1928-03-13

OFFICIAL REPORT


[Stage Direction]
[DOT]		
		
		
		
		
		
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House of Commons Bebates
[Stage Direction]
Tuesday, March 13, 1928

Mr. F. WELLINGTON HAY (North Perth) moved:: That in accordance with the recommendation contained in the third report of the select standing committee on miscellaneous private hills, the fee and charges made on Bill No. 25, an act to incorporate the Niagara Gorge Bridge Company, be refunded, less cost of printing and translating the bill.


[Stage Direction]
Motion agreed to.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I beg to lay on the table
a copy of the final report of Mr. Justice Martin, appointed a commissioner to receive and enquire into the arguments of t'he government of the province of British Columbia in support of its claim for reconveyance to the province by the government of Canada of the land conveyed by the province to the Dominion pursuant to paragraph 2 of the terms of the union. I move that 1,000 copies in English and 500 copies in French of the said report be printed, and that standing order 64 be suspended in connection therewith.


[Stage Direction]
Motion agreed to.


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Mr. E. G. ODETTE (East Essex) moved for leave to introduce Bill No. 64, to amend the Railway Act (Joint hearings of Board and Interstate Commerce Commission).
Mr. DUNNING:: Explain.


Mr. ODETTE:: The object of the bill is
to empower the Board of Railway Commissioners for Canada to hold joint hearings with the Interstate Commerce Commission, either in the United States or in Canada, regarding matters appertaining to international 56103-80	[DOT]
rates and questions of a like character. A similar bill is now before the House of Representatives in Washington.
Motion agreed to and bill read the first time.



THE BUDGET


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The house resumed from Monday, March 12, consideration of 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, the proposed amendment thereto of Mr. Cahan and the amendment to the amendment of Mr. Fansher (East Lambton).
Hon. R. B. BENNETT (Leader of the Opposition):: Mr. Speaker, the debate which
is about to be concluded, I think I can fairly say, has permitted discussion of a very wide range, which discussion-one can say this without flattery to the house-has been of a very high character and has shown a marked determination on the part of various members to understand the problems with which we have to deal. It has been called a budget debate; just why it has been so described I am at a loss to understand. The hon. member for Hants-Kings (Mr. Ilsley) the other day defined a budget, very properly, as a statement of the expected expenditures of the country, together with its estimated revenues, indicating the sources from which those revenues would be derived and the manner in which the expenditures would be made. The Minister of Finance (Mr. Robb) has given us a story about events that will terminate on March 31 this year. He has not given us a single word indicating what his revenues are to be for the fiscal year ending March 31, 1929, although it is to this year that the estimates relate. Nor has he given us any indication as to where his revenues will come from. This would not be permitted in any other country that I know of under the British flag. To call the statement submitted to the house a budget is to misuse words; the term is a misnomer. The onlv

The Budget-Mr. Bennett

single reference which, in his statement, the Minister of Finance made to the revenues of the year 1928-29 was that in which he said that there would be a reduction in the revenues of some 819,000,000. He did not indicate what his expenditures were to be, although as a matter of fact he asks this parliament to vote, in the main estimates, something over $373,000,000, which is a larger sum by $7,000,000 than was voted last year in those estimates. The supplementary estimates are to follow, and extraordinary expenditures are also yet to be provided for. These are the facts. The minister, as I say, does not intimate how his revenues are to be made up; he does not tell the house how much he expects from customs, how much from excise, how much from income tax. All these matters he leaves in the eloudland of conjecture and of doubt. The Chancellor of the Exchequer, in delivering his budget address in the British parliament, is always held to the strictest account to the extent to which he has been able to realize his expectations; and the extent to which his representations agree with the facts of the year under review. In this instance we have been given a review only up to the 31st day of March, 1928; and we are voting supply for 1929 and endeavouring to provide ways and means by which the revenue is to be secured to meet that expenditure. I therefore suggest that this can hardly be called a budget speech for the fiscal year ending March 31, 1929, by any stretch of the imagination, and presumably the hon. gentleman proposes at no distant date to provide us with a budget speech for that year. Until he does so the house is more or less without proper information with respect to the fiscal year with which we are dealing.
The budget has been defended by various members of the administration; the Minister if Health (Mr. King) defended it in a speech which might well be described in the words of Tennyson:
An infant crying in the night:
An infant crying for the light:
And with no language but a cry.
The Minister of Trade and Commerce (Mr. Malcolm) defended this budget in a speech of great casuistry; it was an admirable defence of unemployment, which he said was seasonable in its character. That is true, and he also dealt with other matters in that broad and comprehensive manner for which he is noted, leaving out, of course, many facts to which I shall presently direct attention, no doubt in an earnest endeavour to support the budget presented by the Minister of Finance.

The Minister of Railways and Canals (Mr. Dunning) also essayed to make a gentle speech. His observations were directed first of all to the Canadian National Railway situation, and secondly to explaining how much groups are to be deprecated in a house or parliament such as this. With respect to the first I have only to remind him that he is in error in stating that the Canadian National Railways have available for payment a sufficient sum of money to enable them to meet the interest charges to the public. At page 4 of the preliminary report which has been filed we find that the figures are set out at some length, and while it is perfectly true that the Canadian National railway system had a surplus of earnings of about 846,000,000 which could have been used to pay the interest to the public if there were no other requirements to be met, alas, there were other demands upon that fund which made it impossible to pay the interest upon the advances from the public without regard to the assistance received from the government. At page 4 of the report in question it will be found that there was an operating surplus, gross income as it is called, of $46,463,969.30, but before making that available for the payment of interest on the obligations of the company to the public, $3,599,650.52 had to be used to pay for the hire of freight cars; $92,330.79 for rent of locomotives, and for passenger train cars $291,485.13. In addition to that, joint facility rents, which are a charge upon the revenues, had to be paid to the amount of $1,083,207.19; rent for leased roads $1,212,587.52 and miscellaneous rents $82,091.78; so that after the payment of these charges from the gross revenue there was not sufficient money left to pay the interest charges on the debt to the public, which according to the statement on page 4 of the report amounted to $40,448,274.44. The only difficulty is that my friend the Minister of Railways overlooked the fact that it is one thing to say your earnings amount to so much and another thing to say that they are available for pay* ment of fixed charges. If there are other charges against that money which have to be met before it can be made available for the payment of interest, then that sum is not available, and his confusion with respect to those two matters has caused him to fall into the error which I mention.
Neither is it true, Mr. Speaker, that in any year has the Canadian National Railways earned sufficient money with which to pay the interest on their obligations to the public. The year this government came into power, the year ending March 31, 1923, the Canadian

The Budget-Mr. Bennett
National Railways obtained $77,863,938.23 from the public treasury; in 1924 they obtained $23,710,616.70; in 1924-25 they obtained $9,934,452.64, and I am happy to say that in the next year they only required $10,000,000. In the following year they required another $10,000,000, and for the year ending March 31, 1928 the figures are not available beyond this, that we advanced them $15,000,000 with which to pay bank overdrafts of which, according to the figures brought down and laid before this house, nearly $6,000,000 was used to pay instalments due for equipment trust obligations which normally would be paid out of income. So that, as far as the railways are concerned, they have not had in any one year during these years sufficient money available with which to pay the interest on the obligations now in the hands of the public. However, the railways have improved their condition very materially during the years recently passed, and we can only hope that if this country prospers as it should, under just and proper policies, they may be able to obtain sufficient traffic to enable them to provide revenue to meet interest charges on obligations held by the public.
Then my hon. friend the Minister of Railways dealt with another feature of the present political situation; he attacked the group system. Of all hon. gentlemen in this house who might attack that system, my hon. friend should be the last. When I recall the circumstances under which this government remained in power only a few short months ago; when I remember the hurried call which brought my hon. friend from Southeast Grey (Miss Macphail) off a steamship in Montreal, I am surprised that for a single moment my hon. friend should attack groups in, this country. I will venture to read to him a few words written by his immortal countryman:
Blow, blow, thou winter wind,
Thou art not so unkind As man's ingratitude:
Thy tooth is not so keen,
Because thou art not seen,
Although thy breath be rude.
But I remember somewhat more clearly the
observation of a great Frenchman:
We seldom find people ungrateful as long as we are in a condition to render them services.
That, it seems to me, must have been the thought in the minds of those who sit to my left.
Then my friend the Minister of Justice (Mr. Lapointe) essayed the gentle arts of advocacy. His speech also divided itself into two parts, in the first of which he contented himself with reading from Hansard the speeches made by various hon. members, contrasting one with 56103-80J
the other. It was a very delightful performance for those of us who had not been privileged to be present to hear the speeches delivered by their authors, because he did it most admirably. Then, in a moment of fine frenzy, he indicated how soon he was about to amend the constitution of Canada and pass legislation dealing with navigation laws, the merchant shipping acts and the Admiralty Act. Just why he should have chosen that moment to make that statement it is difficult to understand, but one admired the fine indignation and scorn which he poured upon the hon. member for St. Lawrence-St. George (Mr. Cahan), when he explained that at no distant date this Canadian parliament would pass statutes to deal with the merchant marine and navigation laws. Well, Mr. Speaker, as long as the flag of Mother Britain hangs over the taffrails of our ships, so long shall we rely upon the navigation laws of that country to protect our commerce on the high seas.
Then my delightful friend the Minister of Immigration and Colonization (Mr. Forke) made a defence of his department, and he explained with all the learning of a profound lawyer that section 18 of the Immigration Act governed, and that he had not those high prerogative powers which he has been so fond of exercising. It might be a little more to the point if he would venture to explain to us why he could not exercise the right in the one case, while in other cases he could exercise it so freely. According to the report that was brought down by the deputy minister, we find certain cases of those who would be charges upon the public revenue, or those who were feeble-minded or criminals, all within the prohibited class and I would remind the Minister of Immigration that the permits for a number of these cases to come into Canada were signed by the hon. gentleman himself. At least that is what the deputy of the department says in the report which has been laid upon the table of this house. Why the Minister of Immigration and Colonization should have decided that in a certain class of cases he had authority, but that in a case which arose a few days later he had no authority is somewhat difficult to understand. I feel that the lady and gentlemen who sit to my left when they looked at their former leader, and saw him no longer with them, and heard the terms of his observations, must have thought of Browning's " Lost Leader," and perhaps if I quote them a few lines from that poem they will illumine the dark recesses of my hon. friend's mind:
The Budget-Mr. Bennett


Mr. STEWART (Edmonton):: Quite right.


Richard Bedford Bennett: -because his knowledge
of the one is about as great as of the other. Let us proceed a step further because he would not laugh for a single moment if he realized what that means to the taxpayers of this country. How much does that mean per annum? It means that $69,156,891 more was taken out of the taxpayers of Canada during each of the last six years than during each oi the preceding six years. But let us go a step further. How much does that mean per day? It means that for every day of the last six years $189,471 more was taken from the Canadian taxpayers than during the preceding six years. Let us go another step further. I have pointed out that the government during the last six years have reduced the funded debt of this country by more than $39,000,000; I have pointed out that that amounted to $18,453 per day, and I have pointed out that they received in taxation-
The. Budrjet-Mr. Bennett

and I will, if necessary, give the pages from which the figures are taken-$189,471 more than their predecessors during every day for the last six years, leaving $171,018 per day more, with which hon. gentlemen opposite have played, than during the preceding six years. Do you mean to tell me, sir, that any government should rejoice for a single moment in the reduction of the national debt by $39,000,000 when they had $171,018 every day more than their predecessors that should have been used to retire our national debt? The extravagance of this administration is something to which I shall presently refer, but I venture to say that the language used by the immortal leader of this party in days [DOT]when he was in opposition indicates something of the condition which now prevails. These words uttered by Sir John A. Macdonald in Montreal during his opposition days were heard and are recalled by my friend the hon. member for Mount Royal (Mr White):	'
As bees in flowers alighting cease to hum.
So settling into place Grits grow dumb.
Those were the observations that he made with respect to the attitude of the Liberal party of that day. I put this to any business man in this house-and there are business men opposite; there are some vitally interested in manufacturing, as I shall presently discuss, but let us face this matter frankly. Here we have a government that extracts from the people over $400,000,000 more in six years than their predecessors did in the preceeding six years and all they are able to show is that they have reduced the funded debt of this country by $39,000,000. They have had all these vast sums at their disposal, and with reckless extravagance, with a wilfulness that almost makes the Canadian taxpayer despair, they have wasted those moneys upon matters that presently this house will hear discussed. Now they claim credit because they have made the trifling reduction of $39,000,000 during that period in the funded obligations of this country.
It is worthy of note that during that period they greatly increased our funded obligations by short-date financing which has since been paid off. Just last year the Minister of Finance refunded $20,000,000 of 4 per cent obligations with $20,000,000 of 4i per cent obligations. He had outstanding 4 per cents and he renewed them with 4^ per cents as he said in his budget speech, thus paying one-half per cent higher rate than he paid before and these were long-term, thirty-year engagements as against his previous three-year obligations. Last year I ventured certain suggestions to the house in connection with the national [Mr. Bennett.J
debt which did not commend themselves very highly to my hon. friends opposite. It may well be that on analysis it is found that the application of the principle that I mentioned to a long-term obligation might not be satisfactory, but I will say this. The Minister of Finance adopted and utilized the suggestion I made in order to secure $45,000,000 from the banks at 4 per cent at par. That is all. I do not claim undue credit to myself when I say that it was in consequence of the suggestion made in this house last year that my hon. friend was able to do that. He got $45,000,000-and the Minister of Finance would not be the man to deny the fact-at 4 per cent at par as against the $20,000,000 he borrowed in the open market at 4i per cent at slightly better than 97. So you see, though vague and indifferent it may seem to the hon. member for North Battleford (Mr. McIntosh) and others, the suggestion was ample to meet the necessities of the particular case which I had in mind.
What further do I say about the national debt of this country? I say that we should make a determined effort to deal with our national debt on the basis of paying it off. In that regard let me read a single observation from President Coolidge which I think has more application to this country than it has to the United States of America. Speaking in November last, at the union league, the president said:
At the end of this fiscal year almost one-third of the entire debt will have been paid. The saving in interest alone is about $1,000,000 each day. But well over $18,000,000,000 (eighteen billions) of debt still remain. It is a menace to our credit. It is the greatest weakness in our line of national defence. It is the largest obstacle on the path of our economic development. It should be retired as soon as possible under a system of reasonable taxation. This can only be done by continuing the policy of rigid government economy.
The results have not been easy to accomplish. They have been extremely hard. They have been anything but commonplace. They mark a now epoch and s* a new record in successful government financing. The great burden of the work will be indicated when it is remembered that the congress was called in extra session in the spring of 1921 and remained in session for nearly two years. The task is not yet completed, but we have reached the point where we can see the end. We are turning toward a new era.
Because of the past insistence on economy in national expenditures we are in a position to have further moderate tax reduction. But let it be remembered that tax reduction is possible solely on account of economy. Anybody can spend the money somebody else has saved.


Some hon. MEMBERS:: Hear, hear.


Richard Bedford Bennett: The cheers of the hon
gentlemen who sit opposite indicate that they

The Budget-Mr. Bennett
are perfectly willing at an early date to spent what other people have saved, because the fact is that this country has not increased perceptibly in population, and yet there has been taken from the taxpayers increasing sums of money every year, amounting this year to the largest sum that has ever been taken from the taxpayers of this country; and further, there is no effort on the part of the government to practise the complement of large taxation, namely, economy. Where is it? Will any gentleman name the economies which this government have made? Perhaps the right hon. the Prime Minister may be able to give the house a vivid story of the economies he has effected, but all I can say is that they are not reflected in the Auditor General's report nor yet in the estimates that have been laid on the table of the house.
Let me go a step further. What do I suggest should be done with respect to the national debt? I wonder if hon. gentlemen realize that ever since the days of that great financier Pitt, who in 1798 laid the income tax upon the British people as a war measure, the British people have always maintained a sinking fund. They have suspended the operation of that sinking fund at times when it was essential that they Should do so, but look, if you will, at the operations of British finance to-day, and you will see that no matter how hard * they may be driven, no matter how difficult may be their path, no matter how onerous their burden of taxation, they have always imposed upon themselves the providing of a sinking fund with which to discharge their national debt. Have we done any such thing? The Minister of Finance read a few lines out of McCulloch, who nearly_ one hundred years ago made an observation which was placed in the hands of the Finance minister by one of his officials, and the minister thought it might have some effect upon this house, but the hon. member for Ontario Mr. Kaiser) completely demolished that. The Finance minister said that the only way to pay off the debt was out of surplus. I suggest, Mr. Speaker, that there is another way in which we can pay off our national debt, -and that is to pass a statute by which we provide that a given sum per annum shall be set aside to pay off the national debt of Canada. What will that do? That will impose upon the people economy. Why? Because when they come clamouring to my hon. friend the Minister of Public Works (Mr. Elliott) for a wharf here or a post office in Guysborough, or a public work in some other community, the Finance minister will be able to say: It cannot be done because the sinking fund must be provided for.


An hon. MEMBER:: Mahone Bay.


Richard Bedford Bennett: Ah yes, the post office
that was taken away from Mahone Bay.


Mr. DUFF:: Was not that economy?


Richard Bedford Bennett: Yes, but it was a reckless expenditure of public moneys in another way, with respect to the hon. gentleman himself.


Mr. MANION:: Political economy.


Richard Bedford Bennett: It was what my friend
calls political economy. Let me go a step further. Mr. Speaker. I say that we should place upon the statute books of this country at the earliest possible moment a provision by which a sinking fund will be set up such as they have in Great Britain and in other countries, so that we shall be enabled, within a period to be mentioned, absolutely to wipe out and eliminate the national debt of Canada. What is the province of Ontario doing? Do hon. gentlemen opposite realize that in Ontario they have provided for the setting aside of $3,000,000 every year so that at the end of forty years their debt will be entirely wiped out, half being provided by public utilities, and the other half from the taxpayers of the province itself. Do hon. gentlemen realize that?
What sum would have to be- set aside to enable us to wipe out our national debt? Assuming only a four per cent rate upon money, if we desire to retire the entire $2,400,000,000 of the national debt of Canada at the end of forty-five years, all we would have to set aside each year would be $19,829,904, and at the end of forty-five years the entire debt would be paid off. If you want to go a step further and make it fifty years, you would have to set aside only $15,720,480 a year. Assume that you do it half-yearly, then if you wish to discharge the entire national debt in forty-five years, you would have to set aside $9,710,448 each half year, or to retire it in fifty years, the sum of $7,686,576 half yearly.
But suppose we do it upon a less ambitious plan. Suppose we seek to retire only $1,500,000,000 of this debt by a statutory sinking fund, by means of a provision placed upon the statute books of this country, so that the demands and pressure by political supporters would not induce the Finance minister to part with public moneys because he would have to meet these sinking fund payments. It would ensure economy in the public service, and what is more, it would make the people of this country increasingly proud as they saw what President Coolidge

The Budget-Mr. Bennett
has described as this greatest menace to our economic development, this great load of debt hanging over our necks, being gradually retired. What sum would be required by way of sinking fund if we provided for the retirement of only $1,500,000,000 at the end of forty-five years? We would have to set aside each half year $6,069,030. Pass a statute and make a charge upon the revenues of this country prior to every other charge except the service of the debt and pensions, and all you would have to put aside to retire $1,500,000,000 at the end of forty-five years would be $6,069,030 half yearly, or on a yearly basis it would require only $12,518,700.
Is this country to continue to be menaced by this economic evil, by this debt hanging over our heads? Are we to continue, of all countries in the world, to make no provision for the future? Are we to be content to expend our patrimony day by day without putting anything aside to take care of the long days of the future that are before us?
I say it is unfair to posterity, and still more, it is unfair to ourselves, it is unfair to the taxpayers of this country to extract from them each year these increasingly large sums of money and make no provision for the retirement of our national obligations. The sum to be set aside is not large. I can only say this, that if we on this side of the house were intrusted with power, we would not hesitate a single moment to make provision for the retirement of the national debt of this country.
It has been said that no government is ever defeated because it is extravagant. That well may be. It well may be that the people may be debauched with their own revenues and be taught that all you have to do is to spend their taxes freely among them and then you have succeeded, but what is the effect upon the life of the nation as a nation? It is like the observations made by the Minister of Agriculture (Mr. Motherwell) yesterday. In vague and indefinite terms he endeavoured to cast aspersions on men now dead with respect to Port Nelson, not having the courage to make an open charge in this house. The Eight Hon. George P. Graham himself selected Port Nelson, as he told the House of Commons when the matter had to be dealt with. He said that it was settled before the government of which he was a member was defeated. I read it in the debates that I had in my hands only yesterday. He said the mind of the government had been made up in respect of Port Nelson on the report of the engineers. It is true Mr. Cochrane is dead and Mr. Bowden the engineer, is dead, 
but the fact remains that it was on the report of this engineer and others that Port Nelson was selected as the terminal. To talk of extravagance and the loss of public moneys in this instance when Mr. Cochrane and others were relying on the reports given to them by those best able to advise the government of the day is ridiculous, and it ill becomes the hon. minister thus to asperse the memory of men whom it was our privilege and honour to call our friends. To suggest that they were parties to such transactions as will not bear the light of day is unworthy of the minister himself and of the traditions of our parliamentary life.
Now, Mr. Speaker, having dealt with the question of the national debt in the manner in which I have indicated, I now ask myself the question, on the proposals of the Minister of Finance, how he will make good the necessary supply to meet the requirements of the public service. That, of course, involves taxation; he must tax the people. What form of taxation shall he rely upon? He has told us that he proposes to rely upon the income tax, the sales tax. and the other taxes of that nature, and also upon the customs or tariff tax. Those are the methods by which he proposes to make good the supply required for transacting the public business.
Before I deal with the tariff branch of his proposals, let me say a word or two with respect to the income tax. This tax has been either a colossal failure, or else the situation is very different from what it was when the tax was first imposed; one or the other. Only 116,629 individual taxpayers paid income tax for the fiscal year ending March 31 1927; they paid $1S,000,000. The Canada Gazette says that the income tax this year has thus far brought in $55,000,000 as against $46,000,000 last year, the larger part of which, of course, is paid by corporations, the total last year being $29,000,000, and judging from the observation made by the Minister of Finance the other day about the same amount will be recovered from the individual taxpayers this year as last year, namely, something over $18,000,000. In this regard may I point out that when Pitt inaugurated the income tax in Great Britain he definitely and positively stated that it was a war measure. Mr. Gladstone, in one of the greatest speeches by which he will be remembered as Chancellor of the Exchequer, pointed out that he hoped the day would come when war would be ended and peace restored, as then the income tax would be removed entirely, because he felt it was an unfair tax, having regard to the conditions that then prevailed.

The Budget-Mr. Bennett
Now, the income tax was increased by the Minister of Finance two years ago by removing the freedom from normal tax of dividends paid by Canadian corporations. Having increased the burden of taxation by this form of double taxation, last year he reduced the burden of income tax by 10 per cent, and this year he proposes to reduce it by another 10 per cent, making the reduction 20 per cent in all. But that 20 per cent barely makes up what he took from the taxpayers by the added burden placed upon them. The hon. member for Lisgar (Mr. Brown) the other evening said he was not greatly interested in this form of double taxation. He is a fair-minded gentleman. Let me put this case to him. He has a farm, and when he sells his wheat he makes a thousand dollars net profit. The tax gatherer deducts therefrom $50, or 5 per cent. The bon. gentleman then takes the $950 and deposits it in the savings bank, but the tax gatherer, having found his name among the depositors, takes off $47.50 from the $950. Would my hon. friend regard that as fair?


Mr. BROWN:: The analogy is by no means a correct one.


