1929-04-09

[Stage Direction]
Seventh report of select standing committee on railways, canals and telegraph lines.-Mr. Cahill.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I beg to move:
That the name of Mr. Gray be substituted for that of Mr. Rutherford on the select standing committee on public accounts, and the name of Mr. Gardiner be substituted for that of Mr. Hocken on the select standing committee on agriculture and colonization.


[Stage Direction]
Motion agreed to.

Hon. J. A. ROBB (Minister of Finance):: An order of the house was issued yesterday for the tabling of all correspondence between Mr. Rhodes, the Premier of Nova Scotia, and myself concerning the payment of the annual federal subsidy and the special grant recommended by the Duncan commission, and I desire to lay this correspondence upon the table of the house.



CIVIL SERVICE


[Stage Direction]
On the orders of the day:
Hon. H. H. STEVENS (Vancouver Centre):: I would like to ask the Minister of Finance (Mr. Robb) if he is prepared to announce the membership of the special commission which is to inquire into and report on the salaries of the technical employees in the service, and also if his attention has been drawn to a
statement in the Ottawa Citizen of this morning indicating that the report of the Civil Service Commission which was made last year regarding this subject was an unanimous report, and not a partial report as has been intimated by some press despatches.


James Alexander Robb: I had not the time to read the papers this morning, but I find no fault with that report; my recollection of it is that it was unanimous. I am not in a position at the present time to announce the personnel of the proposed commission.



PRIVILEGE-MR. KENNEDY

Mr. D. M. KENNEDY (Peace River):: Mr. Speaker, I rise to a question of privilege in connection with an editorial in the Montreal Gazette of Saturday, April 6, entitled Regarding Misrepresentation. I will only-read a few lines from the editorial which I think will be sufficient to indicate the point I intend to deal with. They are as follows:
Nor is the Peace River member any more fortunate in his denial of the statement that, from one of the divisions of the session of 1926, the government emerged with a majority of one, including, his vote. "There never was such a division in that session," he says.
After omitting a few lines, the editorial continues:
Mr. Kennedy attempts to set up a case by referring to the votes cast by him in the "hectic divisions" immediately preceding the dissolution, but those were not the only divisions of the session, nor were they the only "hectic" ones. The government was on the edge of disaster from the very opening day of the session, and while nearly every division was critical, some were much more so than others. There was, for example, the vote on February 2, on Mr. Stansell's motion to adjourn the debate on the customs inquiry, a vital issue then, as later. Perhaps Mr. Kennedy will say that this was not a hectic vote; it is' a matter which we will have to take up with the government which, at the time, regarded the Stansell motion as of such importance as to force a division. A vote was taken, and the Stansell motion was defeated by 119 to 118, and if Mr. Kennedy will look at the Hansard of that year and month and day he will find among the 119 nays the name "Kennedy (Peace River)."
The vote referred to took place on February 2, 1926, and my statement that there had not been such a division came immediately after quoting an article in the Montreal Gazette of March 5, 1928, which read as follows:
But he-
Referring to myself.
-occupied the seat, and when a petition was presented in behalf of the Conservative candidate, Mr. Collins, the government resisted its acceptance and it was not accepted. Mr. Kennedy stayed, justifying 'his action on the

Post Office Department
ground that he had, somewhere or other, lost more votes than had been taken from Mr. Collins. The importance of this episode was revealed in one of the hectic divisions of the session when the government was saved by one vote, including Mr. Kennedy's.
My interpretation of that reference to the resistance by the government, and of the comment that the importance of the episode was revealed in one of the hectic divisions, is that it can refer only to a division taken after the resistance of that petition. I cannot by any stretch of the imagination think that its writer could refer to anything else, and I so understood it in my statement the other day. With that in mind, and having that in mind at the time, I may say that the vote referred to is that of February 2, 1925. The Collins petition was dealt, with or -resisted in the House of Commons, according as we like to take the words of the Gazette, on May 4, 1926, three months and two days afterwards. Throughout that session there was not another division that the government lost by one vote or gained by one vote, except one on the 31st May, 1926. I find that I did not vote on that date. If I remember correctly. Liberals and Conservatives in the customs committee paired with each other and I did not vote at all. The only vote during the session after that date was that of June 25,
1926.	on the Woodsworth subamendment to the customs committee report where the vote stood 115 to 117, and where I voted against the government. These are the facts in regard to my position and the statement I made the other day that-


Mr. POULIOT:: I rise to a point of order. There is nothing in the statement made by the hon. gentleman that is in accordance with the rules of the house. It does not interest us to know what happened three or four years ago. My point of order is that my hon. friend, if he so desires, can read the whole Hansard for that date, but there is no privilege in that and it is against the rules of the house.


Mr. SPEAKER:: Bourinot, fourth edition,
says:
Members sometimes correct reports of their speeches, or inaccurate statements in the press on the ground of privilege; but these are personal explanations, not matters of privilege, and are allowed only by the indulgence of the house. Sometimes a member raises as a question of privilege what is, at most, merely a question of order. If a member has a serious complaint to make of a newspaper, he should formally move to have it read at the table, and then make a motion in relation thereto, if he desires to have the matter dealt with by the house. If a member rise to make a personal explanation in the English Commons and proceed in the course of his remarks to complain of attacks in a newspaper, he is not allowed to proceed unless he is prepared to take the proper 78594-88
parliamentaiy course. And if a member brings forward a matter of privilege of this character, the motion with which he concludes should be relevant thereto.
This is the old British practice, but in this house generally when a member feels that he is the victim of an inaccurate statement made by the press, he may rise on the ground of privilege and by the indulgence of the house give a brief explanation of the matter.


Donald MacBeth Kennedy: I have just this to say: that I had no knowledge of any Collins petition pending or otherwise, until it was presented to the house.


Jean-François Pouliot: So the hon. member did
not read the papers.


Hewitt Bostock: The hon. member was in order.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Mr. A. A. HEAPS (North Winnipeg):: Arising out of the question addressed to the Minister of Finance a few minutes ago by the hon. member for Vancouver Centre (Mr. Stevens), I should like to ask this question: It appears that the minister is not willing to accept the recommendations of the Civil Service Commission in regard to the salaries paid to certain people employed by the government. There is also a similar desire on the part of the government not to accept the viewpoint of the commission in regard to the salaries of the postal workers. If we accept the statement of the Postmaster General (Mr. Veniot), he is at variance with the Civil Service Commission with regard to postal workers' salaries. Will the government appoint a committee to inquire* into the question of salaries of postal employees as they have done in the case of the more highly paid technical officials of the government?


Hewitt Bostock: Orders of the day.


Abraham Albert Heaps: Might I have an answer to
my question?


Hewitt Bostock: I understand that the
Minister of Finance gave an answer a moment ago.


Abraham Albert Heaps: This is another question
dealing with postal employees. The matter referred to by the hon. member for Vancouver Centre dealt with the technical civil servants.


Hewitt Bostock: It will serve as a notice.


James Alexander Robb: I shall note the question of
my hon. friend.

1382	COMMONS
The Budget-Mr. Mackenzie King



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Mr. J. S. WOODSWORTH (Winnipeg North Centre):: Does the government propose to
bring in any measures to give effect to the recommendation of Sir Henry Thornton with regard to reducing the capitalization of the Canadian National Railways?


William Lyon Mackenzie King: A few days ago I made
a statement to the house as to the further legislation of the session and the particular matter to which my hon. friend has just referred was not mentioned in the list. It is not the intention at this session to introduce further legislation with respect to the Canadian National Railways.



THE BUDGET


[Stage Direction]
The house resumed from Monday, April 8, 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 Hon. Hugh Guthrie, and the proposed amendment to the amendment of Mr. Spencer.
William Lyon Mackenzie King: Mr. Speaker, it was on
the first of March that the Minister of Finance (Mr. Robb) brought into the house the budget which we have now before us. It is just a month and two days since the hon. member for South Wellington (Mr. Guthrie), in his dual capacity at the time of acting leader and financial critic of the opposition, undertook to reply at some length and to deliver a speech on behalf of the opposition in reference to the several matters in the budget and referred to in the speech of the Minister of Finance. From that time to the present, with the exception of the recess which we had at Easter and two days when another matter was precipitated into the discussion here, the house has continuously debated the budget, and it might appear that at this late stage of the debate little is left which has not already been said. May I say at once that my purpose in participating at this time is not so much in the expectation of contributing any new arguments, but rather for the sake of emphasizing the truth

of some of the representations which have been made on this side of the house, more particularly in reference to the speech by the hon. member for South Wellington.
It was perhaps natural that the speech of the hon. member for South Wellington should attract considerable attention at the time it was delivered, and also occasion much discussion in the course of the debate. My hon. friend took full advantage of his opportunity as acting leader of the opposition to speak at . length, and to cover, in so far as they relate to the finances of the country, the many subjects which were likely to be of interest in political discussion during the next year or two. My hon. friend has already been congratulated upon his speech on that occasion. He is an old parliamentarian; with the exception of yourself, Mr. Speaker, and the hon. member for Bonaventure (Mr. Marcil), he is perhaps the oldest member in the house, certainly the oldest member sitting on the opposite side-. He has had great experience as a parliamentarian, and- also in his chosen profession, and he turned both to the best of advantage in the presentation of the statement which he made to parliament at that time. I should like to congratulate him on the manner of the presentation of his remarks on that occasion; I wish I could do likewise with respect to the substance of them. He congratulated the Minister of Finance on the lucidity of his speech, on its precision, on its conciseness, but I must say to my hon. friend that what his own address gained in lucidity it seemed to me to lack in accuracy. What it had of precision was in large part, to my mind, mere pretence, and if he was concise in many of his statements, he was, I regret to say, not wholly candid. That is the criticism which I have to bring against my hon. friend's remarks, a criticism which I shall endeavour to substantiate in what I have to say this afternoon.
There was, however, one remark made by my hon. friend to which I think no exception will be taken, certainly no exception on this side of the house, a remark which will be remembered long after much of the rest of his presentation will have been completely forgotten. He referred to the present as a time of prosperity, and he did not stop at the word prosperity, but he said, a time of unbounded prosperity. While my hon. friend has stated what I think the country as a whole recognizes to be the fact, he endeavoured strenuously to discover ways in which credit for this prosperity might be given in some quarter other than that of the
13S3

The Budget-Mr. Mackenzie King
present administration. He spoke naturally of Providence and of the energy and ingenuity of the people of our country. Of this the Minister of Finance himself had I think already made full acknowledgment. He went on to say that it would be interesting for those on his side to speculate how much more prosperous the country would have been, and how much more general the prosperity, had another government been seated on this side. May I say to my hon. friend that if he is free to speculate in that way, we are similarly free to speculate and I think we may fairly say that if hon. gentlemen opposite had been in office, there is no doubt that the prosperity of the country would not have been what it is at the present time.
May I say, Mr. Speaker, that this prosperity, far from being, as my hon. friend sought to infer, restricted and not distributed as between the different classes of the country, has been very general and has been shared in some measure by all classes throughout the country. It is a prosperity discoverable, first of all, with respect to the great basic industries of the country, on which the rest of our industrial development so largely depends. It is a prosperity which has been apparent in the manufacturing industries of the country, a prosperity which has been great with respect to the trade of the country, a prosperity which has manifested itself in increase of employment and in diminution oif unemployment, a prosperity that has shown itself in the activities of business and of banks and financial institutions, a prosperity which has also been disclosed in the savings of the people, and in their investments with respect to many matters which have to do with their standard of living.
It might be well, Mr. Speaker, in confirmation of what I have just said to give a few facts with respect to the present prosperity which will serve to indicate how general and how considerable that prosperity is. Before so doing, however, may I draw the attention of hon. members to the fact that the prosperity of the present year succeeds the prosperity of the year previous, which was noteworthy in the same particular; that, as a matter of fact, from the moment at which the government had found it possible to balance the public accounts there has been continual improvement in the public finances of the country, with which has come continuous prosperity until within the past year we have had a period of prosperity unmistakable in the history of Canada.
To begin with the basic industries, may I mention these facts with respect to agriculture, Canada's greatest basic industry?
78594-88J
T.he acreage under crop this past year, 1928, was 59,410,000 or 3,238,000 more than in 1927. The new land brought under crop this year represents an area half as large as the crop acreage of Manitoba

this on the top of continuous increases for many years past.
The wheat yield totalled over 533,000,000 bushels, or 53,000,000' greater than the previous high yield, or 14*5,000 000 greater than the average of the five years 192281926.
Exports of wheat reached the highest point ever recorded in a single month in November, 1928, namely, 75,416,000 bushels. The exports of 1928 were the highest ever recorded in a calendar year, namely, 365,428,561 bushels, valued at $433,767,578.
The previous largest twelve months was the year ending September, 1924, when the totals were only 294,000,000 bushels, valued at $302,000,000.
In mining we had the most active year in the history of Canada. The total value of production was $273,000,000, an increase of $24,000,000 over the total for 1927, the previous high year.
The chief activity was in copper, lead, zinc and nickel, but coal and gypsum made new high records, as did structural materials in general. Gold production was up, and cadmium, produced at Trail during 1928, was a newcomer among Canada's mineral products
Employment was about 7 per cent more active than 1927.
In forest products, newsprint production reached 2,382.011 tons in 1928, the highest on record, the previous peak being 2,086,949 in
1927.	Seven years ago, in 1921, the production was 805.000 tons.
Conditions in the fishing industry in 1928 were notably better than in 1927. With the possible exception of 1926, last year was the most successful experienced by Canadian fishermen since the Fordney tariff was made effective by the United States in 1922. The production had a marketed value of more than $54,000,000, or $11,500,000, in round figures, above the marketed value of the catch of 1923. The total catch of all fish was approximately
1.300,000,000 pounds.
One of the most significant features of 1928 was the fact that power installation work valued at over $300,000,000 was under way. When it is remembered that every dollar spent on primary power presupposes an expenditure of $5 or $6 on subsidiary industrial plant, it is apparent that we are in the midst of a process of adding something like $2,000,000,000 to the capital industrial plant of the Dominion.
With respect to manufactures, it is conservative to say that the gross value of manufactures in 1928 will exceed $3,500,000,000.
1384	COMMONS
The Budget-Mr. Mackenzie King
Employment was 7 per cent more active than in 1927, the significant indexes being: Manufacturing	1926	1927	1928November 1	
102.7	104.9	115.1December 1	
101.5	104.3	113.4
The basic industries of iron and steel were operated on very high levels.
Pig iron production was 1,037,535 long tons, or 46 per cent more than in 1927.
Steel ingots and castings increased from a production of 907,638 tons in 1927 to 1,240,214 in 1928, or 37 per cent.
These are the highest figures since the record year of 1918.
Automobile production was 242,382 cars and trucks, an increase of 35 per cent over 1927.
Boots and shoes have shown increased production-(probably 3 per cent.
All previous records for construction of new work have been exceeded. Contracts have been awarded totalling, according to MacLean's Building Reports, $472,000,000 in 1928, compared with $420,000,000 in 1927, the previous peak, a gain of 12.7 per cent.
Perhaps the best single figure to sum up productive activity is the index of the Dominion Bureau of Statistics on the general volume of production. It stood at 168.7 for 1928, compared with 146.0 per cent in 1927 -an increase of 15.5 per cent.
Coming next to trade, the figures show that with respect to foreign trade the exports of Canadian products for 1928 totalled $1,349,-
751,000,	an increase of $131,414,000, or 10.7 per cent, over the preceding year, chiefly in wheat, newsprint, oats, nickel and automobiles.
Our imports for 1928 were $1,222,318,000, an increase of $135,200,000, or 12.4 per cent over the preceding year.
When allowance is made for exports of foreign products there was a favourable trade balance of $151,812,000, a slight increase over 1927. This is probably the highest favourable trade balance per [DOT]capita in the world. This favourable trade balance was achieved in spite of falling prices of wheat and newsprint, Canada's two leading exports; it is accordingly indicative of "real" trading volume. The physical volume of Canada's trade in 1928 was undoubtedly the largest on record. Our total trade at 1918-20 prices would have run to at least 3J billions of dolUrs.
With respect to domestic trade, the indexes of employment in wholesale and retail establishments showed a gain of 8.1 per cent over 1927, as follows:
Trade-	1926	1927	1928October 1	
101.0	109.4	120.1November 1	
103.9	111.9	121.3December 1	
108.9	121.2	127.4Average for year.. 99.2	107.4	116.1

The huge proportions which the tourist trade has now attained is worthy of special mention under the heading of domestic trade. In 1927 it amounted to $242,754,000, and the estimate for the year just passed is substantially higher.
Coming now to transportation, carloadings totaled 3,697,106 cars in 1928, compared with 3,398,797 cars in 1927, an increase of 9 per cent, notwithstanding the diversion to motor trucking in progress.
The gross earnings of the Canadian National lines and of tihe Canadian Pacific Railway for 1928 were approximately 507.400,000, as against 450.000,000 in 1927.
The Canadian National system (including lines in the United States) had gross revenues of approximately $276,600,000, and net revenues of $53,200,000

all new high records.
The St, Lawrence canal traffic was the heaviest on record-almost half a million tons higher than last year, the previous high record. The Welland also made a new record.
With regard to labour, the general index of all employment was 111.6 in 1928, as compared with 104.6 in 1927, or an increase of 6.7 per cent.
The year was comparatively free from serious industrial disturbances. The time loss through strikes during the past three years was lower than at any time since 1915.
Let me refer to public finances and private savings and investments. The total ordinary revenues of the Dominion including special receipts and credits on consolidated fund, have reached $439,413,000 in the calendar year 1928, an increase of $30,214,000 notwithstanding the substantial reductions in the tariff of the last budget. This has enabled $53,000,000 of the national debt to be paid off, representing a saving of $2,650,000 in annual interest charges.
In banking, the savings deposits of banks increased from. $1,431,000,000 on November 30,
1927,	to $1,523500,000 on tihe same date of last year. Never before 1928 have saving deposits reached $1,500 millions.
Current loans, reflecting the strong demand for credit in connection with commercial and speculative transactions have shown an even greater increase than notice deposits. Such loans on November 30 last amounted to $1,238,000,000, an increase of $158,600,000 over the same date of 1927.
The sales of ordinary life insurance based on reports of fifteen companies having in force 84 per cent of the outstanding ordinary insurance in Canada, were $580,674,000 in
1928,	compared with $502,000,000 in 1927, an increase of more than 15 per cent.

