word about the Tariff Advisory Board. I am not satisfied in my own mind that this board is going to be worth anything; in fact, Mr. Speaker, I think that those who believe it will be of some value are more or less living in a fool's paradise. Let us consider the members composing the board at present, and see what business they are engaged in. One I understand to be a newspaper man, and also a politician; another is a boot and shoe manufacturer, while the third member is a farmer. I quite agree that if they look into the question of whether or not we should have a tariff on magazines coming into Canada, that member of the board who is a newspaper man will know something about it; he should, because that is his business. So far as boots and shoes are concerned, and as to whether we should have a higher tariff, a lower tariff, or no tariff at all, that member of the board who is a practical boot and shoe man will be able to give valuable information, and will know what he is talking about. In dealing with agriculture the third member will no doubt be able to give a good deal of intelligent service. But that, I think, is about all they are capable of inquiring into. When it comes to other industries such as the automobile industry, for instance, in all its ramifications,

The Budget-Mr. Gardiner
what hope is there of a board of that description being able to get an intelligent viewpoint of the whole circumstances? It would seem to me almost impossible under these circumstances for this board to function efficiently.
In connection with the tariff board in the United States, I would like to draw the attention of the House to one point. The hon. member for West Calgary (Mr. Bennett) referred to this board to-night and stated that our Tariff Advisory Board should have practically the same powers as that of the United States tariff board. That is, that they should have such power that if they find that the tariff should be raised or lowered, they may put that tariff into effect according to their judgment. I trust that that will never take place in this country. I think the representatives of the people, who are elected to this House to look after the public interest, should always keep control of the fiscal policy. I read an article the other day regarding the situation in the United States, where the board is composed of six members, I believe. Some time ago an application was made to that board to inquire into the sugar industry of the United States. That was done, and three members of the board thought the tariff should remain as it was, while three others, because of certain facts they had discovered. reported in favour of a lower duty. The board was deadlocked for some time and the report was not brought down for some twelve months. Eventually the administration tried to get rid of one or two of those members in favour of a reduction; they were offered all sorts of privileges and all kinds of high-salaried jobs, in order that the sugar trust might exploit the United States citizen by keeping a high tariff on sugar. I think such a condition is intolerable, and I do not believe the Canadian people would welcome it. However, I am quite willing to give this board an opportunity to function and we can then judge of its usefulness by the fruits of its labour.
I wish to make a protest, however. I suggest to the Minister of Finance and to the government that as far as I can see no provision is made for anyone to look after the interests of the consumers before that board. We can well understand that the individual consumer of farm implements, sugar or anything else, is not in a position to come before that board and plead his case. In consequence, then, if fairness is to be done the consumer as well as the industry under investigation, there should be a representative there to look after the interests of the consumers, and to see that all the facts are

brought forward. I would suggest to the government and more particularly to the Minister of Finance that a representative should be placed at the disposal of the consumers in order that their interests may be protected.
Now I have only one other subject to deal with, and I will be very brief. I would like to speak for a moment on the situation in the House of Commons as we find it at present. After the last general election we found that no party or group in this House commanded a majority, which meant that we either had to have another election, or that two or more of the groups must come together, carry on the government and allow parliament to function. That was done, and I have no regrets to express and no apologies to offer for the course of action I took. Our friends to my right have called us many different names; we do not mind that; we are used to it. But I would like to remind hon. members to my right that had we decided to throw in our lot with them the situation would have probably been reversed. Very little criticism can be levelled at us, therefore, for our action.
The point I would like to deal with to-night is more particularly our parliamentary institution as a whole. We must ask ourselves whether parliament is functioning as effectively as it might function, whether we are rendering the service to this country that we should render, and if not why not. Prior to 1921 we had' only two parties in this House, the Liberals and Conservatives. When the general elections were over one party was left with a majority in the House; they took up the reins of government and were responsible for the administration of affairs. The other party formed what was known as the official opposition, the 'leader of which received something like $10,000 a year over and above his indemnity. For what purpose? To oppose the government measures; to oppose everything the government brought down. The people, by a majority of votes, indicated that they wanted a certain party to form a government and to carry on the affairs of the country. But our politicians decided that something would be added, and that the other party would oppose all the measures the government brought down. That seems to me, Mr. Speaker, to be a ridiculous situation. There is one thing we must recognize. If you look over the industrial field you will find that co-operation is the order of the day, that co-operation is invading every industry in this country. Our parliamentary proceedings, in my judgment, are something like thirty

The Budget-Mr. Wilson (Vaudreuil)
or forty years behind the times, that is to say, behind our industrial development, and the time has come, in my opinion, when if this parliament is going to function under present conditions we shall have to have cooperation in politics just the same as we have co-operation in the industrial field. This parliament has been in session now for four months, and what have we done?


An hon. MEMBER:: Nothing.


Robert Gardiner: Nothing; that is right. We have an insane system of doing the business of this country. If hon. -members of this House came to this House imbued with the idea that they were going to support measures, and not parties, we would have transacted the business that was to be done in this House two months ago. I care not what party may come into power; that is immaterial to me. But I do say this: This country is going to demand more from this parliament than what they have received in the past, and the time has come, unless we are going to run the risk of being laughed to scorn by the average person in Canada, when we must rearrange our method of doing business in this House, and I suggest as a remedy for getting away from our present conditions that all groups in this House try and co-operate for the purpose of giving the best legislation and the best administration that we possibly can to Canada.