Richard Bedford Bennett: The position is this, Mr. Speaker. Double taxation has been denounced by Mr. Gladstone, by Mr. Goschen, and by every other great chancellor of the exchequer in Great Britain, and they have always endeavoured to avoid such taxation. When the earnings of corporations have been taxed, then to the extent that the money available for distribution has paid its toll to the exchequer, it should be free from income tax when it comes into the hands of the individual shareholders whose money it is. That is but a fair proposition, and one that I am sure will commend itself to fair-minded gentlemen in every part of this house. That is the first proposition.
But my hon. friend, true to the traditions of his party, desiring to obtain some kudos where none was due, first of all increases the tax, and then says: Look at what I did in reducing it! That sort of thing injures the country as a whole. Why should he not be perfectly frank about it and say, " I will reduce the income tax." Is it because he is afraid of the hon. gentlemen who sit to his right? I would not be under similar circumstances, for I believe they are sufficiently fair-minded that they do not want to tax money twice if they understand what the real position is. I have never discovered among my fellow-Canadians any desire to be unfair to anyone when they have a real appreciation of the facts. That I can say
with great certainty, and I am perfectly confident that if they understood that what is sought to be done is to take the same dollar and tax it twice, they would say: This is not a fair or proper thing to do. I do not think there is anything at all in the suggestion that those hon. gentlemen are supporting the income tax because they have none to pay themselves, for from what I know of them they would be only too glad to pay income tax if their incomes were sufficiently large.
But may I go a step further in dealing with the income tax, because, I repeat, Mr. Goulburn, the great Chancellor of the Exchequer in Sir Robert Peel's administration, and Mr. Goschen, both dealt with it in connection with the conversion of the national debt of Great Britain. In England securities are usually issued so they may be called for payment at a certain date before maturity, and I do suggest to the Minister of Finance that when he does any further financing he should consider whether or not it is not desirable to do what all corporations now do, provide that all securities may be callable at fixed prices after notice. That was the case that Mr. Goulburn had to deal with in the great debt conversion of 1844. I commend to every hon. gentleman the great speech in which he moved the resolution for the conversion of the national debt at that time. Forty-four years later Mr. Goschen made one of the most memorable speeches on finance that has been heard in modern times when he converted the British debt and saved the taxpayers of Great Britain annually half a million sterling or more. We have two billion dollars drawing 5| per cent interest, redeemable roughly in 1933, 1934, 1935, 1936 and 1937. That means an annual interest charge of 110 million dollars. If the interest could be reduced to 4| per cent we would save 20 million dollars a year, which is more money than was taken out of the pockets of individual taxpayers by income tax last year.
Then why does not the Minister of Finance devote his energies to converting our national debt upon a large scale, instead of reading us some piffling remarks written by an economist a hundred years ago? Let me go further. The saving of 20 million dollars a year on the refunding of the debt might be possible if you would say to the holders of the 5i per cent tax-exempt securities maturing within the next nine or ten years that there would be freedom from or great reduction of income tax during the next decade. Does it ever occur to hon. members that in addition to the 110 million dollars free money, the exemption from income tax for
The Budget-Mr. Bennett

the next five or ten years might bring about a great expansion of public revenue? I wonder if hon. gentlemen realize the implications with respect to debt conversion. When I saw on the order paper the other day the resolution of the Minister of Finance to enable him to borrow half a billion dollars for conversion purposes, I sent to the library for the speech of Mr. Goschen on debt conversion. I saw his resolutions and compared them with those of the Minister of Finance, and then I looked at Goulbum's speech. I said to myself. " Is it possible that my hon. friend thinks that this by-play is dealing with the conversion of the debt of the country?" Why, it is an insult to the intelligence of the house to introduce a resolution of that description and to talk about conversion, when these securities are selling to-day so as to yield more than 4 per cent on the market. Moreover, as the day of maturity approaches, these securities, after they have reached the peak, will decline in value, notwithstanding that they are tax-exempt. Surely my hon. friend must realize that; every thoughtful , financial man does. If we are to deal with this problem why not let us deal with it as men charged with a solemn responsibility? We have some $2,000,000,000 maturing in the next nine or ten years, and with the possibility of the interest rate going down there is a problem for us to face. The money market is open to us, and we are told by financial men that now is the appointed time; now is the time when money is cheaper than ever before or is likely to be, and that the demand for high class securities is considerable. Tet my hon. friend's method of dealing with the subject is to put a resolution on the order paper asking parliament to allow him to borrow half a billion dollars. That is his method of conversion. No wonder my hon. friend looks at me; he had not thought it was quite so bad until he heard it stated in this way.
Now let us go a step further. Whether or not the income tax shall be retained in this country depends entirely upon the skill and financial ability shown in the conversion of the debt. With two billions of securities maturing in nine or ten years, and with money at 4 per cent, there is the greatest opportunity that was ever offered to any Minister of Finance in this country. To seize that opportunity requires courage, skill, ability, knowledge; it requires willingness to devote some time to a study of the problem. It requires more thought about economies and less inclination to extravagance; it requires more consideration of the question as to how the money is to be secured rather

than how it may be spent. It requires the consideration of world factors that determine the price at which money can be obtained. Is this government giving the problem that degree of attention? Is there any evidence of such consideration of the question on their part? Let hon. gentlemen opposite ask themselves that question.
The gradual reduction of the income tax is something that is quite offensive to some hon. members of this house; they consider it an endeavour on the part of rich men to escape the payment of their just deserts. That is the light in which some hon. gentlemen view any attempt to reduce the income tax. I can quite understand their point of view. May I remind the house that last year I argued that, in my judgment, the fairest method of taxation in the world was to be found in the turnover tax. I have not changed my mind in that regard; I think there should be a turnover tax collected every month. Consider what is taking place in this Dominion to-day. How many people escape taxation in this country for the simple reason that they are insolvent when the time comes for the payment of the tax. How many men had an income which was taxable in 1925 but from which no taxation could be derived in 1926. How many men in 1926 with an income could not pay the tax in 1927. And how many more who had an income in 1927 will be unable to discharge their obligation in 1928? A turnover tax, I say, is the most equitable means of securing revenue in this regard. With such a tax one is always in e position to know what he has to pay, inas much as the tax is a part of the charge on the business and is payable monthly, as any other tax should be. I pointed out when discussing this question last year that the idea was not original with myself. I do not claim originality for it; it has been submitted to the house before and is endorsed by sound economists and financiers. I urge the Minister of Finance, therefore, to take it into his serious consideration.
Now, it is contended that the income tax is a tax which the rich man pays. But see what is happening in Canada to-day. Men are devising ways and means whereby they may escape the payment of income tax, and they are doing so under the law. It is well to bear in mind, as the House of Lords very properly pointed out, that there can be no evasion of the law so long as it is permitted by the very nature of the law which it is sought to enforce. That is the fact, as every lawyer knows; and so long as men keep within the law that is all they are required to do. I submit to you, Mr. Speaker, and to the government that

The Budget-Mr. Bennett
much more money would be available for commercial enterprises if the burden of the income tax-the supertax at least-were considerably less than it is at the present time.
I shall presently refer to the situation as it exists in the United States. As the Prime Minister said, we are faced with ever-decreasing income tax in the United States, and this fact is having its influence upon our national life. We cannot, therefore, much longer maintain in this country a higher rate of income taxation than is levied in the country to the south of us. The government of t)he United States is looking forward to the ultimate removal of the income tax; they anticipate its abolition ultimately. We, on the other hand, are apparently endeavouring to make it an absolute fixture. Many of my hon. friends in the far corner of the house oppose any remission of the income tax because, as they fancy, other taxes will be imposed upon the people. May I assure those hon. gentlemen that the buoyancy of business which would attend any substantial reduction of this tax, the release of large sums of money which would not otherwise be available for industrial development, would compensate, as it has done in England and elsewhere, for the increase in taxation-if any-that might be necessary in any other direction. By this means we should broaden the whole foundation, the whole base of our structure of taxation. If we could assure the people of the country that there would be a flat rate of income tax, say, 10 per cent, or any figure you choose, without a supertax, we would be surprised at the effect this would have on the business of the Dominion. I emphasize that statement because the experience of Great Britain proves it beyond question. Formerly they levied a tax of 2 pence on the pound, or 4 cents on five dollars; then it was increased to sixpence on the pound, or 12 cents on five dollars; and gradually the rate went up to 20 cents on every five dollars until finally it reached the point where the government took $2.50, or 10 shillings out of the pound to maintain the national life of the country and to provide for the demands of the sinking fund. Probably, Mr. Speaker, I have said enough on this point. There is not much to be gained by an opposition suggesting anything with respect to the income tax nor indeed, for that matter, respecting taxation generally. Taxes must be imposed by the government and under our institutions proposals in this regard must originate with the administration of the day. The government only can take 'the necessary action in this respect.
And now I should like to discuss for a moment the sales tax which the Minister of
Finance tells us he is reducing 25 per cent this year. It is suggested that next year he intends reducing it still further by 33J per cent and the next year 50 per cent. Stated thus, the reduction has a more imposing sound than if the minister had said that he was reducing the tax by one per cent, or whatever rate he proposes. The sales tax has always been regarded as objectionable, but when my hon. friends opposite came into power they increased it to 6 per cent. The result was so alarming that they decided to reduce it at the same session, so that- finally they restored it to the rate that was in force at the time they took office. There are, of course, many exceptions allowed for by order in council, as the Minister of the Interior (Mr. Stewart) would say, whereby the executive may determine who shall be exempt from the payment of the tax. I suggest that it should not be left to the executive to decide this question; this is a matter that should be determined by parliament.


Mr. ROBB:: My hon. friend knows that
under the constitution this power has been in our act since confederation. The government has power to reduce taxation.


Richard Bedford Bennett: Surely my hon. friend
realizes that I am perfectly well aware of what is in the constitution in this regard. The point I desire to make is that in imposing this form of taxation you subject the executive to unfair pressure by asking them to put certain commodities and classes of people upon the free list, exempt from taxation. That is the point I want to make. In my opinion it would be better for the government itself if this question were left to parliament entirely. It seems to me to be one of the essentials which we are overlooking. We contend that the sales tax should be abolished. Why? The Minister of Finance asks, where shall we get the revenue from? If economy were practised in this country, if an annual sinking fund were put away, money being earmarked for this purpose when derived from the sales tax, then I could understand my hon. friends desiring to continue the tax. But so long as no part of the money is earmarked for some special purpose, so long as there is no statutory sinking fund, so long as reckless expenditure of public money continues, then I say the time has come when this form of taxation should be removed.
Now let me give you an illustration. The other day a lawyer friend of mine had to have an appeal book printed for the Supreme Court of Canada. He had to pay the printer the sales tax on the cost of that book, and

2 he Budget-Mr. Bennett
the printer himself had already paid a tax on the paper. There is double taxation, and for all I know some other person may have paid a tax as well, which would make triple taxation. In addition to that, you are now imposing customs duty on the sales tax itself. I received an invoice for some books which came to me from England the other day; I found the sales tax added and the duty computed upon the invoice plus the sales tax. That is taxing a tax. If there is any necessity for revising the customs laws it seems to me it would be a very sound thing to do in that regard, because it is an inferential form of protection, as one of the hon. members from Manitoba would say, and therefore I suppose it is to be condemned.
Then let me proceed to the next form of taxation upon which my hon. friend proposes to rely for the purpose of raising his revenue, namely, changes in the tariff. First of all I desire to make a few observations with respect to these tariff proposals in the light of statements which were made by my hon. friend the Minister of Finance not so very long ago. This summer he had the privilege of visiting western Canada. While doing so I am sure he found a fine, growing country, and I am satisfied that he was greatly pleased with what he saw. In the course of his journey he appeared before the board of trade at Winnipeg and similar organizations at other places as well, and on each occasion delivered addresses with respect to tariff and other matters. The important matter to which he directed his attention in Winnipeg was connected with the tariff, and on that occasion he said, as reported in the newspapers, that the tariff board was a body that had been set up for a very useful purpose. Now, sir, I would venture to read some words which my hon. friend is reported to have used on that occasion; they were never denied, and they formed the subject matter of editorials in leading newspapers. I think if my friends the Minister of Railways, the Minister of Agriculture and all those gentlemen who come from western Canada will take notice of these observations they will perhaps refrain from their campaign of misrepresentation with respect to the fiscal policy of the party which site to the left of the Speaker. These are the words:
In each of the general elections since 1878 the tariff has been one of the predominant planks of the political parties, with the natural result that many platform exaggerations by frequent repetition are now accepted as actual facts and a great many, without reasoning and without analyzing the statistical records of growth of Canadian business, the possibilities for international expansion or the practical business 
problems which must be faced at home take extreme positions on one side or the other of this question. Good government comes when the electorate have actual facts before them; they can then judge what is best for Canada, and it was to get the tariff and trade facts properly before the people that the advisory board on tariff and taxation was founded.
Now, sir, my friend the Minister of Finance in that instance correctly stated the facte. Does not my hon..friend from Brandon (Mr. Forke) realize that for the last forty years in western Canada there has been carried on a campaign of slanderous vilification with respect to the tariff policy of the Conservative party? Does he not realize that the Minister of Railways the other day spoke of high and ever higher tariffs? Does he realize that from one end of that great western country to the other they have spread the gospel that the Conservative party stood for high tariffs, while they themselves preached low tariffs and free trade as it was in England? Does he remember the banners which hung across the streets of Brandon when the election of 1S96 was being conducted, and which read:
Free trade as they have it in England.
From one end of western Canada to the other they have spread the doctrine that the Liberal party stood for free trade or a low tariff or some other kind of tariff, while the Conservative party always stood for a high and still higher tariff. Those are not exaggerated statements. I will give the house an illustration of the campaign which has been carried on by responsible Liberals with respect to tariff matters in western Canada. I recall a Liberal senator and the speech he made with respect to the tariff. He said, "These Tories! They exploit the tariff for their own personal advantage."


Mr. FORKE:: Read Hansard for 1925.


Richard Bedford Bennett: I am so glad my hon.
friend the Minister of Immigration remembers 1925, but in remembering it he must blush with shame when he thinks what he is now doing, because in those days he was attacking the government of which he is now a member. In those days he was very properly pointing out that the electorate had been deceived. Have they yet been undeceived? He was then very properly pointing out that the Liberal party sought support from one end of this country to the other by alleging what they would do with respect to the tariff when they came into power, but when they assumed office they did not do it. What are they doing to-day with respect to this budget? They are raising the tariff; they are now doing the

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things for which the hon. member foT Brandon condemned them in 1925. They are asking this house to give protection to industries on a higher basis than before, which the hon. member formerly condemned. I am glad to know that he is seeing some semblance of light and is coming to realize the plight in which he has been placed by forgetting the principles which he espoused in 1925. He must never forget the words:
While the lamp holds out to burn,
The hon. member for Lisgar (Mr. Brown) is going to supply the second line:
The vilest sinner may return.
Now, Mr. Speaker, let us go a step further.
I heard this going on from one end of western Canada to the other. It is now over thirty years since I went to western Canada, and I need offer no apology now, in the words of Macaulay, for having maintained consistently the faith which I then had with respect to this country and the fiscal policy which should be followed to bring success and prosperity. I heard these statements, and I was about to refer to the remarks made by one of the Liberal senators in which, in order to arouse public prejudice and the passions of the people, he stated that these Tory manufacturers, rich at the expense of the people, had sent their families south to Bar Harbour and the summering places nearby, then to Newport among the new rich of the United States. Then he said, "Grown greater still, wrapped around with the mantle of wealth taken by exploitation from the taxpayers of the country, they sent their wives and daughters over to the great watering places of Europe, to marry their children to the effete and worn out aristocracy of Europe?" Those are the arguments which were made; I am sure my hon. friend has heard them, but I am happy to say that he has never used them. This campaign was carried far and wide, and people believed it. The hon. member for Brandon believed it; the hon. members before me believed it and the men and women to my left believed that the Liberal party of that day were honest in what they said, as the hon. member for Rosetown (Mr. Evans) pointed out the other night, and that they would do what they promised. When they did not do it Liberal partisans, to make their position secure, went around and denounced this party as the party of high and ever higher protection.


Some hon. MEMBERS:: Hear, hear.


Richard Bedford Bennett: Hon. members say,
"hear, hear". I defy them now to point to
anything which the Conservative party have endeavoured to place on the statute books of this country during the last fifteen years to justify the position they have taken. I will go further. I recall that when the reciprocity agreement was introduced it contained provision for a duty on Portland cement, and I wonder if the hon. Minister of National Defence, realized when he spoke about the reciprocity agreement the other day that the alteration of a single item terminated the entire agreement; not one single item could be	changed without
terminating the entire agreement. It was not a treaty; there was no written agreement or treaty. It could be destroyed at the caprice of either party.	Canadian cement
was protected by a high duty, but one of the first things Sir Thomas White did as Minister of Finance was to reduce the duty on cement. That is the answer to my hon. friend.
I might perhaps digress a moment here to ask the Minister of National Defence and the hon. member for Hants-Kings (Mr. Ils-ley), who spoke on the reciprocity agreement, if they realize that that was not an agreement at all; that each country passed a statute and placed it on its own statute books, so that either party, by changing a single item, would terminate the whole arrangement. In 1920 we had in this country all the benefits of the reciprocity agreement; we had free admission of cattle, potatoes, wheat and other grains into the markets of the United States. Then what happened? There was a change in the government of the United States, and the farmers voted for a high protective tariff against Canada; they had no thought of what would happen to Canadians. I saw Canadian cattlemen ruined by that tariff, which was put into effect without a single thought as to what would happen to the farmers and cattlemen of this country. In the United States they did not care what happened to the Canadians, they were legislating for the people of their own country. Our cattle and our wheat were shut out of the United States market. Do hon. gentlemen not recall the circumstances under which the tariff on wheat was increased up to 42 cents per bushel? I saw that change take place. I saw them raise the duty from 25 to 42 cents. I saw our cattle shut out. Now many of them would like to have our cattle, but the farmers of the United States have a great voting power, and they want the tariff maintained against Canadian cattle and Canadian wheat and they are as much farmers as my hon. friends yonder. Now, sir, digressing for a moment with respect to that, I say to the Minister
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of National Defence, and to my young friend from Hants-Kings, that the reason the Conservative party opposed reciprocity was because it meant the establishment of a channel of trade that could be destroyed at the caprice of our neighbour. That is the reason. My hon. friend the Minister of Trade and Commerce realizes better than most men in this house how dangerous it is to establish a channel of trade and then have your competitor destroy it without a word of warning. That was the reason we voted against the reciprocity agreement, and that is the reason we destroyed it. The reason many farmers and cattlemen in Canada were ruined was because the channel of trade thus established by them was cut off without a word of warning.
But, sir, there is something more. The other evening the Minister of Justice quoted from the report of the Economic conference, and he pointed out that at Geneva it was suggested that high tariffs were very bad and that low tariffs were much to be desired. What do I find? That one of the things stressed most strongly was that we should have long term agreements rather than short term agreements. Now the reciprocity agreement was not a treaty at all. It could be terminated by either party without a single moment's notice.


Mr. RALSTON:: Was not the disloyalty
cry raised by my hon. friends in regard to it?


Richard Bedford Bennett: I do not think the hon. gentleman is just the type of citizen who should make that observation. The person who said the agreement would make us an adjunct to the United States is the gentleman who is now Chief Justice of the United States Supreme Court. He made the observation that if this agreement passed Canada would become commercially an adjunct to the United States.


James Layton Ralston: My hon. friends said at
that time that reciprocity meant annexation and that it was a disloyal policy.


Richard Bedford Bennett: I say now that the
gentleman who was formerly President of the United States, Mr. Champ Clark, and Mr. Underwood said that. We told the Canadian electors that if once a channel of trade were established for our cattle, our wheat, and our natural products to the United States that channel might be destroyed at somebody's whim or caprice with great resulting injury to Canadians. That is what we said and if my hon. friends opposite can get any comfort from it they are welcome.


Mr. EDWARDS (Frontenac):: The hon.
minister must have in mind what Edward Blake said.


Richard Bedford Bennett: It is true that the late
Edward Blake had that view, and one might, I fancy, compare his intellectual attainments and his services to the Liberal party not without disadvantage to some hon. gentlemen opposite.
Now, sir, let us proceed to study further what the hon. Minister of Finance said in his speech when the tariff advisory board was set up. I have in my hand a copy of P.C. No. 530, dated 7th April, 1926, appointing the tariff advisory board and defining their duties. The board was duly set up and in the course of time began to function. I find that it has cost this country quite a considerable sum of money to maintain that board. Here is the story. First of all you have the following employees: A. M. Baird, L. H. Byles, K. Byrnes, F. M. Chapman, J. Easton, K. Easton, T. King, F. Lavoie, J. C. Leslie, D. McEvoy, H. B. McKinnon, Theo. Monty, A. Quayle, M. Northcott. These all draw salaries ranging from $4,120 per annum down to $4 a day; among those who are drawing $10 a day is Mr. F. M. Chapman, who was political organizer and henchman for the chairman of the board when he was a candidate for the Liberal party in South Ontario last fall. Here is the board set up, and who comprise it? It consists of Mr. Moore, as chairman, and two other gentlemen with respect to whom nothing can be said. Who is Mr. Moore? He is a defeated Liberal candidate in Ontario. That is fact number one. A few years ago I had occasion to say in the chamber which preceded the present one something regarding the activities of Mackenzie and Mann in every legislature in this country and as to the effect upon the public life of Canada. I can only say this, that Mr. Moore was one of their chief instruments in effecting their purposes. Now let us go a step further. To-day Mr. Moore is exercising the patronage of Ontario and the government accepts his recommendations. More than that, during the last month he has been discussing with his friends what his chances of success are in Ontario at the next election. There are men in this house with whom he talked the matter over. Now let us ask ourselves whether any man in whose constituency there are industries affected by the tariff and upon which he must depend for support should be made chairman of the tariff board. Why Sir, only the other day I read -n an Ontario paper, with a picture of the chairman of the board, the statement that he was about to take the

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flying camp from Borden down to Whitby in his own constituency. Is that man fit to be chairman of the tariff board? I am not talking about his intellectual fitness at all. Is he fit by reason of his record and of his present endeavours to secure a seat in this parliament for the position which he now holds? There used to be a law which provided that one who occupied a position that touched in any way the right of a citizen to vote, should not be permitted to be a candidate for parliament for a period of years after he left office. That was a sound provision. Now we have the tariff board in the hands of a gentleman who is aiming to be a candidate at the next election, in whose constituency there are a large number of industries that have been touched by these tariff changes, whose political friends-and I wish to say the changes in this tariff are surely political-are benefited, by those changes and whose political opponents are injured by them. I say that is not good for Canada; I say it is not a proper thing for this country.
Now let us see what happens. I have the report made by that gentleman. It was tabled in the house as sessional paper 132A, and	it is what? It	is	a statement
that they were unable to function with respect to some of these matters, and they sent them up to the minister without a recommendation or without even the finding of a fact with respect to them. The list starts on page 1 of the annex and there are five pages of the various applications, but there is no fact finding, nothing of that sort within the order in council that I have just read. No effort at all is made to comply with the order in council. One of the features of the report will be found on page 2, where the commissioner says:
Unfortunately the civil service, as at present constituted, is not fully equipped to meet the board's technical requirements, and it follows that it would be unfortunate if, in its initial, years, the board should be subjected to greater strain than its capacity will bear.
That is the serious and solemn report placed before the minister. It consists of some nine pages and it includes an expression of approval of the assistance that has been given by this person and the other; but there are no findings of fact, nothing upon which a minister could act. I say here and now to the minister that the evidence which was given at those sittings has never been read by him. I know how long it would take him to read it because I took it myself and made an endeavour to read it. These volumes of evidence are calmly transmitted to the minister together with this report and the minister brings in his tariff.
Whose tariff is it? This country has a right to know whose tariff it is. I know one man who did not know anything about it and that is the Minister of Finance himself. But he is learning; since this budget was brought down he is beginning to understand something about it. Let us see how the report complies with the terms and provisions of the order in council. An advisory tariff board is not a new thing, as we shall find. Bill 88 introduced by Sir Thomas White in the parliament of 1911-12 was a bill to create a tariff commission, and under the provisions of section 4 of that act the powers of the commission were defined. They consisted in the right to deal with every phase of our economic life and to determine those factors which should be considered in deciding what tariffs should be allowed. But what have we here? Do you realize, sir, that for the first time in the history of Canada, people outside of this country have assisted in determining what our tariff shall be? I have under my hand the briefs that were filed with the tariff board. By whom are they filled? The first brief on the woollen tariff schedule was filed by representatives of the Canadian Woollen and Knit Goods Manufacturers and there were also filed observations on the brief presented by the Canadian Wool-lien and Knit Goods Manufacturers, by the wool textile delegation of England on behalf of the federations and associations who are its constituent members.


Mr. YOUNG (Saskatoon):: Does the hon.
member object to that?


Richard Bedford Bennett: I certainly do. I object to any man who is not a Canadian having anything to do with fixing our tariff. Let us go a step further. Who also had a hand in
it?


Charles Avery Dunning: The hon. member knows they will give us a hearing in England.


Richard Bedford Bennett: Has the hon. member
tried it?


Charles Avery Dunning: Yes, on many occasions.


Richard Bedford Bennett: They have never had a
public hearing at which a Canadian has been asked to appear or give evidence in regard to the Safeguarding of Industries Act. Of course they would give a hearing to the hon. gentleman in England in their offices. They would be glad to welcome him and to talk over anything with him, and a highly intelligent conversation would ensue; but when in the history of this country did you ever see the representative of a competing industry' come into Canada and file a brief as has been done in this case?
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Mr. YOUNG (Weyburn):: I thought the
hon. member spoke of observations.


Richard Bedford Bennett: These are in the form of observations on the brief. If my hon. friend would rather call it "observations", we will call it "observations." Let us go a step further. This is a statement filed by the West Riding Chamber of Commerce, representing whom? Representatives of the chambers of commerce of Batley and Birstall, Bradford, Cleckheaton and Heckmondwike, Dewsbury, Halifax, Huddersfield, Leeds, Ossett and W7akefield. Then comes the Axminster. Jacquard and Chenile Carpet Manufacturers' Association with whom the Tapestry Carpet Manufacturers' Association and practically all British carpet manufacturers not belonging to any associations are co-operating. Then we have the British Agents Association of Canada, who filed observations for the purpose of affecting the tariff of this country. But this was not the end of it. The French also filed a memorandum or observations in respect to this matter. They represented not one or two or three but some thirty-six great French manufacturers. They filed memoranda with our tariff board as to liOw we should deal with our tariff. Is that what my hon. friend wishes to suggest should be done? In that regard it may be very interesting to ask ourselves just how they treated us. Do you suppose, sir, for a single moment that the great republic of France, in fixing its tariff, would have Canadians tell them how they should deal with it? Do you suppose, under the Safeguarding of Industries Act, the government of Great Britain would rely upon the attitude taken by Canadians as to how they should shape and form their tariff?


Charles Avery Dunning: Yes.


Richard Bedford Bennett: Well, all I can say to my hon. friend is:
I have not found so great faith, no not in Israel.


Charles Avery Dunning: Canada was considered and its representations were considered.


Richard Bedford Bennett: They never had a Canadian representative in connection with the Safeguarding of Industries Act. I am glad the minister has spoken, because I find he also had an idea as to how this should be dealt with. In the fall of 1927 at a banquet given to the Empire Marketing Board, the minister said:
He was not impressed with the fact that it had got far enough away, from the old idea- a relic of colonial days-that it was the business of the colonies and dominions to raise the raw 
materials to be shipped to the central market to be manufactured and that it was the duties of the colonies and dominions to buy the manufactured article. Mr. Dunning held that the idea was good in the old days, but no longer held in the days of the self-governing dominions. He asked the visitors how many of them would be content to raise the raw materials and develop the natural resources, unless they manufactured the finished product at home, and said that he had pleaded with the British manufacturers-
That is the observation he made.
-to transfer to the dominions plants and portions of plants and their artisan genius, rather than to allow others, sometimes outside of the empire, to gain a control of manufacturing in the dominions which might possibly become permanent.
That is his story, but now he approves of these men not bringing factories to Canada but endeavouring to influence the members of the tariff advisory board as to what protection our industries should have.
_ Mr- CANNON: How can we have interimperial trade if we are not to receive observations from the others sections of the empire?


Richard Bedford Bennett: I am sure that the
Solicitor^ General was not serious in that observation. This country, as his senior minister has told him, is an autonomous country and we must be a self-governing dominion. When we have to be told by the manufacturers of other communities how we shall transact our business, what happens?


Mr. CASGRAIN:: Information.