The Budget-Mr. Mackenzie King
The year may be summed up as follows:-
Unprecedentedly heavy production, earnings and profits in agriculture and all the other basic industries and occupations of the people.
Based on this, a heavy investment of savings, not only in existing enterprises but in the launching of new enterprises on an unprecedented scale-a process which has attracted foreign as well as Canadian capital.
An especially gratifying feature as I have already said, is that the prevailing prosperity is well distributed over the various provinces; it is as general for the different economic areas as it is for the different economic classes represented in the Dominion.
I have taken the trouble, Mr. Speaker, to make these facts a matter of record in Hansard, first of all, because they reflect a condition in the country of which, I think, we have all great, reason to be proud, but also because they will serve, as I speak a little later on. to answer some of the points which my hon. friend made in the course of his remarks, with respect to the burden of taxation and the ability to pay. Strive as mjr hon. friend and his associates may not to credit- the government with aught on account of this prosperity, they will have difficulty in having the country believe that the policies which we have put in force during the last seven years have not been in large part responsible for the progress which I have just mentioned.
The existing prosperity is due in no small measure to the fact- that we have restored confidence in the public finances of the country. When we came into office, for years preceding there had been deficits upon deficits in the public accounts. Those deficits have been changed into surpluses under the present administration. When we came into office, what are to-day the Canadian National railways, a splendidly organized system, were an aggregation of bankrupt roads in the nature of liabilities to the country; to-day they are looked upon as one of the country's greatest assets. The hon. Minister of Finance in his endeavour to encourage production and to bring relief to the farming community of this country, in one of his outstanding budgets introduced early after coming into office, reduced the duties on the implements of production in all the basic industries, mining, lumbering, fishing and agriculture, with a view to making the cost of production less in these great basic industries. The prosperity which we have to-day is in part a reflection of the budgets of my hon. friend in that particular. Similarly, the hon. Minister of Railways and
Canals (Mr. Dunning) has brought in measures in connection with the railways of this country, providing for increased branch lines, which have had the effect of opening up new districts and so helping to bring about the prosperity of which we are now justly proud. The Minister of Trade and Commerce (Mr. Malcolm) as the house well knows, has been energetic in expanding the trade facilities of his department, increasing the representation of his commercial agents abroad, and, along with the Minister of Finance, has helped to further treaties than have been of great service in the expansion of our trade. The Minister of Agriculture (Mr. Motherwell) has brought in many measures which have been of distinct advantage to the farming community and of advantage as well in the marketing abroad of the products of this country. The Minister of Labour (Mr. Heenan), has made a record for the country and for himself in the promotion and maintenance of industrial' peace.
I might say also, Mr. Speaker, with respect to the government's policies in other directions, that we have through pursuing a policy of goodwill towards all parts of the British Empire and towards other countries, done much to- further friendly relations between this country and the countries most closely associated with us, and in so doing have helped to forward the general -prosperity of Canada. The establishment of legations in the United States, Prance and Japan, are a part of that policy c-f international goodwill. Despite, therefore what my hon. friend has said, the country. I feel sure, will conclude that a prosperity which is unsurpassed in the history of Canada owes not a little to an administration in which fortunately the country itself has confidence at the present time.
May I come now more particularly to some of the financial matters mentioned by my hon. friend from South Wellington. He first of all undertook to deal with the debt of the country. He well knows, the house knows and the country knows that under the present administration the public debt of Canada has been very considerably reduced; indeed, it is one of the great achievements of the administration that the reduction in the public debt has been what it is. My hon. friend could not deny the reduction in the public debt, but he sought to lead the country to -believe that the reduction had been very much less than it actually has been. My hon. friend said that the only debt we should take any account of is the funded debt. In Great Britain, he said, they do not take
1386	COMMONS
The Budget-Mr. Mackenzie King
account of anything else. There, according to him, they consider only the funded debt and he contended that here in Canada we too should take account only of that debt in estimating what the reduction has been. Now my hon. friend knows better than that. He knows that in Great Britain the Chancellor of the Exchequer is very much concerned about the floating as well as the funded debt. As a matter of fact the Chancellor of the Exchequer issues every week a statement as to the floating debt of England, and his first concern is to gather up outlying obligations of a temporary character.
M3' hon. friend took the public accounts and
said that he would present only what appeared therein. He held up before the house a volume of the public accounts and spoke about the funded debt. At page 13 of the pubke accounts will be found a statement under schedule T with regard to the funded debt. To this my hon. friend referred, but he made no reference whatever to schedule S which immediate^ precedes it. Let me read that schedule:
Temporary Loans Loan of 1917-19, New York 5 per cent, due Aug. 1, 1919.. $ 1,000 5 per cent debenture stock.. . 200,000

That is all there is outstanding at the present time of temporal loans or floating obligations. But, in making comparisons between 1922 and to-day, my hon. friend should have taken the public accounts ended March 31, 1922, and read what appears on the same page, 13, under schedule S with respect to temporary loans. What are the figures in that regard?
Temporary Loans Loan of 1917-19, New York
5	per cent, due Aug. 1,
1919	 $15,000
Treasury Bills, Canada
6	per cent, due Oct. 1,
1922	$24,605,000
Treasury	Bills, Canada
6 per cent, due Oct. 15,
1922..	   49,215,000
Treasury	Bills, Canada
5} per cent, due Nov. 2,
1932	 35,000,000
Treasury	Bills, Canada
5} per cent, due Nov. 15,
1922	 35,000,000	143,820,000
Debenture Stock 5 per cent, payable on demand	 700,000

In other words, when we came into office there was a funded debt of a certain amount and there was, in addition, this unfunded debt of $144,535,000. My hon. friend says that, according to the figures, we have reduced the funded debt by $90,000,000; but he says nothing whatever about the unfunded debt of $144,000,000 by which we have also reduced the debt of the country. Instead therefore of a reduction in the interest-bearing debt of the country of $90,000,000 the reduction is $90,000,000 plus this $144,000,000 to which I have referred.


Henry Herbert Stevens: Will the Prime Minister permit a question?


William Lyon Mackenzie King: If my hon.
friend will allow me to make my speech, I shall be obliged. However, he may ask the question.


Henry Herbert Stevens: One question in fairness.
Should not my right hon. friend take schedule B showing $162,000,000 as owing by the British government and other foreign governments in 1922?


William Lyon Mackenzie King: The hon.
member for South Wellington took full account of what was owing by the British government. But as regards schedule B, let me point out that while the British government owed us something we owed them something as well for advances they had made to us. When speaking to the house and to the country my hon. friend was speaking of the interest-bearing debt; he was dealing with the funded debt. He said that in England they paid no attention to the floating debt and he urged that in Canada we too should leave it out of account, that we should consider nothing except the funded debt. Yet he was aware all the time of the existence of that schedule showing over $144,000,000, every cent of which, except for a few dollars, has been paid by this government. May I add further that the interest on that sum at the time we came into office was something like $7,000,000 per annum, so that in addition to paying off the principal we have been freeing the country of that amount of annual interest. These obligations were pa>dng the highest rate of interest of any form of our indebtedness, the rates being 6 per cent, and 5J per cent. For this reason they were among the first obligations we sought to pay off, and we have paid them off, with the result I have indicated. In other words, I repeat, instead of the reduction to the interest-bearing public debt amounting, as my hon. friend put it, to some $90,000,000, it is, as I have shown, that sum plus S144.000.000; the annual rate of reduction of the interest-bearing debt

March 31, 1922..
1923.. 1924. .
1925..
1926..
1927..
1928..
1929.. estimated


Some hon. MEMBERS:: No.


William Lyon Mackenzie King: Every cent
of it.


Mr. BENNETT:: No. Sir Thomas White made that quite clear.

The Budget-Mr. Mackenzie King


William Lyon Mackenzie King: I am prepared to stand by that statement, and I have here the figures from the public accounts, beginning with the fiscal year 1914-15 and ending with the fiscal year 1919-20, under the headings total revenue receipts; total disbursements; deficit; and spent on war and demobilization account. First I will give the total revenue receipts, as follows:
1914- 15	$ 133.073.4S2
1915-	16	
172,149.3931916-	17	
232,701.2941917-	18	
260,778.9531918-	19	
312,946,7471919-	20	
349,746 335Total	$1,461,396,204
The total disbursements wrere as follows:
1914- 15	$ 248,098.526
1915-	16	
339,702,5021916-	17	
498,203,1181917-	18	
576.660.2101918-	19	
697,042,2121919-	20	
786,030.611Total	$3,145,737,179


Mr. GEARY:: Should that, figure of $786000,000 not be $740,000,000?


William Lyon Mackenzie King: The figure of $740,000,000 does not take into account $45,780,690 which was advanced to railways.


George Reginald Geary: I see wihat you mean.


William Lyon Mackenzie King: There is no
mistake on that score. The deficits, by fiscal years, were as follows:
1914- 15	$ 115,025,044
1915-	16	
167,553.1091916-	17	
265,501,8241917-	18	
315,881.2571918-	19	
384,095,4651919-	20	
436,284.276Total	
$1,684,340,975
The expenditures for war and demobilization were as follows:
1914- 15	$	60,750.4761915-	16	
166,197.7551916-	17	
306,488.8151917-	18	
343,836,8021918-	19	
446,519,4391919-	20	
346,612,955Total	$1,670,406,242
The total expenditure for war and demobilization amounted to $1,670,406,242 and the total deficit amounted to $1,684,340,975, leaving an amount of $13,934,733 which was borrowed for carrying on the business of Canada during that period, over and above the expenditure for war and demobilization. That is a true statement of the finances of that period.
In making a comparison between the two periods, it should be borne in mind that in speaking of revenues and taxation the hon. gentleman opposite did not take into account
any payments for war expenses, while we are obliged to take into account, and dc take into account, in addition to present expenditures due to the war and which constitute 47 per cent of the whole, the amounts by which we are reducing the public debt, which reduction is really in the nature ot making payment on the cost of the war. ^ In other words, it has been left to the administrations which succeeded hon. gentlemen opposite not only to meet payments subsequently arising out of the war, but to meet the whole cost of the war, an.d in addition to meet the interest payments on the sums which were paid out during the period of the war. The expenses which have grown out of the war. such as pensions and the like. I think it is true to State that, 42 cents out of every dollar spent by the present administration is in one way or another an expenditure on account of the war.
My hon. friend mentioned a sinking fund and said that he thought the Minister of Finance should establish such a fund. One of his reasons for advocating a sinking fund was that the temptation to spend too much money might be reproved from the Minister of Finance. If the minister were not presenting to the house the surpluses which he has, were he not reducing the public debt at the rate he is reducing it-$69,000,000 this year-there might be something in the argument for the immediate institution of a sinking fund to ensure that a given amount would be paid every year. If the hon. gentlemen opposite were in office I should say it would be eminently desirable to have a sinking fund. They did the financing of this country during their term of office by borrowing while we are meeting our obligations out of taxation. We are meeting our obligations and at the same time reducing in a very substantial way the public debt, At the same time, I agree with my hon. friend as to the value ordinarily of a sinking fund. I believe it is a desirable institution and I hope that one of these days a sinking fund will be made a part of our scheme of finance.
The next subject to which my hon friend referred was the rate of taxation and the burden of taxation. In the course of his remarks the hon. member for South Wellington (Mr. Guthrie) said:
But who cares about the rate of taxation? The rate does not count. The only thing that counts in this world in regard to taxes is the burden of taxation-the load which the people have to carry. If my hon. friend would read tile speeches of the late William Ewart Gladstone, when he was Chancellor of the Exchequer in England, on this very point he would get some light. Gladstone pointed out very definitely that the rate of taxation means nothing; the burden of taxation means everything.

The Budget-Mr. Mackenzie King
Who cares about the rate? Everyone cares, and no one more than my hon. friend himself. When he speaks about Mr. Gladstone's references to the rate and to the burden of taxation he overlooks the fact that Mr. Gladstone never spoke of the burden in contrast to the rate; he spoke of the burden in relation to the adjustment of burdens and in this regard he attached all importance to the rate. He said that the saime rate meant an injustice so far as the different classes were concerned. He was continually emphasizing that fact, and especially so in his great speech on the income tax in 1850. At that time he stressed, above everything else, the injustice of an income tax which fixed one rate for all classes in the community, because all classes were not equally in a position to bear the burden.
My hon. friend knows that there is an all-important factor in considering the burden of taxation, and that is the ability to pay. That is an all-important consideration. A 10 per cent tax on a man who has an income of
81,000	would be a very considerable burden; it means $100 taken out of $1,000, $900 are left after the tax is paid. A 10 per cent tax on a. man who has an income of $10,000 amounts to $1,000, and it is relatively not so hard a burden to bear, $9,000 are left after the tax is paid. W hen a man has to pay on an income of $100,000 it about reaches the point where he does not feel a 10 per cent tax as a burden ait all. In the light of figures which I have already given to the house I think it must be fully apparent that the ability to pay has -become -increasingly greater so far as all classes of society in t-his country are concerned.
Mr. Gladstone's views with respect to the burden and the rate of taxation may be gauged from the following passage which ippears on page 56, volume 2, of Morley's Life of Gladstone:
It has often been said that he ignored the ?ocial question; did not even seem to know there was one. The truth is, that what marks inm trom other chancellors is exactly the dom-mating hold gamed by the social question in all its depth and_ breadth upon his most susceptible imagination. Tariff reform, adjustment of burdens, invincible repugnance to waste or prolusion, accurate keeping and continuous scrutiny ot accounts, substitution of a few good taxes tor many bad ones,-all these were not merely the love of a methodical and thrifty man for nabits ot business; they were directly associated m him with the amelioration of the hard lot of the toiling mass, and sprang from an ardent concern m improving human well-being, and raising the moral ideals of mankind.
Elsewhere, at page 471, volume 1, of his Life of Gladstone, referring to Gladstone's examination of the income tax, Morley says Gladstone spoke of " the sense in the public mind 'Mr. Mackenzie King.]
of its injustice in laying the same rate upon the holder of idle and secured public funds, upon the industrious trader, upon the precarious earnings of the professional man."
I would say to my hon. friend that the course pursued by Mr. Gladstone is exactly the line on which the present administration has been proceeding in the matter of its tax reforms; we have been seeking to ameliorate the lot of those who are less fortunate. We have followed this course with respect to our reductions in the -tariff and in our treatment of tire income tax, in .the reduction of the sales tax, the rate of postage and other measures. We have attempted to follow .precisely the line of policy which Mr. Gladstone, perhaps the greatest of all chancellors of the exchequer, laid down in his day as the best procedure. May I say to my hon. friend that the one real criticism I have to make of him is this: He seems to have forsaken too largely his old leaders and his old principles. He did not learn about Mr. Gladstone in the school in which he is at the present time, but long ago, and he would be much better employed to-da.v were he to follow his old convictions and apply the principles he knows to be the right ones in the way in which Mir. Gladstone, amongst others, would have sought to have had them applied.
I come to the next subject dealt with by my hon. friend. He treated next of the cost of government and undertook to say that the cost of government had been increased considerably since the present administration had taken office. He referred more particularly to the last four years. If my hon. friend looks over the figures for the last four years in connection with the increased cost of government as it is disclosed by the records, he will find that it comes to something like 10 per cent during this period of great prosperity. I will not trouble quoting the remarks of my hon. friend, but I make that general statement which, I think, he will admit is correct. The figures are as follows:
t	Total cost
Year	of government
1924	 $350,000,000
1929	 385,000,000
Or an increase of about 10 per cent in that period. My hon. friend says that the business of the country has not increased in that ratio and that, the business of the country not having increased in that ratio, that the government has been extravagant in the extent to which it has been increasing the cost of government. I do not know what standard my hon. friend had before him in estimating the business of the country, but I have been trying to get together a few indices of the