Mr. L. A. WILSON (Vaudreuil-Soulanges):: Mr. Speaker, this is the first occasion on which I have risen to address this House. I have observed since the 7th of January when we met, that every hon. member who rose to speak congratulated you upon the position you occupy as Speaker of this House. I would rather congratulate the House and the people of Canada on having been able to obtain such a gentleman as yourself to occupy the Speaker's chair. I shall not enlarge upon your qualities, upon your ability, upon your savoir faire; it is too well known. But I see, and I believe my friends in this House also see, a different vision. They have watched you since this parliament opened. They have observed your patience, your impartial judgments, your knowledge, and they have sympathized with you in the great work that you have done since that day, and I think I am reflecting the opinion of everybody in this House and of the people of Canada generally when I say that they see a different vision, and that is, notwithstanding the great regret we should feel at your departure, we would like to see you occupy the position of Canadian representative at Washington. I have no
mandate to speak for you, Mr. Speaker, nor have I been inspired to make this remark, but, as the gentlemen on the other side of the House have so very correctly pointed out, we are one of the biggest customers of the United States, and I think it is about time that we had a representative at Washington to see that they become our customers as well as we being theirs. With your wide knowledge of affairs, with your manner, and I might add your lovely disposition, you would soon be able to bring down some of the bricks in that wall that at present stands between the two countries.


Mr. MEWBURN:: Let us make it unanimous.


Lawrence Alexander Wilson: I shall occupy
a very few minutes, as I know the House is tired, and the people of Canada are also tired of this debate, which has lasted now for over a month. I shall therefore restrict my remarks to a few observations as a business man for the last fifty years in the metropolis of Canada.
For the information of the House and those who do not know me intimately-and I am glad for them-I may say that I happen to be interested in several industries in Canada and in several banking institutions; consequently I think I am in a position to make a few remarks on the questions that have come up in this debate. I shall not go into figures, for the figures that I have heard here in the last month would worry a dozen Philadelphia lawyers. I shall take the liberty, however, of giving you a picture as a business man, or as a layman, of what I have observed in this House since the 7th of January.
We were called to meet here on that day, and as you know, Mr. Speaker, it was rather dismal for this side of the House, and probably dismal also for the other side. Really it was not pleasant. I came here absolutely as an accident. Two weeks before nomination day I had no idea that I would ever occupy the honourable position I hold* in this House, but Providence decreed otherwise. When I came to this House on the 7th day of January, I tell you frankly, Mr. Speaker, I was absolutely bewildered. I never had any idea of the beauty and grandeur of this chamber. Much less had 1 any idea of the brilliant parliamentarians that sat in this House at that time and since. Frankly I have been amazed at the ability of some hon. members of this House. I had no conception that the House contained such able men as are in this House at the present time. I had no idea of parliamentary procedure: I had no
3538	COMMONS
The Budget-Mr. Wilson (Vaudreuil)
idea of the number of precedents there are for the guidance of this House, and when I saw the volumes being brought in from the library, Mr. Speaker, from which hon. members quoted precedents going back three hundred or three thousand years, I tell you that I did not feel any higher or any bigger than Tom Thumb. I went to the Minister of Justice and offered him my resignation, but he declined to accept it. I want to say in all frankness that I had no conception of the knowledge or experience possessed by some hon. members of this House. I say to my friends on the street, in Montreal and elsewhere, to-day: If you think there is any sinecure in being a member of parliament, if you think that all he has to do is to walk into the chamber, you will soon discover that you do not amount to very much, and you will cease to criticize members of the House of Commons without knowing the facts as some people unfortunately do throughout this country.
Amongst the speakers that I have remarked, I might with the permission of the House mention a few names. We all know our Prime Minister, and his knowledge of technicalities. We all know our friend the Hon. Ernest Lapointe, who was so very patient throughout the month of January. We all know our friend Ed Macdonald, the popular Minister of National Defence. We all know our friend Mr. Cardin, the sympathetic Minister of Marine and Fisheries. We all know our friend the Hon. George Boivin. We all know the Hon. Charles Stewart, our new Minister of Labour (Mr. Elliott) and our Solicitor General (Mr. Cannon). We all know our friend the Hon. James Robb, who is very popular with the automobile people just now. Then there is the Minister of Railways and Canals (Mr. Dunning), that little dynamo from the west; and the Hon. Charles Marcil, of Bona-venture, that veteran member of the House whom we all admire.	[DOT]


An hon. MEMBER:: Don't forget the Minister of Public*Works.


Lawrence Alexander Wilson: 
Some hon. MEMBERS:: Hear, hear.