Richard Bedford Bennett: If it is information that was wanted, it was not necessary for these gentlemen to come to Canada. They might have sent their information by mail. Why should they examine witnesses?


Mr. LAPOINTE:: To get the facts.


Richard Bedford Bennett: I ask my hon. friend
from Manitoba what he thinks with respect to that? There was once a Canadian statesman who made the observation, and it was a very proper one, that he believed a woollen factory in Canada was as great an asset to the British Empire as a woollen factory in Yorkshire. That is the principle upon which we stand. So much for your advisory tariff board and the way it transacts its business.
Then we have the tariff schedules introduced in this budget by the minister, without having read the evidence, without having met the delegations, acting upon a verbal report, I presume, of people who would not put in writing what the order in council said they should do. Has not this house the right to know about it? When these resolutions

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are in committee, we want to know why these tariffs have been framed in a way in which heretofore they have never been framed. Do hon. gentlemen opposite realize that in days
gone by when my friend (Sir Henry Drayton) was Minister of Finance, he went from one end of the country to the other holding public hearings in order that people might make representations as to how they felt the tariff should be framed?


Ernest Lapointe: Nothing came out of it.


Richard Bedford Bennett: The hon. gentleman
never got the opportunity, because an election ensued.


Mr. CANNON:: Pass on to another point.


Richard Bedford Bennett: I am sorry that hon. gentlemen are so vociferous in their applause. I had not expected to meet with their approval to that extent.
May I make this observation-and I think my hon. friend the Minister of Finance will agree with me-that a tariff thus prepared is not a tariff to which the Canadian people can give their assent without the closest scrutiny of every item. I do not propose to discuss these items at length, but this I will say, that when these tariff resolutions are in committee, as no opportunity has been afforded to those vitally affected as should have been done, this house will require the widest possible explanation to justify the action that has been taken. Why? Let me give an illustration. Why should the cotton industry at one point have the duties greatly increased? Why put a duty on cotton yam and leave woollen yarn free? Why these inconsistencies? Why should you, when there is but one mill in all Canada making a given product, increase its protection, and deny protection to another industry? Why put a drawback on coal that was not asked for?


Mr. MALCOLM:: It was asked for.


Richard Bedford Bennett: The records of the tariff board do not show it.


James Malcolm: No. I have asked for it a good many sessions.


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: Well, it has been worth all this just to get that admission. There is one thing we know now that we did not know before. This is not a tariff with which the board had anything to do at all. It is what might be called a log-rolling tariff; that is the kind of tariff it is. If my hon. friend the Minister of Trade and Commerce had his wishes met and is satisfied, peradventure others with similar desires had their wishes 56103-81
met. That will make good reading, Mr. Speaker, as to how a tariff is framed.
There is another matter that might be mentioned. I am not going into details, but with regard to the general trend of these tariff schedules I would point out that steadily we have been increasing our imports from the United States, and steadily our exports have been declining. We made implements practically free, and what has been happening? We find our imports of agricultural implements increasing. Let me read what the United States says about Canadian trade. Let me read what came out in the February 13, 1928, issue of Commerce Reports issued by the United States Department of Commerce.


Mr. POWER:: Is this an observation?


Richard Bedford Bennett: I think it may convince
even my hon. friend. This is not an observation; it is a written document. At page 437 the report says:
The outstanding feature of the shipments of agricultural implements during the year 1927 was the large total that went to Canada, amounting to $29,791,472 which was 33 per cent of the total shipped to all countries, and which exceeded the shipments to all of Europe by more than $8,000,000. Canadian purchases in 1927 were the largest ever reported and were greater than the average shipments to all countries in the years prior to 1918.
This is the United States, remember, upon this subject:
These large Canadian purchases resulted from the material betterment of conditions in Ontario and the prairie provinces, especially Saskatchewan and Alberta, where American tractors, threshing machines, and harvesters were sold much more extensively than in 1926. Purchases of wheel tractors were exceptionally large, amounting to 15,749 valued at $12,421,105 as compared with 8,173 valued at $6,823,648 in 1926. Sales of American implements in Canada have been showing consistent and rapid increases during the past three years and, since each of these years has been a good crop year, the buying power of the farming population has been materially enhanced. It is also worthy of note that exports of implements to Canada comprised 90 per cent of shipments to all of North America, including Central America and the West Indies, and exceeded those to all of South America by $10,000,000.
There is one question I would put both to my hon. friends to my left and to hon. gentlemen before me. Reading that document I ask them, in view of the fact that the price of agricultural implements is a little higher now than it was when the duty was taken off, because of economic and other conditions, whether or not they believe now that the removal of that duty effected any useful purpose to Canada. I go further. I put in front of them that statement which shows that at



The Budget-Mr. Bennett
least 10,000 workmen were engaged on this work day by day in order that Canada might be supplied with agricultural implements. There was placed upon Hansard yesterday a statement of what that means in consuming capacity, in answer to a question by my hon. friend from Frontenac-Addington (Mr. Edwards). Think what that means in terms of food and food products. Weigh it carefully, make the computation in the light of the figures given yesterday and what I have given you from the American Commerce Reports, and I ask hon. gentlemen whether they believe that their hopes and expectations in this regard have been justified. I think, if they are the gentlemen I believe them to be, studying these matters as I know they do, that they will say no.
There is another matter. What is, after all, the attitude of any party towards tariffs? It is merely to utilize, if possible, this particular machinery of the government to accomplish a particular result. And what is that result? The result we hope for is to advance the interests of our country. I hold in my hand the February number of the National Review, in which at page 866 appears an article on the plight of British industry, giving figures from the International labour bureau, respecting the comparative real wages in different countries, as follows:
London			
Amsterdam		
Berlin		
Brussels		
Copenhagen		
Dublin		
Lisbon		
Lodz				
Madrid		
Milan		
Ottawa		
Paris		
Philadelphia		
Prague		
Riga			
Rome		
Stockholm		
Sydney		
Tallinn		
Vienna		
Warsaw		
It is against such	competition that the
Canadian workman is pitted. I ask you, sir, whether or not the Canadian workman has the right to maintain his high standard of living and education for himself and his family? Have we not the right, by the equalization of conditions through any form of legislation that may be devised, to protect our people in the development of our resources from the low wages of these different countries I have mentioned. That is the reason an effort is being made to equalize these conditions. There are the figures; they 
speak for themselves. I shall not at this hour do more than merely refer to them, but the whole article is illuminating as indicating the conditions under which British industry is maintained.
There is another matter to which I wish to direct attention, in connection with the report of the Economic conference. If my learned friend the Minister of Justice had only turned back a little he would have found in that very report a statement relating to a country that desired to become self-contained. I quote from page 28 of the final report of the World Economic conference:
The desire to deal with the problem of excessive industrial capacity has usually led to an attempt to reserve the home market for home production by means of tariff barriers erected with a view to creating an independent national economy capable of producing, under the protection of the tariff wall, an increase of invested wealth and a more satisfactory return for the work of the nation. This effort to attain self-sufficiency cannot hope to succeed unless it is justified by the size, natural resources, economic advantages and geographical situation of a country. There are very few countries in the world which can hope to attain it.
And, sir, Canada is one of them. If my hon. friend had >
read that the other day, as he should have, he would have ascertained that there is the principle upon which we to the left of the Speaker have been endeavouring to work out this country's economic salvation. It is all right to say that you have reduced the tariff year by year. Ever since 1923 there has been a steady effort to reduce tariffs, so they say, and now they have reached the point where, under the guise of reducing the tariff, they are really increasing it. Let me read these words as to the necessity of tariff stability in the Dominion. Do you recall, sir, that in 1923 to your right sat the right hon. Prime Minister and his Minister of Finance, the Right Hon. W. S. Fielding? These are Mr. Fielding's words:
There is a thought which does not receive as much consideration as I think sometimes it should be given in public discussions, and that is the desirability of something like tariff stability. Business men do not like to be always threatened with changes in the tariff. There is no finality in legislation whether as respects that tariff or as respects anything else. That which parliament can do to-day it can undo to-morrow. Everybody knows that. Everybody must conduct his business in the light of that fact. Nevertheless it is desirable that something like an assurance of tariff stability should be given to business men. Exceptions will occur. Speaking broadly, it is possible to give the country a reasonable assurance of stability of tariff. Such assurances are very desirable, for no business man would care to enter upon enterprises which may be brought into peril by frequent tariff changes.

The Budget-Mr. Bennett
The right hon. Prime Minister on May 23 of the same year, dealing with the same matter, said:
What my hon. friend sought to convey to the house in his remarks was that the government, after having carefully studied the situation from all angles, had come to the conclusion that having regard to the situation of Canada to-day in relation to other countries, it should tell the Canadian people that as respects the tariff, unless there were obvious reasons why there should be changes occasioned by necessity, they might be reasonably assured that there would be a steadiness in the tariff for some little time to come. That is what my hon. friend sought to make clear to this house, and he did so for the reason that what we in Canada can do with justice in the matter of tariff revision is necessarily dependent in large part upon what is done by our neighbours to the south and upon what occurs in Europe.
I find to-day-that France, one of the leading members of the League of Nations, is raising her tariff against Canada, while the Minister of Justice talks vaguely of following the mandates of the league. I find further that the right hon. Prime Minister in those days was saying that what we did was largely dependent on what was being done by our neighbours to the south. They have increased their tariffs against this country year in and year out, so as to shut out practically anything that is Canadian-unless they want our raw materials to fabricate in their own factories. The Prime Minister continued:
What is the position with regard to the United States? Since the Liberal convention was held there has been enacted by the United States a much higher tariff than ever before existed between Canada and the United States. The Fordney-McCumber tariff, socalled, to-day is operating to the disadvantage of Canada.
Here is the question he then propounded, and I put it to my friends yonder:
Is there any member of this house who will stand up in his place and say: Notwithstanding that obvious fact we think we should throw down our bars against the United States and give them an opportunity to come in here and affect our industries in a manner even more seriously than they have already been affected?


An hon. MEMBER:: Who said that?


Richard Bedford Bennett: The right hon. Prime
Minister of this country on May 23, 1923. But that was intended for consumption by the manufacturers, and when he found he had before him hon. gentlemen led by my friend from Brandon (Mr. Forke), who did not think that way, he commenced to tinker with the tariff, and ever since he has been revising it in the manner that I have indicated. You, sir, will recall that happy expression of the Minister of the Interior who sounded "the death knell of protection" in that famous speech of his, and he now finds himself confronted with the observation I have just 56103-811
read by his leader. That is the position. It is the old story illustrated by the remarks of the Minister of Railways, who endeavours to make the Canadian people believe that we are the party of high tariff because we have dared to say just what the Prime Minister himself said in 1923, that there is no one in this house or in the country who dare say- what? "Notwithstanding that obvious fact we think we should throw down our bars against the United States." Have you done it? Let the' statistical record in regard to imports of iron, steel, agricultural implements, tractors, copper, brass, in fact almost everything that might be mentioned, answer-look at those imports steadily increasing. Just as the minister said, the trend is to increase what we buy from the people of the United States and to sell less and less to them, except raw materials. That is what the right hon. Prime Minister then protested against. But power was more important than adherence to the policy he then laid down, and, as the Minister of Immigration and Colonization said in 1925, his thunderbolts launched against the government secured the abrogation of those expressions of opinion, with the result that we have the tariff as it is to-day. That is the position with respect to it.
One step further, Mr. Speaker. We have been dealing with the problem of immigration, and hon. gentlemen on the other side of the house have ventured to say that because we on this side have pointed out the actual conditions in this country we were boosting the United States.


Some hon. MEMBERS:: Hear, hear.


Richard Bedford Bennett: Boosting the United
States? Then I ask if that is what the Prime Minister was doing in 1923. May I go further, may I ask my friend from Hants-Kings (Mr. Ilsley) who referred to Sir Richard Cartwright's speeches when the Liberal party was in opposition, was Sir Richard then boosting the United States? That great financial critic pointed out the conditions prevailing in the two countries, and stated what he believed was necessary to be done for the benefit of Canada. It will be a poor day for the Canadian parliament when it becomes a rubber stamp to enforce the will of the Prime Minister; it will be a poor day for this country when the parliament of Canada is to be a rubber stamp to record the will of the Minister of Railways or the Minister of Agriculture; it will be a poor day, sir,-


Charles Avery Dunning: Or to rubber stamp your
will.


Richard Bedford Bennett: That might be. What,
sir, is the duty of this party? The duty of

The Budget-Mr. Bennett
every man in this house is to think in terms of his country, and when he finds in 1923 the Prime Minister declaiming against a possible attitude of mind towards the great republic to the south in dealing with fiscal matters, and then changing his mind and calling upon his friend from Brandon and that gentleman's associates to support reductions in the tariff from year to year,-I say the duty of every hon. member is clear. We who criticize know that the right hon. gentleman does not change his mind so lightly, we know there is a purpose behind the change, and we have a right to seek the purpose. And if we have a right to point out the effect we have also a right to point out the purpose. The purpose is power; the effect is injury to Canada. It means loss of population to this country. And it means more than that. The American commercial reports indicating the movement of farm machinery to this country mean that just so many Canadians as might have been engaged in the manufacture of that machinery here are without jobs. Is it treason to point that out? Did the right hon. gentleman hesitate to do it when he talked of usurpation of power and abuse of the institutions of this country? When he spoke of those matters in days gone by was it treason on his part? Do hon. gentlemen opposite fancy that they can becloud the minds of the Canadian people by making such observations? Let me assure them that so long as we are here, so long as we occupy the seats to which we have been elected, we propose fearlessly to criticize the acts of the government notwithstanding what they may say. It ill becomes ministers of the crown, responsible ministers, to foster such a delusion as that and to charge us with engaging in immigration propaganda in the interests of the United States. My hon. friends opposite know perfectly well that people are shut out of that country under the laws that prevail there. Aware of these things, we propose to criticize the government so long as no effort is made to provide work for our people; because work is what is very urgently needed in Canada. Every effort, therefore, which this party makes is an effort to secure work for Canadians and not for others.
I would remind my hon. friends of one other fact. When they were in opposition what did they do? They were not content to make speeches on subjects such as my hon. friend from Hants-Kings has discussed; they moved resolutions. And what was the purport if the resolutions they moved in 1889, in 1890 ind again in 1891? It was to secure unrestricted freedom in the trade relations uetween the United States and Canada. The 
reform which was suggested, to quote the words of Sir Wilfrid Laurier, was the absolute reciprocal freedom of trade between the two countries. This briefly sums up the history of my hon. friends in this regard; this is the record of those who now attack us because we venture to assert the rights of Canada and to urge those rights as being of greater moment to us than the interests of the United States. When we turn to the record of the party opposite when in opposition, we find that, making a strong appeal for support in 1891, Sir Wilfrid Laurier said:
The reform suggested by the Liberal party is absolute reciprocal freedom of trade between Canada and the United States.
How long would there have been a Dominion of Canada had that policy been carried into effect? Is that my hon. friends' policy to-day? Is that the goal towards which they are striving? Is that the reason for the tariff being reduced? Is that the reason that they are pursuing the course proposed in days gone by? Let my hon. friends answer these questions before they attack those who sit to the left of the Speaker.
I will not venture to trespass further on the time of the house, but I merely point out that, according to the Commercial Intelligence Journal which we received last week,
I find at page 354 that whereas the imports of automobile parts for assembly amounted in 1927 to $29,582,000, in 1926 they were only $25,000,000, an increase of over $4,000,000; while automobile parts for replacement are given respectively as $4,919,000 and $3,600,000. The same condition of things exists in regard to rods. That is the effect of the government s legislation:	with decreasing exports we are assembling parts to a greater extent than before. This means less work for Canadians-less manufacturing and an increasing tendency towards the assembling of parts. Now, what is the aim of the Conservative party? It is to endeavour to make this country economically independent. Our objective is to render the Dominion of Canada no longer dependent upon foreigners for our economic existence. I put this to the government:	If we are obliged always to
go abroad for all our machinery, what will happen supposing, in a moment of caprice, that foreign supply is shut off? What did Adam Smith say on this point?


Charles Avery Dunning: Surely you will not
quote him.


Richard Bedford Bennett: I admit that one should be reluctant to quote Adam Smith after the Prime Minister, but I do not think it is at

The Budget-Mr. Bennett
all amiss to point out the ground on which Adam Smith justified the taking care of industry at home. I ask this house quite seriously this question:	is this country to
become economically a dependent or an independent community? Are we to find ourselves in such a situation that, at the caprice of a powerful neighbour, for purposes solely selfish and entirely in its own interests, we shall be excluded from our sources of supply? Yet this has happened before. Do my hon. friends realize that in Europe one country has established, and to-day maintains at an annual loss, a factory for the purpose of ensuring that its people shall not be dependent upon foreign supplies as they were during the war? Do hon. gentlemen realize that this particular industry now operates in the Netherlands? Well, is Canada going to find itself in a similar predicament? All we endeavour to do, Mr. Speaker, is by every legislative means within our power, to use the words of a great Englishman, and with the tools that are in our hands, whether they be tariffs, regulations, bonuses, drawbacks, or bounties, to bend our efforts to one purpose and one purpose only, namely, to make the Canadian people a strong and virile nation, developing their own resources to the limit of their ability, and thus become entirely economically independent of foreigners, whoever they may be or wherever they may be found
I have not the time this afternoon to dwell upon the trade treaties which have been entered into by this government; I cannot indicate the extent to which the government has failed in respect of these agreements. Suffice it to say that every trade treaty which the government has entered into has operated against the Dominion of Canada. There is, perhaps, one exception respecting which there may be some doubt; I refer to the treaty with the Netherlands. But so far as the others are concerned I think the statement I have just made can be accepted without any qualification. We have made treaties with Australia, New Zealand, Japan, Italy and France.


James Alexander Robb: And South Africa.


Richard Bedford Bennett: Yes, and South Africa. And all these treaties have been equally disastrous to Canada. See what happened but yesterday: France raised its duties but we were powerless. We cannot touch ours unless we abrogate the treaty; so the minister told me yesterday. In Australia they increased their tariff; we are powerless. Why? Simply because we were not skilful enough as bargainers; they outreached us; they outgeneraled us. The bargain, so far as they
are concerned, leaves them free to raise their tariff against us while, without abrogating the treaty, we are powerless to touch our tariff as it affects them. Did my hon. friends know that? Do they know that we cannot touch these items without cancelling the treaties we have with these countries? The Minister of Finance was waited upon the other day by a certain delegation-this will reveal his state of mind concerning these treaties-and when he heard a complaint regarding certain items in the schedules affected he remarked, "You did not support me properly with respect to the Australian treaty". It appears, then, that industry is to be punished if it fails to support the Minister of Finance. Is that the law of this country? Is that the way in which Canada is to be governed? If so, clearly our tariff is but a political tariff. Legislation has been introduced, retroactive in its character, for one purpose and one purpose only, and I say that such a thing is improper. It is improper for the Minister of Finance to tell certain people that inasmuch as they did not support his Australian treaty to his satisfaction he will do nothing for them. This, I submit, is anything but a proper frame of mind for the Minister of Finance, whoever he may be; it is not the right attitude for any Canadian minister to take towards the industrial life of the country.
Now, Mr. Speaker, we have moved an amendment the affirmative of which we say clearly expresses the attitude of the party to which we belong. Our position is stated in simple, clearcut language. In order that there may no misunderstanding, let me once more read that amendment:
This house regrets that the measures proposed by the government do not tend to provide increased employment in Canada nor to induce the return of Canadians to their native land, nor to prevent the continued emigration of our people to the United States; and that they make no provisions for the preservation of our domestic markets for Canadian farm and dairy products. nor for the effective development of the natural resources of the country, nor for the abolition of the sales tax by the first of January 1929.
The policy of the Conservative party is to increase employment in Canada, to keep our people here and to induce the return of Canadians to their native land. The evidence given before this high court of parliament by the hon. members who have taken part in this debate proves conclusively that the policies in force at present are not having this effect, and neither are they preventing the continued emigration of our people to the United States.
The Budget-Mr. Bennett

The amendment also expresses regret that no provision has been made for the preservation of our domestic markets for Canadian farm and dairy products. I have under my hand a letter dealing with the butter and egg situation; the last commercial report deals with the competition of Russia in the egg markets of Great Britain. Look at our imports of butter and eggs and dairy products and see our position with respect to these matters. No attempt is made in the budget to improve that condition. Yesterday the Minister of Agriculture (Mr. Motherwell) tried to give some of the dairy interests of Canada a little comfort by quietly suggesting that the Australian treaty was not inviolable, but that there was provision by which it might be abrogated. Did he consult the Minister of Finance as to whether or not he would abrogate it? Not yet. That is the way in which the government is conducted, to try and induce hon. members yonder to believe the treaty will be abrogated in order that they may vote properly, while the Minister of Finance sits quietly in his seat knowing very well that he has no intention of abrogating that treaty in any way. In other words, if I might be permitted to use a colloquialism, it is his own baby and he proposes to nourish it. The amendment also regrets that no provision is made for the effective development of the natural resources of the country. You Only have to consider the American commerce reports and the other publications to which I have alluded, to make the position perfectly clear.
Now, Mr. Speaker, the affirmative of that amendment expresses our settled convictions.


Charles Avery Dunning: But not your policy.


Richard Bedford Bennett: It also expresses our
policy, as outlined at Winnipeg. There is high authority for saying the policy is a chart, and there is still higher authority for saying it was never a compass, as far as the hon. gentleman is concerned. He feels very much hurt that he will no longer be able to make his diatribes against the Conservative party because of their alleged position with respect to tariff policies. Now he and the Minister of Agriculture must face the electors of Saskatchewan and explain why the butter markets of this country are being destroyed and why the farmers of Saskatchewan are going out of the dairying business. They will also have to explain why 3,000 head of dairy cattle were sold in Colchester county alone in the last six months.
These things will have to be explained, and the policy to which I have alluded is the policy of the party with which I have the honour to

be associated for the present. We have no apologies to offer; we stand four-square by that policy, and repeat that Canada can only be built up by a proper appreciation of all those principles which political economists say are essential to the development of the resources of a new land. We must practise economy; we must practise thrift; we must reduce our national debt as rapidly as possible, to maintain the great heritage which Providence has given to us. In the words of the Prime Minister himself, this can only be done by taking full cognizance of the fact that there is a great republic to the south clamouring for our markets, invading them at every point and securing them wherever possible. Every bit of legislative machinery in our power and every tool we can pick up must be taken in hand and used to effect the purpose we have in mind, and when that purpose is effected they may be laid down again. If the country is being exploited by industry then this country and this parliament can deal with it.


Alexander MacGillivray Young: In what way?


Richard Bedford Bennett: My hon. friend is far too intelligent to require any reply. Excise duties and reduced tariffs, when industries are able to stand such measures, can make it impossible for this country to be exploited in that way. Everyone knows that; everyone who has studied this question at all is aware of that fact.
Now, sir, I have trespassed upon the time and attention of this house very much longer than I had intended, but there were many matters which came to my mind and which I thought should be dealt with. I am conscious of not having dealt with as many of them as I should have liked, but I do commend to this house and to this country the thought that in so far as we are endeavouring to criticize fearlessly, boldly and courageously the proposals of the government, we are within our rights. Every effort we can make to secure the health, happiness and prosperity of the people of this country will be made, and we will continue to urge that economy be practised in the conduct of our national affairs in order that we may no longer be threatened with the economic menace to which the president of the United States so fittingly referred.