The Budget-Mr. Mackenzie King
business of the country-it is not an easy thing to gauge, but one can gauge it in a general way-to see whether the business of the country has not increased much more rapidly than any cost of government has increased, also to show whether the burden of taxation is not more easily borne than it was a few years ago, and whether the ability to pay on the part of the taxpayers is not greater than it has been at any time hitherto.
I give my hon. friend and the house the following figures which will help to illustrate something of the increased growth of business in Canada. These figures can, I believe, be substantiated.
It is estimated by statisticians pretty generally that the national wealth of Canada increased from S22,195,000,000 in 1922 to $26,691,000,000 in 1926, an increase in that period of 20 per cent. I admit it must take some collecting of data to reach the conclusion, but nevertheless that is what I believe those who speak with authority would quote.
The bank debits of chartered banks in 1924 totalled $27,157,000,000, while in 1928 they totalled $43,477,000,000, an increase of 60 per cent in these four years.
Life insurance in 1921 totalled $2,935,000,000, while in 1928 it is estimated that it totalled $5,609,000,000, an increase of 90 per cent.
As regards savings deposits in chartered banks, which are an indication of the position of individuals in the community, they increased from $1,197,000,000 in 1923, to $1,496,000.000 in 1928, an increase of 25 per cent.
Exports of Canadian products increased from $740,000,000 in 1922 to $1,356,000,000 in the last twelve months, or an increase of 80 per cent.
Gross revenue from all industries, according to the Financial Post of January 4, 1929, was in 1926, $6,188,000,000 and in 1928, $6,840,000,000, or an increase of 10 per cent in those two years.
The developed water-power of the country in 1921 was 2,700.000 horse-power and in 1928 it was 5,350.000 horse-power, or an increase of almost 100 per cent.
Motor vehicles increased from 465,000 in 1921, to 945,000 in 1927, or an increase of about 100 per cent.
The number of employees in the leading industrial establishments has increased by something like 20 per cent.
These are indices which, I think, should help anyone to arrive accurately at the improvement there has been in the business of the country in the last few years in comparison with the increase in the cost of government.
But if we wish to make a comparison of the cost of government that no one will question, let us make it between 1914 and the present time. This will help to disclose as between political parties how much the cost of government has increased, how much it has increased under the present Liberal administration in comparison with what it was before the war in the days of the Conservative administration. In that comparison I think the house will agree that it would be proper to exclude amounts which to-day we are paying on war account, such as pensions and the like, and which do not appear in the accounts of the year 1914. If we exclude these amounts, it will be found that the total expenditure of Canada to-day is very nearly the same as it was in 1914. If we go a step further and regard the receipts of the Post Office Department as payments for services rather than as a tax, and exclude, in addition to the expenses now being met on war account, the amounts of the Post Office department, a comparison of 1914 with the present day will show that the cost of government today is less than it was in 1914, and that, notwithstanding the great increase in the population of the country from 1914 to the present time, and notwithstanding the fact that the value of the dollar to-day is only two-thirds of what it was in 1914. I should like to place the exact figures on record because I think they are important for purposes of comparison.
In 1914, when the Conservatives were in office prior to the war, total expenditures were $186,241,048. In 1928, according to the reports before parliament, they were $362,827,742, or almost double the 1914 figures. Account, however, must be taken of the expenditures attributable to the war, and these, as furnished by the Minister of Finance, are as follows: Year 1927-28
Increase of interest on public debt
over 1914	$116,009,440
War pensions	 38,592,493
Soldiers' civil re-establishment..	.	6.958,611
Soldier land settlement	 1,334,008
Memorial War Graves Commission.	573,419
Battlefield memorials	 183,067
Adjustment of war claims	 1,656,011
Total	$165,307,049
If we deduct the sum of $165,307,049 from the total expenditure of 1928 we have $197,520,693, or an increase over 1914 of $11,279,645. This represents an increase of 5-71 per cent in total expenditures, apart from war expenditure, between 1914 and 1928. As I have said, the purchasing power of the dollar is only two-thirds of what it was in 1914, and if this is taken into account, the showing of the present administration is even better than these figures represent it to be.

The Budget-Mr. Mackenzie King
In addition, as already mentioned, it must be remembered that not all government expenditures are payable from tax revenues. For example, postal revenue could hardly be considered as ordinary revenue for the reason that here the public pay not so much a tax to the government as a price for the transmission of letters. It is submitted, therefore, that the
revenues and expenditures of the Post Office Department might, in fairness, be deducted from both the 1914 and 1928 figures. If this be done, the comparison of expenditures be tween the Conservative administration of 1914 and the present administration of 1928 will be as follows:
year	Total
1914	 $186,241,048
1928	 362,827,742
In other words, the actual cost of government to-day is less than it was in 1914 not taking into account the increase in population in the interval and the fact that $1.50 to-day will only go as far as $1 in 1914.
And now may I come to one other phase of my hon. friend's discussion, and this was perhaps the most ingenious of all, if it was not also the most deceptive. My hon. friend undertook to deal with taxation. I stress this because I notice that hon. gentlemen opposite following him have continued to do the same. My hon. friend said: I think it will be admitted that most of the taxes go into consolidated revenue. Let us compare, he said, the figures in consolidated revenue during the six years during which the Conservatives were in office, the period from 1918 to 1922, with the amount of total taxation during the period when the Liberal administration was in office. He then set out both sets of figures side by side and came to the conclusion that there was an annual increase in taxation under the present administration of $51,000,000. In other words, my hon. friend tried to have this house ana the country believe that under the present administration taxation, and meaning by taxation, the amount necessary to carry on the government, is $51,000,000 a year greater than is was during the years hon. gentlemen opposite were in office, and in presenting this plausible statement, he produced government accounts to show the total amounts paid into the consolidated revenue. But my hon. friend never said one word in his statement about how much the government of his day was borrowing during the time they were in office, about how largely they were carrying on the business of this country, not out of taxation, but out of borrowed money, all of which has to be met by taxation at one time or another and which should be credited as taxation incurred at the time expenditures were being paid out of the moneys borrowed; not one

QJ Gj "	-4J
For war	Post office



S3 S c.

[Stage Direction]
$12,922,058	$173,418,900
$165,307,049	31,782,968	165,737,725
word did he say about how this administration has to make good the borrowings for which my hon. friends opposite were responsible.
My hon. friend said:	We taxed practically
everything we could. May I say to him that he might much better have said:	We borrowed practically everything that we could borrow. That is the truth. They did not tax everything they could tax. As my hon. friend knows, they never touched the income tax in the period of the war until about 1918, and then only a very small amount was raised from that source. When at last they did levy an income tax, they issued tax-exempt bonds, and yet my hon. friend says to this house that they taxed everything they could tax. They were very careful to see, while they were conscripting men for overseas service, that they did not conscript any of the wealth of the wealthy men of the country. They took good care to see that the bonds were issued at a very good price, that they carried a rate of interest of 5| per cent for those in a position to invest their wealth and that these persons would be secured in their privileged position by the government undertaking that these bonds would not be taxed at any time in the future. They could be stowed away among the assets of the well-to-do of the country by those who were fortunate enough to be able to purchase them, and the government of to-day in its efforts to raise taxation is, as a consequence, prevented from getting a dollar of the income derived from those bonds at the present time. Not only are we expected to make good the borrowings of my hon. friends opposite, but in this effort we are deprived of the very source of revenue which ought to be the first source from which it should be possible for a government to collect.
398 millions of 5\ per cent tax-exempt bonds were sold to the public in November, 1918.
660 millions of 5i per cent tax-exempt bonds were sold to the public in November, 1916.

The Budget-Mr. Mackenzie King
What was the result of this policy of borrowing rather than taxing? The annual interest bills of the Dominion increased 'by leaps and bounds. Whereas in the fiscal year ended 1917 the total interest payments of the Dominion of Canada were $35,802,000, they rose in the fiscal year ended 1918 to $47,845,000; 1919 to $77,431,000; 1920 to $107,527,000; 1921 to $139.551,000; falling somewhat in 1922 to $135,247,849.
In these five years the previous administration increased the interest bills of the people of Canada by no less than 100 millions a year. Owing to the rapidly increasing interest burdens resulting from the policy of wholesale borrowing instead of taxing during the war period, additional taxation had to be imposed, after the war to take care of the increased interest charges as well as pension obligations.
May I say that the only fair comparison between the two periods is to estimate how much in each case it would have taken to balance the budget. That is the only fair basis of comparison, and to see then what was left. If we take the period to which my hon. friend has referred, we will find that year after year, far from balancing the budget, there were these huge deficits, all of which at a later period had to be met by taxation. When you come to the present period, you find that, in addition to balancing the budget there is a surplus which goes to wipe off the public debt, to wipe out these borrowings of the previous period. I say that alongside the figures which my hon. friend has quoted the following figures should also be inserted, they represent the increase in the public debt through borrowing instead of taxation in the years which my hon. friend has chosen for purposes of comparison:
Conservative Debt Increase
1918	
$312,697,764	701919	
382,646.969	941920	
674.337,591	351921	
92,010,359	901922	
81,256,818	04
What has been the comparison on the other side? The years during which the present administration was in office show the public debt, not increased, but, during the years which my hon. friend has taken for the purposes of comparison, decreased as follows:
Liberal Debt Decrease
1925	
$	345,589 291926	
27,706,586	171927	
41.896,729	331928	
50,984,137	171929	
69,782,000	00
In other words, there has been a decrease in the public debt during this latest period of
$190,000,000. Those are the figures which my hon. friend should have quoted, and what do they mean? They mean, so far as hon. gentlemen opposite are concerned, that the large debt increase for which they were responsible is a tax which has been imposed upon the present and future generations. My hon. friend should have said: We raised a certain amount in taxation, but this additional amount running into many millions of dollars, which will have to be met by taxation, we left to someone else to meet.
So far as the period of the present government is concerned, the position has been exactly the reverse. We are able to say with regard to our accounts: We have raised every dollar of taxation that is required to meet current expenditure, and in addition we are relieving all future generations of taxation equivalent to amounts in the form of surpluses which we have from year to year.
I have here a statement of the taxation necessary to balance the budget, not in war years or the years of demobilization, but in the subsequent years-a statement of the actual taxation and of what would have been
necessary to make an even balance up to 1924, then a statement of the amounts raised in excess. They are as follows:
Taxation Necessary to Balance Budget
[Stage Direction]
1921..	.. 460,780.858
1922..	.. 401,182.830
1923..	.. 367,094.408
1924..	.. 305,725.213
1925..	.. 293,568,929
1926..	.. 299,86.8,426
1927..	.. 304,752.543
1928..	.. 313,721,665 1929
Estimated 321,268,000
Addition to Actual or subtrac-Total tion from Taxation	Debt
$ $ 368,770,498	92,010,360
319,926,013	81,256,817
335,453,341	31,641,067
341,718,807 -35,993,594 293.914,518 -	345,589
327,575,012 -27,706,586 346,649.272 -41.896,729 364,705,802 -50,984,137*
391,050,000	-69,782,000
* After transferring $16,035,672, soldier land settlement and other advances from active to non-active assets.
1929 Expenditures include-
Maritime Freight Rates Act
Due to 20 per cent reduction
in rates	 $ 2,992,000
Deficit on eastern lines, C.N.R.	4,303,000
Special grant to maritime provinces	 1,600,000
Federal District Commission..	2,190,000
[Stage Direction]
I would ask permission to insert as well a table showing the tax contribution per individual and the increase or decrease in the amount of the individual's share of the na-
[Stage Direction]
The Budget-Mr. Mackenzie King
tional obligation for the fiscal years ended
March 31,	1921 to 1929, inclusive.		
Fiscal	Per	Per Capita Total per Addition to capita taxes or subtrac- required	years	capita	tion from	to balanceended	taxes	obligations	budgetMarch 31	$	$	$1921 .. ..	41.96	4-10.47	52.431922 ....	35.91	4- 9.12	45.031923 ....	37.16	4- 3.50	40.661924 .. ..	37.34	- 3.93	33.411925 ....	31.71	- .04	31.671926 ....	34.89	- 2.95	31.941927 .. ..	36.42	- 4.40	32.021928 ....	37.76	- 5.28	32.481929	Estimated	39.91	- 7.12	32.79*Let me	make further comparison between	
the years 1918-22 and the yeajrs 1925-29. Take the figures as they appear on page 786 of Hansard and recall that $190,000,000 of debt has been paid off in the last five years which left 1,809 millions of revenue to meet the current expenditure. What about the relative uncontrollable expenditures in the two periods, the relative interest charges, pensions, et cetera? In the first five-year period the increasing sums paid- out in interest aggregated $507,603,475, as follows:
1918		 1919			
1920		
1921		
1922			 135,247,849
	$507,603,475
In the second five-year period the sums paid out in interest show a decreasing tendency, as follows:
1925		$134,789,604
1926		 130,691,493
1927		 129,675.347
1928		 128,902,945
1929		 125,000.000
[Stage Direction]
The present administration has had to pay out in interest charges in the second five-year period 141 millions more than the previous administration had to pay out in its selected five-year period or at the average rate of 28 millions per annum-in itself sufficient to weight down the comparison against us.
Again, the pension payments in the first five-year period, aggregating $126,016,374, were as follows:
1919
1921
8,155,691
18,282.440
26,004.461
37,420,751
36,153,031
fMr. Mackenzie King.]	$126,016,374
In the second five-year period there were pension payments aggregating $191,773,434, as follows:
1926
1928
34,888,665
37.203.700
37,902,939
39,778,130
42,000.000
[Stage Direction]
1 hus, on this account again, we had to pay out in the second five-year period over $65,000,000 more than the previous administration during the first five-year period. In a word, the present government paid off 190 millions of debt during the last five years, and had to pay out an extra 141 millions in interest and an extra 65 millions in pension charges, as compared with those paid in the previous five years. It will be readily seen that the ordinary administration of the country is being carried on vastly more economically in the second five-year period than in. the first.
My hon. friend asks, where is the reduction in taxation under the present administration? He must have forgotten all the reductions that have taken place. May I refresh his memory with respect to some of them at least. Here are some:	In regard to the income tax, the following exemptions and reductions have been made:
1922-Exemption for each child raised from $200 to $300;
1924-Additional exemption for each child raised from $300 to $500;
1926-	Exemption limit raised from $2,000 to $3,000 in the case of married persons or those with dependents and from $1,000 to $1,500 in the case of other persons, in addition those with incomes of $5,000 or less to pay only 2 per cent of their taxable income instead of 4 per cent. Corporation income tax reduced from 10 per cent to 9 per cent;
1927-	10 per cent cut off the 1926 rates;
1928-	Additional 10 per cent cut off the 1926 rates.
Now I come to the tariff changes. These are as follows:
1922-	Eeductions on sugar, agricultural implements, textiles, boots and shoes, etc.;
1923-	Tariff on goods imported under the British preferential tariff reduced by 10 per cent wherever regular rate of duty exceeds 15 per cent and where goods are imported directly to a sea or river port of Canada. Duty on sugar reduced;
1924-	Duty on instruments of production used in agriculture, mining, forestry and fisheries reduced;