Lawrence Alexander Wilson: These fellows behind here happen to know what business I was in. Well, I have made a sfanfy of agriculture during that time, being honorary president of the Agricultural society of Vau-dreuil, as well as honorary president of the Agricultural society of Soulanges. I know the good people that live along the Ottawa and St. Lawrence and I can assure the House that my county can boast the finest inhabitants that are to be found1 anywhere. As I say, I have made a study of conditions from door to door and I modestly claim to understand the requirements of the farmers in my constituency, which I have no doubt is pretty much like any other district in the Dominion. Now, as a result of my observations I think that what the farmer requires to-day above everything else is cheap money. He must borrow at a lower rate of interest than he has been paying if he is to succeed1. We cannot expect him to pay 7 and 8 per cent and be able to carry on under those conditions. If he is to pay such rates of interest it will be impossible for him to buy the adjoining farm or a farm within a few acres of his own upon which to establish his son or sons. The great trouble has been that the farmer has had to pay altogether 
too much in the way of rate of interest. He cannot bear up under this load, nor will he foe able to throw off the yoke unless we can help him to secure cheaper money. I claim, therefore, that the rural credits bill is the most important piece of legislation that has ever been submitted to this House and it calls for the most careful consideration.
On the order paper I asked the question whether the government will provide in the rural credits legislation that borrowers under the ten-year period shall pay not more than 5 per cent on their loans, and those borrowing for a longer period than ten years, not more than 4^ per cent. I certainly do not think that farmers who borrow from the Dominion should be asked to pay more than 4J per cent. They cannot make both ends meet if they do. The government have not specified the rate of interest that will be charged, having left that question open; but when the matter comes up for consideration in due course I think that my labour friends and hon. gentlemen. of the Progressive party, as well as hon. members on both sides, should ask the government and the Finance minister to see to it that those provinces which take advantage of the $10,000,000 loan shall charge the farmer no more than 4 or 4| per cent for the money he borrows. Remember that the farmer with a family of eight, ten, fifteen of twenty children, such as we find in my county, pays these children nothing in the way of wages, and even then, notwithstanding the cry raised against the agriculturist about the prices he charges for his produce, he cannot make ends meet simply because of the extortionate rates of interest he must pay. In my opinion the solution would be for the government to borrow money at, say, 3 per cent. The banks to-day do not- pay more than \\ or 2 per cent on their deposits. I would ask my hon. friend from St. Lawrence-St. George (Mr. Cahan) this question: Do the banks pay more than li or 2 per cent? The hon. member will not answer. To my mind 'he is the best posted man in this House on banking and he knows that the banks do not pay more than li or 2 per cent. And I will tell you why. The hon. gentleman is as foolish as a fox; he will not answer me. If you examine the statements of the banks you will find that two-thirds of the money on deposit is in the savings department at 3 per cent, while one-third is in current accounts bearing no interest. We may therefore discount that one-third, and that means that they pay 2 per cent. The banks do not pay you any interest if you deposit your money on the second or any

The Budget-Mr. Wilson (VaudreuU)
other date during the month; you must, deposit on the first, otherwise you lose your interest for the balance of the month. But when you borrow they charge interest from the moment you get the loan. It is not surprising, therefore, that the banks can put aside these wonderful reserves and pay their shareholders 10, 12, 13 and 14 per cent. No man knows better than I do that the banks now in Canada are as strong as the rock of Gibraltar; they are strong and powerful.
I know it, and I am proud of it. But I say that it is immoral that they should declare dividends of 12, 13 and 14 per cent to their shareholders. Any man should be content to have his money safe in their vaults and draw 6. 7 or 8 per cent. That is why the farmers are paying so much for their money, and I defy any accountant or any banker to stand up in this House or elsewhere and contradict the statement I have just made.
The hon. member for Marquette (Mr. Mullins) the other night stated that when there was a financial crisis in his county the manager of a small local branch had to write to the home office in Toronto or Montreal before he could make a small loan to a client to finance the shipping of grain or cattle. Why should these branch managers be restricted to that extent? It is simply because they are limited to a certain amount in each of these branch banks, whereas the large deposits held by the banks are sent to New York on what they term "call loans." In 1907 I happened to be in the city of Calgary when that terrible financial crisis took place, and out of sixteen or seventeen banks only one or two would lend to any of its customers. The managers had received telegrams from their home offices, either in Toronto or Montreal, to refuse advances to any person. I met a man in Calgary that day whom certain hon. members know, and one of the biggest merchants in the west, and I had to assist him in a small way because he could not get any money from his bank. I ask my friend from St. Lawrence^St. George (Mr. Cahan):	Where was the money? It was in
New York with the gamblers. Millions of Canadian dollars are sent down to the gamblers there, thus depriving our trade and industry of the money it requires.
I am not trying to make a speech to the gallery, I am just giving my impressions as a business man. I am talking of a subject which I understand, and I defy any banker to contradict me, although he may not like what I am saying. Why this timidity in the House of Commons about our banks? Why is the question of banking not broached by 14011-225
my friend across the way, the ex-Minister of Militia (Mr. Mewbum), one of our old loves? He understands what I am talking about. We are not attacking the banks. As I understand it, we are a big family representing the Canadian people. We are not attacking the banks, we are in a sense working as a close coiporation in the interests of the people generally, and if we help the banks they should help us. I am giving the House tonight what to my mind is a solution of our banking problem. We must not allow the banks any more than we allow the railroads to go ahead without proper regulation, and without letting them know that we in this House understand the situation just as well as they do.


Mr. BAKER:: Supposing after the war our banks had stopped discounting our paper, where would we be to-night?


Lawrence Alexander Wilson: They did
stop discounting with certain people-they were taking great precautions.


Richard Langton Baker: Then give the banks credit for what they did.