William Lyon Mackenzie King: Mr. Speaker, in opening his remarks my friend the leader of the opposition (Mr. Bennett) expressed his appreciation of the high character and tone of the debate which has now lasted for almost four weeks. I am happy to join with him in his apprecia-

The Budget-Mr. Mackenzie King
tion of the speeches which have been delivered. May I also venture to congratulate him on having the front rows of the opposition benches filled for the first time since this parliament has been in session. He has succeeded in bringing his wanderers back from different parts of the world. I see my hon. friend from West York (Sir Henry Drayton), who has just returned to us from the West Indies; my friend from Vancouver Centre (Mr. Stevens) who has just returned from Great Britain, and my friend the senior member for Halifax (Mr. Black), who has also come back from across the ocean. I say to these hon. members that we are pleased to see them here and glad to see them looking so hale and hearty. I might also say that I imagine not one of them has read the speech of the Minister of Finance (Mr. Robb). I doubt if they have read the amendments which have been moved by the Conservative party and the Progressive group; on the other hand I venture the assurance that they will all vote for the amendment proposed by the opposition, that they will vote against the amendment of the Progressive group and against the budget.
May I say to my hon. friend that I appreciate the manner of his presentation of the point of view of the opposition in its criticism of the budget. I shall endeavour to follow him as well as I can in the order in which he proceeded, and try to touch upon the various subjects with which he dealt. He opened his remarks by a number of references to hon. gentlemen on this side of the house who have spoken during the course of the debate. Most of those references were in the nature of poetic effusions-I do not know that I can follow my hon. friend there. One little quotation, however, did come to my mind, as I listened while he lectured us, and told of what had been done elsewhere as well as what should be done here. As I watched the expression on the faces of those who surround him, I thought of those lines:
And still they gazed and still the wonder grew,
That one small head should carry all he knew.
As far as I was able to follow my hon. friend, he began with references to the public debt. From that he proceeded to a discussion of railway finance, then he dealt with the taxation which is proposed for the coming year. He came next to the tariff and spoke at some length in that connection. Finally he concluded by a reference to the amendment moved by the hon. member for St. Lawrence-St. George (Mr. Cahan), which he said he was going to read to the house. Unfortunately,
however, my hon. friend did not read the amendment, and for the sake of those members of his party who have just returned perhaps I could not do better than read it in order that they may know exactly what it is they are expected to support.
First of all, what is the present position? The Minister of Finance made a motion to the effect that the house resolve itself into committee of ways and means to consider certain resolutions which he was anxious to present. These resolutions are in accord with similar resolutions which have been moved by the Minister of Finance in previous years. They agree with those resolutions in following lines of fiscal policy which have been consistently maintained by the government from the very day that we took office, and which have brought surpluses instead of deficits, reductions instead of increases in public debt, and reductions instead of increases in taxation. My hon. friend in presenting his motion gave to the house a statement of the finances of the country during the past year. But my hon. friend the leader of the opposition seems to think that the Finance minister should not have touched upon the past year, and rather chided him with having failed to say a little more about the year to come. The Minister of Finance was erring on the safe side when, in giving a statement of the government's policies with respect to taxation and tariff and how they had worked out in the past year, he indicated that in following similar" lines for the coming year, he was safe in predicting that the statement he would present at the end of the next financial year would be similar to that which he was then presenting. What was that statement? It was a statement to the effect that the balance sheet of the country showed a surplus, a very large surplus, a surplus running into very many millions of dollars; that it showed reductions in the public debt of many millions, and reductions in taxation as well. Those were the three outstanding features of the budget. The Minister of Finance pointed out wherein, by following along lines he indicated, the government had been able to achieve these results, and he predicted that in the next statement which he would present, following lines parallel to those Which had been followed in the past year, there would be another surplus, further reduction of the pubic debt, and possibly further reductions of taxation. One would have thought that the presentation of a statement of that character would have met with some measure of general appreciation. Instead of that, however, it has brought forth two amendments, each of which is similar to the other in one

The Budget-Mr. Mackenzie King
particular only, namely, that each is in the nature of an expression of regret that the Minister of Finance has not gone far enough. But the interesting feature of the two amendments is this-that while hon. gentlemen immediately opposite regret that the Minister of Finance has not gone far enough in one direction, the Progressive group are supporting an amendment which regrets that the government has not gone further in an opposite direction. That is the real significance of the two amendments which are 'before us. Let me read the amendments in the words in which they have been presented to the house.
On February 16 the Minister of Finance moved:
That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
On February 20, the hon. member for St. Lawrence-St. George moved the following amendment:
That all the words after the word "that" be struck out and the following substituted therefor :
This house regrets that the measures proposed by the government do not tend to provide increased employment in Canada, nor to induce the return of Canadians to their native land, nor to prevent the continued emigration of our people to the United States; and that they make no provisions for the preservation of our domestic markets for Canadian farm and dairy products, nor for the effective development of the natural resources of the country, nor for the abolition of the sales tax by the 1st of January, 1929.
Then on February 22nd, the hon. member for East Lambton (Mr. Fansher), of the Progressive group, moved:
.	ah the words after the word "regrets"
in the amendment be struck out and the following substituted therefor:
"That the government proposes further reductions in the income tax, thus making a serious departure from the principle of direct taxation; that the proposed revision of the customs tariff is inadequate to bring effective re let to the consuming public; and that the sales tax on the necessaries of life has not been eliminated.
As I said, Mr. Speaker, these amendments are similar in one particular only, namely, that each expresses a certain regret. It is true that each takes cognizance of the salles tax. Hon. gentlemen immediately opposite regret that the sales tax was not completely removed. Hon. gentlemen supporting the subamendment regret that the tax is not wholly removed on the necessaries of life. But when it comes to the rest of the amendments, hon. gentlemen of both parties regret that we have not followed policies based on fiscal principles diametrically opposed to one another. That is the line of criticism that the government

has to meet. The public, I think, will be quick to appreciate that those who are opposing the government are greatly divided and not united. The public will be able to make a comparison between the weakness of the disunited criticism of the opposition and the merit of the united support which the budget will receive from this side of the house.
Let me come immediately to the question of the public debt. In order that the policy of the present administration may be appreciated in its true perspective, it is necessary to consider the situation as the government encountered it when we came into office. My hon. friend, in the course of his remarks, gave certain figures of taxation during the six or eight years prior to that time. He pointed out that during that period the governments then in office had taken from the taxpayers of Canada only a certain amount of taxation. He then quoted the amounts which had been taken from the taxpayers since we came into office and said:	"Behold the
much greater amount of taxation which the present government has taken from the people of this Dominion." Rightly understood, my ihon. friend's comparison is a condemnation of hon. gentlemen opposite. What took place during the eight or ten years which preceded our coming into office? When the country was at war did hon. gentlemen opposite tax the people of Canada as was done in England, in France, anl elsewhere in order to carry on the war? They did not tax them to the extent of a single dollar for the purpose of carrying on the war, but left to their successors the payment of every dollar of the capital cost of the war. They did worse than that. They left to their successors the payment as well of every dollar of the cost of demobilization. My hon. friend talked about the mortgage on the farm. His friends left the country with a mortgage to the extent of one billion and several hundreds of millions of dollars, not one dollar of which did they seek to meet while in office. When we came into power we were at once confronted with the debts left by hon. gentlemen apposite. We found that the country had been going deeper and deeper into debt, and we took the first step necessary to save it, namely, that of seeking to "make ends meet," or in other words, to balance the budget. May I go further. Hon. gentlemen may say with respect to the war that the expenditure was abnormal, and that they did not expect to be able to meet that expenditure by taxation at the time. But what about the normal, ordinary expenditures at the time they were in office? If my memory

The Budget-Mr. Mackenzie King
serves me aright, hon. gentlemen opposite, when they say they were taxing the people so lightly, added in the period of the war and demobilization on ordinary account an expenditure of something over $13,773,000. To this was added another $173,000,000 of deficits for the fiscal years 1920-21, 1921-22. That is the situation with which we were confronted. What did the Right Hon. Mr. Fielding, then Minister of Finance, point out? He informed parliament that if the policy continued of not balancing the budget, of not even seeking to have revenues equal expenditures, this country would go further and further into bankruptcy and from bankruptcy into utter ruin. It was to overcome that situation and to reach a point where our finances would be on an even basis that this government undertook to levy a little more in the way of additional taxation, sufficient to help to reach a point where expenditures and revenues would be more or less equal. We came into office on December 29,1921. That was the fiscal year for which hon. gentlemen opposite had provided. Their own Minister of Finance prepared the budget, and I claim, and I think hon. gentlemen will admit, that the figures relating to that year belong appropriately to their administration. I will say for my hon. friend's predecessor that he had courage enough to add something in the way of taxation during the time that he was in office. He had greater courage in that regard than the Union government which preceded him, but he did not add anything like enough to meet even the expenditures which he incurred, as I will show in a few moments. But if you compare the two years of his administration with the three following years of our administration, which three years were taken to bring about an adjustment of the finances of Canada, a readjustment so that we would reach a point at which the budget would balance, and then the three yjears following, you will see the successful working out of a consistent line of policy on the part of the Liberal administration. Those years disclose what? They disclose, as the Minister of Finance showed in the budget statement which he made the other day, surpluses instead of deficits, reduction of debt instead of increase of debt, reduction of taxation instead of increase of taxation. Let me give the statement to the house as briefly as I can.
According to the public accounts for the fiscal year 1920-21-1 am giving the figures in millions of dollars-the total revenue amounted to $436,000,000 and the expenditure to $528,000,000, or a deficit of $92,000,000. That deficit of $92,000,000 was due to what?


Richard Bedford Bennett: Railways.


William Lyon Mackenzie King: It was due to the fact that my hon. friends did not levy the taxation which they are accusing us of levying. It is easy for my hon. friend to take credit to himself and to his party and say that they were saving the people taxation in those days. They were adding and did add $92,000,000 of taxation that had to be met at some time and had to be met rather quickly if this country was not to go into bankruptcy. What about the following year? In 1921-22 the revenues amounted to $382,000,000 and the expenditures to $463,000,000, or another addition to the debt of this country of $81,000,000, not on war account, but on account of the ordinary business of government. Then we came into office and we were confronted, as I have said, with the obligations which hon. gentlemen opposite left to us. Our first effort was to readjust finances so as to bring about a balancing of expenditures and revenues. In the first year it was impossible completely to avoid a further deficit; but let me give the house the figures for that year. In 1922-23 revenues amounted to $403,000,000 and expenditures to $435,000,000 with a consequent deficit, not of $92,000,000 or $81,000,000, but of $32,000,000. In the following year, 1923-24, revenues were $407,000,000 and expenditures $371,000,000, bringing for the first time a surplus, and that a surplus of $36,000,000, and from that moment on to the present we have had surpluses every year. If, instead of surpluses, we had brought in deficits, hon. gentlemen opposite might well have started their amendment with regrets; but when the showing is what it is from that time on, the government I submit deserves something in the way of real appreciation from the house and from them in particular. The figures for the later years are as follows:
Surplus
Fiscal year
1924-	25 ..
1925-	26 ..
1926-	27 ..
1927-	28 ..
Revenues Expenditures About *352,000,000 $351,000,000 $	300,000
383.000.	000 355,000,000 28,000,000
401.000.	000	359,000,000	42,000,000419.000.	000	365,000,000	54,000,000
The Minister of Finance gave as his surplus not $54,000,000, but that amount less $16,000,000. What was that $16,000,000? Of it, $14,000,000 was in the nature of loans made by hon. gentlemen opposite on soldier land settlement, loans which no future government would be able to collect and which, in order that the slate might be cleared of a bad debt, was wiped off entirely by the Minister of Finance. Then there were further moneys amounting to $2,000,000 given as loans in the way of relief for seed grain.

The Budget-Mr. Mackenzie King
The Minister of Finance might have left those on the books if he had wished to do so, and if he had done so the surplus this year, instead of being $38,000,000, would have been $54,000,000. That is the real showing which has been made on the accounts for the last fiscal year. What my hon. friend did this year with regard to those bad debts was what in a much larger way the government has been doing right along with the deficits which were left to us by hon. gentlemen opposite.
Having been confronted with the obvious inferences of this statement, various speakers on the other side have insinuated that in some way the accounts have not been kept as they formerly were. The first criticism was that we should include in the general expenditures cf the government expenditures made on account of the Canadian National Railways, and hon. gentlemen have repeated that over and over again. With respect to expenditures on the Canadian National Railways, may I [DOT]say that there is no reason why those expenditures should be included in the public accounts as part of the ordinary expenditures of the government, and this for the following reasons: First, they never have been; from . the days of confederation down to the present time the railway accounts have been kept separate. In the second place, the Canadian National Railways is in the nature of an industrial enterprise which is being operated not at cost but for purposes of profit and gain. It is in competition with a great private enterprise, the Canadian Pacific Railway, and if a just policy is to be exercised towards all the railways in this country, we must permit the Canadian National Railways to seek to make '.heir profits just as the Canadian Pacific Railway Company seek to make theirs. In the third place the whole control of the government railways has been taken out of the hands of the administration; the railways have been placed under the control of a president and board of directors who, by authority of parliament, are completely-removed from any control on the part of the administration. I ask whether in those circumstances it would be fair and proper that the accounts of the Canadian National railways should be made part of the ordinary government expenditures.
But more than that. As has been very properly said in this debate, the Canadian National Railways are on all fours with a large industrial enterprise, such as the Hydro-Electric m the province of Ontario-an industrial enterprise which is in the nature of a great business corporation giving service to the public at large, but being conducted along

lines similar to those followed by any large industrial enterprise. Every industrial corporation looking to the future will make outlays in the present with the expectation that returns will come in the course of a period of years. That has been the case with the Canadian National Railways. When one looks at the advances that have been made to the Canadian National Railways, one will discover that while money has been advanced from parliament to the Canadian National Railways, it has gone into improvements of a character which, though it may take years to bring results, we nevertheless expect in the course of time, will more and more justify the advances which have been made. May I point out this difference between the advances made by hon. gentlemen opposite to the Canadian National Railways and the advances made by the present administration? For the most part the advances which hon. gentlemen opposite made went to meet deficits in operation. The advances which have been made by the present administration have for the most part gone into improvements and extensions of a character likely vastly to increase the revenues of the railway in the course of time.
With respect to the statement that a different method in accounting has been followed by the present administration than was formerly the case, may I say that I am glad my hon. friend from West York is present, because I think he will bear me out when I mention that when he was Minister of Finance he called in a firm of auditors in the city of Toronto, the firm of Edwards, Morgan and Company, chartered accountants, to audit the books of the Finance department. The hon. member for South Wellington (Mr. Guthrie), speaking in this house the other day, said that it was a new idea to have an outside auditor come in and audit the books of the government, but my hon. friend from West York agrees that when he was in office as Finance Minister he engaged this firm of chartered accountants to audit the boks. They did so, and having audited the books, my hon. friend from West York published in the public accounts of that year the following certificate which was given:
We have examined the balance sheet of the Dominion of Canada (shown herewith) as of March 31, 1920, also the expenditure and revenue account for the fiscal year ended on the said date, and have verified the same by reference to the Dominion ledgers. We certify that the above-mentioned statements accurately set forth the matters therein referred to, and are as shown by the said books.
(Signed) Edwards, Morgan and Company.
Chartered Accountants

The Budget-Mr. Mackenzie King
In the course of the next year or two criticism came from hon. gentlemen opposite that, in keeping the railway accounts separate from the ordinary accounts, we were adopting a different method from that followed by my hon. friend. The Minister of Finance (Mr. Robb) then called in the same firm that my hon. friend from West York had retained when he was Minister of Finance, and asked them to examine the books and to give a certificate. This the government published in the public accounts, as follows:
We have examined the balance sheet of the Dominion of Canada as at March 31, 1924, and we certify that the balance sheet conforms to the balance sheets of previous years in not including in the net debt of the Dominion, issues of the Canadian National Railway Company and companies included in its _ system, which carry the guarantee of the Dominion of Canada. 'Such guaranteed issues are shown year by year as indirect liabilities.
(Signed) Geo. Edwards,
Of the firm of Edwards, Morgan & Co.
W. Garth Thomson.
Of the firm of Peat, Marwick, Mitchell & Co This year, my hon. friend the Minister ol Finance, seeing that hon. gentlemen opposite were still criticising the administration on the score of having altered the method of keeping the accounts, asked another firm of auditors, Messrs. P. S. Ross and Sons, chartered accountants, of Montreal, to audit the books, and they presented the following certificate which appears in the public accounts of last year:
We certify that the published balance sheets examined by us have been compiled in a manner similar to the corresponding statements of previous years, and do not include in the net debt of the Dominion, issues of the Canadian National Railway Company and the companies included in its system which carry the guarantee of the Dominion. The details of such guarantees have been shown separately each year in the public accounts.
(Signed) P. S. Ross & Sons,
Chartered Accountants. I think we can take it as now definitely settled that so far as accounting is concerned the government is justified in saying and the country in believing that comparisons will be on lines parallel to those which were followed by hon. gentlemen opposite when they were in office, and that any figures which we give to the country through the public accounts are correct in all particulars.
Let me deal for a moment more particularly with the railways financing. What is the record as it appears? I have not time to go at great length into a volume of figures, but I have taken some trouble to gather together figures that are significant with respect to the operation of the railways, and here again I would ask hon. members to note the difference
in the three periods which I have mentioned- the period during which hon. gentlemen opposite were in office, the three years when we were seeking to readjust the finances of the country, and the last three years in which there has been more in the way of substantial success achieved. Take, first of all, the cash advances to the Canadian National Railways. There are two classes of figures which record these cash advances; there are the figures in the books of the Finance department, and there are the figures in the books of the Department of Railways. The books of the Department of Railways record as such all the cash advances that are made. The Finance department gives as its figures of cash advances the total advances less any refunds made by the railways to that department. I am going to give both columns so that hon. members will see that I am not seeking to give one set of figures rather than the other:
Actual net advance as per books of
Fiscal Year	Railway department
1920- 21	 110,329,351 52
1921- 22	 111,940,957 42
Then coming to the years of the present administration, the cash advances are not in terms of hundreds of millions, not $110,000,000 or $111,000,000, but in 1922-23 the net advance was $80,678,179.29. That dropped in 1923-24 to $24,550,000, and dropped again in 1924-25 to $10,000,000; $10,000,000 again in 1925-26, and $10,000,000 in 1926-27.
Now, taking the figures of the Finance department, we find as follows:
Net Cash advanced as disclosed by books of Fiscal Year	Department of Finance
1920- 21	 $109,662,655 36
1921- 22	 97,950,645 36
Those were the years when hon. gentlemen opposite were in office. Coming to the years of the present administration, the figures are
as follows:
1922-	23..
1923-	24. .
1924-	25. .
1925-	26..
1926-	27..

That is a showing vastly to the credit of the present administration.
I	have here a statement of the operating deficits or surpluses on the Canadian National Railways under the two administrations. During the period hon. gentlemen opposite were in office there were deficits each year-these are calendar years-but from the moment the present administration came into office there was a surplus which has grown more or less every year. The figures are as follows:

The Budget-Mr. Mackenzie King
Canadian National Railways Operating Deficits or Surpluses (Calendar years)
1920		 1921			Deficits . .. 11,543,378 00	Surpluses
1922			$ 2,886,711 55
1923			20,430,649 08
1924			17,244,251 48
1925			32,264,414 79
1926			46,483,192 55
1927			42,113,976 45
Now take	the total deficits	after fixed
charges, and note how they figure out:
1921
1922 1023
1925
1927
Canadian National Railways Total Deficit after Fixed Charges (Calendar Years)
	 $80,478,828	00
	 69,866,589	00
	 57,960,097	78	 51,697,674	94
	 54,860,419	22
	 41,444,764	42
	 29,701,444	91
	 34,373,027	22
A steady improvement all along the line from the time the present administration took charge of national affairs.
Take the bond issues of the Canadian National Railways guaranteed by the government, and the same improvement appears:
1919-	20
1920-	21
1921-	22
1922-	23
1923-	24
1924-	25
1925-	26,
1926-	27,
1927-	28.
Canadian National Railways Guaranteed Bond Issues

50.000.	000 00
61.000.	000 00 Nil
72,500,000 00 81,000,000 00 Nil
34,879,252 86 65,000,000 00

Let me say a word about the guarantee of $34,879,252.86 in 1926-27. That was the statutory guarantee required by the Grand Trunk Pacific 4 per cent debenture settlement. The dispute had 'been outstanding since the Grand Trunk Pacific went into receivership in 1919. It ought not, therefore, to be held against the present management which arranged the settlement, or the government which recommended ratification by parliament last year. So the record with respect to railway financing would go to show that during the period that this administration has been in office there has been a steady improvement-a steady decline in deficits, a steady lessening of advances, a steady lessening also of guarantees.
Let me come to the contention of hon. gentlemen opposite, that in presenting the public accounts for purpose of comparison we should take account of all expenditures no matter whence they may arise. There are three comparable sets of figures which can be used for purposes of comparison. You can take the ordinary expenditure of the government as it appears in the public accounts; or the ordinary, plus the special and capital expenditure, but not including the Canadian National Railways and the government merchant marine; or, the first two sets I have mentioned, plus what is advanced for the Canadian National Ralways and for the merchant marine. Let me place on Hansard a statement of all three It goes to show that no matter which of these three sets of comparable figures you take, the same improvement all along the line is apparent:
Expenditures (In millions of dollars)
Fiscal Year 1920-	21 	
1921-	22	Ordinary (Chargeable to con solidated fund)	Ordinary plus capital and special - (Not including C.N.R. and M.M.) 418 365	Total (Inc. C.N.R. [DOT] and M.M.) 528 463	Per capita expenditures $60 11 52 031922-	23 	
1923-	24 .. . . 1924-	25 	. .. 318	350 344 339	434 370 351	$48 15 40 50 37 891925-	26 	
1926-	27 	
1927-	28 (est.) .	. .. 319 . .. 333	343 346 361	355 359 365*	$37 83 37 67 37 80
* Exclusive of $16,000,000 written off soldiers' land settlement loans and seed grain loans.

The Budget-Mr. Mackenzie King
This statement shows that total expenditures for 1927-28 were about one million less than in 1921-22 and about 164 million less than in
1920-21.
I shall now place .before the house in tabular
form the additions to net national debt as shown by the figures from the public accounts for these years:
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


William Lyon Mackenzie King: When the
house rose at six o'clock I was about to take up the representations of the leader of the opposition (Mr. Bennett) with respect to the public debt of the Dominion. I notice that in his presentation this afternoon my hon. friend took an attitude somewhat different from that which he assumed when speaking on the address. On that occasion he intimated that the government had increased the public debt. He alleged that the government was responsible for the increase of the debt in the fiscal year 1921-22 and in the fiscal year 192223. He did not repeat that comparison this afternoon, but I should like nevertheless to point out to him at this juncture how unfair it was. The fiscal year 1921-22 was the year in which his friends were in office during nine months out of the twelve. The present administration came into office in December 1921, and, as I said this afternoon, the budget of that year had been prepared by a Minister of Finance who was a member of the Conservative government of the time. Therefore the responsibility for the relation of the revenues to expenditures was entirely attributable to the budget as then brought down; and that budget occasioned an increase in the public debt of $81,000,000. It is not argument but a species of legerdemain to charge this government with that increase in the debt; it must be ascribed to hon. gentlemen opposite. And the increase in the following year, the increase of some $31,000,000 odd1, was inevitable in view of the large amount of obligations which were left on the doorstep of the present administration, which had to be met before we could begin to deal in any adequate measure with the necessities of the public service. The correct comparison, as I have already stated, is between the two years for the most part of office of hon. gentlemen apposite prior to the time at which the present government took office, the years 1920-21, and 1921-22 and the three years succeeding, which was a period of financial readjustment leading to surpluses instead of deficits, as well as the three years following that, of which this is the third, and which is a period of tax and debt reduction.
Additions and Reductions in Net National Debt (In Millions of dollars)
Net consolidated debt, Mar. 31.
1920	= 2,248
Addition
2	years Cons.-	to debt
1920-	21. Mar. 31, 1921 =2,340 + 92
1921-	22, Mar. 31, 1922 = 2,422 + 81= + 17.3
3	years Lib.

1922-	23, Mar. 31,
1923-	24, Mar. 31,
1924-	25, Mar. 31,
Reductions in Debt
1923	= 2,453 + 32
1924	= 2,417

1925	= 2,417- 0.3= - 5
1925-	26, Mar. 31, 1926 =2,390 - 28
1926-	27, Mar. 31, 1927 = 2,347 - 42
1927-	28, Mar. 31, 1928 = 2,308 - 38=- 108
For the two years ending 1921 and 1922 the addition to the debt was $92,000,000 in the one case and $81,000,000 in the other, or a total additional debt in those two years of $173,000,000. Now in the first three years of Liberal administration, which I have called the period of financial readjustment, the increase in the debt, taking the year ending 1923, was $62,000,000; in the following year there was not an increase but a reduction in the debt to the extent of $36,000,000; while in the subsequent year there was a reduction of some $300,000 odd. In other words, it took three years for the present administration to get the affairs of the country so readjusted as to have surpluses replace the deficits of the old administration. From that time on we have had continuously surpluses as follows: In the year ending 1926, $28,000,000; 1927, $42,000,000; and this year we have a surplus of $38,000,000-a surplus which would have amounted to $54,000,000 had the Minister of Finance not written off the bad debts which grew out of loans made by our predecessors for soldier land settlement and for relief in the form of seed grain.
Not only has the present administration reduced the public debt in the manner I have indicated, but we have also considerably reduced the burden which the taxpayers of the country must carry, in meeting interest on the debt, by the system of refunding at a lower rate of interest which the present Minister of Finance has brought about. The present minister found that hon. gentlemen opposite had been making loans at high rates of interest over long periods and he immediately set to work to see whether it was not possible, by refunding, to reduce these loans and to issue new loans at lower rates of

The Budget-Mr. Mackenzie King
interest. He has succeeded to the extent of reducing the current burden of the Canadian taxpayer, on account of interest on the public debt, by a total of some $13,000,000. This he
has accomplished through refunding. I will not read the entire statement, but with the permission of the house I will have it embodied in Hansard:
Statement showing the Increase or Decrease in the Annual Interest Charges on the Public Debt due to the issue or retirement of Loans each year since 1920-1921
Fiscal Year	Due to Refunding at lower interest rate	Due to Retirement of outstanding loans	Total Reduction in annual interest charges1920-21	$	$ 4,144,225 3,335,041Inc.	$ 4,144,225 3,891,641Inc.1921-22	556,600Inc.	
252,584
1922-23		900.048 1,107,611 2,506,713 166,S12 275,000Inc. 675,000	1,768,805 1,797,563* 14,886 773,913 1,320,000 2,932,811	
			2,668,853 2,905,174* 2.521,599 940,725 1,045,000 3,607,811
1923-24				
1924-25				
1925-26				
1926-27				
1927-28 				
			
			13,689,162
			
*In 1923-24, the dollar bond loans from the Imperial government of $2,000,000, 31%, due 1925-28, and $65,207,351, 4J%, due 1925-45, were written off by agreement against advances made by the Dominion to the Imperial government. The annual interest of $3,004,331 on these loans is included in the above figures as a reduction in interest charges.
Now I come to the next subject dealt with by my hon. friend opposite. Throughout this debate an effort has been made on the part of the opposition to have it appear that the reductions in taxation which we have been steadily making are in the last analysis simply the equivalent of the additional taxation which, after we came into office, we found it necessary to impose. As I have already pointed out to hon. gentlemen opposite this additional taxation was necessary to meet their debts; it was necessary to meet the obligations which they had left to us. I take issue with my hon. friends opposite in the allegation that the reduction of taxation which we have effected is merely the corresponding equivalent of the increase. What were the taxes which we found imposed when we came into office? There were, of course, the duties of customs and excise, but there were also the special war taxes such as the income tax, the sales tax and the tax upon cheques, promissory notes and the like. In the year ending 1922 we added a tax on receipts, we slightly increased the tax on cheques and on promissory notes and bills of exchange, and made some changes in the sales tax. But these taxes we have long since reduced to a point lower than they were at the time we came' into office.
The sales tax was a tax which as I have said we did increase slightly, but we did away with

the system of pyramiding which under hon. gentlemen opposite had existed, and which made the sales tax very much higher in reality than it has ever been since 1923. We have exempted from the operation of the sales tax an increasing number of articles; we have cut the tax in half in some cases, and once we had discharged the special obligations which it was increased to meet, we have steadily reduced its rate.
With respect to the income tax, again the record of this government has been one of reduction, but not reduction of taxation with increase of debt; it has been reduction of taxation accompanied by reduction of the public debt. I wish to stress that point to hon. members of the house, because I would agree with those who say that there is no justification for reducing the income tax so long as we are adding to the general debt of the country, and so long as the public debt of the country is not being paid off at an appreciable rate. I would point out to hon. members, however, that this year for example we have paid off of the public debt, taking the bad loans to which I have referred, the sum of $54,000,000, which is very much iu advance of the sum suggested by the leader of the opposition this afternoon as an annual reduction in the public debt under the scheme which he thought should be adopted as a

The Budget-Mr. Mackenzie King
sinking fund. In order that hon. members may have the record in a form which will make possible easy reference and verification I will place on Hansard a few statistical tables which I have prepared in order to make quite
clear the exact reductions in taxation which have been effected by the present administration.
Take first the taxes on receipts, on cheques and on postage.
Reductions in Taxation in Budget Years on Receipts, cheques, notes and postage
Taxes imposed when present Administration came into office	1922	1923	1924	1925	1926	1927	19282c. on every cheque, bill of exchange, and promissory note. Postage 3c. since 1915.	2c. on receipt for $10. or over. Tax on cheque 2c. on every additional $50. Maxi-mnm tax, $2.	*s, bill Maximum tax,$1	Receipt tax s of exchange, docum	promissory not jnts. Remitted on cheques, etc up to $5.00.	Receipt tax abolished es and similar Postage reduced to 2c.	Remitted on cheques up to $10. Re duced to flat rate of 2c. on all cheques above $10.	
As to the receipt tax, that was a tax of two cents on all receipts of $10 or over, which was imposed in 1922. That tax does not exist today ; it was abolished in 1926; in that regard it cannot be said that we are now taking off a tax which we imposed. Then consider the tax on cheques, bills of exchange, promissory notes and other documents. When we came into office we found a tax of two cents on every cheque, bill of exchange and promissory note, and in our first year in office we provided that there should be a tax of two cents on every additional $50, with a maximum tax of $2, which was reduced to $1 in 1923. That was an increase in the amount of the tax on cheques and notes, but in 1925 we took off the tax on cheques up to $5, so at that time we were bringing our taxation on cheques and similar documents to a lower point than was the case with similar taxation under hon. gentlemen opposite when they were in office. In 1927 we went still further; we abolished the tax on cheques up to $10 and reduced to a flat rate of two cents the
tax on cheques over $10. The tax on cheques is therefore at present much lower than that which existed at the time we came into power.
Again, when we came into office the price of postage stamps, which is a form of taxation, was three cents on all letters sent to any part of the Dominion or to Great Britain, and that tax had been in existence since 1915. In 1926 we reduced the postage to two cents, in other words we restored penny postage, which meant a reduction of 33$ per cent if one wishes to figure it out on a percentage basis. I contend that these figures, if the estimates were properly prepared, would show that we have taken off under these 'heads alone a great deal more than the additional taxation which we imposed in order to make the budgets balance in a satisfactory way.
Let us come now to the sales tax, and let us consider the increases and reductions in the rate of that tax. And here again let me present the figures in the form of a statistical table, so that the facts can be seen at a glance.