The Budget-Mr. Mackenzie King
1925-	Reductions on well-drilling machinery and engines for fishermen's boats;
1926-	Duties on sugar, automobiles, tin plate, etc., reduced;
1928-Numerous changes contained in Chapter 17 of the statutes for 1928.
I put on Hansard last year at page 1301 of Volume II and page following, a more or less complete statement of the reductions in the tariff since the present government came into office up to 1928.
As to postage, we restored penny postage within Canada July 1, 1926, and in 1928 imperial penny postage was reestablished.
The following statement shows the reductions we have made in the cheque tax, the receipt tax and the sales tax:
Cheque Tax
1922-	Imposed at 2c. on every $50 with a maximum of $2 on $5,000 or over;
1923-	Reduced to $1;
1925-	Tax on cheques not exceeding $5 remitted ;
1927-	Tax reduced to a flat 2c. on cheques of over $10;
Receipt Tax
1926-	Imposed in 1922; abolished in 1926.
Sales Tax
1923-	A flat 6 per cent;
1924-	Reduced to 5 per cent;
1927-	Reduced to 4 per cent;
1928-	Reduced to 3 per cent;
1929-	Reduced to 2 per cent.
A list of the earlier changes made by the government in customs duties will be found at pages 2137 to 2141 of revised Hansard of May 15, 1924.
This .government, to state the fact, has been making a continuous reduction in taxation year by year. Statements have been made by the Minister of Finance in his different budgets indicative of the amounts of taxation that have been remitted. In 1926 the estimated reduction of taxation was $25,000,000; in 1927, $27,000,000; in 1928, $19,000,000; in 1929-the present year-$25,000,000. That is, within the last four years there has been an estimated reduction in taxation of almost $100,000,000. A reduction, be it remembered, which constitutes from now on an annual reduction as compared with 1926.
That is the record of the present administration with respect to taxation.
I come, Mi. Speaker, to another subject discussed by my hon. friend, and to a phase of that subject which has been taken up at some length in the course of the debate by hon. gentlemen opposite. Now that the Canadian National Railways have begun to pay,
now that everyone recognizes that the Canadian National system is an asset to the country, and that the country is profiting by it in the eyes of the world., hon. gentlemen apposite are seeking to claim the paternity of that institution. Hon. gentlemen opposite are desirous of having it appear that they are responsible for the Canadian National system being what it is to-day. My hon. friend used all the skill of which he was capable in seeking to make out a case to that end. He started out, by saying that with respect to the national railways they on the opposite side were all optimists. Well, it is easy to be an optimist when anything is going well, and particularly where its success has been assured by someone else. But my hon. friends were not always optimists. They were not optimists even in 1921 in their last year of office and when appealing to the country. I recall very well the discussions that took place at that time. The most they said about the railways was that Sir Wilfrid Laurier was responsible for the condition they were then in. It was stated that Sir Wilfrid Laurier was responsible for having constructed the Grand Trank Pacific, for having built the National Transcontinental, for having been a friend of Mackenzie and Mann; that was the kind of thing one heard throughout the country as late as 1921 when hon. gentlemen opposite were hoping they might be returned to power.
But, as I have said, my bon. friend, in the course of the present debate, sought to build up a case to have it appear that at the time these railway matters were up for consideration in parliament, the Liberals were doing their utmost to destroy tihe Canadian National system. He said he well remembered the time that parliament sat in the old Victoria museum, in the fall of 1919. He was kind enough to remind me that in that year I came back into the bouse as leader of the Liberal party. He went on to say my first act was an endeavour to destroy these veiy railways for the success of which the government is now claiming so much credit. He said he recalled the discussion very well, that Hon. D. D. Mackenzie, as leader of the Liberal party in the early part of the session, had first of all sought to postpone any consideration of the question of the consolidation of the national railways, any organization of the Canadian National Railway system: that he was followed later by Mr. Fielding, who suggested that a royal commission should be appointed to inquire into the matter, but that the real intention was to destroy the organization of the Canadian National system. Then he said that I had brought in a motion to Tefer the whole matter back to
1396	COMMONS
The Budget-Mr. Mackenzie King
committee for the purpose of forcing a vote of want of confidence in the government and of destroying the bill. Finally he referred to the present Minister of Finance, and said that he had at the conclusion of the debate moved the six months' hoist. All of this is now on Hansard in the remarks of my hon. friend to show that those who to-day are members of the present administration were at that time seeking to destroy the organization of the Canadian National system.
Perhaps I had better read exactly what my hon. friend said, in order that there can be no misunderstanding. I quote from pages 743 and 744 of Hansard of March 7. 1929. He said:
In respect,_ however, to the national railway tit °in , ls SK e ,°1 the house are all optimists. We look upon that railway as practically our own infant and our own creature.
Then later on:
Moreover, across the ocean in France and I landers we were carrying on Canada's part in the greatest war in history. There was serious financial calamity awaiting us at home unless speedy action was taken to relieve the railway situation and at the same time hundreds of mil-u ^ dollars had to be supplied to carry on the war. Such then was the critical situation 1919 8 country in the sPrinS and summer of
Mr. DUNNING :: In 1919.


William Lyon Mackenzie King: Yes, in 1919. He goes on to say:
The leader of the government (Mr. Mackenzie King) was not, I think, in the house until September of the year 1919, when he was returned for a constituency in Prince Edward Island and came back to the house as leader of the Liberal party. But he was present in the house during the session of 1919 and I recall with the greatest distinctness what transpired during that session. So will my right hon. friend; so will the Minister of Finance; so would the Minister of Justice (Mr. Lapointe) if he were in his place.
Well, he is here now.
A great fight -was then waged by the Conservative party-
Remember, this all relates to the fall session of 1919 at which many members of this parliament were present.
A great fight was then waged by the Conservative party to take over these three railway systems that had gone into bankruptcy, reorganize them, consolidate them and make them into a Canadian National railway to be owned by the people of the Dominion of Canada.
Then later on:
Day in and day out in the old museum during the session of 1919 the railway hill was fought to a finish. Every kind and method of opposition was urged against it. Nothing was left undone or unsaid by our opponents.

I remember some of the amendments that were moved on that occasion and I will mention one or two of them. Under the guidance of Mr. Meighen that bill was fought through the house. Amendment after amendment was moved to defeat it. The late Mr. D. D. McKenzie moved that the matter be dropped and not considered for the present time. His motion was defeated. Then came a motion by Mr. Denis, at that time member for Joliette and until recently a member of the house. His motion was defeated. Then there was a motion by the Right Hon. Mr. Fielding to appoint a royal commission to inquire into the whole matter, his object being to defeat the bill and to destroy the government as well. His motion was defeated. After that followed a motion by my right hon. friend the present Prime Minister on the third reading of the bill, just before it was passed, a motion to recommit it to the committee of the whole house, which constituted a want of confidence motion in the government on the third reading. It was intended to defeat the government and to destroy the bill.
Then later:
When the Liberals had exhausted every effort to beat us, when they had tried everything in their power to destroy that measure and prevent the nationalization of these railways, the present Minister of Finance was put up to lead the final attack, and in the early hours of the morning he solemnly moved that the bill be given the six months' hoist. . . The Liberals tried by everything in their power to destroy that measure but they failed. .	. No, Mr. Speaker, hon gentlemen opposite had no faith in a national railway system then, and they tried to kill it at its birth, and for two or three years afterwards they continued their efforts to destroy it.
Now what are the facts? In the first place, my hon. friend says that they were busy with the war; they were straining every nerve to get enough money to carry on the war. He says this of the latter part of the year 1919.
I do not think I need to remind the house that the war ended on, November 11, 1918. The war was over. In the second place, my hon. friend talked all the way through of what the Conservative party were doing at that time. If I am not mistaken the hon. gentleman at that time was boasting that he himself was a Liberal in a Unionist administration. There was no Conservative party in office at the time; the government led by the Right Hon. Sir Robert Borden at the time was a unionist government, and in that government, at the time of which my hon. friend speaks, were such gentlemen as himself, Hon. James A. Calder, Hon. Frank Carvell, the Hon. Newton Wesley Rowell, the Hon. A. K. Maclean, all of whom professed at least to be Liberals and meet of whom, I am happy to say, have remained Liberals since. It was not a Conservative government that was in office at that time; it was a unionist administration. Now what about the bill itself to which my hon. friend

The Budget-Mr. Mackenzie King
refers? I say to my hon. friend, and I challenge him to contradict me, that the measure to which he refers was not a Canadian National measure at all, not a measure to organize the Canadian National Railways. The measure with respect to which all these different amendments were made was a " bill for the acquisition of the Grand Trunk Railway Company," a bill a copy of which I have in my hand at the moment. That was the bill which was introduced in that session. And to show bow proud my hon. friends opposite were of the bill they were then introducing, no mention whatever was made of it in the speech from the throne. The session which was being held at that time, as I reminded my hon. friend w'hen he was speaking, was a session called for the purpose of approving the treaty of peace which had been signed at Versailles. That was what the session was for; it was not for the purpose of dealing with a railway measure. And after discussion had taken place on the treaty, this bill for the acquisition of the Grand Trunk Railway was introduced. All the amendments to which my hon. friend has referred, and the object of which he says was to destroy the Canadian National system as we know it to-day, were amendments not one of which was related to any bill respecting the Canadian National system but to the bill respecting the acquisition of the Grand Trunk railway and were introduced by members of the Liberal party because of the terms of the measure as presented to the house and methods taken by hon. gentlemen opposite to achieve their ends. As a matter of fact, as the present Minister of Railways (Mr. Dunning) reminds me, there was no Canadian National Railway system at that time.


Mr. GUTHRIE:: This was the keystone of the arch.


William Lyon Mackenzie King: The keystone
of the arch? I am afraid my hon. friend will find that he is the keystone of a very much mistaken statement. My hon. friend makes light of it ait the moment, but all his followers behind him, one after another, repeated the statement over and over again, and I presume we should have heard it repeated from now until after the next general election unless something in the interval had been said respecting the matter.
What was the exact position? Mr. D. D. McKenzie, who was leading the opposition at the time, moved that the bill for the acquisition of the Grand Trunk railway should not be proceeded with at that session inasmuch as the session had been called for the purpose of dealing with the treaty of peace and nothing else. That was the reason of his motion;
it was not as my hon. friend has said, to destroy any railway system. And the motion moved by Mr. Fielding was a motion asking that the Consolidated Revenue and Audit Act should be applied to the finances of this particular transaction. That was voted down. My hon. friend says that I sought to destroy the railway system by a motion I introduced. But what was that motion? It was that the agreement between the Grand Trunk Railway Company and the government, which hon. gentlemen opposite were proposing to make by order in council after the close of that session, and which involved more in the way of financial obligation upon this country than any other single transaction in its history, should be referred to parliament for approval before it was acquiesced in. That was the motion, and that was the motion hon. gentlemen opposite voted down. They would not allow the agreement between the company and the government to be submitted to parliament; it was to be put through by order in council, and this notwithstanding that the shareholders of the Grand Trunk Railway in Great Britain were to have the right to approve it. Hon. gentlemen opposite were obliged later to come to parliament to have it approved, because in drafting the measure they had made some mistake and could not rectify it without bringing the whole measure to the house. To return to the bill and the session of 1919 after my motion was defeated, the present Minister of Finance at the end of that session, moved the six months' hoist, not at all in relation to the Canadian National measure but, as I have said, in regard to this particular transaction introduced at that particular time and in the arbitrary manner I have described.
When was the Canadian National measure introduced? At the previous session of that parliament a measure was brought in to enable the then Canadian Northern railway to be operated along with the Intercolonial railway under one management. That was by a bill entitled " to incorporate the Canadian National Railway Company and respecting the Canadian National Railways." It was assented to in June, 1919, and the bill respecting the Canadian National Railways as passed at that period was, as I have said, nothing more than a bill to enable the Canadian Northern Railway system to be operated along with the Intercolonial. Now my hon. friends the year before had acquired the Canadian Northern system. But how did they acquire it ? They had a royal commission appointed to inquire into the conditions of the railways in this country. That commission made its report, and among other things it stated that the stock of the Cana-

1398	COMMONS
The Budget-Mr. Mackenzie King
dian Northern system was not worth a single dollar. That was the report of a commission appointed by hon. gentlemen opposite. Yet, on the eve of the election of 1917, these same gentlemen gave to that stock a value of $10,000,000, and forced that transaction through the House of Commons under closure. They got the Canadian Northern into their hands and out of the hands of their friends in that way, and it was to enable them to operate the Canadian Northern along with the government railway that this act respecting the Canadian National Railways was then introduced.
But in speaking of the organization of the Canadian National system such as we have it to-day, may I direct the attention of the house to this further fact. In the bill with respect to the acquisition of the Grand Trunk railway there was not there one clause which related to bringing the Grand Trunk railway system under a Canadian National railway system such as exists to-day? Not a line. As a matter of fact the bill, of which I have a copy, provided that the management of the Grand Trunk Railway Company would remain in England, as had been the case in the past, with the president and the board of directors in that country, and it was not until 1921, when a crisis arose with respect to the arbitration of the Grand Trunk securities, that an agreement was arrived at whereby provision was made for a board of directors in Canada. This board remained a seperate board; it remained the Grand Trunk Railway board and was not brought in any way into association with the Canadian National system. That is what my hon. friend calls the keystone of the whole system, a keystone left absolutely by itself.


Hugh Guthrie: So it was, awaiting the
judgment of the privy council.


William Lyon Mackenzie King: To go a step further, what was the position with respect to the Grand Trunk Pacific company, which in March 1919 had been placed in the hands of the Minister of Railways and Canals as a receiver? When the Canadian National bill was passed, when the Grand Trunk bill was passed, no provision was made for ending that receivership and making the Grand Trunk Pacific a part of the system; it was left with the Minister of Railways.
But most significant of all, when the Canadian National bill was before the house and something was said about government ownership, the then Prime Minister, Right Hon. Arthur Meighen was asked whether with respect to railways, the policy of the government was one of government ownership. My
(Mr. Mackenzie King.]
hon. friend, for reasons best known to himself, i n the course of his remarks sought to bring torward Mr. Meighen as the personage above ill others responsible for the present splendid organization of the Canadian National system, yet at the time the bill respecting the National Railways was introduced and Mir. Meighen was asked wihat he had to say about government ownership he absolutely refused to make any commitment. My hon. friend said he came forward with some carefully thought out scheme "a definite plan" he called it, as a matter of fact the whole policy was one of expediency, and there was no vision about it whatever. On April 11, 1919, during the course of the debate, Mr. McMaster put this pointed question to Mr. Meighen, who was then fathering the particular measure under discussion:
I hope the minister will not think me unduly insistent when I ask for a declaration of the policy of the government. Public ownership, whether we wish it or not, has been imposed upon the people. If we were holding the railways only with the idea of disposing of them to private companies in, perhaps, as short a time as possible, one particular kind of organization might be better than another; but if we made up our minds to adopt the permanent policy of the public ownership of railways, some different system of organization would be necessary. The government therefore should state clearly whether they are for the principle of government ownership as a definite policy for Canada.
Then, after mentioning the fact that the responsibility for the principle rested with the government, Mr. McMaster continued:
.... the port that they are steering for should be made known to the people before we are asked to vote for a resolution of this kind.
To this Mr. Meighen replied:
I do not know just how many years ahead the hon. member thinks we should place ourselves in order to determine the port. I think the government is well advised to take its hearings by ports that are in sight, not to fix a policy with reference to yet unborn decades. So far as there is any necessity of stating policy, the government's policy as to railways has been stated and repeated over and over again. As to the roads that we now own, our policy is to continue to own them and to operate them; we have no intention of selling them to any private corporation. Certain roads we do not own.
The Grand Trunk Pacific is one; our policy as to that has been brought down to the house, and we are engaged in the carrying out of that policy. The Grand Trunk is another; we have stated repeatedly our policy as to the Grand Trunk: we have stated what we are doing. The Canadian Pacific is another; the government has not intimated to parliament any intention of acquiring the Canadian Pacific Railway company. I do not know what more the hon. gentleman desires; I certainly do not know what more is necessary to the consideration of

The Budget-Mr. Mackenzie King
this resolution. Every time the subject of railways is mentioned in parliament, is the government, as to its policy, to see years or centuries ahead? All the government has to do is to adjust its course with reference to circumstances now known; we have stated our course with reference to all the railway circumstances now known. All that is necessary to a consideration of this bill is a determination of the question whether it is the part of wisdom to operate such roads as we now and may in the future own under the system set out and by the principle clearly defined in this bill, namely, by the establishment of a holding and operating company, the Canadian Rational Railways.
That is the extent to which Mr. Meighen, who was supposed to have had the far-sighted vision to bring into being the Canadian National system as we have it to-day, was at that time .prepared to commit himself and his party.
May I say that if the government of that day had had the slightest intention of bringing about the organization of the Canadian National Railways as we now know it, that measure would most certainly have received mention in some speech from the throne, but neither in the special session during which the Grand Trunk was acquired nor during the previous session when provision was made for the Canadian Northern being administered along with the Intercolonial as part of a national system was there a single word in the speech from the throne in regard to such a measure. In each case the railway bills were introduced, one might almost say, more or less surreptitiously after the session had commenced. Indeed, the impression was general at the time that the government's object was to return the roads to private control at a convenient season, and under conditions more or less favourable to some of the government's own friends.
What was the position at the end of 1921? As I have said, if hon. gentlemen opposite were so sure of the future of the railways; if they were so proud of their alleged paternity of the railway system, why did they not make a little out of it during the elections in 1921? They did just the opposite; they disowned the whole business, they blamed previous Liberal governments for all the misfortunes of the roads, and the situation as the present government, found it when it came into office was this: Instead of there being any Canadian National Railway system such as we have to-day there were three different railway organizations carrying on, separate and distinct, at that time; the Grand Trunk Pacific Railway was in the hands of the Minister of Railways and Canals as a receiver, and its affairs were being administered through the Department of Railways
7R5B4-8!>i
and Canals; the Canadian Northern Railway system, together with the Intercolonial Railway, was under the management of a Canadian Northern directorate, not a Canadian National management or directorate, but with a Canadian Northern board of directors appointed under orders in council in 1918. That railway was travelling under an alias; it was called Canadian National but it could not be known legitimately as the Canadian National system because up to that time it had not become a part of such. There was simply a Canadian Northern administration, and in addition there was the separate administration of the Grand Trunk Railway Company, which had its own president and board of directors.


Richard Bedford Bennett: That was necessary until the decision of the privy council was made.


William Lyon Mackenzie King: The decision of the privy council had been made. My hon. friend will find that it was made before the election. There may have been some appeal on a point of law, but apart from all that, the decision of the privy council had nothing to do with it. My hon. friends had it within their power, had they wished to do so, to pass such legislation as they deemed necessary to bring the Grand Trunk when it was acquired under Canadian National control and which would have relieved them from waiting for any decision of the privy council.


Richard Bedford Bennett: No, we had to wait.


William Lyon Mackenzie King: My hon. friend is quite wrong; he is mistaken.