Lawrence Alexander Wilson: Many years ago a certain bank made me walk my room for months and, months and refused to discount my paper although I showed a growing profit every year. Then I met a friend who asked me how much I owed the bank. I told him. At once he said, "You don't owe them enough."


Richard Langton Baker: They gave the hon. gentleman credit-so would anybody in the House.


Lawrence Alexander Wilson: I do not understand my hon. friend.


Richard Langton Baker: They played fair with you.


Hewitt Bostock: Order.


Lawrence Alexander Wilson: I am not worrying. My hon. friend can ask me any question he likes. I am talking on a very serious subject. As I was saying, Mr. Speaker, my bank made me walk my room for months although my statement showed a growing increase. When I told one of my friends the situation I was in and that I would have to go into bankruptcy unless my paper was discounted as it usually was, but owing to the stringency of the money market my bank could not advance me any more money, having made large loans elsewhere in other quarters, he advised me, as I say, to get into my bank much deeper. This I did. Then I slept while the bank did the walking.
I know my friends opposite would be very much disappointed if I did not deal with one

3542	COMMONS
The Budget-Mr. Wilson (Vaudreuil)
item of the budget-the income tax. I believe our friends across the way would have raised the roof with their applause if one of their number had been able to bring down the budget of our Minister of Finance. It is easily seen by everybody that the new income tax provision is intended to reach wealthy individuals-there is no doubt about that-wealthy individuals who have so far succeeded in evading the surtax and the super tax by incorporating themselves into joint stock companies and only paying the corporation tax of 10-t per cent. They will now have to pay from 30 to 50 per cent upon their dividends. The double taxation, that is, the corporation now pays upon its profits 9 per cent, and the dividend owner pays his tax-there is where the howl comes in. Let us see how it works out. To-day the corporation pays one-seventh less than under the old tax, consequently it can now pay 8 per cent to its shareholders instead of 7 per cent. These facts are absolutely uncontradictable. My friend from West York (Sir Henry Drayton) knows that the corporations are paying one-seventh less; consequently they can pay one per cent more to their shareholders and still come out the same as before. I admit the big man over $10,000 will pay more, and that is the man we are after. Unfortunately I happen to be one of the greatest victims of that law, I am glad to say. I do not think many men in this House will be affected as much as I will be affected by this attack which the Minister of Finance has introduced into this House, but I am willing to make the sacrifice for the state, and I hope my hon. friends opposite will do the same, remembering that those sacrifices are only temporary. We are only lending the money to the government and from what I can see, if we remain members of parliament we will get it back. When the election was announced they came and asked me to save the country; two Liberals were running, and they were afraid a Conservative would step in and win out. A deputation of about 5,000 people, including many Conservatives, asked me to run. I capitulated and here I am. They said, "Come along; the election won't cost you a cent." I am reminded, Mr. Speaker, of two men in a county not far from my own who were selected as candidates, one for each party. They were neighbours, and one said to the other, " Baptiste, how much did you get from the party?" Baptiste said, "$3,000; how much did you get?" The first man said, " $3,000. We would be fools to spend this money; let's get into the same buggy and go round and shake hands with everybody and save our [Mt. L. A. Wilson.]
money." So they started out, and when they got to a certain part of the county they asked how it was going, and the answer was, " Oh, very doubtful, very dangerous; if you don't spend money you will both be beaten."
For the edification of my good friend the exMinister of Finance (Sir Henry Drayton) I would like to give one example which applies to all the figures which may be mentioned in regard to income tax. Surtax and supertax are paid, under the old law, only when above 15,000. If a corporation shows a dividend income of $10,000, under the old law the tax would amount to $115, leaving a net income of $9,885. According to the new tax the increased dividend amounts to $100, with a tax of $262, leaving a net income of $9,838, or a difference of about $46, so why should any howl be made?
The hon. member for West York stated in his brilliant speech that:
If the average Canadian income from dividends of Canadian companies was $7 000, the government would receive $S,750,000 more than last year, and if the average was $10,000 the extra collections would be $12,500,000.
This is just what the Minister of Finance wants; this is just what the government wants, and what the people of Canada want; they want to reach the millionaire, and they are doing so. The hon. member forgot to say, however, that the dividend holders would now receive more from their corporations, and the government will receive less from the corporations. The excess revenue that he mentions will be sliced off the millionaire's melon, and I will have to contribute my slice. I am bound to admire the ex-Minister of Finance; he is a great artist and can paint a most dismal picture or a most brilliant picture, as circumstances demand. The dividend owner now pays exactly the same tax as the salaried or business man, although the dividend owner does not work for his money. The majority of investors are wage earners, professional and unincorporated business men, and this scheme affords great relief to the bulk of Canadian workers and small investors.
Now, gentlemen, I have here clippings from a hundred newspapers. I will not read them all, but there are one or two which I think are important.
Mr. Robb's objective is obvious: he is directing his main attack against the larger private incomes and "unearned increment'' derived from invested capital, and plans to afford some alleviation to the recipients of smaller salaries and wages. The theory of his plan is just and has the support of almost every class, including those adversely affected...
"For some time past many wealthy individuals have successfully evaded the heavy assessments of surtaxes and supertaxes by the simple expedient of incorporating themselves and paying only the "corporation tax" of