The Budget-Mr. Mackenzie King
Sales Tax by Budget Years Increases and Reductions in Rates.
1921	1922	1923	1924	1925	1926	1927	1928Various rates from U% to 4% (on goods imported by retailers or consumers). Normal rate from manufacturer or wholesaler to consumer 3%.	Rates increased by one-half from 2\% to 6% (on goods imported by retailers or consumers). Normal rate from manufacturer or wholesaler to consumer 4	Rates raised to a straight 6%.*	Rates reduced to a straight 5%. Rate reduced to 2\% on boots and shoes and rubber foot wear. 50% reduction on biscuits, canned vege tables, fruits, etc., printing paper, creosoted railroad ties.	Sales Tax reduced to 2J% on canned fish.	General rate reduced to 4%. 50% reduction on apples, dried, desiccated, or evaporated; moist mincemeat.	General rate reduced to 3%.
Note.-'Prior to January 1, i924, sales tax pyramided on successive sales and in some cases reached as much as 10%.
In 1921 when hon. gentlemen opposite were in office, there were various rates ranging from IV per cent to 4 per cent on goods imported by retailers or consumers. The normal rate from the manufacturer or the wholesaler to the consumer was 3 per cent. In 1922 the rates were increased by one-half from 2i per cent to 6 per cent, on goods imported by retailers or consumers. The normal rate from the manufacturer or wholesaler to the consumer was 4i per cent. In 1923 the rates were raised to a straight 6 per cent; that is the rate about which we have heard so much in this discussion. But simultaneously with that increase the system of pyramiding which had been in existence under hon. gentlemen opposite was done away with. Under that system on successive sales the tax in some cases reached as high as 10 per cent. From that time we continued year by year to reduce the tax.


Richard Bedford Bennett: Pyramiding still goes on.


William Lyon Mackenzie King: But not in the same form or to anything like the same ex-;ent. In 1924 the rates were reduced from 3 per cent to 5 per cent, and the rates on boots and shoes and rubber footwear were
reduced to 24 per cent. There was a 50 per cent reduction in the rate on biscuits, canned vegetables, fruits, printing paper, creosoted railway ties and so on. Then in 1926 the tax on canned fish was reduced to 2i per cent. In 1927 the general rate, which had been 6 per cent in 1923, and which was reduced to 5 per cent in 1924, became 4 per cent, with a 50 per cent reduction in addition on dried apples and other products. Then in 1928 this policy of a steady reduction of the sales tax was continued and the rate was reduced to 3 per cent; that is in the budget of the present year. So there has been a steady reduction of the rate of tax from the time it stood at 6 per cent, and to-day it stands at a very much lower figure than it did when hon. gentlemen opposite were in office. That only covers the reduction in the rate. In addition there was a very large list of exemptions. I will ask permission of the house to place this list on Hansard without reading it, simply stating that the exemptions fall broadly into three groups. First there are the exemptions on implements of production in the basic industries, then exemptions on necessities of life, and a large miscellaneous list in addition.

The Budget-Mr. Mackenzie King
Sales Tai by Budget Years Exemptions
Implements of Production
1921	1922	1923	1924	1925	1926	1927	1928Fish hooks, for deep-sea or lake fishing, certain lines, seines and nets; manilla fibre for use in manufacture of rope for fisheries as defined by tariff Item 682; boats for use in fisheries and articles and materials used in their manufao-ture.	Drain titles for agricultural purposes.	Fire brick of various kinds as defined by tariff Items 281 and 281a;coil chain and links as defined by tariff items 410 and 410a; agricultural implements of practically all sorts, as defined by tariff items 445, 445a, 445b, 446, 446b, 446c, 447, 447b, 448, 449, 450 and 591; machinery for sawing lumber and logging purposes, as defined by tariff item 453b; ore crushers, rock crushers, stamp mills, rock drills and other machinery for mining operations, as defined by tariff item 453c; ingot moulds for use in the production of steel; sundry articles of metal, when for use exclusively in mining or metallurgical operations; this list is extensive and is contained in tariff items 460; and 460a; machinery and apparatus for use exclusively in washing coal or for the manufacture of coke and gas, as defined by 460b; articles of metal, when for use exclusively in the smelting of iron ore or in metallurgical operations, as contained in tariff items 460c and 460d; machinery and appliances of iron or steel for use in alluvial gold mining, as contained in tariff item 461; iron and steel pipe under items 461a and 1017; freight wagons, drays and sleighs, n.o.p., and complete parts thereof; cream separators and parts thereof, and articles and materials for use in their manufacture cars and other similar appliances for use exclusively by a mine or quaiTy anc articles to be used in their manufacture; wool rolls or wool yarn, milled for producer of wool from such wool supplied by him foi his own use; cotton duck and cotton sail twine usee in the manufacture o equipment for ships o vessels.	Lasts for boots and shoes, including rubber footwear and patterns and dies for boots and shoes, including rubber foot-wear. Engines and complete parts thereof, used for propulsion of fishermen's boats, as defined by tariff item 453e.	Machineryand a p pa r a t us and parts for use in the production of unrefined oil or fertilizer from shales, under tariff item 469b; Certain iron and steel tubing for use only in oil wells, and machinery and apparatus used for pumping oil from the wells.	
Necessities of Life
Farm produce sold by the individual farmer of his own production;
Materials for use solely in manufacture of oleomargarine or any substitute for butter or lard.
Self-raising flour; rolled wheat; condensed milk, evaporated milk and powdered milk; salt.
Barley meal
Syrups and molasses of all Vegetable kinds; milk foods; pre- plants, pared cereal foods in packages not exceeding 25 lbs.; sage and tapiaco; rennet; ice cream; rice, cleaned; macaroni; vermicelli; meats, salted or smoked; bakers cakes and pies.
Pot barley;	
pearl barley;	
split peas;	
glucose or	
grape sugar;	
glucose sy-	
rup and corn	
syrup or any	
syrups con-	
taining an	
admixture	
thereof.	

1276	COMMONS
The Budget-Mr. Mackenzie King
Sales Tax by Budget Years Exemptions Miscellaneous
1921	1922	1923	1924	1925	1926	1927	1928Bran, shorts, middlings, oilcake, oil cake meal; grains mixed or crushed for cattle or poultry feed bees; logs and rounc unmanufactured timber; fence posts, railroad ties, pulp wood, tan bark and other articles, the product of the forest, when produced and sold by the individual settler or farmer; materials for use only in the equipment and repair of ships; artificial eyes; war veterans' badges; memorials or monuments erected in memory of soldiers who fell in the great war; articles imported for the use of the Governor General; articles imported for the personal or official use of consuls general who are natives or citizens of the country they represent, and who are not engaged in any other business or profession; bibles, missals, prayer books, psalm and hymn books,religious tracts and Sunday School lesson pictures.	Fertilizers, anc materials entering into the manufacture thereof; dried beet pulp.	Manuscript; raw furs wool not further preparec than washed.	Books of a kind for use by deaf, dumb and blind, under tariff Item 173; books for use in universities, colleges and schools; books specially imported for the bona fide use of incorporated mechanics' institutes, public libraries, libraries of universities, colleges and schools, or for the library of any incorporated medical, law, literary, scientific, or art association or society, and being the property of the organized authorities of such library, and not in any case the property of individuals-Tariff item 175. Printed text books authorized by the Department of Education of any province in Canada and materials used exclusively in the manufacture or production thereof; bells, when imported for use of churches onlv (T.I. 352a). Surgical and dental instruments of metal; surgical needles; X-ray apparatus, microscopes, etc. under tariff items 466 and 466a; Crutches or specially constructed staffs for a cripple. Binder twine or twine for harvest binders. Nitro-glycerine, giant powder, nitre and other explosives, n.o.p. Blasting and mining powder. Certain philosophical and scientific apparatus, including utensils, instruments, etc., as defined by tariff item 696. Nicotine sulphate. Dry and liquid (non-alcoholic) preparations for disinfecting, dipping and spraying, n.o.p. Insulin; calf, cattle, hog or poultry feed; carbolic or heavy oil, to be used only in creosoting logs and round unmanufactured timber; Usual coverings, to be used exclusively for covering goods not subject to the consumption or sales tax; Materials to be used exclusively in the manufacture of usual coverings to be used for covering goods not subject to the consumption or sales tax; Coins, cabinets of; collections of medals and postage stamps, as covered by item 692.	Animals anc articles brought into Canada under tariff items 700, 701, 702, 703 and 704.	
If hon. members will take the trouble to look carefully through that list I think those who are regretting that the sales tax has not
'Mr. Mackenzie King.]
been completely eliminated with respect to the necessities of life will find something which will enable them to revise their judgments

The Budget-Mr. Mackenzie King
Now may I say just a word with regard to the clause in the amendment which suggests that the sales tax should be entirely removed. There are two or three outstanding reasons why that is impossible or at all events inadvisable. This afternoon I gave one reason which of course is self evident; that reason was that there are heavy obligations which came down to us from the period of the war, which must be met. Taxes have to be raised somewhere and somehow and the sales tax having been in existence for some time it is perhaps advisable, if it is to be removed, that it should be removed by degrees *ather than all at once. The reason why the sales tax should be removed by degrees will be apparent to hon. members Who were in the house at the time parliament was asked to vote a large sum of money in order to make a refund to automobile dealers who had stocks of automobiles on hand when the tax on automobiles was abolished. They had paid the tax, and it was held that it was most unfair, when subsequently they were unable to pass it on to the consumers because of the reduced prices owing to the sudden change in taxation, that they should not be recompensed, and parliament decided to give them back these sums in order to reimburse them for the money which had been exacted in the form of taxation. Now in a number of instances where taxes are being reduced the practice has been followed of reducing by stages. By making the reduction at the rate of one per cent at a time the merchants and dealers are able to absorb it. If however, you take the tax off completely, you are liable to create a serious injustice to a large number of persofls in the country who have on hand supplies of the articles on which the sales tax is imposed. You are unfair towards a large class of citizens, and apt to create an uncertainty or unrest in
business which, in the net result, is bound to be baneful. So I say that if my hon. friends who have in their amendment suggested that the sales tax should be completely removed, will reconsider the matter from the point of view of what is sound business in the commercial community, they will see that the reason I have just advanced is not only a thoroughly good and effective one, but one which has been endorsed by the action of this very parliament in dealing with a situation created heretofore owing in a particular instance to the complete abolition of the tax. So much then, for the sales tax.	_
Now I come to the income tax. Here again may I stress the point that the present government, in connection with this tax as with all others, has sought to bring such relief as it could to the taxpayers of the country. One form of that relief has been in exemptions from income tax. 'I venture to say that those who are asking us to retain the tax would not ask us to restore it with respect to any of the exemptions which have been granted under it. But if the income tax is so exceptional in its character that it should be retained at all costs, it seems to me that it does not require one to go very much further to say that there should be no exemptions whatever, or that the exemptions should be exceedingly small. However, this government has sought steadily to exempt from the income tax those persons in the community who are least able to bear it. I venture to say that hon. members will be surprised, as they hear in the order of sequence in which the exemptions have taken place, how considerable they have become as the result of steady reductions year after year. Let me present these exemptions in tabular form:
Reductions in Individual Income Tax in Budget Years.
Exemptions
Taxation when present adm inistration assumed office.	1922	1923	1921	1925	1926	1927	1928Unmarried Persons $1,000; Married Persons $2,000. Allowance for each dependent child under 18 years of age $200.	Exemption for each child raised from $200 to $3C0.	Exemption for each child raised to $500. (so that married man with 4 children paid no income tax unless income exceeded $4,000)	Raised from $1,000 toll ,500 for unmarried persons; from $2,000 to $3,000 for married persons and bona fide householders. (Applicable to 1925 income.)	$500 for dependents mentally or physically incapable of self-support.
1278
The Budget-Mr. Mackenzie King

When hon. gentlemen were in office the exemptions were as follows: married persons were exempted to the extent of $2,000 of their income. In the case of unmarried persons the exemption was $1,000. The allowance for each dependent child under eighteen years of age was fixed at $200. In 1922, the first year that we were in office, we increased the exemption for each child from $200 to $300. In 1924, the exemption for each child was raised to $500, so that married men with four children paid no income tax unless their income exceeded $4,000. In 1926 we raised from $1,000 to $1,500 the exemption for single persons, and from $2,000 to $3,000 for married persons and bone fide householders. That exemption was made applicable to the income of the previous year, as all exemptions since have been. In 1927, the age for a dependent
child was increased from eighteen years to twenty-one years; and this year we have provided a further exemption of $500 for each dependent child over twenty-one years of age mentally or physically incapable of selfsupport. What I wish to make clear to hon. members is that the policy of the government in the matter of tax reduction has been one of consistently endeavouring to relieve of the burden of taxation those persons in the community who are least able to bear it, and what we have done with respect to the income tax has been in that particular the same as in the case of the other taxes which I have mentioned.
Now as to the rate of the income tax. Let me also present the rate reductions in tabular form:
Reductions in Individual Income Tax in Budget Years Rates
Taxation when present administration assumed office	1922	1923	1924	1925	1926	1927	1928Normal tax 4% up to and 8% over $6,000-progressive rates up to 65%. An additional 5% of the tax and surtax is payable where the income is $5,000 or more.	Normal rate reduced from 4% to 2% (married person with income of $4,000 and without dependents paid only $20 instead of $80; if income $5,000 Da id $40 instead of $126.	Reduction 10% on all rates.	Reduction 10% on all rates.
The normal tax was 4 per cent up to and 8 per cent over $6,000-progressive rates up to 65 per cent. An additional 5 per cent of the tax and surtax was payable where the income was $5,000 or more. That was the position as we found it. In 1926, the normal rate was reduced from 4 per cent to 2 per cent. Married persons with an income of $4,000 and without dependents, paid only $20 instead of $80. If the income was $5,000 they paid $40 instead of $126. Last year we made a reduction of 10 per cent on the rates of the previous year. This year we have again made a reduction of 10 per cent on the rates of the previous year.
Now I wish to draw the attention of hon. members to this circumstance: while we purpose making this reduction this year, the amount that it is expected will be collected this year will, notwithstanding the reduction in the rate, equal, nay, will exceed, it is estimated, the amount that had been collected in the previous year. Hon. members may ask, how can that be? How can you reduce the tax and at the same time get as much in volume out of it in the succeeding year? Well, the explanation is this:	Under the policies
which this administration has put into practice conditions have improved throughout this country. There is an increased prosperity. Men are making money to-day when they did not make it before, with the result that notwithstanding the lowering of the rate of taxation it will be possible to collect for the public treasury an equivalent or an even greater amount. These are the facts in regard to the rates. As to what we are collecting from income tax, let me place on Hansard-I will not take the time to read it-a statement of the amount of revenue which has been collected from year to year in income tax from individuals and from corporations, and the total of the two combined:

The Budget-Mr. Mackenzie King
Statement of Revenue Collected under Income Tax
Individuals-
Fiscal Years		Totals
1918-1919			7.972,890 33
1919-1920			
First period

		
1920-1921			32,532,526 36
1921-1922			39.820,597 01
Second period-		
1922-1923			31,689.392 56
1923-1924			25,657.335 21
1924-1925			25,156,768 45
Third period-		
1925-1926			23,849.474 26
1926-1927			18,043,260 87
1927-1928 (12 months)	(est.)	22,400,000 00
		240,317,558 64
Corporations-		
1918-1919			1,376,829 47
1919-1920			7,068,426 32
First period

		
1920-1921			13,849,297 95
1921-1922			38,863,757 79
Second period-		
1922-1923			28,022,145 81
1923-1924			28,546,692 78
1924-1925			31.091,274 37
Third period-		
1925-1926			31,722,487 31
1926-1927			29,343,048 35
1927-1928 (12 months)	(est.)	33,600,000 00
		243,483,960 15
Combined-		
1918-1919			9,349,719 80
1919-1920			20,263,739 91
First period-		
1920-1921			46,381,824 31
1921-1922			78,684,354 80
Second period-		
1922-1923			59,711.538 37
1923-1924			54,204,027 99
1924-1925			56,248,042 82
Third period-		
1925-1926			55.571,961 57
1926-1927			47,386,309 22
1927-1928 (12 months)	(est.).	56,000,000 00
483,801,518 79
What do the figures show with respect to the point I have made as to the amount of revenue to be collected from this source of taxation during the present year? Last year, that is the year 1926-27, there was collected
from private individuals and corporations from incomes of 1926, the sum of S47,000,000. Now it is estimated by the Department of Finance that notwithstanding the reduction of 10 per cent which we are making this year, the amount that will be collected for 1927-28 from incomes of 1927, will equal not $47,000,000 but $56,000,000. I say to my hon. friends who have taken some exception to the reduction of the 10 per cent that that is a circumstance which I hope they will keep very much in mind.


Richard Bedford Bennett: Mostly corporation tax.


William Lyon Mackenzie King: My hon. friend says "mostly corporation tax." I hope it is.


Richard Bedford Bennett: I hope so too.


William Lyon Mackenzie King: May I say
that is true in regard to not only the corporation tax but the individual tax! These are the figures in regard to the two separately. There was collected in income tax in 192627 from individuals $18,000,000 of revenue and it is estimated that, notwithstanding the 10 per cent reduction that is now going into force, there will be collected for 1927-28 not $18,000,000 but $22,000,000 from individuals. In regard to corporations, while there was collected in 1926-27 the sum of $29,000,000, it is anticipated that, notwithstanding the very slight change-and I think it is a change more for the purpose of book-keeping than might else-there will be collected this year not $29,000,000 but approximately $33,000,000 from the corporation tax. I submit to my hon friends-and I know many of them are thinking seriously as to whether they will not support the budget after we have dealt with the amendment which they have proposed-that these are facts which should be taken into account in deciding whether or not the government 'has acted wisely in this particular this year.
The reductions in corporation income tax have been as follows:
Reduction in "Corporation" Income Tax in Budget Years.
Rates
Taxation Imposed when present administration assumed office	1922	1923	1924	1925	1926	1927	1928Corporation Tax 10% on income in excess of $2,000 where the Corporation's income is less than $5,000. Corporation Tax 10|% on income in excess of $2,000, where the Corporation's income is $5,000 or more.	9% on income in excess of $2,000.	8-1% on income in excess of $2,000.	8% on income in excess of $2,000.1280	COMMONS
The Budget-Mr. Mackenzie King
May I give to the house quite frankly the reason that actuated the government in reducing the income tax to the extent that this has been done in the present year? As hon. members know, we had in the fall of the year a conference between the provinces and the Dominion where questions of concern to the provinces were discussed very freely with the several members of the government. One question discussed was that of taxation and more particularly the delimitation of the fields of taxation. Representatives of the provinces pointed out that, while the Dominion was entitled under the constitution to raise taxes by indirect methods, such as, the customs and excise, and also by direct methods, the provinces on the other hand were restricted to direct taxation, and1 being restricted to this field they were finding it more and more difficult to raise the revenues required for the increasing services which they were being called upon to perform. The point was stressed by the provinces that in recent years many obligations have devolved upon them which require a degree of expenditure which they did not believe was wholly contemplated at confederation. There were, for instance, large expenses in connection with social legislation of one kind or another, expenses in connection with road making, expenses in regard to several other matters such as technical education, all of which are under provincial jurisdiction They further directed our attention to the circumstance that in seeking for new sources of revenue they had imposed certain taxes which had been questioned in the courts; that they had been precluded from continuing one tax after another because of some decision which had been given which made it impossible for them to enter a particular field. So the plea was made to the Dominion that we should if possible leave to the provinces certain fields of taxation, and the field of taxation that was especially mentioned in this connection was the income tax. May I direct the attention of the house to this fact? Many hon. members pay income taxes not only to the Dominion treasury but also to the provincial treasury. Some provinces of this Dominion have income taxes as a source of their revenue. British Columbia, Manitoba, Prince Edward Island impose an income tax as provinces, but in addition to that, throughout the Dominion there are municipalities which also are imposing an income tax for purposes of revenue. Municipalities in Ontario, New Brunswick, Nova Scotia, Saskatchewan and possibly one other province are doing this. In some seven provinces out of

nine, income taxes are being imposed either by municipalities in those provinces or by the provinces themselves, in addition to the tax imposed by the Dominion. I confess that members of the government felt that there was much to be said for the point of view presented by the provinces that they should be permitted more latitude in regard to income taxation. Let me distinguish at once between income tax derived from the income of individuals and income tax derived from incomes of corporations. I think that incomes of corporations must always be collected by the federal government, for the reason that otherwise one or two provinces, to be concrete Ontario and Quebec, would profit at the expense of other provinces from which much of the income of these corporations is derived. It is for the most part true that in a few centres large business corporations have their headquarters. The great railway companies, insurance companies, trust companies, banks and the like have their headquarters in some of these larger cities of the Dominion and principally in the cities of Montreal and Toronto but the revenues of the corporations are drawn from all parts of the Dominion.


Mr. WOODSWORTH:: Is that not equally true of the large private fortunes?


William Lyon Mackenzie King: I am not so
sure that it is equally true. I do not think it is equally true. I admit my hon. friend is right in assuming that many wealthy men have their places of residence in the two provinces to which I have referred, but as regards wealthy individuals they are to be found .pretty much in all parts of the Dominion. There is no province that has not at least a few fairly wealthy men who derive their incomes from corporations, and which very corporations have their headquarters in the provinces which I have mentioned. The point I wish to make clear is this, that as regards income tax derived from corporations, the federal government was not prepared to consider for a minute parting with that tax to the provinces. We maintain that this is a tax which ought to be and which will toe retained by the federal treasury so long, at least, as the present government has office. As I have said the government was to some extent impressed by the plea made to it by the premiers of some of the provinces in regard to the tax on the income of individuals. I remember the Premier of Manitoba suggested that not only should we give to Manitoba the tax which comes from the income of individuals but that we should collect it as well and hand over to the province the

The Budget-Mr. Mackenzie King
collected amount. The hon. member for Marquette (Mr. Glenn), who spoke the other evening, made much the same suggestion, that the income tax should be collected by the federal treasury and distributed in part to the provinces. That is a matter, in one sense, of book-keeping; but the point I wish to stress at the moment is this, that if we were to do that very thing, we would not be doing anything different in principle from what we are doing undeT the present reduction, in reducing the tax on incomes of individuals with a view to allowing the provinces that much more of freedom in the matter of their collection of taxation from individual incomes.


James Shaver Woodsworth: Is there not a
fundamental difference of principle involved in that scheme?


William Lyon Mackenzie King: I do not see
any difference of principle. In whait regard?


James Shaver Woodsworth: I do not want to
interrupt, but my thought was this, that in decreasing the income tax, the principle is to place a heavier burden upon those who pay through indirect taxation. I should say it would be merely a matter of book-keeping if the principle were maintained and the sums collected turned over to the provinces.


William Lyon Mackenzie King: What I want
to stress to my hon. friend is this, that the provinces, as the premier of Manitoba and the premier of British Columbia in particular pointed out, are restricted to direct taxation. This Dominion may impose direct taxation, and it may impose also indirect taxation, but the provinces are restricted to direct taxation, and when you restrict them to direct taxation, you must remember that the number of forms in which there can be direct taxation is distinctly limited. From the point of view of the provinces it would appear to be a question as to whether they shall be permitted to have certain fields in which they can raise the revenue (necessary, or whether they shall do as was done at the Dominion-provincial conference-complain that their field is so restricted that they cannot get the revenue necessary, and then appeal to the Dominion government to give them in subsidies what they cannot get by means of taxation.