Richard Bedford Bennett: I am sure the Prime Minister will agree with me that as appeal was taken from the arbitration, parliament could not act pending a decision. I happen to remember that the decision was made after the election, because I was in London when the decision was announced.


William Lyon Mackenzie King: Did the decision of the privy council have anything to do with the forming of a Canadian National railway board to run the Canadian Northern?


Richard Bedford Bennett: Absolutely, because if the decision went in accordance with the contentions of the Grand Trunk the matter had to be re-arbitrated.


William Lyon Mackenzie King: But that had nothing to do with the Canadian Northern.


Richard Bedford Bennett: Certainly it had, because the two systems could not be combined until after the decision was rendered.


William Lyon Mackenzie King: Surely my hon. friend is not familiar with what took place.
1400	COMMONS
The Budget-Mr. Mackenzie King


Richard Bedford Bennett: Yes he is.


William Lyon Mackenzie King: Then if he is familiar with it he does not like the whole business. I venture to say that even to-day my hon. friend would not support the action of the government of the day in giving $10,000,000 to Mackenzie and Mann for the common stock of the Canadian Northern System. It was that $10,000,000 that brought the Canadian Northern under the control of the government, and it was to administer that particular road that the act to which I have referred was passed in the early part of 1919 or other roads which might be amalgamated. That act when it was passed had nothing to do with the Grand Trunk at all; it simplv united the Canadian Northern with the government road for the purposes of administrit tion.


Richard Bedford Bennett: I merely point out again that there could be no union between these two systems until after the decision of the privy council had been announced. With respect to the payment of $10,000,000, I declined to follow Mr. Pugsley and the Liberal party in giving them $40,000,000.


William Lyon Mackenzie King: My hon.
friend speaks about there having been no unity between the Grand Trunk and the Canadian Northern until a decision was given by the privy council. Whether that is or is not true does not affect in the least the fact that the Canadian National Act was passed in relation to the Canadian Northern railway and the Intercolonial railway, to bring the two under the one management. Even that much had not been done when the present government came into office in December, 1921, although the bill had passed during the early part of 1919. We found on coming into office two separate systems, and we also found the Grand Trunk Pacific being administered by a receiver. We realized that the first thing to be done was to end this duplication, this dual, if not triple control, to bring about a centralized control and to discover the right person to put in charge of the two systems when they were combined. In November, 1922, we succeeded in obtaining the services of Sir Henry Thornton, whose reputation at that time as a manager of railways in the old country was outstanding. If any one person above everyone else, is entitled to credit for the present success of the Canadian National system, I venture to say that that person is Sir Henry Thornton. But I think Sir Henry Thornton would be the first to admit that along with him should be associated the Minister of Railways and Canals who was in office at the time he came to

this country, and the ministers who have been in office and have been associated with him in the work of administration. Too much credit cannot be given to the late Hon. William C. Kennedy, the first Minister of Railways and Canals in this administration; to the Right Hon. George P. Graham, and to Hon. Charles A. Dunning, the present Minister of Railways and Canals for the manner in which they have cooperated with Sir Henry Thornton and his board of directors and dealt with the affairs of the National railways in this parliament. Great credit should also be given to the officials of the railway for the loyal manner in which they have cooperated with Sir Henry, and credit as well to every man employed upon the system. They are the persons to whom credit is due for the success of the Canadian National railways, and not the Right Hon. Arthur Meighen or the hon. gentlemen opposite. So far as any government is entitled to credit it is the present administration which brought about the complete unification of the lines, secured and appointed the president and board of directors, and -which along with Sir Henry Thornton, has walked out the -best, type of organization -best suited, and has kept the system from political interference.
My hon. friend spoke about extravagance, and he brought up a number of items which he claimed were in the nature of extravagances on the part of the administration. He mentioned the legations at Washington, Paris and Tokyo. With regard to the legation at Washington, he said that the government had spent $500,000 on a palace for the present minister, to be used as a place of residence, whereas the government should have allowed him to rent or buy a house for himself. My *hon. friend knows that such is not a true statement. He knows that the building which has been purchased at Washington was not purchased as a residence, but for the purpose of a legation, including the offices of the legation as well as a residence for the minister. He knows that practically all the ministers or ambassadors at Washington live in buildings which are either embassies or legations. My 'hon. friend instead of being penurious in his criticism might have been generous enough to have said that the present minister the Hon. Vincent Massey, deserves the highest praise not only of all political parties in this house but of the nation as a whole for the manner in which he has represented the interests of this Canada, at Washington. He should receive the highest praise not only for the manner in which he has represented the interests of this country, but for the very generous manner in which he has placed a considerable portion of his own private for-

The Budget-Mr. Mackenzie King
tune at the service of tihe state. Anyone who knows anything about the manner in which Mr. Massey has been carrying on the representation of Canada tit Washington knows that whatever he has received from the government is only a small portion of what he has spent. His private means 'have been given liberally towards helping to maintain the reputation of Canada at Washington on the high plane which it holds in the estimation of the people of this continent. Instead of misrepresenting the situation with respect to the legation building, my hon. friend might well have directed his talents to a be'tter end.


Richard Bedford Bennett: He took the Minister of Trade and Commerce (Mr. Malcolm) up to the White House.


William Lyon Mackenzie King: And I have no doubt he would take my hon. friend there also.


Richard Bedford Bennett: No, he will not.


William Lyon Mackenzie King: I think they would let my hon. friend in.


Richard Bedford Bennett: He will never do that.


William Lyon Mackenzie King: Not only is
this building being used for office purposes, but in the purchase made the furnishings for residential purposes were acquired as well. The amount which my hon. friend mentioned was in excess of the cost of the building and site, including the cost of furnishings. The hon. member for South Wellington also said:
Last year the vote to maintain our Washington embassy was $60,000; to-day it stands in the estimates at $100,000-an unwarrantable and extravagant increase of $40,000.
My hon. friend knows that that is not correct. The vote last year was not $60,000; the vote was for $100,000, and the vote the year before was for $130,000. I told the house in the session of 1927-28 that if it would sanction the purchase of a legation building at Washington we would cut that estimate from $130,000 to $100,000, and we have kept that promise. The estimates included an amount of $100,000 last year, and the amount being asked for this year is $100,000, and yet my hon. friend tells the house and the country that there has been unwarranted extravagance in an increase of the vote from $60,000 to $100,000.
In reference to Paris, my hon. friend mentioned an expenditure of $75,000, and then remarked on an additional sum of $40,000 which he said was being provided for another building. He should be careful before he makes such statements. He should look up the records and see what the expenditures are related to. The expenditure of $40,000 was not for another building in addition to and
in connection with the present legation. My hon. friend knows that while Commissioner General, the present minister occupied premises in one part of Paris, which premises were entirely different from those of the legation which we now have in that city. The expenditure of $40,000 to which he referred and led the house to believe was an added extravagance was an amount expended upon premises occupied by the minister while he was the Commissioner General, and during which time no money was being spent upon a legation 'building. There was in his Statement a complete 'misrepresentation of the facts. We come next to the building at London. My hon. friend considers the expenditure upon that building as an extravagance, but I wonder if the people of Canada are not proud of the Canadian building in London. Every dominion of the British Empire has a building in London: New Zealand has one, Australia has one and South Africa has one, and I know that some of the buildings which are occupied by other dominions in London are much more expensive than the offices which we have. We have been fortunate in securing for our offices the finest site in London; we have been fortunte in obtaining a very good building there, and I think this country has reason to be proud of the purchase which the government has made. My hon. friend referred to the cost of administration of the High Commissioner's office, and compared it to the cost during the time his government was in office; he said:
When I was in the Meighen government the vote for the whole establishment in London was $69,000; this year the vote is $117,000.
He is again guilty of a very serious oversight, if not of a deliberate misrepresentation, because when he gave the figure as to what the London office cost when he was in the government he deliberately omitted the salaries paid, although, when giving the figures with reference to the present government, he included them. My hon. friend apparently took the figures as shown in the statement of 1920-21, which are as follows: Supply, government contingencies, $69,586. That is the $69,000 which he said was the cost of the whole establishment in London when he was in the government. But right alongside that figure in the public accounts of that year stand the following;
High Commissioner's publications.... $ 1,000 Supplementary, civil government contingencies	 7,000
Civil government salaries	 25,950
These figures give a total of $103,536, and not the $69,000 as given by my hon. friend. At that time the High Commissioner's office
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The Budget-Mr. Mackenzie King
did not include, as it does to-day, accommodation for some of the work of the immigration department, the Department of Trade and Commerce, the Department of Health, and the payment of pensions overseas. These are all additional branches of activities that have been gathered into the present office in London.
Now we come to Ottawa, and my hon. friend says: " Here again there has been an absolute waste. The destruction of property, destroyed for what? Merely to get a view." My hon. friend knows better than that. He knows first of all that the property in Ottawa that was demolished was for the most part in the nature of old buildings that were to have been taken down anyway. That is the reason why at i'he particular time the government took the step it did. We knew that these buildings were to be demolished. The old Russell House block had been for the most part disposed of; it was to 'be torn down, and it was a question of either acquiring the property for the state at that time or losing the opportunity of getting it later on because of the more expensive buildings that would certainly have been put up there. My hon. friend knows further that this House of Commons in general, if not in specific terms, approved of something being done to commemorate in the capital of the Dominion the diamond jubilee of confederation, and this particular commemoration was to take the form of a confederation park in the centre of the city, provided the civic authorities were prepared to cooperate with the government in the matter. He knows that an arrangement has been reached between the government and the city authorities for a very considerable improvement in the heart of the capital, a much needed improvement in the immediate vicinity of these houses of parliament which means much in the present but which will mean infinitely more in the future. He knows very well that what has been done in that regard has been done as part of a great scheme in the national interest and not, as he says, for the purpose of getting a view. I think hon. gentlemen opposite would be more public-spirited, more patriotic, to say the least, if instead of criticizing the government on every conceivable subject, they would recognize that there are some questions that might well be taken out of the realm of party discussion altogether. Improvement of the capital of this Dominion is one of those questions, and I say now to my hon. friend opposite I think the step he should take-and I am prepared to have him take iit and to cooperate if he is agreeable so to do-would be to have a group of hon. fMr. Mackenzie King.]
gentlemen behind him or who are associated with him, meet with myself and a corresponding group of hon. members on this side together with representatives of the other group apposite, and discuss plans for the further improvement of the capital of this country. Let us then come to this parliament and say what we feel is owing alike to the present and the future generations and needed in order to make the capital of our country what we would like to have it and what we know future generations would wish it to be.
The talk about extravagance in the price of public buildings mentioned, reminds me of the discussion we had in this parliament with respect to the completion of the tower of these Houses of Parliament. Hon. gentlemen who were here then will remember that for two days the government, on an item which asked the house for enough money to complete the present tower, was held up on the score that the tower might well remain as it was and that we had better wait until the country was in a more favourable position. Notwithstanding the fact that the whole front of the parliament buildings was obscured by the equipment required in the reconstruction of the building, we were told that the completion of the tower might well wait; that we were too extravagant. This present opposition is pretty much on a par with that; only it is not a tower, it is the capital of the Dominion that is involved. We owe it to the country as a whole to make this capital worthly of this great Dominion and I may tell my hon. friends opposite that they will find in the hearts of the people in the back concessions much more pride in the capital of their country than they themselves have exhibited in the discussions in this house.
I might give the house a little information with respect to some of our expenditures. Consider the building at the comer of Sussex and Rideau streets, the so called1 Daly building, a hideous looking structure, an eyesore in the city, It was purchased by hon. gentlemen opposite, not for $500,000, as my hon. friend says the legation building at Washington, a very handsome building with furnishings complete was purchased for, .but purchased for $1,000,000, and on what further terms? That $100,000 should be paid down on the eve of the election of 1921, and that from then on the sum of $100,000 should be paid each year with interest on the balance at the rate of 6 per cent per annum. Under that contract we have been obliged to pay $100,000 and to contribute 6 per cent on the balance each year from, the time hon. gentlemen opposite went out of office until to-day, and the payments will not be completed until next year.

The Budget-Mr. Mackenzie King
The payment when completed will amount, to $1270,000. These are the bon. gentlemen who talk about waste and extravagance.
May I refer again ,to what I have just said about the purchase of the Canadian Northern system? Hon. gentlemen apposite had a report from their own commission which said that the common stock of the Canadian Northern was not worth a single cent, but notwithstanding that they so engineered matters as to give to that stock a value of $10,000,000 and compelled the people of this oowntry to meet that amount out of taxes 'by the use of closure in this House of Commons.


Richard Bedford Bennett: That was done by arbitration.


William Lyon Mackenzie King: What could we not do with $10,000,000 in the improvement of the .capital of Canada? That money would be better in the treasury here for the improvement of Ottawa than in the pockets of friends of my hon. friends opposite.


Richard Bedford Bennett: The right hon. gentleman knows that was awarded by arbitration by Chief Justice Meredith.


William Lyon Mackenzie King: My hon. friend can make his statement later.


Richard Bedford Bennett: I was not there. It was
by arbitration.


William Lyon Mackenzie King: I daresay my hon. friend thanks the Lord he was not there May I now conclude what I have to say?
I had intended to say something about tirade and the tariff, in regard to which my hon. friend spoke at same length, but I shall have to leave that for some later time. I should like however to say a few words in regard to the amendments to the motion that has been made by the Minister of Finance that the house go into committee of ways and means.
During the last few years on each occasion that the Minister of Finance has brought in his budget, we have been confronted, as regularly as by the years themselves, with amendments of hon. gentlemen opposite, amendments which were diametrically opposite in character. We have had one amendment which has asked us to increase taxation, to raise the tariff, to give more in the way of protection; and we have had from the other end of the chamber an amendment for less in the way of taxation, for reduction in customs duties, for less in the way of protection. On each occasion we have met those amendments by pointing out that it was the policy of the government to pursue a moderate course, avoiding an extreme in one direction as well as an extreme in the other, to take only that course which would help to bring prosperity to this country. Our course is vindicated by the position of the country at the present time. We have the prosperity at which we have aimed, and we intend to maintain it and, if possible, to increase it. We intend to maintain and increase it by exactly the same methods as those we have adopted in the past. To-day we are confronted with amendments similar to those of previous years. If we take the amendment of hon. gentlemen opposite and strip it of its verbiage, what does it mean? More in the way of taxation, higher tariffs, more in the way of protection. On the other hand, hon. gentlemen at the other end of the chamber ask us to go a little further in reducing taxation, in reducing duties and to do much less in the way of protection.
This year differs from other years in one essential particular. This year, when the government was preparing its budget, it had before it the knowledge which is common throughout the continent, that a neighbouring country was about to make certain changes in its tariff, changes which may materially affect trade between the two countries. Trade between this country and the United States is,
I believe, the greatest trade that exists between any two countries in the world, and naturally we are interested in what the citizens of the republic do with respect to matters which may affect that trade. We are interested as well in all that affects the industrial conditions of that country because, as we know from experience, matters are so interrelated in economic affairs that it is seldom that one portion of this continent is appreciably affected by depression or the opposite without other parts being also affected. We have the word of those in authority in the neighbouring republic that there are certain measures to be introduced at a special session of congress now about to assemble. An important measure, we are led to believe, is a measure relating to farm relief. Another measure relates to "limited adjustments of the tariff"; that I think is the expression which has been officially used. Having that knowledge 'before us, I ask hon. gentlemen irrespective of party: In the condition of prosperity which Canada is to-day enjoying would it be desirable on the part of the administration to take any action with respect to the tariff in Canada at the present time which by those across the line who may be interested in seeking to raise the tariff in that country could be regarded as provocative? I say that with the knowledge which we have before
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us at the present time, were we to do what hon. gentlemen opposite by their amendment apparently wish us to do, namely raise the tariff, we would be creating in the minds of the American people the very sentiment which would cause them to raise their tariff higher perhaps than it was ever their intention to raise it. We do not intend to take any action of that provocative character.
May I say to my hon. friends opposite, in the other comer of the house, that were we to-day to take a step along the lines of increasing the British preference to a greater degree than exists at the present time that step also might be misconstrued, for we know that there are people on the other side of the line who are just as anxious to be troublemakers as certain people on this side of the line, who are ready to misrepresent matters, and we have to take human nature as it is, and deal with it as it is. So facing the situation before us, we have followed the policy that we have followed in the past and that we shall follow at all times, of dealing with each situation as it arises in the light of the conditions as they exist at the time.
That is the position which this government took when we came into charge of the administration of the country's affairs. What did we find? We found the depressed condition that Canada was then in. We had before us the record of hon. gentlemen opposite, where year after year deficits were exhibited in the public accounts. We took the step that was necessary to deal with that situation. We put on some extra taxation so that we might be able to balance the budget and restore public confidence in the public finances of the country. The moment we had restored public confidence and balanced the budget we began to remove taxation, and to remove it steadily. We saw that if the country was to prosper, what was needed above all else was that the basic industries of the country should be made prosperous, that production should be increased. So we dealt next with the duties on the implements of production in the great basic industries. Later on there were other changes that we felt should be made, and all along, year after yeair, whilst moving steadily in the direction of lower tariffs and taxation, we have consistently followed a policy of dealing with each situation as it existed at the time in the light of all known circumstances, hoping always that by so doing we might further the prosperity which we enjoy at the present time. I say that that is exactly what wre intend to do with respect to any situation that may arise in the future.