The Budget-Mr. Wilson (Vaudreuil)
10-1/2 per cent. The revenue from these private corporations probably ran far in excess of their living requirements, and the owner would draw down in dividends or salary only enough to cover his expenditure, and on this amount only would he pay tax, at the usual rate for individuals...
And so on.
"Those in receipt of salaries and wages which are declared to government by their employers have never had any possible means of evasion and have undoubtedly, proportionately, borne the brunt of income taxation in the past. They are now given a considerable measure of relief by the increase in the amount of statutory exemption and in the low scale of taxation governing lower amounts...
I have hundreds of extracts of that kind which I will not read. Hon. gentlemen opposite have been very courteous to me tonight, but in conclusion I wish to say something regarding concealed bonds and securities. I want to impress upon the Minister of Finance that there are concealed bonds, coupons and securities hidden away in strong boxes throughout this country, not paying their honest taxes to the government. I want to say on the floor of this House that I believe some people are concealing their securities, bonds and coupons payable to bearer, and thus cheating this country of its just dues. These men are despicable; they should not be called Canadians, and I claim that the Minister of Finance, who has it in his power, should start the machinery to break into these strong boxes, if necessary, and make the owners of these concealed bonds pay what is due the government. I am not exaggerating when I make that statement. By what means can he do it? It is rather difficult to know. It is almost as difficult as to find out in the customs probe who is doing the smuggling-difficult when you get all sorts of people coming forward who will swear but not bet. I claim that the Minister of Finance and the government, who are striving by every means to increase the revenue of this country, should see to it that the man who is hiding coupon bonds and trying to defraud the government and the common people of this country who are earning their living by the sweat of their brow should be brought before the criminal courts of this country. How are you going to reach them, Mr. Minister? Reach them, if necessary, by printing a proclamation in the newspapers of this country stating that in the case of any man who conceals bonds and does not report his income therefrom in the regular way, when he dies and a statement of his affairs has to be made to the government of the province in which he lives for succession duties, his whole estate will be confiscated. That man will then start thinking of his family and pay his honest debts.
14011-225J
That is my advice, Mr. Minister, on that question, and I think in that way the treasury of this country would be the richer by several million dollars.
There is an hon. member of this House for whom I have a great admiration. I have not the pleasure of knowing him very intimately, but I have listened to all his speeches, and I consider that he is a very valuable man to the country, but like mosit great men he goes wrong sometimes. All great men have their weaknesses. I am now alluding to the hon. member for Winnipeg North Centre (Mr. Woodsworth). He stated in the House the other day:
I believe we are absolutely right in suggesting that after a certain exemption sufficiently large to enable a man's estate to provide for his immediate dependents, the rest of his estate ought to be very heavily taxed. Personally I would go a great deal further. I would say that it ought to be expropriated.
I do not know whether my hon. friend sent that out as a joker or not, but really it is a very serious thing. I have a high admiration for his ability; I am not trying to throw flowers by any means; that is not my style. Probably he is one of the most valuable men in this House, and we want men in this House like him and his colleague from North Winnipeg (Mr. Heaps). I once belonged to the international union of labour myself. But the hon. member for Winnipeg North Centre would confiscate the capital or estate of a dead man. If that were done, what incentive would there be for a man to increase his capital after he had accumulated sufficient to provide for his immediate dependents? After making a certain amount of money by his ability, by his intelligence, and taking advantage of his opportunities, what incentive would there be for him to continue if all his surplus capital were to be confiscated? It would take the ambition out of a man, and I would point out to my hon. friend that the big financial men of this world who have accumulated large fortunes have done considerable good for their fellowmen. Take Mr. Carnegie, for instance, who happened to make three or four hundred million dollars. He did not carry the gold away with him when he left this world for a better. He did one of the greatest things in the world with his money. He established libraries all through the United States and Canada in any place that required one, to help in educating the people. Take Mr. Rockefeller's son; I happen to know him and the good work he is doing for humanity. Mr. Duke, of the American Tobacco Company, only a short time ago gave between forty and fifty
The Budget-Mr. Wilson

(Vaudreuil)
million dollars for hospital purposes. You gentlemen know what good the great kings of finance are doing with their capital, and remember many of these men came from the labour ranks. They are not men who have had a classical education. Carnegie, Henrv Ford and all these men had only the ordinary commercial education. I really fail to see why the hon. member should propound such a theory in this country. To me it sounds too much like Moscow or Russia, if I may say so, to be introduced in the House of Commons of Canada.
I shall not' detain the House for more than a few minutes longer. The other side of the House has been very kind to me. I can expect kindness from this side, because they are mostly old friends, but I appreciate the extreme courtesy and attention, numerical and otherwise, that has been accorded me. I have had some very great kindnesses extended to me since I came to this House on the 7th of January. I came here thinking I was a wonderful man, but I had not been here twenty-four hours before I found I was not in the picture. My friend the Minister of National Defence (Mr. Macdonald) and a few other gentlemen were good enough to encourage me along by asking me to lunch, and I have now got sort of acclimatized. My friend the ex-Minister of Finance (Sir Henry Drayton) was also very kind to me, also my friend from East Hamilton Mr. Mewburn, and you, Sir, have also been very kind-and they have not touched me yet. I am going to tell you of the impression I had when I first entered this beautiful building. The first thing I saw when I came in by the Senate entrance was a big blackboard, with the word "Divorce." That was an awful thing to be staring one in the face. I got to the post office, and there I got a lot of printed matter from every department of the government, from the Minister of Agriculture, from the Minister of the Interior, from the Minister of Labour, and the Minister of Finance, informing me on international relations and how to kill moths in winter. I also received an envelope, with my address printed, advising me that there would be a caucus of the Liberal party at eleven o'clock. I thought that was wonderful. The attention given by the staff of the Sergeant at Arms of this House to hon. members is very satisfactory. You get stationery free, consisting of ink, pens, rubber, and pads of paper, maps, et cetera. I thought to myself when I came here first that I was in clover. I find they put me on several committees dealing with astronomy, botany and subjects of that kind,
I have commenced to feel very important.
[Ml. L. A. Willson.]
In conclusion I wish to say something about the railway question. I am sorry to disagree with my old friend of forty years standing (Mr. Maclean, York) on the railway question. My hon. friend wants a marriage of the railway systems of Canada. It is true there is a deficit on the Canadian National railway. The management show there is a surplus, but I do not believe there is any surplus at all. How can there be a surplus when all the members of this House get passes and travel free? I claim there has been a wonderful improvement on the Canadian National railways. There is no doubt about that. I travel on it every day and I have noticed the great improvement in the management of the line and in the deportment of the staff. I think Sir Henry Thornton is a wonderful railway man. He is working for love, I believe.