Mr. ADSHEAD:: It was suggested at the
conference by some of the provinces that the Dominion government should collect the income tax and distribute it among the provinces. Will the government consider distributing among the provinces the ten per cent reduction which has been made in the income tax this year?


William Lyon Mackenzie King: I wish my
hon. friend could have been at the Dominion-provincial conference to hear the number of requests to give them different things that were made of us by the provinces. They wanted the Dominion to give them increased subsidies, increased grants, for one purpose and another, and many other things. I think we had better hold on to what we have in any form of taxation until we reach our final reckoning with the provinces.
That is all I wish to say in regard to the taxation of incomes, beyond making this clear: that not only was the government moved in this matter by the representations made by the provinces, but we were interested in ascertaining how this House of Commons would view leaving that field of taxation to the provinces. I may say that if we ever entertained an idea of giving up the individual income tax to the provinces or for any other purpose, certainly the discussion that has taken place in the house during this debate will preclude anything of the kind for the future. Hon. members need not be concerned about any policy which may be said to aim at doing away with the revenue derived from income tax.
I want to make this clear to my hon. friends, so that there will be no misunderstanding when they come to consider again their attitude towards the government on the budget.
I know that some hon. gentlemen have had the impression that the intention of the government was gradually to do away altogether with the income tax upon the incomes of individuals, but as I have said, the government's action from now on will be guided in that matter by the opinions which have been expressed in parliament during the course of this debate.
I come now to the question of indirect taxation. My hon. friend the leader of the opposition this afternoon said that he was not sure just how far we had carried out our policy of lowering customs duties. Well, I venture to say that there are a good many members of the house who along with my hon. friend may be in doubt as to how much reduction there has been in the way of customs duties during the time the present administration has been in office. In order that any doubts in the mind of my hon. friend and of other hon. members of the house may be removed, I have had prepared in tabular form a statement of the reductions that have been made in customs duties since the present administration took office. I would like to read them to the house, but they are of considerable length, and I venture to say that they will be grasped more
1282	COMMONS
The Budget-Mr. Mackenzie King
accurately if they are read in Hansard. I would therefore ask the permission of the house to place these papers on Hansard.


Mr. GOTT:: No.


William Lyon Mackenzie King: Does my hon. friend not wish to have them appear on Hansard?


Richard Bedford Bennett: Objection has been made to so many hon. members putting extracts on Hansard. It seems to me my hon. friend the Prime Minister is carrying this practice to a very great length because the documents he produces are very, very long. I scrupulously refrained this afternoon from doing that very thing in view of the observations of the Prime Minister the other day. I myself have not offered any observation.


Eccles James Gott: It will require a special
edition.


William Lyon Mackenzie King: I am entirely
in the hands of the house in this matter. What I wish to make clear is this: His honour the Speaker has indicated at different times that it is expected a certain degree of latitude will be given the leader of the government and the leader of the opposition in the matter of placing on Hansard certain documents. That has always been done, and why objection should be raised just at the moment the government wishes to place on Hansard a statement with regard to the reductions it has made in customs duties is something I find it difficult to understand. If the hon. gentleman objects, I am prepared to read them, but I dr not wish to read them at this stage. I will read them when I have concluded the main part of my speech. I would still ask my hon. friend if he objects to having the statement placed on Hansard.


Richard Bedford Bennett: Your honourable friend
has not yet objected; that is number one. Number two is that the observations made by the Prime [DOT] Minister the other evening were so relevant to the action he is proposing to take, that I assume he will not himself entirely depart from them; but if he so desires, I am not offering any objection, and I have not done so.


Ernest Lapointe: The assent is not very
graceful.


Richard Bedford Bennett: I do not think I require to take lessons in gracefulness from the hon. Minister of Justice. What the Prime Minister said the other evening was this:
Mr. Speaker, inasmuch as mention of myself has been made by the hon. member for Winnipeg North Centre (Mr. Woodsworth), I should like to say that he is quite right. I 
did take exception to his colleague putting on Hansard^ last Thursday a lot of material that he had in the form of a statistical table. At the time I think the hon. member mentioned that last session I had taken exception to an hon. gentleman opposite adopting the same course. In both cases I did so simply to uphold your honour in maintaining the rules of the house, and I stiff think that principle ought to be observed. Either we should alter the rule or have it observed. With respect to the time-honoured custom which you, Mr. Speaker, have mentioned, that of giving to the immediate critic of the Minister of Finance replying to the budget wider latitude than is granted to hon. members generally, I have no exception to take to it. Apart from that, I think it is the duty of every member to uphold the rules, and I believe we shall get further ahead if we make no exceptions.
His case is not a case within the exceptions.


William Lyon Mackenzie King: I take it that my hon. friend would really like to be reassured in the matter of what the government has done, and I will take the liberty of presenting this to Hansard and asking the house to allow it to be printed.


Eccles James Gott: The increases too.


William Lyon Mackenzie King: Yes, I am quite prepared to give increases where there have been any worthy of mention. I think hon. members when they look over what actually has taken place in the way of tax reductions will be surprised at the extent to which the government has carried out every pledge and promise wthich it has made in that regard.
One reason why I am anxious to place on record what has 'been done in this regard is that the government with respect to the tariff has been following a consistent policy of downward revision, and, in considering the budget presented this year, it is only right that it should be considered in relation to what has been done in previous years in the matter of tax reductions. I will give in a few moments what we did in respect to cottons and woollens a few years ago. This ought to be taken into account in connection with what is being done this year* Before I do that however, I should like to come at once to the remarks of my hon. friend the leader of the opposition in regard to the tariff. May I draw attention to a circumstance which is enlightening when one reflects upon it?
The amendment proposed by hon. gentlemen opposite is on all fours with all amendments which have come from hon. gentlemen opposite in regard to matters of fiscal policy. Notwithstanding what they have said in their speeches on public platforms and what we know to be implied in their utterances in
* The tables referred to appear on page 1301 and following pages.

The Budget-Mr. Mackenzie King
parliament and in the amendments as drawn, they have always carefully avoided ever dividing this house on the subject of protection. At every general election the country is told by my hon. friends of the opposition that what is needed for Canadian industry is more protection. This appeal is made because it is effective as directed to individual localities, one at a time. It is possible, for example, for Conservative candidates to appeal for protection in British Columbia with respect to certain classes of industry, such as fruit-growing, lumbering and the like, then in another province, Ontario, to appeal for protection for the large factories that are scattered up and down this province; and in the maritime provinces to make their appeal for protection to suit certain localities there; but when it comes to taking a consensus of view of the Dominion as a whole, as it expresses itself in this House of Commons, hon. gentlemen run away every time and evade the direct issue-they fail to bring in an amendment advocating protection.
Take the general election of 1921. From one end of the Dominion to the other our Conservative friends informed the electors that what was needed to save the country was more protection, that this alone would prevent men from emigrating to the United States, that this alone would prevent unemployment, that this alone would revive industry. But when the hon. gentlemen came back to this house in 1922 and had an opportunity of moving their first amendment, was it an amendment for increased protection? No, their amendment completely avoided any such profession of faith on their part. It was much like the amendment before the house to-day-an amendment of regrets; it regretted that up to that time the resolutions of the Liberal convention of 1919 had not been carried out in full. In the session of 1923 they failed to bring in any amendment whatsoever. In the session of 1924 they waited until my hon. friend from Winnipeg North Centre (Mr. Woodsworth) brought in an amendment on the cost of living; then they became very courageous and, knowing that the rules at that time only permitted one amendment, they moved an amendment in favour of a protective policy consistently maintained, and of course it was ruled out of order. Next we come to the session of 1925, just before the general election, and my hon. friend from West York (Sir Henry Drayton) presented an amendment regretting that there had not been more done in the way of tax reduction. Then in
1925	we had another general election and throughout the country the doctrine of protection was again preached by hon. gentlemen opposite, but when they came back to this house in 1926 did they move any amendment along the line of protection? They did bring in an amendment, but what was it? We had undertaken to reduce the duty on automobiles. Their amendment was not in regard to their policy of protection at all, but was directed purely and simply to the procedure which we had followed. They said we had laid down a policy when we appointed the tariff board of investigation before tariff change, and they complained that before introducing in this house any revision of the tariff on automobiles we should have secured the opinion of the tariff board. To-day when we come to the house with a tariff revision based upon investigations made by the tariff board, our friends of the opposition complain of our ever having approached the board. In
1926	was another election and more talk of the need for protection. After the election of 1926, having talked so much of protection throughout the campaign, did they bring in an amendment advocating their fiscal policy? Not at all; they let the session go by without moving an amendment. This year they move an amendment in the old form, an amendment which is full of regrets but does not contain a single statement of the fiscal policy on which they are supposed to be united, and not a word of their real convictions. No, it is simply the sort of thing one sees at hallowe'en, when little boys appear on the streets in false faces. Our Conservative friends come here with an amendment which is nothing other than a false face, something very fair to look upon-just as the words of my hon. friend the leader of the opposition this afternoon were fair to listen to-but back of it all if you take away the false face, as hon. members well know, you get the ugly mien of protection for special interests, which have always been the particular care of hon. gentlemen opposite.
Let me now say a word, Mr. Speaker, in reply to my hon. friend's remarks this afternoon respecting the tariff board. I gather that his chief objection to the tariff board is that the chairman, Mr. Moore, was a candidate at the last general election and therefore should not have been appointed to such a position. Well, I may say that there is in his remarks a good deal not only of reflection upon Mr. Moore, but of reflection upon every hon. member of this house when it is suggested that because a gentleman has been a candidate for parliament he is thereby disqualified from
1284	COMMONS
The Budget-Mr. Mackenzie King
holding a responsible position in the gift of the government, Mr. Moore was appointed to the position of chairman of the Advisory Board on Tariff and Taxation, which he holds with great ability and impartiality, because of his well-known and exceptional qualifications as an economist. I well remember when a student at the university of Toronto that Mr. Moore was then at the head of his classes, carrying away the scholarships and fellowships that were awarded in the department of political science. Subsequently he was appointed a fellow of political economy in the university, and from that time has given special study to economic questions. Then, as my hon. friend knows, he was for some time one of the editors, if not the editor-inchief, of the Monetary Times, a paper which is regarded as one of the important financial papers of the Dominion. His business experience-my hon. friend referred to it this afternoon-was of a character to give him an exceptional knowledge of big business, a knowledge not without its advantages in the position he now holds.


Richard Bedford Bennett: A lobbyist-and a disgraceful one too.


William Lyon Mackenzie King: I would say
to my hon. friend that I think-


Mr. McGIBBON:: What is his court record?


Mr. SPEAKER:: Order.


William Lyon Mackenzie King: One should be
very careful in criticizing in parliament a public servant who is not in a position to answer for himself. I would suggest that if hon. gentlemen opposite have any argument to present in regard to Mr. Moore's capacity for the position he holds, and particularly in regard to any alleged disqualifications, they might be well advised to appear on some public platform and give to Mr. Moore an opportunity to speak for himself.


Richard Bedford Bennett: They will.


William Lyon Mackenzie King: I submit that when a public servant is not in a position to reply to any loose charge that may be directed against him, that kind of charge should not carry any weight in this house. In criticizing Mr. Moore on the score of his appointment I think my hon. friend failed to recollect what took place in the administration with which he or his friends were connected. A few years ago we had an arbitration of some considerable importance dealing with a very large railway
[Mr. Mackenzie King.l
transaction. My hon. friend refers to Mr. Moore's association with the Canadian Northern Railway Company. My recollection is that when the Grand Trunk railway was taken over by the administration supported by hon. gentlemen apposite, and an arbitration was arranged to decide what value should be given to the stock of that company, one of the gentlemen chosen was not a candidate for parliament; he was a member of parliament and the Minister of Finance of that date. The Hon. Sir Thomas White was not only chosen as a member of that board of arbitration, but -and I still think the whole procedure was very much open to question-he was paid a sum by this parliament for so acting, although Minister of Finance at the time.


Sir GEORGE PERLEY:: He was not.


William Lyon Mackenzie King: I beg your pardon not Minister of Finance, but a member of parliament.


George Halsey Perley: He was not.
Some hon. MEMBERS : He was not.


William Lyon Mackenzie King: Do my hon.
friends say that he was not a member of parliament?


An hon. MEMBER:: He is not here to defend himself.


William Lyon Mackenzie King: Well, the record is on Hansard.


Mr. CHAPLIN:: He was not a member of parliament.


Peter McGibbon: The Prime Minister
knows he was not a member of parliament.


Some hon. MEMBERS:: Order.


William Lyon Mackenzie King: Perhaps my
hon. friend who says I know that he was not a member of parliament will listen to what I shall read from Hansard of March 29, 1921. Evidently this is a shot that is driving home.


Peter McGibbon: Not at all.


Some hon. MEMBERS:: Sit down.


William Lyon Mackenzie King: It has struck
even more deeply than I expected.


Peter McGibbon: Not at all.


William Lyon Mackenzie King: As leader of the opposition I was at the time addressing the Prime Minister, and these are the words I used, as reported in Hansard of March 29, of that year. I said:

The Budget-Mr. Mackenzie King
I addressed the right hon. gentleman in what I thought was a courteous and proper way-
Evidently there was the same sort of uproar on that occasion as there is to-night.

when I asked if in the opinion of the government the hon. member for Leeds had not forfeited his right to a seat in this house by virtue of having accepted a position as one of the arbitrators on the board which is to value the stock of the Grand Trunk Railway Company.


Peter McGibbon: Mr. Speaker-


Some hon. MEMBERS:: Order.


Hewitt Bostock: Order.


Peter McGibbon: May I ask a question..


Some hon. MEMBERS:: Order.


Richard Bedford Bennett: Mr. Speaker-


Hewitt Bostock: I understand the leader of the opposition wishes to ask a question.


Richard Bedford Bennett: If the Prime Minister will examine the record he will find that Sir Thomas White did not act as an arbitrator until after the' dissolution of parliament. I think he will find it is so, because I recollect the discussion of the case before the privy council and I recall the circumstances surrounding it. The arbitration was to begin, but it did not get well under way until after that.


William Lyon Mackenzie King: Mr. Speaker-


Some hon. MEMBERS:: Take it back.


William Lyon Mackenzie King: Sir Thomas
White, member for Leeds, was in that position when I raised this question in the house with the Prime Minister of the day. That is the point I am making.


Peter McGibbon: He never acted-


Some hon. MEMBERS:: Order.


William Lyon Mackenzie King: But let me come a little nearer to my hon. friend.


Hewitt Bostock: I would ask hon. members
not to interrupt.


Peter McGibbon: The Prime Minister
should-


William Lyon Mackenzie King: Does my hon.
friend wish to ask a question?


Peter McGibbon: Yes.


Some hon. MEMBERS:: Sit down.


Peter McGibbon: Mr. Speaker-


Hewitt Bostock: Order.


Peter McGibbon: Will the Prime Minister deny the fact that Sir Thomas White had resigned before he acted in the capacity of arbitrator?


William Lyon Mackenzie King: He had not
resigned his position as member of parliament, no.


Peter McGibbon: Yes.


William Lyon Mackenzie King: He was not
Minister of Finance; I have already corrected that statement.


Peter McGibbon: As member of parliament.


William Lyon Mackenzie King: He was a member of parliament at the time I refer to.


Peter McGibbon: And resigned before he acted.


William Lyon Mackenzie King: But I will not refer to an ex-Minister of Finance who is not in the house; I will take an ex-Minister of Finance who is present, the hon. member for West York (Sir Henry Drayton). That hon. gentleman is in the house.


Peter McGibbon: Answer the question.


William Lyon Mackenzie King: The leader of the opposition quarrels with Mr. Moore's capacity for sifting evidence and investigating matters relating to the tariff with a view to making a report to guide the administration as to what is in the public interest, and he complains on the score that Mr. Moore had been a candidate for parliament.


James Dew Chaplin: And was a prospective
candidate.


Richard Bedford Bennett: A prospective candidate.


William Lyon Mackenzie King: And a prospective candidate, yes. We will consider him in both roles, candidate and prospective candidate. But let us take the case of my hon. friend from West York. At the time to which I have reference he was neither a candidate nor a prospective candidate but actually a member of parliament. Moreover, he was Minister of Finance. And he went from one end of the country to the other, taking evidence, doing the very thing Mr. Moore is doing to-day. No one took exception to that; no one attacked it on the ground that the method was wrong, for as a matter of fact that was the method which had been generally practised in connection with revisions of the tariff until the present advisory board on tariff and taxation was appointed. Until then ministers of the crown travelled from one end of the country to the other
1286 ^	COMMONS
The Budget-Mr. Mackenzie King
summoning interested persons from whatever quarter they might wish to come to appear before them to give evidence. That evidence was sifted and the ministers brought down such recommendations as they deemed advisable in the way of tariff revision. It was found, however, that this method was not as satisfactory as having a detailed investigation made by experts week by week, month by month and year by year-an investigation such as the present tariff board is able to make. Let me point out to hon. gentlemen, however, that the tariff advisory board does not in the exercise of its functions in any way take away from the power of the government and of parliament in dealing with the tariff itself. But let me go a step still further in the direction of the party opposite, and take the case of my hon. friend from Fort William (Mr. Manion). That hon. gentleman is a member of parliament; he is not only a prospective candidate at another election but he is a prospective minister, if ever a Conservative administration should be returned to power again. And at this very moment while sitting in this house as a member of parliament, he is a member of a liquor commission appointed by a government which is friendly to my hon. friends opposite.


Robert James Manion: May I ask the Prime
Minister a question?


William Lyon Mackenzie King: I will anticipate my hon. friend and answer the question for him. Does the leader of the opposition wish to insinuate, in reflecting upon Mr. Moore, that his colleague, who is a member of the liquor commission of Ontario, will be influenced unfairly and unduly by reason of the fact that he is also a member of parliament and a past or prospective candidate?


Richard Bedford Bennett: Do you want the answer?


William Lyon Mackenzie King: I for one would not say that the hon. member would be so influenced. Indeed, I believe my hon. friend from Fort William will be perfectly fair, straightforward and honest in his share of the administration of the affairs of that commission.
An 'hon. MEMBER: That is the difference. Some hon. MEMBERS:	Order.


William Lyon Mackenzie King: But what I
say of my hon. friend from Fort William I say with equal emphasis of my friend who is the chairman of the tariff board at the present time.


Robert James Manion: Mr. Speaker-


Richard Bedford Bennett: I trust the right hon.
Prime Minister realizes that one is a provincial and the other a federal matter.


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: I trust, further, that he
realizes that the duties of the hon. member for Fort William, in his capacity as a -member of parliament, have no relation to the matter before the house, and that it has always been the practice for ministers of the crown to make inquiries inasmuch as they are in the house to deal with such questions. What I said with respect to Mr. Moore stands.


Robert James Manion: May I ask the Prime
Minister what relation there is between the liquor commission of Ontario and a commissioner who is framing the tariff of this country? May I also ask him whether there is not some excuse for one acting in a temporary position such as I am filling?


William Lyon Mackenzie King: 
Some hon. MEMBERS:: No, no.


William Lyon Mackenzie King: Then how
are you going to avoid being dependent on foreigners? The whole of my hon. friend's argument this afternoon was along that line.
Some hon. MiBMBERS: Oh, oh.


Hewitt Bostock: Order.


William Lyon Mackenzie King: I would ask
hon. members who listened to my hon. friend's speech this afternoon if his point in regard to reciprocity was not that we ought not to depend upon another nation because that nation might cut us off at any moment without notice.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: Was that not the argument he made to-day in discussing the reciprocity agreement? Then what is to become of our foreign trade if we are not to depend in any way on foreigners? You cannot have foreign trade on the one hand and not be dependent on foreigners on the other. You cannot have trade at all unless you are prepared to trade with other nations. And so my hon. friend's contribution to the debate on the matter of trade and his economic policy reduces itself to this-that Canada should become a self-sufficing unit without any relation to any other foreign country in the world.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: I notice that when hon. gentlemen opposite are hit they begin to roar. Every time an argument strikes home they begin to make a noise imagining that no one will be able to hear it.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: I am quite
prepared to leave the matter at that point and I hope echoes of the shouts of hon. gentlemen opposite will be recorded in Hansard along with the rest.
May I speedily conclude by referring very briefly to the particular clauses of the amendment of the opposition? The amendment
first of all alleges that:
The measures proposed by the government do not tend to provide increased employment in Canada.
Let me say just a word about increased employment. What are the facts. And here

I wish to draw to the attention of the house the fact that the policies enunciated by the government in the present budget are along the lines of those enunciated in previous budgets. In other words, we have been following a consistent line of policy which, year after year for the last few years, has resulted, as I said this afternoon, in surpluses, in reduction of the public debt, in reduction of taxes, and with them has come general increase in prosperity throughout the Dominion. This budget being to all intents and purposes similar to previous budgets, we have a right to believe that similar results will follow, and that among other things increased employment will follow in the wake of the budget that has been brought down this year.
What is the position with regard to employment in Canada? I will give just a few figures that will serve to illustrate what has taken place, and I am using the index numbers as compiled by the Government Bureau of Statistics. These are the figures in regard to manufactures:
Index number
Year	of employment
1921		 81.1
1922		 81.6
1923		 89.3
1924		   85.3
1925		 86.0
1926		 92.1
1927		 95.6
This shows a steady increase from 81 when hon. gentlemen were in office to 95 at the present time. In regard to all industries the figures are as follows:
Index number
Year	of employment
1921		 87.8
1922		 87.9
1923		 94.6
1924		 92.3
1925		 92.5
1926		 98.4
1927		 103.4
Or, taking the total number of the actual average in numbers employed in manufacture as shown by the census-and these are of firms reporting-the figures are as follows:
Year	Numberemployed
1922		 474,000
1923		 575,000
1924		 508,000
1925		 544,000
1926		 581,000
1927	(Est.)	 611,000
Or a steady increase in employment throughout the years.
In regard to immigration, my hon. friends opposite in their amendment allege:
That the measures proposed by the government do not tend to induce the return of Canadians to their native land.

The Budget-Mr. Mackenzie King
That statement is not true, for the fact is that the records of the Department of Immigration show conclusively that Canadians are returning from the United States to this country. For many years no record of this kind was kept in Canada, and that is where hon. gentlemen opposite got their chance. Just because the Department of Immigration in the United States was keeping a record of virtually every man who was entering the country for any purpose and putting him down as an immigrant when he so declared himself and our department was keeping no corresponding record, the figures became entirely misleading and hon. gentlemen opposite began to quote them to the disadvantage of this country. In 1924 this government began to keep a record of Canadians who were returning to Canada after having been in the United States for a period of six months or under three years. This record relates to men or women who have gone to the United States as declared immigrants and who have come back to Canada Stating that they had gone over as declared immigrants and had come back intending to reside again permanently in Canada. This is the record:
Returning Canadians from
Year	United States
1924-	25	
43,7751925-	26	
47,2211926-	27	
56,957
That is the record of how the policies of the government have been operating in bringing back Canadians who had formerly taken up residence on the other side. The Canadians who returned from the United States
are classified as follows:
Canadian horn	   49,255
British subjects who had acquired
Canadian domicile	 5,326
Naturalized Canadian citizens	 2,376
Total	 56,957
Now I come to statements that have been made by hon. gentlemen opposite, and I think the one made by the hon. member for Fort William was perhaps the most concrete, and most of the discussion centred around what he said. His statement related to the third part of the amendment of hon. gentlemen opposite, which is to this effect:
That the measures proposed by the government do not tend to prevent the continued emigration of our people to the United States.
The hon. member for Fort William made this assertion:
Last year, according to the American figures, we lost to the United States over 84,000 Canadians.
That, I tlhink, is a correct statement of what my hon. friend said.


Robert James Manion: Correct.


William Lyon Mackenzie King: What I wish
to draw his attention to-and I think he already knows it-is that he again persists in consulting American sources and not taking his data from Canadian sources.


Robert James Manion: May I give my hon.
friend my source? It was the Minister of Immigration of the United States, absolutely the most official United States source.


William Lyon Mackenzie King: I wish my hon. friend would take as his source the Minister of Immigration of Canada.


Robert James Manion: He will not give us the
figures.


William Lyon Mackenzie King: My objection
with reference to hon. gentlemen opposite is that, whenever occasion offers, they invariably take what will best suit them in the matter of quoting figures in favour of the United States and against Canada.


Robert James Manion: My right hon. friend
should not criticize us for that.


William Lyon Mackenzie King: Let me read
the figures to the house to show them exactly how the figures are made up. First of all my hon. friend says that we lost to the United States over 84,000 Canadians. In that he is not wholly correct because even the figures he quoted-and I think he will admit I am correct in this-relate not only to Canadians but to emigrants from Canada and Newfoundland.


Mr. CLARK:: Two thousand from Newfoundland.


William Lyon Mackenzie King: First of all the report in this respect for June, 1927, of the United States Commissioner of Immigration gives immigration from Canada and Newfoundland as 84.580.


John Arthur Clark: How many from Newfoundland?


William Lyon Mackenzie King: They are not given.


John Arthur Clark: Yes, they are given.


Some hon. MEMBERS:: Order.


John Arthur Clark: Two thousand.


William Lyon Mackenzie King: Let us come
along a little further and take Canadian residents who were crossing the line. I will give the figures correctly.


John Arthur Clark: The right hon. member will get those figures from the bureau of statistics.

1292	COMMONS
The Budget-Mr. Mackenzie King


William Lyon Mackenzie King: If my hon.
friend will wait, I will give him something better than his hon. friend gave. Canadian residents crossing numbered 81,506, classified
as follows:
Canadian born	 68,366
Those not born in Canada	 13,140
These figures moreover include classes of
people that we know go back and forth at different seasons to work in the mills of New England and lumber woods of Michigan and Maine. They are all put down as immigrants into the United States although they return to Canada. My hon. friend gives the number of Canadians who are going from Canada to the United States and he says that we lose these to Canada, but he makes no reference to those Canadians who are coming back, to whom I made reference a moment ago. What are the facts for the same period?


John Arthur Clark: Did the right hon. gentleman ever meet one?