Hon. gentlemen opposite have been very crafty in some of itheir methods in debate. This year they have been perhaps a little more subtle than before. They have not wished to refer to the past, and above all else they have sought to avoid the present, and so they have sought to create-and thi3 is what we have had all through this debate- a discussion not with respect to an existing situation but with respect to something that may oir may not happen next year. They have resorted to the device of shifting discussion from the present issue and fighting in advance an imaginary tariff war. They have told us that this and that should be done, not because something is 'being done at the moment, but because something may be done by the government of the United States next year or during the present year. They have conjured up and talked of tariff wars. They have suggested that special sessions of parliament should be called. They have urged that legislation on the tariff should be by orders in council; they have talked about a red-blooded attitude on the part of Canada, They have chosen their ground well, because if there is one thing above another that hon. gentlemen 'opposite are adepts at, it is jingoist pronouncements, more particularly when they relate to the United States. But may I say to my hon. friends opposite, it is not a red-hlooded attitude that is needed at the present moment so much as a coolheaded attitude, and a cool-headed attitude is the attitude which this administration has taken with regard to all tariff matters from the time it came into office, and is the attitude which we intend to continue to take during the time we are serving the people in the position which we now occupy.
May I quote to the house the two amendments that are before us. First of all, may I make this clear, that each of them, though they differ so widely, as I have indicated, are alike at least in this particular, that each is in the nature of a want of confidence motion in the administration. The Minister of Finance has asked that the house should have leave to consider ways and means of raising the revenue necessary to carry on the government of the country. Hon. gentlemen immediately opposite say: No, we will not allow this motion to carry; we ask instead that there shall be increased protection. Hon. gentlemen at the other end of the house say: No, we will not permit the house to consider ways and means; we want the government to go back and consider the question of increasing tihe British preference. My hon. friends know, or they ought to know, that if their motions were to carry, the government would not be

The Budget-Mr. Mackenzie King
aible to consider the very questions they put before us, for the simple reason that the government would no longer be in power, having been denied the right of providing the ways and means of carrying on the administration of the country's affairs. I think that should be understood by the country in viewing the action of my hon. friends when they come to vote on their amendments.


Mr. IRVINE:: Why allow any amendment at all to this budget?


William Lyon Mackenzie King: There	are
times and places for amendments, but the
time and place for an amendinent of the kind before us is not on the budget. May I read, so that the record may be complete, the amendment which is proposed' by hon. gentlemen of the official opposition? It is moved:
That all the words after the word "that" be stricken out and the following substituted therefor;	.
This house regrets that the financial proposals of the government make no provision for reasonably safeguarding and protecting the interests of those "engaged in agricultural pursuits or in industrial" employment in Canada.
Then-hon. gentlemen representing an opposite extreme have the following as their amendment:
That the amendment be amended by striking out all the words after "house" and substituting therefor the following:	_
"urges upon the government the consideration of an immediate and substantial increase of the British preference as a step towards freer trade relations between Canada and other nations.
Returning now to the amendment of the Conservative party, as I have already said, that amendment means nothing other than increased protection. It is interesting to notice what has happened with respect to hon. gentlemen, opposite on the question of the tariff. During the election of 1921 and the election of 1925 and the election of 1926, we heard from hon. gentlemen opposite endless talk about the necessity for increased protection. That was openly and avowedly the policy of hon. gentlemen opposite-increased protection. Wherever they went they talked about the need of increased protection. If they went into a mining district, it was the mining industry that needed protection. If they went into a manufacturing centre, it was the manufacturing industries that needed protection. If they went into a farming district, it was some branch of agriculture or horticulture that needed protection. Wherever they went they always preached protection in relation to the industries of the particular locality. But they did not succeed in 1921; they did not succeed in 1925, and they got a knockout blow in 1926, with the result that immediately afterwards they dropped the word "protection" completely. They had their convention at Winnipeg and they drew up their tariff program, but you can search from one end to the other of that platform and you will not find the word protection" in the whole of it; there is no mention of it, they talk of the "historical fiscal policy of the Liberal-Conservative party." Then when in this house they moved their first amendment, declaratory of their fiscal policy as determined upon at the Winnipeg convention there was not the word "protection" to be found in the whole of it. The idea was there, to be sure, but it was disguised. The action of bon. gentlemen opposite reminds one of something that Lord Asquith said in the last speech which he made as leader of the Liberal party in England. In reviewing the work which the Liberal party had accomplished in the period of his leadership, he referred to an election that bad taken place in Great Britain in 1905,
I think it was, when the forces of protection were so completely routed that thereafter, protection on the part of its advocates never raised its head, but according to Lord Asquith,
" went creeping about under modest and belittling pseudonyms"
They talked first, of " tariff reform " then of " safeguarding," but studiously avoided the use of the word " protection." That is exactly what hon. gentlemen opposite have been doing here with respect to the word " protection ". Their course has not even the merit of originality; it is a. belated imitation of an old country pseudonym. Look at this resolution. They have got here the word "safeguarding", and they have been careful to place it in front of the word that relates more specifically to protection, to sort of shelter it; and they do not even use the word "protection", 'but the word "protecting", afraid to come out with a substantive but as a means of declaring their intention 'having resort to a participle. Let me read this resolution:
This house regrets that the financial proposals of the government make no provision for reasonably safeguarding and protecting-
Safeguarding comes first and then this participle, protecting.
[DOT]-the interests of those engaged in agricultural pursuits or in industrial employment.
Last session my hon. friend was careful to avoid any use even of the participle " protecting." He told all his followers not to use it, or the word "protection," and you can look through their speeches to see how they struggled against employing it, but, here and there, a few broke loose. But after the session was over my hon. friend found the forces around him had been too strong. So
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when he went down bo the eastern townships and some of -the counties along the American frontier where he had a chance to talk to the vegetable growers he himself began to use the word protection. He received some applause, and thought the whole community was behind it. He proceeded then much enheartened to the maritime provinces, and thinking to kill two birds with one stone, he decided to preach protection, and at the same time hy his eloquence help his friends in the provincial government at a pending election. From every parish pump, from every local wharf he preached protection. With what result? Why, the provincial government was nearly defeated. My hon. friend then went back to the west, where he was told he had been talking too much protection. Now, torn between two extremes, he puts forward this resolution, not employing the word protection, but the word "protecting," placing it after, and as it were, sheltering it with the word "safeguarding." That is the position my hon. friend is now compelled to take.


Richard Bedford Bennett: That is better than
domination by Washington.


William Lyon Mackenzie King: That is the
position to which hon. gentlemen immediately opposite have been reduced.
Now, may I say a word to my hon. friends at the far end of this chamber with respect to their particular amendment. As they well know, the British preference has been a part of the policy of the Liberal party from the days when Sir Wilfrid Laurier introduced in the parliament of this country the first measure of British preference. This Dominion of Canada has led the empire in the matter of the British preference; and the Liberal party has led Canada. Year after year we have considered carefully wherein we could justifiably extend and increase the British preference. And may I say to my hon. friends, we intend to continue so to do from this time onward. I want no misunderstanding as to why we have to reject their resolution. It is not because we are not strongly in favour of the British preference. It is not because we have not considered it. We have made some increase in the British preference in the present budget. But I have to tell my hon. friends quite frankly, and I think they must in their hearts agree with me, that there are strong reasons why in this session above all sessions we should do as little as possible by way of change in the tariff. That we believe is the wisest course to pursue.
Next session we will, as I have already said, deal with the situation as we find it at that 
particular time. And we will deal with it in the interests of Canada. The Minister of Finance has, I think, in a few brief words, made very clear what the position of the government is in this matter. Let me read what he said, emphasizing that his words express the policy of the government as a whole:
In so far as we have a fiscal problem, our task would appear to be that of readjusting, as necessity arises, our customs tariff schedules to meet new conditions, other things being equal, of favouring those countries which favour our products. It is our desire to trade freely with any and all who are willing to trade with us. What may, or may not, be possible in this particular necessarily depends in some measure on the purchasing power and the fiscal policies of other countries.^ The policy of this administration is not a high tariff policy; it is a low tariff policy. Its policy is to encourage production at home and the marketing of our excess of production abroad. In applying this policy both domestic and international factors must of necessity be considered.


Mr. EDWARDS (Frontenac):: Is that a
policy or a chart?


William Lyon Mackenzie King: It is both.
Then after reference to the tariff changes submitted to-day, the following statement is made in regard to the advisory board on tariff and taxation:
The board is continuing its inquiries, on which substantial progress has already been made, into several larger problems which involve the consideration of whole tariff schedules and the interrelation of many important Canadian industries. While these inquiries are being pursued, opportunity will be afforded for considering the possible effect on trade of changes being proposed in the tariff schedules of other countries, should they be implemented by legislation.
Now, Mr. Speaker, I say that nothing could be clearer, nothing could be more sensible, than the statement of policy as therein made by the Minister of Finance. We will be guided in the future as we have been in the past by expert advice. We will study carefully the situation as it is and proceed in the light of conditions as we find them. What we may do may not wholly-please hon. gentlemen opposite, but I venture to say it will satisfy the country.
I want to make this further position clear. Of late there has been brought into the discussion of the possible adjustments of the tariff, references to the St. Lawrence waterway. Representations have been made to the effect that in some way or other these two questions were being discussed together, that the one question was being made to relate in some measure to the other. May I say that I can conceive of no greater misfortune than that the question of the St. Lawrence waterway should be mixed up in any way with the

The Budget-Mr. Mackenzie King
question of the tariff of this country or of the United States. Each question must be dealt with separately on its merits.


Mr. CAHAN:: Will the Prime Minister
allow a question?


William Lyon Mackenzie King: With pleasure.


Charles Hazlitt Cahan: Did he not himself suggest that in his correspondence with the United
States?


William Lyon Mackenzie King: I thought my
hon. friend would interrupt me at this stage, so I brought the correspondence with me. I think it illustrates exactly what I was about
to say when my hon. friend interrupted.
When it comes to the working out of any international problem, the success or the failure of the negotiations will depend more than anything else on the atmosphere of trust and of confidence and of goodwill that exists between the peoples who are interested in the particular transaction. I submit that to that extent what may develop out of discussions on cne subject or occasion may come to have it, bearing on the solution of other questions. For this reason I think it all-important that with respect to the tariff as with respect to everything else we Should at all times seek so to conduct our discussions as not to create an atmosphere that is hostile but so far as we can, strive to preserve an atmosphere of goodwill between this country and our neighbours to the south.	_
Now, as to my hon. friend's interjection. On January 31 1928, a communication was addressed to the United States government by our 'minister at Washington, which communication was based on a communication sent iby the present government, and in that communication a reference was made to the tariff. But i't was made in what way? In a way which illustrates the truth of what I have been saying-.the wisdom of not having steps taken with respect to one policy or one question which possibly may come to prejudice the solution of some other question. Here is the statement to which my hon. friend refers. It is the only statement touching upon the tariff in all the correspondence between this government and the United States.


Charles Hazlitt Cahan: There was only one statement.


William Lyon Mackenzie King: Just one, that is right. Let me read it to my hon. friend. But before doing so, may I point this out so as to explain the context: The United States had intimated to us that they felt their western farmers were much interested in the St. Lawrence waterway and they were hoping
that our people would be equally interested, as perhaps they are. And this was what was stated in reply

the reply is to the Secretary of State of the United States:
It will therefore be observed that the transportation situation in the two countries is not identical as to available facilities, extent of use, or rates and that the economic handicaps to which you referred in your note of April 13 appear to have more application to United States than to Canadian conditions. In this connection, it may be said that Canadian agriculture is more directly affected by the restrictions on the importation of Canadian farm products which have been imposed by the United States in recent years, with the object, it is understood, of assisting agriculture in those western states which would share so largely in the benefits of the proposed St. Lawrence waterway. This situation, and the effects upon the maritime sections of Canada of United States duties on the products of the fisheries, are among the factors which have contributed to bringing it about that public opinion in Canada has not so clearly crystallized in favour of the waterway project as appears to be the case in the United States.
In other words, this observation simply emphasizes what I would seek to emphasize to-day. I tlhink it is advisable, so far as our international relations are concerned, that those who are most concerned should have at heart at all times the possible effect of any action of one country upon the other with which it may have any dealings.


Charles Hazlitt Cahan: Will the Prime Minister allow another question. Is not the quotation which the Prime Minister has just read and which has appeared in the press of the United States, the basis of their comments, to which my right hon. friend has referred, as to the mixing of the St. Lawrence waterway and tariff questions?


William Lyon Mackenzie King: I do not think so.


Richard Bedford Bennett: Absolutely.


William Lyon Mackenzie King: Well, they
have an explanation now, which perhaps will help to correct it.	_
I wish to repeat-and I do not think this can be made too clear-that so far as the United States tariff is eon'cemed that is a matter which the government of that country must settle for itself in accordance with its own interest. And the United States will be the first to recognize, if in any action they take our trade with them is adversely affected, that it is our right and our duty, and should be and will be our policy to see to it that we make such arrangements with respect to our tariff as will further our interests in our own way. Having said this much may I again make clear, what I wish above all else to make clear, not only in this connec-
1408	COMMONS
The Budget-Mr. Mackenzie King
tion but in all others, living as we do beside the United States as near neighbours, it is in the interests alike of the United States and of this country, and in the larger interests of the British Empire, that so far as we can, with respect to all our relations, we each conduct our affairs in a spirit which will help to advance mutual interest, and which will help to avoid steps that may lead in the opposite direction.
I have spoken, Mr. Speaker, at greater length than I had intended. I shall conclude by saying, with respect to the amendments which are before the house at the present time, that I hope hon. members will feel that neither amendment is at the present time in the national interest, but that it is very much in the interests of the country to allow the government to continue to carry out the policies which in the past have made for the increased prosperity which we enjoy to-day. Let us get on with the business of this session so that when we come to parliament at another session we may again present a record of further prosperity and again bring in a budget which will disclose to the people of Canada a surplus instead of a deficit, a further reduction in the public debt, and a still further reduction in taxation.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Mr. I. D. MACDOUGALL (Inverness):: Mr. Speaker, at the outset of my remarks may I congratulate the right hon. Prime Minister (Mr. Mackenzie King) who spoke so eloquently this afternoon, in what was without doubt a very masterful speech which did credit to him as the Prime Minister of this country and as the leader of one of the historic political parties of Canada. I shall not attempt to follow the argument of the right hon. gentleman; his speech was devoted to a comparison of a government, his own, exercising power in times of peace, with a government headed by a Conservative leader exercising power in time of war. I shall not attempt to follow him in his argument for the simple reason that I do not consider the Prime Minister a very good authority on the difficulties, financial and otherwise, which confront a government in this country in time of war. My reason for that statement is that during those fearful days when the people of Canada were concerned only with winning the.war the right hon. gentleman who to-day criticized the war government was devoting

his splendid talents to the work of ironing out difficulties for the Rockefeller Institute in the United States. Consequently I do not consider him a good authority on the difficulties confronting a government in time of war.
Since I am in a congratulatory mood, Mr. Speaker, and since I will not be in that mood long, I am reminded that it is an amenity of parliament to congratulate a minister of finance upon the presentation of his budget. Even at this late date I intend no violence to such an ancient and honourable custom, but when I congratulate my hon. friend the Minister of Finance (Mr. Robb) on the present budget I must perforce explain that it is courtesy and not reason that motivates my action. In Canada we are accustomed to consider the budget from two distinct aspects: on the one hand as a tabulation of fiscal and trade figures, and on the other as an indication of public policy. Judged from the first viewpoint the present budget is in many respects satisfactory; it records a year of abounding revenues, something like $450,000,000 having been collected. But, Mr. Speaker, estimable gentleman though the Minister of Finance may be, he is not a wizard; he does not raise these revenues by waving some magic wand. There is only one source from wdiich they come; there is only one way in which they are derived. That source is the people of Canada and that way is taxation, and when my hon. friends make the welkin ring with references to the fact that they have collected $450,000,000 in the form of revenue from the people of this country I point out to them that 90 per cent of that money was collected from the pockets of the taxpayers, either directly or indirectly, in the form, of taxation. I also point out to them that this is the first occasion since 'Canadian confederation was consummated on which any government, Grit or Tory, has taken such an amount of money in one fiscal year from the people by way of taxation. My hon. friends may take what comfort they can from that declaration. I do not know whether they are entitled to bouquets because of that fact; if there are any bouquets to be handed out I will allow the taxpayers to give them to the Minister of Finance.
One would have thought, Mr. Speaker, that there would be a considerable reduction in taxes in view of the revenues which have been derived; one would have expected that these revenues would have been applied in order to reduce the taxes of the poor, common people of this country. But let us see what has happened. Whatever reductions have been