An hon. MEMBER:: Fifty thousand dollars.


Lawrence Alexander Wilson: I would ask
my hon. friend to be discreet, and not give the price away. We have in Mr. Beatty a lovable man, trained under one of the greatest men who ever lived in this country and one of my oldest friends, Sir Thomas Shaughnessy. I pause to-night to pay a tribute to his memory. Under the tuition of Sir Thomas Shaughnessy Mr. Beatty learned the railway business and there are few better on this continent. Now, I believe in competition between these two systems. Allow them to be operated separately. If there is not competition between them you will not receive the attention or the satisfaction you are getting at the present time. This country is big enough to support two railway systems. Even though there should be a little deficit of twenty-five millions what does it amount to? The Canadian National Railways employ one hundred thousand people. One of the shops of the system is located in my own county and I know what an amount of good that railway is accomplishing. I know that the town of Coteau is dependent on the workshops of the Canadian National railway. If we consider that the one hundred thousand employees of the system have, on the average, families of three or four it means that half a million persons are dependent on the Canadian National railways for their bread and butter. Destroy that system, root it up, and it would cost you many millions more to support these people if you ever make an amalgamation with the Canadian Pacific. My advice is: Let Mr. Beatty and Sir Henry Thornton remain friendly enemies.
May I draw the attention of the House to the fact that in 1908 I sent a Christmas

The Budget-Mr. McKUlop
card to my friends, bearing the following poetic greeting:
Men should be judged not by their tint or skin,
The gods they serve, the vintage that they drink,
Nor by the way they fight or love or sin,
But by the quality of thought they think.
I happened to send one of those cards to a friend-the friend of both sides of this House -the then Prime Minister of Canada. The right hon. gentleman in question replied to me as follows:
Prime Minister's Office, Canada,
Ottawa, Dec. 20, 1908.
My dear Larry,
I received this morning your Christmas greeting and I will not lose one moment before sending you my thanks.
The ranks are getting thinner and thinner of the old friends who, in the early years of my career, urged me on, helped me and assisted me. You are one of them. To them and to you especially my heart goes with ever growing gratitude.
May the new year be to you a year of prosperity and happiness.
This is the wish of your old friend,
Wilfrid Laurier.
This shows the sentiment and the heart of a man we all respected and revered. Let us follow his example and harmony will reign forever in our beloved Canada.


Mr. H. C. McKILLOP (West Elgin):: Mr. Speaker, in the first place I wish to congratulate the last speaker on the very entertaining and humorous address with which he has entertained the House.
I realize that the hour is getting late and for that reason I shall curtail my remarks; I promise not to detain the House for any length of time. There are, however, one or two problems to which I wish to draw the attention of the government and more especially of the Finance minister (Mr. Robb). The budget as brought down has dealt with only one industry in Canada. But there are a great many other industries that are hoping against hope that the government will provide a little more protection for their needs. I am afraid they are going to be disappointed, nevertheless I hope that before the budget is finally disposed of the Minister of Finance will give due consider-3 a m.	ation to	the industries	whose
situation I am going to bring to his attention, and will see that they are given a little more protection.
There is	a class of	citizen of	our countrywho want	and need	protection	very	badly.I	refer to	the truck	farmer or	the	market
gardener, of whom there are a great many throughout Canada. Now these farmers, owing to our geographical situation, are labouring
under a heavy handicap, as the southern states produce each year so much earlier and flood our markets with their produce for which they obtain the highest prices; then when our farmers' produce is ready for market they frequently find the market filled up, or at least filled to such an extent that they have to take a very low price for what they have to sell and in a good many instances take a good part of their load back home with them. This, Mr. Speaker, is not as it should be. These farmers are up early and work late to produce these goods and it is certainly not very encouraging to see the cream of this business going to the producers in the south.
For instance last year the following fruits and vegetables were imported:
Apples	Quantity .. 150,840 bbls. $	Value 800,059Blackberries') Gooseberries}*.. ..	.. 38,360 lbs.	6,227Raspberries J Peaches	.. 14,898^566 lbs.	643,001Pears	.. 20,905,150 lbs.	926,398Plums	.. 190,756 bus.	495,035Strawberries	.. 3,168.975 lbs.	607,345Cabbage	221,134Onions	423,546Potatoes	.. 26,129,680 lbs.	481,933Tomatoes	.. 329,781 lbs.	1,110,587Making a total of	.. $5,715,265	This amount.	Mr.	Speaker, has gone	to enrich the coffers	of	some other nation,	and I
am satisfied that if more protection were put on the various articles I have mentioned it would not be long before all the fruit and vegetables needed would be produced in this country and the money kept circulating at home, to the benefit of both producers and consumers alike.
For the last four years I have at every session raised my voice in protest against the low duty on beans coming into this country to the detriment of our own bean producers. For the benefit of those members who. came for the first time to this House after the last election, I would just say that the duty on -beans coming into this country is now and has been for a good many years just twenty-five cents per bushel, while on beans going into the United States the duty is SI.05 per bushel. In other words, if a bean dealer in the United States wants to send a bushel of beans, or for that matter a carload, into this country he has to pay 25 cents per bushel duty, while on the other hand if a dealer of this country wants to send beans into the republic to the south of us, he has to pay $1.05 per bushel. Now just to show how this is worked out to the detriment of the bean producer of this country, I want to