William Lyon Mackenzie King: Evidently the immigration officials have.


Hewitt Bostock: I hope hon. gentlemen
will not continue these interruptions.


William Lyon Mackenzie King: There again may I note the significance of my hon. friendJs remarks? Hon. gentlemen opposite have been complaining that we are finding fault with them for perpetually praising conditions in the United States and running down their own country, and here is my hon. friend by his interruptions verifying the very statement against which he is protesting. He asks, did we ever see a returning Canadian?


John Arthur Clark: I asked if you had ever met one.


William Lyon Mackenzie King: I will give my hon. friend the figures. According to the
statistical records, the movement back of Canadians from the United States in the period to which I have referred was 56,957, but in addition to Canadians returning, there are many American citizens who came over here and took up their residence in Canada. Hon. gentlemen opposite made no mention of that in their figures. The immigration from the United States to Canada in the period I am referring to was 21,025. In other words, my hon. friend says that we lost over 84,000 Canadians, while, as a matter of fact, in that same period from the United States there came to Canada as returning Canadians, and United States citizens coming to reside in Canada, the number of 77,982.


Robert James Manion: If my hon. friend will
pardon me, I did state those figures, but I
[Mr. Clark.)
showed also that according to the figures of the Immigration department most of these people were central Europeans coming over from the United States.


William Lyon Mackenzie King: The figures I am giving are the actual returns compiled by the Immigration department.


Ernest Lapointe: Too bad Canada is prospering !


William Lyon Mackenzie King: If hon. gentlemen opposite wish to be strictly accurate in their figures, they will say that the maximum net loss suffered by Canada last year was at most something like 3,524 Canadians, a pretty small figure, and that figure would be wiped out completely if a .proper record had been kept of those going across the border just for seasonal employment. May I add this, that if only Canadian-born are considered, Canada has a reoord of 9,600 over the United States.
The inference which hon. gentlemen opposite seek to draw from their remarks is that the administration is unable to check the exodus; in other words, that there is something in regard to our policies which occasions it. As I have already said, hon. gentlemen opposite have taken all their figures from the United States immigration records, but there is another record kept in the United States which is equally important, and that is the United States census. If you take the United States census you will find that the number of Canadians resident in the United States is very much less than one would be inclined to gather from the figures which are kept by their immigration agents from day to day. According to the United States census, there were the following numbers of Canadian and Newfoundland-born resident in the United States on the dates here indicated:
1850	 147,711
1860	 249,970
1870	 493,464
1880	 717,157
1890	 980,938
1900	 1,179,922	-
1910	 1,209,717
1920	 1,138,174
In other words, according to the census statistics of the United States, there were over 70,000 fewer Canadians in the United States in 1920 than there were in 1910, although the United States immigration figures for that same period show a very large immigration of Canadians to the United States, namely, 742,000. That throws a great flood of light on the matter of this immigration back and forth across the American frontier. During the period in which hon. gentlemen opposite for the most part were in office,

The Budget-Mr. Mackenzie King
and quoting from the sources which they have quoted against us, there were no less than 742,000 Canadians who left Canada for the United States, according to the immigration figures in that ten-year period, yet the census which keeps a record of those who actually settled and remained in the country shows that there were 70,000 fewer Canadians in the United States in 1920 than there were in 1910. If that was the case then, I submit that the same is the case to-day. As a matter of fact, as everyone knows, immigration has been going on back and forth across the frontier ever since the beginnings of the two countries. Lord Durham in his report in 1839 refers to the emigration from Canada to the United States at that time and deplores it, and so you find it all along. But the statistics at present go to show conclusively that the numbers leaving this country are fewer and fewer, and on the other hand that the total number of immigrants entering Canada from other countries has been increasing year by year during the last few years.
I should like to have said a few words in regard to the question of trade, but I Shall pass over that with a single reference to our trajde with Australia and New Zealand. My hon. friend the leader of the opposition, in speaking this afternoon about our trade with Australia and New Zealand, said that every treaty we had made had been against the interests of Canada. What are the facts?
The facts regarding the trade between Australia and Canada-and I would like my hon. friend to remember this in his advocacy of empire trade-are that on an average over a period of years for every dollar's worth of goods we have bought and buy from Australia and New Zealand they have bought and buy three dollars' worth from us. In addition, the goods that we have been sending to Australia and New Zealand have been for the most part the very class of goods which hon. gentlemen opposite, in accordance with their theories, say that we should export, namely, manufactured goods. Our exports for the most part have been automobiles, implements, rubber, paper, lumber, canned fish, and other classes of products which are manufactured. I think something like ninety per cent of the commodities we have sold to Australia and New Zealand have been raw materials manufactured into the finished articles in this country. The port of Vancouver has grown to be one of the great ports of the world, and if that port is going to continue to grow, it will be through the growth of our Pacific trade, yet hon. gentlemen opposite, when we have a trade with another part of the empire in the proportion 56103-831
of three to one in favour of this country, say that we ought to cease that trade, notwithstanding that it is the very class of trade they are advocating, namely the export of manufactured products. To show how our Australian trade is growing, may I read from a copy received to-night of the St. John. New Brunswick, Telegraph-Journal of March 12 (yesterday), which says:
Australian orders to the amount of 25,000 cases have been received for New Brunswick sardines, it was announced here Saturday by A. Neil McLean, of the firm of Connors Brothers.
This firm, I understand, are the largest sardine manufacturers in the world.
May I now say a word in regard to the development of our natural resources, because in regard to that hon. gentlemen opposite have an amendment. They say that-

the measures proposed by the government make no provision for the effective development of the natural resources of the country.
There again if we are to be guided by what has taken place in the last few years, the figures are absolutely to the contrary. Let us look at the field crops of Canada, and see how the natural resources of the soil have been developed between the years 1921 to 1927. Here are the total values of our field
crops:
1921		 $ 931,863,670
1922		 962,293,200
1923		 899,226,200
1924		 995,235,900
1925		 1,098,303,938
1926		 1,104,983,100
1927		 1,134,192,600
That looks like a development of the natural resources of this country in that particular branch of Canadian industry.
Take the pulp and paper industry. What is th'e quantity and value of our production? The figures are as follows:
Tons	V alue
1921	
1,018,947	$106,553,9351922	
1,366,815	106,260,0781923	
1,589,303	127,984,3701924	
1,718,741	133,395,6731925	
1,884,705	140,680,1771926	
2,266,143	158,277,078
The figures show a steady increase.
The mineral production of Canada from 1921 to 1927 was as follows:
1921		 $171,923,342
1922		 184,297,242
1923		 214,079,331
1924		 209,583,406
1925		 226,583,333
1926		 240,437,123
1927		 244,520,098
Then in regard to our fisheries: From 1921 to 1928 these are the figures in millions of dollars:
1294	COMMONS
The Budget-Mr. Mackenzie King
Fisheries Production	of Canada 1921-26
1921		. 34,931,935
1922		. .. 41.800,210
1923		. .. 42,565,545
1924		. . . 44.534,235
1925		. . . 47.942.131
1926		 . .	
These figures indicate	an increase between
1921 and 1926 of over	$21,000,000 or 61 per
cent. For the same period	the manufacturing
production of Chnada reached the following	
totals, again in millions	of dollars:
Manufacturing Production of Canada 1921-26	
1921		.$ 2,576,037,029
1922		. 2,482,209,130
1923		. 2,781,165.514
1924		. 2.695.053.582
1925		. 2,948,545,315
1926		. 3,250,900,000*
Partly estimated and subject to revision.
These figures show an increase in five years of $674,000,000, or 26 per cent.
So I say hon. gentlemen opposite are again wrong in their contention that the policies of this government are not meeting the situation.
My hon. friend has been making a great many speeches in various parts of the Dominion, in all of which he has stressed the point that our development in trade means "parting with our estate"-our natural resources. He says we are selling our estate. Well, let us get first of all a true perspective of what constitutes the estate of Canada. Take agriculture. What is the position of this portion of Canada's estate? It is estimated that the total arable land of Canada amounts to three hundred million acres. Now, not more than a fifth of that total is under cultivation at the present time. Can it be said that when we grow wheat and sell it from the land under cultivation we are parting with our agricultural estate? We send the raw products abroad in order to get money back wherewith to create a demand for our manufactures and other commodities. That is the position in regard to agriculture.
Now let me take timber. The estimated total forest area of Canada is in the neighbourhood of 1,200,000 square miles. Forty per cent of this is covered with merchantable timber. There is not another timber area of equal extent in the world outside Siberia. As a matter of fact, we have not begun to appreciate even the extent of these resources. But is not the preservation of this part of our estate very largely a question of conservation, and are not a large proportion of our timber resources under the control of the provincial governments? It is to those governments that my hon. friend should address his remarks

rather than to the federal government. We are co-operating with the provinces in conserving the forests. Much more harm is done to our forests through loss by insects and fire than by lumbering operations. Some of the provinces have a statutory requirement that before the timber is exported it must to a certain degree be manufactured. Ontario, Quebec, New Brunswick and one or two of the other provinces have enacted such regulations. It can be shown that a very large quantity of our forest wealth is leaving Canada to-day only in the form of the manufactured product.
Another part of our estate is our minerals. Is there any hon. member who will attempt even to estimate the extent of the mineral wealth of Canada? How can it be said that we are parting with that estate when we sell some raw material from a portion of the earth that has been little more than scratched? Every year we are discovering new areas of mineral wealth, and what there may be ultimately available in the way of production no one can yet foresee.
Another portion of our estate is represented by our fisheries-ocean, river and lake. So far as our ocean fisheries are concerned we know nothing of depletion; as to the fisheries of our lakes and rivers, the governments of the provinces and the Dominion authorities are co-operating by means of hatcheries and in other ways to conserve and increase this important natural resource. So there again any reference to losing our estate seems to me to be wide of the mark.
Then take our water-powers; a few years ago we did not even regard them as an asset; to-day they are one of our greatest assets. This government has laid down the policy that the export of hydro-electric power shall be prohibited so that these great reserves of energy may be utilized in building up the Dominion. We have available forty-one million horse-power, of which at present only four and three-quarter million has been developed.
But in speaking of our natural resources, emphasis must be laid upon the word "resource" as well as upon the word "natural". A resource is something to be used in case of need, when it is required. That is what these resources were given to us for by nature-not to be left dormant, but to be used. The extent to which they can be used and what they will produce depends upon the application of science and human energy. Science is continually finding new means of developing our natural resources. Take, as an example, low grade ores that a

The Budget-Mr. Mackenzie King
few years ago were regarded as worthless; to-day, through scientific processes, those ores are becoming increasingly valuable. So in regard to wheat and grain, frost-resisting qualities have been discovered iu the course of evolving new varieties, and the effect will be to roll back the map of this Dominion further and further north. And yet hon. gentlemen opposite say that we are not to export any of these raw materials, that they must be made into manufactured goods to supply the home market. May 1 draw their attention to this fact?-We could not more effectively destroy the home market than by following their suggestion. If we put aside the proportion of wheat that is exported, we find that we are importing more in the way of raw materials than we are exporting. Do hon. gentlemen mean to say that we can lay down to the world the doctrine that we will not export any of our raw materials, and at the same time expect other nations to supply us with their raw materials for our cotton mills, our woollen mills and our rubber factories? If we want to trade with the world we have to be prepared to sell them what they are prepared to buy from us. If you take the total of our exports-I will not trouble the house to go through the list, but any hon. member can look up the year book-you will find that for the most part the various commodities are as far advanced in the manufactured state as they can be. Not all of them, it is true. For instance, wheat might be manufactured into flour. What would be the effect if we were to follow the doctrine of hon. gentlemen opposite? If we refused to sell our wheat unless manufactured into flour, the nations that to-day are buying our wheat would turn to some other countries for their supply and we would lose our market altogether. The reason that wheat is exported rather than flour is that it can be handled in bulk cargo, whereas flour is handled in package cargo. Besides, the countries that import wheat do not want it in the form of flour. More than that, the great flour-milling industries in the United States grind our wheat in bond, exporting the flour and retaining the by-products. Under the circumstances, it is doubtful whether any effective action could be taken which would secure the grinding of our wheat for our own flour mills. It is far more likely any such action would jeopardize our exports of wheat which must be sold in competition with the wheat of other countries on the markets of the importing nations. Therefore, Mr. Speaker, the more one considers the position taken by hon. gentlemen opposite the more untenable it appears to be.
I will conclude with a brief reference to one or two matters of a different nature which have been referred to in this debate. The first was a reference by my hon. friend from Frontenac-Addington (Mr. Edwards), to what transpired in a previous session of parliament. He mentioned that, shortly before it left office in 1926, on three occasions the Liberal administration was defeated. May I read his statement:
It is likewise true that on June 25, 1926, the King government was defeated three times in one day.
* My only reason for raising this question at the moment is that in my opinion it is just as well to be accurate in any matter touching the records of parliament. Let me say that the government which I had the honour to lead prior to my resignation in June, 1926, was never once defeated. Had the government been defeated the fact would appear in the records of parliament. I have in my hand the votes and proceedings of the 25th day of June, containing t'he proceedings of parliament on that date. What were the various resolutions submitted to the judgment of the house on that occasion? There was one resolution moved by the 'hon. member for Winnipeg North Centre (Mr. Woodsworth), defeated by a vote of 115 to 117. That motion was defeated. Will anyone say that the resolution moved by the hon. member for Winnipeg North Centre was a government motion, and that because that resolution failed to receive the support of t'he house the government was thereby defeated? Then there was an appeal to you, Mr. Speaker, to which exception was taken by the leader of t'he opposition. Appeal was taken by the then leader of the opposition from your ruling to the house, the house being asked whether the ruling of the Chair should be sustained. The house on a vote of 117 to 115 failed to sustain that ruling, but that, Mr. Speaker, I regard as a reflection upon the opposition and its leader rather than upon either the government or the Chair. And what was the next motion? The next motion was one moved by the hon. member for Provencher (Mr. Beaubien) and seconded by the late Mr. King of North Huron, a member of t'he Progressive party, "that the debate be now adjourned". By a majority of one that motion was defeated; the vote was 114 to 115. Will anyone contend that that was a government motion and that in consequence of its failure to carry the government was defeated? There was one further motion, it was moved by the hon. member for Quebec South (Mr. Power) and seconded by the hon. member for Quebec-Montmorency (Mr. Lavigueur). It was the only motion which
1296	COMMONS
The Budget-Mr. Mackenzie King
came from this side of the house, it was "that the debate be now adjourned". The record in the votes and proceedings of that day shows this motion as having been agreed to; and this was the last motion put in that parliament, for it was a day or two following that I tendered my resignation to His Excellency the Governor General. The house adjourned on Friday and being denied a dissolution, I tendered my resignation before the house reassembled on Monday. It is, I say, just as well that the public be correctly informed in respect of the records on this question.


John Wesley Edwards: May I ask
a question?


William Lyon Mackenzie King: Yes.


John Wesley Edwards: Has the government, of which my right hon. friend has the honour to be the head, ever been sustained by the popular vote of the country since 1921?


William Lyon Mackenzie King: In answer to
my hon. friend I will say that the government of which I have been the head since 1921 assumed office by virtue of the will of the people of this country, and has retained office in virtue of the support it has received from this House of Commons. The government, let me add, is in office to-dav by reason of the votes of the people of Canada and in virtue of the confidence reposed in it by the House of Commons. But let me remind my hon. friend that there was another so-called government formed in the short interval between my resignation and the time the government resumed power. Of that short-lived phantom administration my hon. friend was not a member, and I imagine he is proud of the fact; no doubt he is happy to have been left out of it. However, there is one fact to be observed in relation to that government, and that is, that it never had the confidence either of the House of Commons or of the country.


John Wesley Edwards: May I say-


Some hon. MEMBERS:: Sit down.


Some hon. MEMBERS:: Order.


John Wesley Edwards: It had the confidence of the people to the extent of over 100.000 votes more than my hon. friend's government received.


William Lyon Mackenzie King: Well, all I can say to my hon. friend is, there is a perfectly obvious answer to his remarks and it is that we are over here and he is over there.
Now, speaking of the confidence of the electorate in governments, my hon. friend from Southeast Grey (Miss Macphail), adfMr. Mackenzie King.]
dressing the house the other evening on the budget, touched upon one or two matters which I consider subjects of reasonable and proper debate; I refer particularly to what she had to say in regard to the constitution of parliament and to certain matters of procedure in the House of Commons. One question she brought up was the right of dissolution, and this comes up in connection, with what I have just been, saying. My hon. friend expressed the view that the power of dissolution should not rest with the Prime Minister but that-if I understand her correctly-there should be a fixed parliamentary term. It seems to me that many of these matters of form appear differently when we come to the reality. When one comes to examine the so-called right of the prime minister to request dissolution it is obvious that no one individual has the power at his will and caprice, to dissolve parliament at any particular moment. The fact is that the Prime Minister gives expression to the view of his cabinet, and the cabinet gives expression to the view of what it considers to be the will of the majority in parliament at the time that decision is reached which leads the Prime Minister to ask for a dissolution. So that the expression of opinion of the Prime Minister, in asking for dissolution, is the expression not of an individual but of parliament as constituted at the time. I would direct the attention of the house to this important fact. Comparisons are frequently made between our system of government and the system in the United States where there is a fixed legislative term. When these comparisons are made this essential fact seems to be ignored: Where there is a fixed term of office, a period of four years as in the United States, the executive is completely independent of the legislature. The executive in the United States, the president and his cabinet, take office under oath to devote their whole time to the administration of government. They have nothing to do with legislation; they are not responsible to the legislature.	They are
bound only by their oath of office and are assured of office for the period of time designated under the constitution. The British system is entirely different. Under the British system ministers of the crown have not only responsible executive duties to perform; they must come into parliament, as the ministers of the government of this Dominion do, and assume the responsibility for such legislation as is enacted. They must take the responsibility for the administration of the affairs of the country as well as for the proceedings of parliament. Under the latter svs-

The Budget-Mr. Mackenzie King
tem of government you have a condition which makes it imperative, in circumstances in which the executive finds, it impossible, being manacled or thwarted, to continue the conduct of public business, that the administration, through the Prime Minister, should have the right to appeal to the judgment of the people. I know that my hon. friend from Southeast Grey feels equally strongly with myself on the rights of the people. After all where is the wrong in giving to the Prime Minister the right to ask for a dissolution of parliament? Is dissolution not an appeal from a comparatively few members of the House of Commons to the great body of public opinion? After all, is it not based on trust in the people? When the Prime Minister asks for a dissolution of parliament, what is it for which he appeals? He simply asks for the right to allow the people themselves to judge in relation to the conduct of those whom they have made theft trustees. I hold, therefore, that no finer doctrine of the rights of the people could be propounded than that which ensures, in times of crisis, or when any measure comes up of paramount importance to the public welfare on which the people have not been consulted, that the people shall be given the right to pronounce upon the question. In other words, the Prime Minister asks for the right to go to the people, from whom all power is derived, in order to ascertain whether or not he and his colleagues are right in the particular course which they are pursuing or intend to pursue. That point I wish to make clear because I think there are many instances in which, under the British constitution, the reality is so profoundly different from the appearance of things and that we cannot examine too deeply into what is fundamental in questions of this nature. Our system of government, which has grown up-not over a period of decades, not over a period of twenty or fifty or a hundred years, but through centuries of time-has, I believe, reached the point where it cannot be surpassed by anj' other form of government to be found anywhere else in the world.


Miss MACPHAIL:: Does the Prime Minister mean to imply that the British form of government, as we know it and as we have seen it exemplified in Canada, has reached perfection and that it cannot be improved?


William Lyon Mackenzie King: No; I believe that so long as we are human there will always be room for improvement. I do say, however, that the British system has developed t.o a greater point of improvement and more
nearly approximates perfection than any other political system in the world. Let me assure the house that in this regard I am speaking as a minister of the crown who, being responsible for legislation which parliament is asked to consider, feels very keenly the force of what he is saying on this question.
Similarly I believe that under the British system, as demonstrated over a very long period, the most effective way of making principles and policies prevail in legislation, is by great parties composed of individuals who have in common certain principles which they desire to advocate and support. The other evening my hon. friend spoke about the feeling which is held by herself and a number of those surrounding her, that they are in parliament for the purpose of representing a class. I think I am right in placing that construction on her words; if I am wrong I hope she will correct me. May I ask her first of all one question: If we each of us took that view what would become of government in an orderly fashion?


Agnes Campbell Macphail: We would have honest government; everyone would know whom we represented here.


William Lyon Mackenzie King: That, I submit, is a matter of opinion. However, I may say to my hon. friend that before you can even take that position in parliament you must get into parliament, and the results over a number of years have demonstrated that the only really effective way for any body of opinion to find expression in legislation through debate on the floor of parliament ig to have a party large enough and strong enough to elect enough members to give expression to that opinion in parliament itself.
In speaking the other evening my hon. friend used these words:
.	.	.	. agriculture said: This kind of thing
is no good; we are going to organize ourselves as an industry. They said to themselves: Our politics is our business, and we have been foolish in letting other people look after our business: we will never do well that way; We will send people to Ottawa, we will choose them, finance and elect them; we will control them.
Notice those words:
. . . . we will send people to Ottawa; wre will choose them, finance and elect them; we will control them.
My hon. friend remembers what took place in North Huron, where there was a member of her group who took exactly this view and who was running as a candidate in a recent by-election. I have in my hand the manifesto which he irsued during that campaign, which is in words very much like the words my
129S	COMMONS
The Budget-Mr. Mackenzie King
hon. friend uttered. It is signed by Sheldon Bricker the Progressive candidate, and he uses these words in his election manifesto:
Surely agriculture, our basic industry, needs representation in the Dominion house, unfettered by party ties; free to vote on the merits of each question as it arises.
That statement was issued by the Progressive candidate in that election. Now let me return to what my hon. friend said:
.. .we will send people to Ottawa; we will choose them, finance and elect them;
Is Mr. Bricker here as a member of the Progressive group, sitting where the late Mr. King sat in this house? What was the result of having chosen a representative of a class group as a candidate? The result is that you have sitting in the Tory group opposite a gentleman who is going to cast a vote against the Progressives, against the Liberals and not at all in accord with the principles that my hon. friend has laid down as those which she supports. The point I wish to bring out is that parties are not as some suppose wrong in themselves. They are a means to an end.


Mr. EVANS:: May I ask the hon. gentleman a question? Does not the Prime Minister think every party represents a distinct class?


William Lyon Mackenzie King: No, I do not agree at all with that view; that is exactly where I differ from my hon. friend. I say that as far as the Liberal party is concerned its members represent the people as a whole, and no particular class. In the ranks of our party we have men who come from farming communities and others who come from the business world; we also have those whose lives have been given up to learned professions, but they are all united not by a class tie or bond which separates them from those belonging to the other classes in this house but by a tie which binds them in the advocacy of certain principles and policies which they hope to make prevail in legislation. It is quite true that no one can have his own way; no. one can go the full length he might wifh to go, but the advantage of a party is that it brings together men and women with like sympathies, like aims and like purposes in the advocacy of measures that they believe to be in the public interest. That is why I am touching on the question at the moment. I feel a great sympathy with many of the objects which my hon. friends of the Progressive group pursue; I would like to see some of the measures in which they are interested enacted as legislation, but I say honestly and frankly from my experience in matters of government that the fact that they hold

themselves aloof and do not avowedly co-operate with other groups in this house makes it so much more difficult to get action on some of these matters than would otherwise be the case.


Agnes Campbell Macphail: Does the Prime Minister mean to say that this group have not cooperated with his government every time the government brought down legislation in which
we were interested?


William Lyon Mackenzie King: I do not want my hon. friend to misunderstand me; if she will look at my words she will see that I spoke comparatively. It makes it more difficult to do many things that otherwise night be done. Let me be concrete: There are a number of members in the Progressive group opposite who come from the province of Alberta. Time and again I have heard the Minister of the Interior urge that certain matters be pressed forward concerning that province, and I have seen him do his utmost to bring about progress in particular measures, but before he can get this House of Commons to support his views he has to have the support of others who have been made to think and feel as he does. Now let me ask this: Does my hon. friend think my task as leader of the government or the task of the Minister of the Interior with respect to Alberta is made any easier by the fact that most of the members from Alberta are sitting in the opposite corner and not one of them where he can most effectively use his persuasive powers with other members on this side of the house?


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: So I struck
home again.


Agnes Campbell Macphail: Does the Prime Minister really want me to answer that question? I think it is very much easier for him and for the Minister of the Interior to bring down legislation in the interests of Alberta, because the Alberta men are outside the government and are therefore in a position to use their individuality and their brains to induce the government to bring in the legislation,


William Lyon Mackenzie King: No, in that
my hon. friend is mistaken. May I direct this argument to her in connection with what I am now saying: She personally has found that in order to get those sitting around her to see her viewpoint it is advisable to have discussed together many matters of policy within a little group which is termed a caucus. What is necessary with the few opposite is equally necessary if agreement is to be reached by the larger numbers here assembled. What

The Budget-Mr. Mackenzie King
I wish to say is that all government is in the last analysis, a matter of opinion. That opinion is most generally the result of persuasion, not of coercion. In the long run more of service can be done to any particular cause or any particular locality by the sharing with others of responsibility in the fullest possible way in the support of a particular cause or what may be desired for a particular locality. That is my reason and my sole reason for preferring the party system to what my hon. friend refers to as representation by class.


Mr. KENNEDY:: Do the Liberal-Progressives attend the Liberal caucuses?


William Lyon Mackenzie King: I will say a
word to my hon. friend with regard to the Liberal-Progressives. They are pretty closely in touch with opinion on this side of the house, and I think we on our part endeavour to give full regard to what the Liberal-Progressives have to say. To my hon. friend who interrupted me, may I point out just where the line of reasoning which he takes is apt to lead, and how serious may be the false position into which it may bring him. He made a statement in this house the other evening to the effect that the most effective way a class group could act might be to see what bargain it could make with a party whose known principles were wholly opposed to its own. What were his words? He said:
.	.	.	. the only thing for us to do is to go
and make the very best possible deal with the protectionists and see what they can do for us.
Now those are the words of my hon. friend. How are they viewed in the country? Here is the Montreal Gazette which represents the Conservative party and I think represents in the best way what is in the best interest of that party. What does it say, contrasting the point of view of the Conservative party with the point of view of my hon. friend? It says:
Whether the member for Peace River used the word "deal" or the word "bargain"- reports of his remarks differ in this respect- is not very material, the sense being the same. It is unfortunate that he did not express more clearly his idea of what the protectionist "can do for us".
Then it goes on to say:
But the Conservative party is still founded upon the principle of protection, and there can be no "deal" and no "bargain" which involves a surrender of that principle. The Conservative policy is not in the market.
That is the position which the Montreal Gazette takes.