The Budget-Mr. Macdougall
made have been entirely in favour of the *wealthy people of this country at the expense of the poorer people. There is a canon of taxation that has been recognized by every government in every part of the civilized world; economists term it the canon of human welfare. Briefly it means that the strongest backs shall bear the heaviest burdens, that those who can best afford to pay shall pay the most, and that where relief is to be given, it shall be given those who need it most. The Minister of Finance, in his present budget, has completely violated that ancient, honourable and most equitable canon of taxation, because whatever relief is accorded in this budget by way of reduced taxation goes to those who can best afford to pay taxes.
That has been his policy in previous years; during a former session in his budget he took off the duty on angostura bitters so that the rich men of this country might have their cocktails a little cheaper; now he has reduced the tax on pullman car tickets and on telegrams and cablegrams. All these reductions affect only the rich men who can well afford to pay and should pay these taxes, but of what assistance are they to the man on the farm, the man who works in the mine, the man who goes down to the sea in ships, the artisans and workingmen of Canada? Abso-'utely of no assistance whatever.
The Prime Minister has to-day repeated the claim which has been made by his supporters with regard to the prosperity of Canada. There is no doubt whatever that there is prosperity in Canada; there will be prosperity under any government, because the great natural resources with which we are endowed are of such a nature that even the government in office cannot prevent prosperity from coming to this country, much as they may try and they have been trying ever since they assumed office in 1921. We must not judge the prosperity of a country by the reported surpluses in national bookkeeping; we must not judge the prosperity of a country by the reports issued by the large financial institutions. If you desire to find out whether a country is really prosperous you must not go into the mart, to the financial institutions nor to the mansions of the rich; you must go to the homes of the common people and find out how much the sum total of the human value of happiness and contentment has been increased for them by the policies of the government in power. There is considerable philosophy in those lines of the poet Markham in which he says:
We all are blind until we see That in the common plan,
Nothing is worth the making That does not make the man.
Why build these temples glorious If man unbuilded goes,
We build a world in vain unless The builder also grows.
How have the builders of this country, our farmers, our fishermen, our miners and our labouring classes fared under the policy of this government? There are only two ways by which the policies of this government can assist the common people of Canada: one is by reducing the cost of living, and the other is by putting more money into their pay envelopes. What about the rate of wages since this government assumed office? I make the statement, and I challenge contradiction from any supporter of the government, that in every industry employing over two hundred men wages have been reduced since this government came into power in 1921. Not only have they been reduced, but in some cases the reduction has amounted to as much as fifty per cent. So far as the money which goes into their pay envelopes is concerned, the workmen are worse off under the policies of this government. But someone may reply,
" Thev may have benefited in the matter of real wages; the money wage is not important, it is what you can buy with what you get." Well do I remember the right hon. the Prime Minister-and I do not, think he mentioned it in his speech this afternoon-discussing the cost of living while he was in opposition in 1920. I heard him in one of the theatres in Halifax while he was discussing that issue with a sob in his voice and a tear in his eye. He told of how the people were being crushed by the high cost of living, and how he and his government would reduce it. He has been in power since 1921; he has been carrying on his policy of fiscal folly, and what is the result? The result is that ten years after the cessation of war the cost of living is just a little higher to-day than it was at _ the time he made bis pathetic speech >in Halifax.
Let us now consider the second phase of a budget, namely, the indication of public policy. There has been no indication of a policy of any kind so far as the fiscal condition of Canada is concerned. They do not preach free trade; they do not preach protection-they know not where they stand, but they occupy that invidious position which was so vigorously condemned by our divine Lord when he said, "So then because thou art lukewarm, and neither cold nor hot, I will spue thee out of my mouth."
The Minister of Justice (Mr. Lapointe) mentioned this fiscal question in his speech

The Budget-Mr. Macdougall
of yesterday. At this point I might say, in common with all the members of the house, that I am glad to see him again in his place in the house. He brought out a new argument in favour of free trade, in which, by the way, he does not believe. He said that the imposition of customs duties would only mean war; that the nations which raised their tariff to protect their own people, to protect their own markets for their own products, to protect their own workmen in their jobs, were paving the way for a world war. He went further and said that the policy of high tariff was condemned at the economic conference at Geneva through a resolution which was passed there condemning the policy of tariff protection. Of course it was. Why? Because those who were assembled there knew that it wias a pious resolution and one which would not amount to anything. The delegates knew that the tariff was a question of internal policy, and they knew that when they had subscribed to this pious free trade resolution they could go back, as was the case with the United States delegates, and put into effect a tariff policy which would suit the needs of their own people and protect their own markets. My 'hon. friend seemed to take some pride in the fact that Canada, through its delegates, had been able to announce at that Geneva conference that it was the only country in the world, with the possible exception of soviet Russia, which had reduced its tariff. Then he turned around and said in effect that because we had acted differently from every other country we must be right. He puts me in mind of the fond mother who was watching a battalion of soldiers marching by. She proudly said to one of her neighbours, "See, they are all out of step but my Johnny!" The Minister of Justice seems to think that all the other countries of the world have all been wrong, and that Canada alone has been right. I ask him to contemplate the other side of the question; perhaps the rest of the world is right and Canada is wrong.
I am one of those who believe that a country like Canada, with its great diversity of natural resources, is required to maintain definitely the protective principle in its fiscal policy. In Canada we have a country unsurpassed in natural wealth. We have the wealth of farm, forest, sea and mine. We have the potentialities of becoming a great economic and industrial people. We have the opportunities to develop a wealth sufficient to maintain a population of one hundred million people within the confines of our country. When we consider a fiscal question,
HVIr. Macdougall.]
we must not look through the eyes of days nor yet of years; when we are legislating in respect to a matter of policy of this kind, we must look through the eyes of centuries; we must realize that we have an obligation to those who come after us and thus be ever ready to make even a little sacrifice, if that be necessary, to apply the protective principle for the sake of developing our own industries and making us, as far as possible, independent economically of foreign powers. Hon. gentlemen may say that the application of the protective principle may raise the price. What happens, though, if you fail to protect as the government is doing in relation to the steel industry to-day? If you fail to protect, what will be the position of your industries in the future? If you allow your industries to be swamped by foreign competition, to languish and to die, what will be the position in the future? You will be handing over	to a foreign power	the	right	tofix monopolistic prices in the Dominion of Canada in regard to those commodities. Even	if the application	of	the	protectiveprinciple were to mean that we would have to make	some little sacrifice	in	the	matter	ofprice,	the result will be	a	continuity	of
employment, higher wages for Canadian workmen, and an increase in the purchasing power of the people of this country. In that way we shall have real prosperity, for increased purchasing power is the only true basis on which prosperity can be established.
I spoke of the need of protection for our basic industries. Protection may mean some sacrifice, but the principle of progress is the same principle that underlies protective philosophy. What is the principle of human progress in any form? It is merely the ability and willingness of a person, or a people, or a nation, to make present sacrifices for the purpose of securing a greater future economic good. That fact is recognized by all civilized people, and that is the principle which differentiates the civilized from the uncivilized man. We may have to make little sacrifices in order to maintain the protective principle at the present time, but we must look to the days when Canada shall be supporting 100,000,000 people. We must not sacrifice our industries now; we must be prepared to apply that principle of progress, postponing the gratification of present economic wants, and guarding against the day when Canada will become, in the matter of important industries, a vassal economic state.
The Prime Minister stated this afternoon that the trade between Canada and the United States was our greatest trade. That is quite true. It is our greatest trade, but it is

The Budget-Mr. Macdougall
greatest for the United States. Our imports from the United States are as follows:
Year	Value
1928		 $706,289,854
1929		 840,353.000
Or an increase of $134,000,000 in one year. At the same time our exports to the United States are as follows.
Year	Value
1928		 $474,000,000
1929		 497,000,000
Leaving	for	Canada	an	adverse balance	oftrade of	$350,000,000.	A	large amount	of
that adverse balance is made up of steel and steel products, and I wish to speak about this particularly, because it is of special interest to my province. Our imports of steel and steel products from the United States are as follows:
Year	Value
1928	 $249,145,395
1929	 330,953.000
Or an increase of about $80,000,000 in steel and steel products alone in one year. We are importing at present, under the tariff of my right hon. friend, almost $1,000,000 worth of steel and steel products a day from the United States. Yet, while that is going on, we could be producing at least 50 per cent of -those commodities in Canadian -mills, giving employment to Canadian workmen. But they say:	This
is 'the policy we -on this side of the house intend to continue. My right hon. friend said that they were satisfied with it. For my part I will never be satisfied with a policy under any government, Grit or Tory, -that allows foreigners to take our markets and drives our own men out of employment.
I wish to refer now to the steel industry in Nova Scotia. That industry, as a result of the tariff tinkering of this government for a number of years, and because we have been allowing Americans to supply markets which we should have for our own steel products, has gone into liquidation. Some time ago a commission was appointed -by this government- and its appointment was due to the force of public opinion-to investigate the claims of the maritime provinces. That commission visited Nova Scotia and it made a finding. It reported that a bonus should be given on every ton of coal used in the manufacture of steel in that province. That recommendation of the Duncan report has not been implemented by this government. They put up the Minister of National Defence (Mr. Ralston) the other day to defend their action and I never before heard a more faltering more lame, more feeble, more disjointed or more illogical defence than that which the Minister of National Defence gave. It was merely the application of shrewd evasion. He was not big enough to stand up in his -place and say: The government, controlled by free trade sentiment, will not do this. He was not big enough to say: The government has broken faith with the province of Nova -Scotia because it has not done this. But, he said:	No, the government does not implement this recommendation, the recommendation of a commission of its own creation, because there are abuses^ in jhe capitalization and there is not unification of those steel and coal industries. I want to point out to my hon. friend 'that if there are abuses in the capitalization of the British Empire Steel Corporation to-day, he is the last man in this parliament who should speak about them. Representatives of -the British Empire Steel Corporation came to a Conservative government- -prior to 1921 looking for a charter of incorporation and they were refused. They went back to a Liberal government, of which the Minister of National Defence was a member, and enabling legislation was passed bringing that corporation, with whatever abuses it may have had in capitalization, into existence.


Mr. RALSTON:: Just to keep the record
straight, I might say that my hon. friend does me undue honour. I never was a member of that government.


Isaac Duncan MacDougall: I should say that
my hon. friend was a supporter of that government until he was defeated in 1920. We in the province of Nova Scotia claim that the recommendations of this report, made by a commission the creation of this government, should be fulfilled. When we claim that this measure of justice which has been recommended by a commission appointed by this government should be accorded us, we are told by the Minister of Finance that we are whiners. I do not care what they call me, for as long as I am in the parliament of Canada I am going to stand for justice for the province of Nova Scotia.
There is another' very important industry in the economic life of the province of Nova Scotia. It is one of the oldest industries in the province. I watched my hon. friend the Minister of National Defence (Mr. Ralston) making his speech on the budget, and just when his time was about up I saw him look first at his wrist watch and then at the clock, and then he said, " I only wish I had time to devote to agriculture in Nova Scotia and to the fishing industry, which is going ahead by leaps and bounds." Let me tell the hon. minister and this house something about how

The Budget-Mr. Macdougall
the fishing industry in Nova Scotia is going ahead by leaps and bounds, in order that we may have a correct conception of the hon. gentleman's idea of progress, because it is perhaps this very thing that is keeping this country and keeping the government 'back.
In 1890 there were employed in the fishing industry in Nova Scotia 28,224 men; in 1927 there were employed 16,127. This is the industry which is going ahead, according to the Minister of National Defence, " by leaps and bounds," an industry which shows a 50 per cent reduction in employment in the period since 1890. If we take the county of Yarmouth, where my hon. friend found a political harbour of safety when all others had failed, we find that in 1890 the fishing industry in that county gave employment to 1,995 men, and in 1927 that volume of employment had shrunk to 1,076. This is the industry that is going ahead by leaps and bounds, according to the Minister of National Defence. That is what a fisherman would call lobster progress.
Conditions in the fishing industry in Nova Scotia last year were so deplorable that a meeting was held of clergymen of all denominations, and I suppose of all political affiliations, to discuss the exodus of people from the fishing villages of that province. It was pointed out in the public press, over the names of representative clergymen who lived in these fishing hamlets that the fishermen were not able to clothe their children properly, or to send them to school. As a result of the agitation conducted in the province of Nova Scotia by a number of clergymen, backed up by the shore fishermen, a recommendation was made to this government that a commission be appointed to investigate the grievances of the fishermen. That commission was appointed, and it cost the taxpayers of this country in the neighbourhood of $i00,-000. They made their findings to this government, but I did not hear the Minister of National Defence make one single reference to that commission or to its report, nor did I hear any reference to it by the hon. member for Antigonish-Guysborough (Mr. Duff), who last night regaled the house with forty minutes of verbal buffoonery.


Mr. DUFF:: Thank you very much. I am not a statesman like you.


Isaac Duncan MacDougall: Neither did the
Prime Minister make any reference to that report. As a Nova Scotian, realizing the seriousness of the present situation of the fishermen, _ with the fishing hamlets of Nova Scotia being depleted, and the report so states, I ask the Minister of National Defence to-night, what does the government intend
fMr. Macdougall.]
to do about that report? I ask him if he will stand up in justice to Nova Scotia, because we in Nova Scotia look to him as our representative in the cabinet, and tell this house if the government is going to accept the minority or the majority report of that commission. I pause for an answer.


An hon. MEMBER:: Go on.


Isaac Duncan MacDougall: Perhaps if my hon. friend will remain quiet, someone may say something which will give the minister an opportunity to get out of his difficulty in some way. I feel that the people of Nova Scotia are entitled to know what the government is going to do about that report. So far they have done nothing at all that amounts to anything. They have given us one bill that is wholly innocuous, that does nothing, that leaves the situation exactly where it was. What is the government going to do about a minister of fisheries?


Henry Herbert Stevens: Ask the hon. member for Antigonish-Guysborough.


Isaac Duncan MacDougall: The hon. member
for Antigonish-Guysborough has devoted his whole life to the fishing industry in the province of Nova Scotia, and a great many of us down there, Liberals and Tories alike, consider that he would make a proper minister of fisheries. It is rumoured down there that the Minister of National Defence opposes his appointment. I hope that is not true. I would welcome the appointment of my hon. friend because I believe that he knows a great deal about the fishing industry, which he has been engaged in all his life. We need somebody at the head of that department at the present time who knows something about the fishing industry because we have before us to-day a proposal to amend the Fisheries Act, and one way in which they are going to amend it is by giving Nova Scotia a statutory lobster season. Those of you who know anything about fishing in the province of Nova Scotia know that the lobster season opens at different times in different counties on account of ice and weather conditions, and if a statutory lobster season is enacted the fishermen of my county or the county of Yarmouth or cuf some other county might be able to fish for only ten days while the fishermen of another county could fish for twenty-five or thirty days. I have read in ancient mythology how Ajax defied the lightning, and I have read in English history how an early English king, flattered by his followers into believing that he possessed the power to command the elements, allowed himself, in order to confound them, to be taken down to the

The Budget-Mr. Bourassa
seashore, where he commanded the incoming tide to recede, greatly to his own discomfiture.
I have heard of those things, Mr. Speaker but in no other civilized country of the world have I heard of a department trying to legislate against wind and wave and drifting ice.
Another proposal in that fisheries report was for the extension of long term loans to fishermen. That has not been carried out; in fact, none of the recommendations of that report has been carried out, and the situation is very serious. For the information of the house let me read a few extracts from that report. The commission say;
While the figures given to us in specific localities cannot always be accepted as accurate, there is abundant proof of decline in boats, small vessels, equipment and population. There is ample evidence too on every hand that young men are not entering the shore fishing industry in large numbers. This is doubtless because of its lack of promise of an adequate livelihood, rather than because of its lack of inducement as a calling; although hazardous, in itself it should be an attractive pursuit, which offers independence in labour, and which, under more favourable conditions, should yield a fairly large return for the labour and capital invested compared with other industries. A remedy-
So the commission says.

must therefore speedily be found, and the remedy should be prompt and drastic.
Well, it is not very prompt; but I hope it will be drastic when it comes, if it ever does.
In default of a remedy, it is not improbable that the fishing villages of the maritime provinces may soon be even more seriously depopulated.
Those are words from the report of commissioners appointed by this government to investigate that industry, which according to the Minister of National Defence is going ahead by leaps and bounds. Now, these men either knew their business or they did not. If they did not know their business, they ought not to have been appointed as commissioners. If they did know their business, the situation they reveal is so serious that it calls for prompt action on the part of this government, and we on this side of the house demand that such prompt action be taken.
Now, Mr. Speaker, as I said, I am one of those who believe in the maintenance of the protective principle in the fiscal policy of our country. I believe that the Canadian market should be protected in so far as possible for Canadian producers; I believe that Canadian labour should be given a preference in Canada; I believe that Canadian products should be transported over Canadian railways and shipped through Canadian ports. That is the 78594-90
historic policy of the great party to which it is my privilege to belong, and because that is its policy I belong to it.
But there is something else needed, Mr. Speaker. We need in power to-day a government that will protect the interests of the common people and give them a chance to live; that will develop the great wealth of farm, forest, sea and mine; that will make available to our people the myriad opportunities which this great young country should present to them. We need a government that is able to take, and will take, courageous action in the defence of Canada and the Canadian people when it is needed in the matter of tariff application. But-


Mr. DEPUTY SPEAKER:: Time.