The Budget-Mr. McKillop
go back to the years from 1891 to 1901. For that period of ten years the average annual amount of beans produced in this country was
875.000	bushels, but in the year 1901 there were imported into this country 11,000 bushel of beans. From that time on the production of beans in this country steadily grew smaller while the importations increased by leaps and bounds, until we find that in the year 1920 there were produced in this country only
388.000	'bushels of beans, while in the same year 444,000 bushels were imported. In other words, for the year 1920 there were 56,000 bushels more imported than there were produced in Canada. I think that all hon. members will agree with me that that is a big change in this one industry in twenty years, all owing to the low duty of 25 cents per bushel on beans coming into our country. And further importations were as follows for
* five years from	1921 to 1925:	
Year .	Bushels	Value1921	203,725	$637.6321922	148,157	376,7921923	329,974	777,2141924	29S647	754,0901925	150,524	350,369Total	1,131,027	2,746,097
In other words, nearly 13,000,000 has gone from Canada to enrich the producers of this commodity in some other country, while here at home many of our producers are still holding their last year's stock. For the months of January and February, and March of this year beans to the extent of 68,167 bushels, valued at 8146,907 have come in under this low duty.
. Now, Mr. Speaker, I do not think that this is fair or equitable to the bean producers of this country, and I sincerely hope that this duty on beans will be raised as high as the duty imposed by the nation to the south of us on the same product. I want to say that as long as I am a member of this House I will continue to fight for an increase of this duty, because in doing so I contend that I am only trying to get justice for our bean producers.
There are a great many industries in this Country that need more protection than they have at present, such as our woollen mills, our knitting plants, our coal fields, our pulp wood industry, and many others I could mention. It Is my humble opinion that if, instead of spending so much money trying to get immigrants into this country, the government would increase protection all round and get the wheels of industry turning, there would be no need to spend money trying to get people to come here; because as soon as it is known abroad that there is plenty of work in Canada, people will flock here by the thousands and in this 
way our great Dominion will be built up and will soon become one of the greatest nations in the world.


Mr. F. P. QUINN (Halifax):: I would not
trespass on the valuable time of the House at this late hour, and indeed it had not been my intention until a very short time ago to say anything at all, but for the fact that after listening to the splendid address of the hon. member for Shel'bume-Yarmouth (Mr. Hatfield) last night, and having read some of it to-day in Hansard, I thought I would reply, however briefly, to some of the criticisms he levelled at some of the Maritime representatives in this parliament on the grounds upon which they conducted their campaign and upon which they were elected. As the hour is so late I will not discuss the point at any length, but I should like to quote just a sentence of what the hon. member had to say. For instance:
If my hon. friend will permit me to say so, this government has done the only thing done by any government to help Nova Scotia.
He went on to point out that the government had appointed a royal commission to investigate Maritime rights. Now the reason why there are so many representatives from the Maritime provinces on this side of the House is the fact that nothing has been done either by this or any previous government to assist either Nova Scotia or the other Maritime provinces. I make this statement in no partisan spirit, for the fact is that every parliament, Liberal and Conservative alike, has ignored the rights of the Maritime provinces. We feel that we have not received justice at the hands of confederation. On a former occasion on which I addressed the House I referred at some length to this question, and indicated why we Maritime righters, as we have been called, were elected. We were elected to press the claims which Nova Scotia, New Brunswick and Prince Edward Island justly have against the Dominion and which have been consistently ignored.
Just a word or two now with regard to the budget. I do not feel justified in supporting the budget. The Minister of Finance (Mr. Robb), in presenting his statement, referred to it as a poor man's budget. I may be lacking in intelligence but I must confess that I cannot see in what respect this budget will be of any advantage to the poor man. Take for instance the reduction in automobile duties. Will that affect the poor man in any way? And when I speak of the poor man I am referring to wage earners whose income seldom exceeds $2,000. Are they interested in the purchase of automobiles? Take again the increased exemptions in income