Donald MacBeth Kennedy: Is this budget which has been presented to the house a protectionist budget or not?


William Lyon Mackenzie King: I should like my hon. friend to wait a minute. Probably he does not wish to hear what some of the other papers are saying. Here is the Financial Times of Montreal. How does it regard my hon. friend's remarks? I shall not read the whole article, but it says in interpreting the point of view which he is now presenting:
Indeed Mr. Kennedy's offer-the way in which he puts that support up for sale-is hedged about by a most unacceptable condition.
Evidently it regards my hon. friend's attitude as one not of maintaining but of selling principles.
Now, Mr. Speaker, I wish to dose. My only reason for quoting the remarks of my hon. friend was that he rose and thereby directed my attention to a matter which I had already covered in my notes but which I had for the moment thought of passing over. I am very glad that the hon. gentleman interrupted me for this reason: His attitude has helped to make clear that the moment you attempt to govern on the basis of class representation that moment you begin to cause just the kind of suspicion with regard to motives that is set out in articles I have quoted, namely that, the whole business is a matter of bargaining. I know my hon. friend from Southeast Grey believes in representative government, but I ask her is it possible to have representative government where members sit in parliament as the representatives of a class, and do not sit as representing all classes.


Agnes Campbell Macphail: No one can represent all classes.


William Lyon Mackenzie King: Those who advocate class government also believe, I think, in democratic government. But government by a majority is the only way in which it is possible to express the voice of democracy. Class representation may be described as an attempt at government not by a majority but by a minority. Hon. members of the Progressive group say we desire power. So do they; the difference between them and ourselves is one of method. The method under the parliamentary representation system is the method of gaining and maintaining power through persuasion and co-operation. As interpreted by my hon. friend from Peace River, the method to be employed is not so much one of cooperation as it is one of coercion.


Mr. SPENCER:: The Prime Minister laid stress on the importance of numbers. May

The Budget-Mr. Mackenzie King
I point out that when Nova Scotia had a full quota in the Liberal ranks that province had less relief by a long way than it has had since most of its members have sat on the other side of the house.


William Lyon Mackenzie King: I shall deal with that point at another time. I notice, Mr.. Speaker, that I have already taken up more time than I intended. I have no desire to enter into any argument. I was simply trying to make clear to some of my hon. friends opposite with whose point of view on many things I have the utmost sympathy, how a government is situated in the matter of making policies prevail, and I do say that hon. members from Manitoba who sit here as Progressive Liberals, associating day by day with the members of the Liberal party, speaking with the different members of the party, and giving the government in an intimate way the benefit of their opinions and advice and their support, are doing much more to ensure the enactment of legislation in this parliament in accordance with the principles they have most at heart than would have been possible had they been sitting on the opposite side and away from the government altogether.
May I say this in conclusion? The leader of the Progressive group in speaking the other day on the death of Lord Oxford and Asquith said he believed' that Mr. Asquith would be remembered in history more for what he had done in the way of legislation for the benefit of the masses in the shape of old age pensions and the like, than for anything else he had accomplished. I ask my hon. friends where would Mr. Asquith's legislation on old age pensions have been if he had' gone into the
House of Commons of Great Britain as a lawyer, determined to sit there as a representative of the legal profession? I ask my hon. friends to take all the leaders in the public life of Great Britain, I ask them to take all that has been achieved in the matter of social reform legislation, and I ask them where that legislation would have come from if men of many callings and professions had not stood up and fought the battles of the people in the matter of the franchise, in the matter of the tariff, in the matter of the factory laws, the mining laws, and other legislation deeply affecting the interests of the masses. Had many of the great men whose names are household words been in parliament only as the representatives of a particular class, where should we have got the legislation which they were responsible for enacting-men like Gladstone, like Bright, like Cobden, like Huskisson, like Shaftesbury, and others of great eminence none of whom ever sat in parliament as the representatives of a particular class? They represented the people as a whole and the liberal doctrines which they professed were implemented' into legislation for the benefit of the country as a whole. We as Liberals consider with them that the duty of members of parliament is not to represent a class only or the people in only one section of the country but men and women of all classes in all parts of the country, and that to this end we should work in cooperation and close association with our fellow members of kindred sympathies and views for the greatest good to the greatest number throughout our broad Dominion.

(The tables referred to on p. 1282 are as follows):-
Table Showing the Reduction in Hates of Customs Duties on Instruments of Production in the Basic Industries of Agriculture, Mining, Lumbering and Fishing and
on other articles under the Seven Budgets of the Liberal Administration
Farming:
Mowing machines, harvesters binders, reapers-
Preferential	
Intermediate	
General	
Cultivators, harrows, horse-rakes, seed-drills, manure spreaders and weeders-
Preferential	
Intermediate	
General	
Ploughs, threshing machines and complete parts thereof-
Preferential	
Intermediate	
General	
Farm or field rollers, post hole diggers, hay loaders, stumping machines, grain crushers, potato diggers, hay tedders and other agricultural implements-
Preferential	
Intermediate	
General	
Axes, scythes, sickles or reaping hooks, hay or straw knives, edging knives, hoes, rakes and pronged forks-
Preferential	
Intermediate	
General	
Shovels and spades-
Preferential	
Intermediate	
General	
Rates of Duty
121%
121%
121%
10%
15%
15%
121%
171%
171%
121%
20%
20%
15%
20%
221%
20%
30%
321%
Free
6%
6%
Free
71%
71%
5%
10%
10%
5%
10%
10%
10%
15%
20%
10%
15%
20%
Reductions
5%
21%
21%
21%
21%
21%
21%
2)%
21%
5%
5%
1924
71%
4%
4%
10%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
21%
10%
15%
121%
1925	1926	1927	1928
			
			
			
			
			
			
			
			
			
			
			
			
			
			
			
			
			
			
Total
121%
61%
61%
10%
71%
71%
71%
71%
71%
71%
10%
10%
5%
5%
21%
10%
15%
121%

a
15%
174%
17*%
15%
17*%
17*%
*-3
s-
30%
30%
30%
30%
6s
e
a.
Drawback 1% 70%
1%
70%

2*%-25%
6*%-29%
6*%-31*%
2*%-25%
6*%-29%
6*%-31*%
&

g

o

The Budget-Mr. Mackenzie King
Logging wagons-
Preferential	
Intermediate	
* General	
I*' Logging sleds-
Preferential	
Intermediate	
General	
Fishing Industry:
Manilla rope not exceeding 1} inches in circumference when used exclusively for the fisheries-
Preferential	
Intermediate	
General	
"See notes (d)and (e)" Marline-
Preferential	
Intermediate	
General	
Engines for propulsion of individual fishermen's boats-
Preferential	
Intermediate	
General	
Aluminum net floats of class not made in Canada for deep sea or lake fisheries-
Preferential	
Intermediate	
General	
General industry:
Machinery and parts and dies valued at more than $500 of a kind not made in Canada- Duties on principal items-
Preferential	
Intermediate	
General	
See notes (fj and (g)
Pulpboard in rolls for the manufacture of wallboard-
Preferential	
Intermediate	
General	
175%
25%
25%
175%
25%
25%
20%
225%
25%
20%
225%
25%
15%
25%
275%
15%
225%
25%
15%
25%
275%
15%
225%
25%
Free
Free
Free
Free
Free
Free
Free
Free
Free
Drawback
60%
	H%	105% 15% 15%				
						
						
			125% 15% 15%			
						
						
20% 225% 25%						
						
						
	2%	18% 225% 25%				
				*		
						
			5% 125% 125%			
						
						
						15% 225% 25%
						
						
	9% 125% 165% 15% 175% 20%					
						
						
						
						
						
125%
15%
15%
125%
15%
15%
20%
225%
25%
20%
225%
25%
5%
125%
125%
15%
225%
25%
9%
125%
165%
15%
175%
20%
%
o

a
10%
171%
17J%
10%
m%
174%
5!%
10%
10%
15%
171%
174%
74%
io%
10%
15%
174%
174%
15%
174%
174%
15%
174%
174%
The Budget-Mr. Mackenzie King

Table Showing the Reduction in Rates of Customs Duties on Instruments of Production in the Basic Industries of Agriculture, Mining, Lumbering and Fishing, and
on other articles under the Seven Budgets of the Liberal Administration
General industry-Con.
Sponges of marine production-
Preferential	
Intermediate	
General	
Pulpboard for wrapping rolls of paper-[DOT]
Preferential	
Intermediate	
General	
Calcium chloride for road treating-
Preferential	
Intermediate	
General	
Crude petroleum not in natural state, etc., for refining-
Preferential	
Intermediate	
General	
Nickel chromium in bars or rods for manufacture of electric resistance wire or strip-
Preferential	
Intermediate	
General	
Printing presses, lithographic presses, and typemaking accessories therefor, also machines specially designed for ruling, folding, binding, embossing, ci easing, or cutting paper or cardboard when for use exclusively by printers, bookbinders and by manufacturers of articles made from paper or cardboard- including parts thereof composed wholly or in part of iron, steel brass ot wood-
Preferential	
Intermediate	
General	
Rates of Duty
121%
171%
171%
15%
221%
25%
Per Cwt. 10c. 15c. 15c.
Various
Various
Various
15%
171%
171%o
5%
10%
10%
Free
171%
171%
5%
71%
10%
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
5%
10%
Reductions
1923
1925
1926	1927
121%
10%
15%
15%
Per Cwt. 10c. 15c. 15c.
Various
Various
Various
15%
171%
171%
5%
5%
Total
121%
10%
15%
15%
Per Cwt. 10c. 15c. 15c.
Various
Various
Various
15%
171%
171%

(e) PHmtoSi924 the duty exemption applied only to "barked" marline; the exemption now applies to all marline, which means some additional saving to fisher-men and does away with considerable annoyance.
manufacture of similar boats in the fisheries; and on articles and materials used in the manufacture of similar boats.
Notes on General Industry:-
(g) Th^Goverament'has^so^y recra^am^ndmentsmade reductions in many articles that enter into the construction, equipment or repair of blast furnaces.
While the duty on tea is a rate per pound, the ad valorem rate on the basis of value imported and duty paid for the fiscal year ended March 31, 1923, would equal 26-4 p.c.
1316	COMMONS
The Budget-Mr. Mackenzie King
Textile Changes under Budget of 1928 Cottons
The maximum duty under the General Tariff is reduced from 374 per cent to 30 per cent, with a single exception.
Cotton yarns, 40's and finer, are made dutiable but the rates are reduced on the coarser counts of yarn.
Gray (unbleached) cotton fabrics are reduced by 2J per cent in the intermediate and general tariffs.
Printed and dyed cottons are reduced 24 per cent in the British preference, 5 per cent in the intermediate and 5 per cent in the general tariff.
Yarn-dyed fabrics are reduced 24 per cent British preference, 5 per cent in the intermediate and 24 per cent general.
On a large range of household cottons, such as tablecloths, counterpanes, sheets, quilts, towels, plain curtains, etc., there are reductions of from 5 to 10 per cent in the British preference rate, from 24 to 5 per cent in the intermediate, and from 24 to 5 per cent in the general.
Blankets of cotton are reduced 74 per cent in the British preference rate, the intermediate and the general.
Cotton embroideries, laces, etc., are reduced, roughly, 5 per cent on all tariffs.
Cotton clothing and manufactures of cotton show reductions ranging from 24 to 5 per cent on all tariffs, (with very few exceptions, due to reclassification).
Woollens
Yarns for weaving are reduced from various duty ranges (chiefly 124, 174 and 20) to Free under the British preference rate, 10 under the intermediate and 124 under the general rate.
Dress goods in the gray for dyeing or finishing in Canada are reduced 5 per cent under the British preference rate.
Lustres and linings are reduced from 20, 30 and 35 per cent to 10, 20 and 25 per cent.
Woollen fabrics not over 5 ounces in weight per square yard are reduced 24 per cent in the British preference rate.
Cheaper ranges of woollen socks and stockings are reduced 5 per cent in all tariffs.
Knitted goods of all kinds valued at not more than 90 cents per pound are reduced 5 per cent in the British preference rate.
. Flax, Jute, Hemp, Etc.
There are reductions in the British preference rate, (24 per cent) on the finer grades of linen, as well as on plain and fancy linen handkerchiefs.
Manufactures of flax, not otherwise provided for, formerly rated at 25 per cent under the British preference tariff are reduced to 224 per cent.
Oiled clothing of cotton or linen is reduced 5 per cent on British preference and intermediate tariffs.
Silk and Art Silk
There are practically no changes in rates affecting silk and artificial silk but the items are reworded and reclassified to conform with those comprising the wool and cotton schedules, ack Provisions
The Foregoing Tables do not Include Reductions under Treaties and Trade Agreements nor do they include the following Drawback Provisions:
Item No.	Goods	When subject to drawback	Portion of Duty (Not including Special Duty or Pumping Duty) Payable as Drawback1026	Materials, including all parts not finished	W'hen used in the manufacture oi goods enumerated in tariff items	40 p.c. 30 p.c.1027	Materials, including all parts not finished	When used in the manufacture of goods enumerated in tariff items 447, 448b and 591	1028	Materials, including all parts	When used in the manufacture of goods enumerated in tariff item 447a	
When imported by hat and cap manufacturers and used in the manufacture of hats and caps in	99 p.c.1029	Hatters' plush or silk or cotton, and hatters' bindings	99 p.c.1030	Materials	When used in the manufacture of surgical trusses, suspensory bandages and elastic hosiery	50 p.c.1029	Materials	When imported by manufacturers of hat sweats and hatters' tips and sides and used in the manufacture of such articles in their own factories	99 p.c.1030	Materials	When used in the manufacture of articles enumerated in tariff item 236	50 p.c. 60 p.c.1031	Artificial silk tops and waste or artificial fibre silk, artificial silk yarns or filaments, enumerated in Tariff items 583a and 583aa.	When imported by manufacturers to be further manufactured in their own factories before the first day of July, 1924	

The Budget-Mr. Mackermie King
The Foregoing Tables do not Include Seductions under Treaties and Trade Agreements nor do they include the following Drawback Provisions:
Item No.	Goods	When subject to drawback	5ortion of Duty (Not including Special Duty or Dumping Duty) Payable as Drawback1032	When used in the manufacture of manila rope, not exceeding one and one-half inches in circumference, when used exclusively in the fisheries	99 p.c.1033	Glass tubing	When used for the manufacture of glassware and other scientific apparatus for laboratory work in public hospitals	99 p.c.1034	Barilla or soda ash	When used in the manufacture of sal soda	99 p.c.1035	Machinery, and parts thereof, and dies valued at more than five hundred dollars each, of a class or kind not made in Canada.	When used in manufacturing or producing goods of a class or kind not manufactured or produced in Canada prior to the twelfth day of May, 1923	60 p.c.1036	Materials, including all parts not finished	When used in the manufacture of goods enumerated in tariff item 448c	40 p.c.1037	Copper in blocks, ingots, pigs or bars	When used in the manufacture of rods for use only in the manufacture of trolley, telegraph and telephone wires, electric wires and electric cables	99 p.c.1026	Materials, including all parts, imported prior to eleventh day of April, 1924	When entering into the cost of goods enumerated in tariff items 445, 446, 446b, 447b, 448 and 591, before the first day of July, 1927	99 p.c.1027	Materials	When used by manufacturers of malleable iron castings or steel shafting for use exclusively in the manufacture of such articles for use in the manufacture of goods enumerated in tariff items 445, 446, 446b, 447b, 448 and 591	80 p.c.1031	Artificial silk tops and waste or artificial fibre	When further manufactured before	silk, artificial silk yarns or filaments enumerated in tariff items 583a and 583aa.	the first day of January, 1925	80 p.c.1036	Bar iron or steel, rolled, whether in coils or bars one and one-eight of an inch in diameter anc	When used in the manufacture of goods enumerated in tariff item	99 p.c.over.	410	1038	Materials, including all parts	When used in the manufacture of goods enumerated in tariff item 544a	99 p..1039	Materials, including all parts not finished	When used in the manufacture of goods enumerated in tariff items 447 and 448b	30 p.c.1040	Bags, boxes and barrels	When imported by producers of salt, for use in covering salt produced in Canada.	60 p.c.1041	Materials	When used in the manufacture of bags, boxes and barrels, when such bags, boxes and barrels are used in covering salt produced in Canada..	60 p.c.1042	Materials, including all parts	When entering into the cost of cyanide of potassium and cyanide o' sodium	99 p.c.1043	Materials, including all parts	Which entered into the cost of goods enumerated in tariff items 445, 446 446b, 447b, 448 and 591, on hand oi in process of manufacture, in possession of the manufacturer and unsold, on the tenth day of April 1924. Provided that drawback payable under this item is in lieu o drawback payable under any othei tariff item	99 p.c.1318	COMMONS
The BHdget-Mr. Mackenzie King
The Foregoing Tables do not Include Reductions under Treaties and Trade Agreements nor do they include the following Drawback Provisions:
Item No.	Goods	When subject to drawback	Portion of Duty (Not including Special Duty or Dumping Duty) Payable as Drawback1044	Fire brick	When imported by manufacturers ol iron or steel for use exclusively in the construction or repair of a blast furnace, open hearth furnace or	99 p.c.1045	Materials	1046	Materials	cubes enumerated in tariff item 397	99 p.c.1047	Materials	articles entitled to entry under tariff item 663b when such articles are sold to manufacturers to be used as specified in said item	99 p.c.articles enumerated in tariff item 469a	99 p.c. *1048	Materials, including all parts	goods enumerated in tariff item 453e 	50 p.c.1049	Bituminous Coal	When imported after the twenty-fourth day of March, 1925, by proprietors of by-product recovery coke ovens and converted into coke at their by-product recovery coke ovens. Provided that no drawback shall be paid under this item on coal converted into coke at a gas retort plant or as at plant using any other process than the by-product coke process, also provided that drawback payable under this item is in lieu of drawback payable under any other	99 p.c.1050	Sugar	When used in the manufacture of loganberry wine. Provided that drawback shall not be payable in respect of any raw sugar, except raw sugar produced in a British	99 p.c.1051	Artificial silk tops and waste or artificial fibre silk tops and waste enumerated in tariff item 583A	31st day of December, 1925, and prior to the 1st day of January, 1928	80 p. c.1052	Artificial silk yarns or filaments enumerated in tariff item 583aa, imported prior to the first day of January, 1926	When further manufactured prior to the first day of January, 1927	
Wrhen imported by manufacturers and further manufactured in their own factories before the first day of	1053	Cellulose acetate in powdered form imported after the thirtieth day of April, 1927, and prior to the first day of November, 1927	80 p.c. 99 p.c.1054	Yarns produced from cellulose acetate, dry spun, not more advanced than singles, when imported after the thirty-first day of October, 1926, and prior to the first day of August, 1927	When imported by manufacturers and further manufactured in their own factories before the first day of September, 1927	80 p.c.
IMr. Mackenzie King.J

The Budget-Mr. Mackenzie King
The Foregoing Tables do not Include Reductions under Treaties and Trade Agreements nor do they include the following Drawback Provisions:
Item
No.
Materials, including all parts.
1012
1029
Goods
When subject to drawback
Portion of Duty (Not including Special Duty or Dumping Duty) Payable as Drawback
Botany yam, single, numbers thirty and finer on mule cops, tubes or cones, or in hanks, dry spun on the French or Belgian systems, in white only, not doubled or twisted.
Woven fabrics in the web	
Yams composed in chief value of wool, single numbers thirty and finer, on mule cops/tubes or cones, or in hanks, dry spun on the French or Belgian systems, in white only, not doubled or twisted.
Materials	
When used in the manufacture of goods enumerated in tariff items 438a and 438b:	,
Provided that before April 1, 1927, ,_j drawback shall be paid under this item unless at least forty per cent of the cost of producing the finished articles has been incurred in Canada;
Provided that on and after April 1, 1927, no drawback shall be paid under this item unless at least fifty per cent of the cost of producing the finished article has been incurred in Canada;
And provided further that no drawback under this item shall be payable more than once on any
^rticlo		
When used prior to the first day of October, 1928, in the manufacture of socks and stockings and Jersey
cloth	
When used in the manufacture of
linings for hats and caps	
When used prior to the first day of October, 1928, in the manufacture of socks and stockings	
Newsprint paper, machine finished book grades of paper, not coated, coated or super-calendered book grades of paper, when imported under tariff items 197, 197a, or 198a.
1062
Woven fabric manufactured for Covering the outside of books of a class or kind not made in Canada.
Materials, including all parts	
When imported by manufacturers of hat sweats, cap peaks and hatters tips and sides when used in the manufacture of such articles
in their own factories	
When used exclusively in the production in Canada of magazines or periodicals, including farm journals, piinted, published and issued at regular intervals, and enjoying second class postal privileges, containing critical, informative and descriptive articles on various subjects, current topics, political and other news or reviews, criticism or other informative matter, or fiction, being bound, wire stitched or otherwise fastened together... When imported by bookbinders for use exclusively in binding books
in their own factories	
When used in the manufacture of bit braces, marking gauges of metal or wood, levels of metal or wood, planes or hand tool scrapers of metal or wood, spoke shaves, try squares and bevels with metal or wood handles: Provided that no drawback shall be paid under this item unless at least fifty per cent of the cost of producing the finished article has been incurred in Canada; And provided further that no drawback under this item shall be pay-| able more than once on any article.1
25 p.c.
99 p.c. 99 p.c.
99 p.c.
99 p.c.
80 p.c. 99 p.c.
60 p.c.
1320	COMMONS
The Budget

Mr. Mackenzie King
The Foregoing Tables do not Include Reductions under Treaties and Trade Agreements nor do they include the following Drawback Provisions:
Item No.	Goods	When subject to drawback	Portion of Duty (Not including Special Duty or Dumping Duty) Payable as Drawback1063	Materials, including all parts	When used in the manufacture of engines for use only in the equipment of aircraft: Provided that on and after July 1, 1930, no drawback shall be paid under this item unless at least forty per cent of the cost of producing the finished engine has been incurred in Canada. When used in the transmission of natural gas under high pressure from the gas wells to point of distribution	1064	Seamless iron or steel cubing over four inches in diameter	50 p.c.1065	Bituminous coal	50 p.c.When used in melting or evaporating salt produced in Canada: Provided that no drawback under this item shall be payable on coal used in producing salt or brine when such salt or brine is further manufactured than salt enumerated in tariff items 40, 41, 42, and 42a	99 p.c.


Hewitt Bostock: Is the house ready for the question? Before I put the question, I wish to address myself to hon. members on both sides of the house. Standing order 7, under our new rule, reads as follows:
At 11 of the clock, p.m., unless the closure rule be then in operation, the proceedings on any business under consideration shall be interrupted and Mr. Speaker shall adjourn the house without question put, provided that all business not disposed of at the termination of the sitting shall stand over until the next sitting day when it will be taken up at the same stage where its progress was interrupted.
I wish to point out that it is not yet 11 o'clock, but that hour will soon be reached, and there are three votes to be taken this evening. It is not only probable but quite certain that by 11 o'clock the three divisions will not have been taken. I should like to know, therefore, the sense of the house as to whether we shall proceed with the three votes notwithstanding the hour. Am I to understand that such is the unanimous wish of the house?


Mr. BOURASSA:: I beg your pardon, Mr. Speaker; I cannot agree, if any question be not put at 11 o'clock, to giving my consent to the breaking of the rule. I consider that these rules are binding, and that we must suffer the consequences of our absurdity.


Hewitt Bostock: It is a collective "absurdity" voted by the house last year.


Hewitt Bostock: the main motion.
Hanson,
Preston,
McRae,
MacDonald (Cape Breton South),
Bell (Hamilton), Lennox,
Hocken,
Clark,
Guthrie,
Bell (St. Antoine),
. Macdonald (Richmond-West Cape Breton), Cantley,
Gardiner,
Irvine,
Simpson.
Perley (Sir George). The question is now on


Joseph Henri Napoléon Bourassa: Mr. Speaker, I call your attention to the fact that it is now past eleven o'clock.


Hewitt Bostock: If the house is to proceed, consent must be unanimous. Bourinot says:
Each house is bound by every consideration of self-interest and justice to observe strictly its rules and standing orders, and to rebuke every attempt to evade or infringe them. Consequently the Senate and House of Commons never permit their rules and standing orders to be suspended, unless by unanimous consent.
Does the hon. gentleman persist in his opposition?


Joseph Henri Napoléon Bourassa: That is the rule.


Hewitt Bostock: Then consent not being unanimous, it is my duty to declare, it being eleven o'clock, this house stands adjourned.


Some hon. MEMBERS:: No, no.


Mr. McLEAN (Melfort):: Mr. Speaker, on a point of order I would like to point out to you that last year a similar situation arose when an hon. gentleman called attention to the fact that it was six o'clock, and the Speaker said. "I am in the hands of the house," and put the question whether he should leave the chair or not.


Hewitt Bostock: There is a positive rule in this case. It is a new rule, standing order 7, which says:
At eleven of the clock, p.m., unless the closure rule standing order No. 39 be then in operation, the proceedings on any business under consideration shall be interrupted and Mr. Speaker shall adjourn the house without question put.
I have asked if it be the unanimous wish of the house that we proceed, and I am told that there is not unanimous consent.

Questions


Joseph Philippe Baby Casgrain: There is; let us proceed.


Hewitt Bostock: The hon. member for
Labelle (Mr. Bourassa) as a rule speaks quite clearly, and I understand that as it is eleven o'clock he does not want the proceedings to continue. Therefore this house stands adjourned until to-morrow at three o'clock in the afternoon.


[Stage Direction]
It being after eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, March 14, 1928