The Budget-Mr. Quinn
tax: is that a matter of interest to the poor man? And the reduction in postage: to what extent does that affect the poor man's purse? The average workingman writes two letters a week. That is a matter of $1 spread over a period of twelve months.
I do not know that there is anything else the government can boatt about, apart from the slight reduction of 2J per cent in the sales tax on canned fish. This will mean very little to the average wage earner. Had the Minister of Finance been sincere the first thing he would have done would have been to eliminate altogether the 5 per cent sales tax which this government imposed upon the people; for that would have been of direct advantage to every man, woman and child in Canada. I leave that suggestion for his consideration.
Just before the budget was brought down I happened to read an editorial from the Labour Gazette from which I took the following quotation:
The tariff changes will lead to restriction of opportunities of employment without providing any commensurate benefit to the wage earner generally.
There is the opinion of the Labour Gazette. Further on, referring to the tariff board

and I call this particularly to the attention of the Labour representatives-the Gazette has this to say:
In the creation of the tariff board organized labour has been given no consideration, for there is no group in Canada whose interests are more vitally affected by the tariff reductions.
I am not going to say more, but I want to read to the House something which were it possible under the rules to do so, I would move by way of amendment to the budget. I know it is not in order to propose a second amendment, but if I could submit one it would be to the following effect:
That conditions in the Maritime provinces, especially with regard to employment and markets for basic products, such as coal and steel are at this very time alarming.
That as a consequence people are leaving for other lands in numbers unnaturally large.
That remedial measures have been already too long delayed.
That such conditions are due in no small degree to tariff reductions made in recent years, especially in respect of steel, which discriminate against the Maritime provinces.
And the House regrets that the budget of the minister of Finance contains not the slightest promise of relief.


Mr. J. H. HARRIS (Toronto-Scarborough):: In the space of just two minutes I want to say what in my opinion the policy of this government means to this Dominion. To my mind it is a tragedy that in this day and generation we should find in Canada a government, which is supposed to comprise the brightest minds in the country, utterly unable so to deal with our fiscal problem as to inspire the ordinary wage earners with confidence not only in themselves but in the country. Our people are leaving Canada for foreign shores to seek the employment which they are unable to find at home. It is most unfortunate that representatives of the Canadian government and representatives of our leading manufacturing industries, particularly of Ontario, including the producers of motor cars, should not find it possible to come together and decide upon a policy in the interests of the country.
I might mention again what I dealt with in some detail in the debate on the Address. The longer the Liberal party stays in power the more are we getting out of balance with regard to the number of our people engaged in the production of raw material as compared with those employed in the production of manufactured goods. Whereas in the United States every year more and more men are engaged in the various processes of manufacturing and a diminishing number are employed on rough labour, in this country the conditions are reversed. What is the reason? The United States consistently adheres to a protective policy, while under this government Canada is handicapped by an unstable tariff policy.
And the government has gone a step further. Under this budget the imposition of double income tax will discourage the investment of money in Canadian industries. This is another example of how the industrial life of the Dominion is being crippled by the ineptitude of this government.


William Lyon Mackenzie King: I was paired
with the right hon. leader of the opposition (Mr. Meighen). Had I voted I would have voted against the amendment.
Mr. O'NEILL: Mr. Speaker, I was paired with the hon. member for Pontiac (Mr. Cahill). Had I voted I would have voted in favour of the amendment.


Mr. DESLAURIERS:: Mr. Speaker, I was paired with the hon. member for Port Arthur (Mr. Langworthy). Had I voted, I would have voted against the amendment.


Mr. HOWDEN:: I was paired with the
hon. member for Marquette (Mr. Mullins). Had I voted I would have voted against the amendment.


Hewitt Bostock: The question is now on
the main motion.


Henry Lumley Drayton: The same
division.


Hewitt Bostock: Shall I say carried on the same division?


Some hon. MEMBERS:: No, no.

The Budget-Division


William Lyon Mackenzie King: I was paired with the right hon. leader of the opposition (Mr. Meighen). Had I voted I would have voted for the motion.
Mr. O'NEILL: I was paired with the hon. member for Pontiac (Mr. Cahill). Had I . voted I would have voted against the motion.


John Power Howden: I was paired with the hon. member for Marquette (Mr. Mullins). Had I voted I would have voted for the motion.
Questions


Hermas Deslauriers: Mr. Speaker, I was paired with the hon. member for Port Arthur (Mr. Langworthy). Had I voted I would have voted in favour of the motion.



WAYS AND MEANS


[Stage Direction]
The House in committee of Ways and Means, Mr. Duff in the chair.
The CHAIRMAN:: I will read the resolution:
1.	Resolved, That the Customs Tariff, 1907, he amended by repealing subsection 1 of section 3 and substituting therefor the following-


James Alexander Robb: I move that the committee rise and report progress.
Progress reported.


PRIVATE BILLS COMMITTEE
William Lyon Mackenzie King: With the unanimous consent of the House I would like to move that the name of Mr. Cannon be substituted for that of Mr. Goodison on the select standing committee on Miscellaneous Private Bills.


Hewitt Bostock: By unanimous consent the House reverts to motions.


[Stage Direction]
Motion agreed to.
On motion of Mr. Mackenzie King the House adjourned at 4.34 a.m. (Wednesday).
Wednesday, May 19, 1926