Isaac Duncan MacDougall: I thank you.


Mr. HENRI BOURASSA (Labelle):: - Mr. Speaker, I hope my young and sympathetic friend from Inverness (Mr. Macdougall) will not think it discourteous on my part if I do not follow him in his remarks. My intention is to devote what I have to say mainly to the subamendment proposed by the member for Battle River (Mr. Spencer).
Last session, with the greatest of pleasure I supported my friends in their subamend-memt to the budget, but I am forced to say that on this occasion I am far away from the position they take. Let us look at their motion. It is short. It-
-urges upon the government the consideration of an immediate and substantial increase of the British preference as a step towards freer trade relations between Canada and other nations.
Ever since this subamendment was moved I have studied it in an endeavour to find out what my friends are aiming at. Had they worded their motion in this form:
-urges upon the government the consideration of an immediate and substantial increase of the British preference as a step towards closer trade relations between Canada and other British countries,
I could understand it. Or had they advocated a general policy of preference as a step towards freer trade relations between Canada and other nations, again I could have understood their purpose. But I think I demonstrated two years ago, and I will demonstrate this evening, that the most efficient manner in which this government can be helped or forced to adhere to a stand-pat attitude in tariff matters is precisely to be found in the policy advocated to-day by members in the opposite corner.
I wonder if they have ever gone over the history of the British preference policy as introduced and applied in Canada. The mem-

The Budget-Mr. Bourassa

ber for Frontenac (Mr. Edwards) made a very timely remark the other day when he said the first advocate of this policy was Sir Charles Tupper. Even before he 'became leader of the Tory party, when he was still High Commissioner in London, Sir Charles was actively engaged in furthering the policy launched by Joseph Chamberlain as a protective policy for the British Empire. As everybody knows, Chamberlain's dream was to organize the British Empire on the pattern of the German empire

not the liberal-minded German empire, but the Tory, Prussianized fabric which aimed at creating economic as well as military domination on the continent of Europe. Chamberlain, so aptly described by Gladstone as the first English politician of the Yankee type, wanted to induce the English people to imitate at once the Yankee policy and the Prussian policy. One 'of his main arguments was that the British Empire should be self-sustaining in matters economic just as was the German empire and the great American commonwealth. Sir Charles Tupper caught that idea with enthusiasm, and became an apostle of inter-imperial preferential trade as advocated by Chamberlain.
This was the position when the general election of 1896 took place. Three years before, the Liberal party, at their famous national convention hel.d here in Ottawa, had pledged themselves to the wiping out of every vestige of protection. But when the general election came they accepted subscriptions from the manufacturers' association. Therefore once the election was over they had to make a composition between their preelection pledges against protection and the pro-election assistance they had received from the people interested in maintaining protection. It was then that they caught up that cunning device of the British preference, which on the one hand they offered to the " free trade on principle " Liberals as a reduction of the tariff, and on the other hand to the protected manufacturers as an obstacle to any further reduction in the tariff. The difference between the preferential policy as advocated by Joseph Chamberlain and Sir Charles Tupper, and the British preference as adopted by the Liberal government of Canada in 1897 was this: The genuine article was to be a protective policy for the whole British Empire; as adopted by the Liberal government of Sir Wilfrid Laurier it was a protective policy for British capital, for British industry and for British labour, as against Canadian capital, Canadian labour and Canadian industry. As a matter of fact it worked out largely in that

way, with the result that all or most of the complaints that arose from the industrial sections, at least in the province of Quebec, as against foreign competition, arose from the operation of the preferential tariff.


Mr. EVANS:: Was protection in Sir Wilfrid Laurier's mind when he introduced the British preference in 1897?


Joseph Henri Napoléon Bourassa: I cannot say. I never
try to find out what is in people's minds. I simply try to put a reasonable construction upon their actions. The policy advocated by -the fullfl-edged imperialis(t Tory protectionist was an all-round tariff for the whole British Empire. The policy as devised and applied by the Liberal government of 1897 was a combination of their pre-election free trade principles and of the Tory imperialist protective policy. It worked to this effect, that it not only enabled the British manufacturer to take advantage of it as against foreign competition in Canada, but also enabled some skilful English agents of continental manufacturers to have goods made in France, -but more especially in Belgium, Holland and Germany, finished to about 85 or 90 per cent, brought into England, marked as British goods, and entered as such into Canada under the preferential tariff. That practice was inaugurated about 1899-1900, and it has continued ever since. So that this so-called policy tending towards freer trade resulted as a matter of fact in a measure of protection for the British manufacturer, for the British trades agent, for the Dutch manufacturer, for the Belgian manufacturer and for the French manufacturer. There is only one class of industrialists that has not benefited by it, and that is the Canadian industrialists. From the moment this was discovered there was a tendency on the part of the Liberal government of that day to revise their policy. As a matter of fact, at the imperial conference of 1902, Mr. Fielding served notice upon the British government that unless, by some measure of reciprocity, they implemented their recognition of the advances made by the Canadian parliament and the Canadian people, the Canadian government would revise their policy in favour of the Canadian producer. This was never done except in minor instances.
Then came in England the famous campaign to which the Prime Minister (Mr. Mackenzie King) made allusion this afternoon-the tariff revision campaign in which Mr. Joseph Chamberlain displayed, perhaps to the highest degree possible, all his political activities and, with qualification, his genius. In that campaign Mr. Asquith, later Lord Asquith, was the main political instrument which de-

The Budget-Mr. Bourassa
feated Mr. Chamberlain's advocacy. But what really carried the day as against the Tory-Prussian-Yankee policy of Mr. Chamberlain was the common sense of the British people, who did not wish to have a new pattern imposed upon them, but preferred rather to stick to the policy which has made Great Britain what she is to-day, the mistress of industry and trade the world over. What I cannot understand is that good Canadians, whether they call themselves Liberals or Progressives, who appear to sympathize with either the fiscal or the general policy of the Liberals or the radicals of England, should cling to that so-called British preferential tariff, which is the one hope of the Tory imperialist protectionists to regain in the future what they lost in 1905.


Donald MacBeth Kennedy: Is my hon. friend advocating the wiping out of the preference?


Joseph Henri Napoléon Bourassa: faires, les exagerations direetes ou indireetes de prot-ectionisme, de discrimination ou de preference, les obstacles apportes aux transactions inter national es par des reglementations abusives des transports, doivent etre condamnes.
Us se declarant en consequence favorables a toutes mesures qui tendraient a la suppression de telles barriferes artificielles, qui s'opposent a la libre reprise des relations economiques d'a-vant-guerre entre les nations.
This answer was subscribed to by such men as Horace Finaly, Directeur general de la Banque de Paris et des Pays Bas, It. Laede-rich. Regent de la. Banque de France, R. Masson, Directeur general du Credit Lyonnais. The Italian ansrver was still more to the point; fortunately it was in English, so all the members of the house will be able to understand it.


Mr. JACOBS:: What about the French?


Joseph Henri Napoléon Bourassa: At least those members of this house whose education has been completed, as is the case with my hon. friend, will have the advantage of understanding both. The Italian reply was as follows:
The undersigned, whilst signifying their agreement with the spirit which has dictated the above manifesto, wish to place on record that had it been possible for them to cooperate in the framing of the document, they would have preferred to give a different and more precise form to some of its passages. Above all, they would have liked that criticism should have been exercised not only as regards the excessive height of customs tariffs and the rigidity of customs regulations in force in some countries, but also in respect of all the numerous forms of direct or indirect protection, discriminations or preferences, artificial subsidies and restrictions on emigration.
With such reservations they willingly subscribe to the manifesto.
As I have already said, I happened to be in London then and I had occasion to meet some of the men who were instrumental in preparing the program for the next Geneva economic conference. Naturally they were struck, as I was, with these replies, and saw the difficulty immediately; they realized that in order to obtain a unanimous vote at the economic conference to be held in Geneva six months later they at once had to satisfy the legitimate protests of the French and the Italians,-of the Germans also, who thought likewise but who did not care to express their views in writing,-and generally all other peoples, while at the same time avoiding the embarrassing position of antagonizing the Canadians and Australians present at that conference in order to please the foreigners. So this milder form which I read a moment ago was adopted unanimously by the conference, leaving out the word "preference" but keeping in the body of the report the 
protests of the French and Italians and leaving it to the intelligence of economists and statesmen to realize that by "discrimination," as a form of indirect protection, they meant such measures of preferential tariffs as we have in Canada and as they have adopted in Australia and South Africa. Once before, I compared this attitude with the truce offered by Mr. Winston Churchill, a few years before, the war, when on the one hand he was proposing to the German government that Great Britain would curtail its program of shipbuilding to a certain number of ships if Germany would do likewise,-in the proportion of 16 to 10 if I remember correctly,- while at the same time he was encouraging Canada and Australia to build those ships which England would agree not to build, under the concealed condition that if war arose all the ships would be banded together and England thereby would maintain the same ratio of superiority which she agreed to reduce.
Naturally the foreigners were no more deceived in 1926 than the Germans had been in 1912; and one of the reasons why this report has not been followed up by practical action is simply because there stands to-day in the way of a general scaling down of tariffs the world over what remains of the Tory imperialistic policy fostered by Joseph Chamberlain and partly adopted by Canada and Australia. Because I have discarded all that I held in my young and crude days of faith in protection, for the last ten years I have never ceased to denounce this so-called British preference which, as I have explained, is just as much a preference in favour of the continental manufacturer and labourer as it is in favour of the British labourer and manufacturer. It is one of the obstacles to the adoption of a low tariff policy by Canada or Australia, and it is one of the foundations upon which British protectionists have laid and now maintain their hopes for the future. That is my first and main reason for not accepting the subamendment proposed by the hon. member for Battle River.
The hon. member for .Peace River (Mr. Kennedy) has put to me a very pertinent question; he has asked me if I would advocate the immediate wiping out of the British preference. Of course I would not. I agree fully and unreservedly with the closing words of the Prime Minister this afternoon; and once more I find myself in a more British state of mind than many of my so-called Anglo-Saxon colleagues in this house. I do not believe in a precipitous policy. I think it was wrong to adopt the British preference in the first place; we did it in good faith, but I think we must

The Budget-Mr. Bourassa
prepare for a revision of that policy and of our whole fiscal policy as well by way of a scaling down of the tariff; but we cannot do it all at once. I think the Prime Minister struck the right note when he said that just at the time there may be a change for the better or for the worse-we do not know-in our neighbour to the south, is not the time for this government either to make or to announce any radical change in its fiscal policy. What is the use of boasting, like big children, that we can either play with the United States or quarrel with them? A tariff war as between Canada and the United States would be just as foolish, just as senseless and just as suicidal as a physical war against that great country.
We must face the facts as they are. Where can we find on the continent of America allies who will support us in either a fiscal or a physical war against the United States? Are we to apply to Senor Calles or his brigand successor to help us out against that country? Those Mexicans already are pawns in the hands of the American government. No, Mr. Speaker, the Prime Minister is absolutely right when he says that we must frame and maintain a sensible, moderate policy according to circumstances, which will suit the requirements of the Canadian people from time to time. We need not frame our policy to suit or to antagonize the Americans or to suit or antagonize the British or any other people on earth. It was a foolish thing to introduce the factor of sentiment into our fiscal policy in 1897; it would be just as foolish to introduce another form of sentiment, wicked sentiment this time, against the United States, in any change we may make in that policy. Let us play our game according to our own situation and our own strength. If the American market is to be closed to us to a greater extent than is the case to-day, I suggest, not as a set policy but as one of the factors of our economic situation which always must be in the minds of the men who are responsible for our government, that they must prepare to find some other markets. The greater our production becomes the greater will be the necessity of going further away for markets, at least so long as that great consuming market of
120,000,000 people is closed to a large extent. Therefore again in that respect I approve of the policy generally pursued by this government in looking out for other markets for our export trade. But, just as the maintenance of the British preference is the main obstacle to the reduction of our tariff generally, as far as our internal fiscal policy is concerned, so the maintenance of that British preference is the main obstacle to our making trade relations easy with the other countries of the world. I stated a moment ago that I supported the policy thirty-two years ago; but at that time it differed very widely in principle from what it is to-day. The preferential policy adopted in 1897 was a standing offer by Canada of reciprocity with any country, British or foreign, which was prepared to tra/le with us on fair terms. It was first offered to Great Britain because of the trade relations with her, and there was no objection to that, although Great Britain did not give us anything in return in those days. The British treated us just as they treated the Americans or any other people, because they had the sense to frame their fiscal policies according to the needs of their economic life and not according to some foolish outburst of sentiment. Sentiment has its place, but common sehse and business principles should apply where it it is a question of business. This is one of the many things we have to learn from the people on the other side.
Let us frame our policy for Canada as the British have framed their policy for Great Britain. I think that is the best tribute we can pay to British genius with regard to matters of policy or of economics, and it is a tribute they would appreciate. They do not appreciate that kind of soft water loyalty carried into the sphere of business; they simply laugh up their sleeves at us, and they are doing only what is right. They think we are still children, acting like children, shouting like children and singing like children, but not trading like men. The best manner in which to approach the British, or any other people on earth, is by taking business seriously and acting in a businesslike manner when it is a question of business. When it is a question of sentiment or a display of friendship, talk and sing sentiment as much as you like, but when it is a question of business, deal with it from a business point of view. I always thought that that was the point of view of my friends from the west. I always thought that they desired a change from indirect to direct taxation; but their advocacy of the maintenance of and increase in the British preference is the most concrete obstacle they could put in the way of the carrying out of what I have always considered to be their main policy.
If we are to do something tangible towards carrying out the resolutions which were adopted at Geneva last year for the establishment of economic peace, for the elimination of obstacles to trade, the establishment of a liberty of trade which would permit
14HS
The Budget-Mr. Bourassa


Mr. GEORGE SPOTTON (North Huron):: is more than I can find in the pages of history. I have in my library Hansard almost from the first time it was published, and looking over all the Hansards as I have done, it seems to have been the bounden duty of every government after they have been one year in office -and it takes them about a year to get things well oiled and greased and running smoothly to claim in every speech from the throne that the country is prosperous. The next year it is more prosperous, the third year more prosperous still, and so* on. This administration is something like Doctor Coue: every day, in every way, they are growing better and better. But this seems to be a duty which followers of an administration must perform. They will admit in private that things are not prosperous in the country, but, in their public speeches they must proclaim that Canada is prosperous. In past history, when any young country was prosperous it always increased in population, yet under this administration since 1921, notwithstanding the fact that they have spent $16,000,000 on immigration, to bring in 660,000 immigrants and drive out 700,000 people, we are not keeping even our natural increase. I wonder why so many are leaving for a foreign soil when this country is so prosperous. But I will come back to that in a moment.
I	should like to use as my text to-night a statement of the Hon. Thomas A. Crerar, made in Winnipeg after he had attended a convention in Regina on August 6, 1925. He says:
In the minds of many thoughtful people the course of the present government at Ottawa on domestic affairs has been marked bv inefficiency and drift.	J
Inefficiency and drift. Those are not my words, Mr. Speaker. They are the considered opinion of the Hon. Thomas A. Crerar. He goes on to say:
That the King administration had largely failed to implement its platform on tariff and bad krgdy failed to introduce economies in public expenditures that would lead to reduced taxation, which was imperative; that the financial condition of the country was extremely serious, and that as Canada could not longer support a burden of taxation such as we have at present in the face of reductions of taxation YY-6 Urn ted _ States alongside of us, this condition or affairs might have very serious consequences.
If the speech made by the Prime Minister this afternoon had been made on the hustings during an election campaign, I could have congratulated him upon his excellent stump speech, but in the parliament of Canada the Prime Minister is supposed to have vision, and to lead and point the way. But I ask you, Mr. Speaker, what high-sounding 
note of statesmanship fell from his lips today? We knew nothing more about his policy, if indeed he has one, when he sat down than when he rose. I heard the Prime Minister speak in my own county, in a grove at Exeter, when the Minister of Public Works (Mr. Elliott) was with him. I heard him make just as good a stump speech there as he did this afternoon, but it did not mean a thing. He advocated some kind of reform of the senate, as he has done in this house, and he had an example before him-I think he must have been a teacher at one time, because he believes in teaching by example. He had on the platform with him a senator who has since gone to his reward, and after the Prime Minister had said, "I have appointed this man with strings to him, and I can pull them at any time. Ho must support any legislation that I may propose for the reform of the senate," this senator got up and said, " Yes, that is correct. I was appointed under those conditions." A fine way for the members of the other chamber, who are supposed to sit as judges in the land, to be appointed, that when " Bunty pulls the strings " they will obey his order. Right in this house in 1924 the Prime Minister made a characteristic grandstand gesture in regard to reforming the senate. He told the country prior to the opening of the session that the government were considering legislation looking to a curtailment of the powers of the senate, but that the government were anxious that the country should be convinced of the necessity before pressing it on the attention of parliament. He assured the House of Commons:
I desire to assure the house that when parliament reassembles steps will be taken by the government to obtain, if 'possible, means whereby bills may be enacted by and with the advice and consent of the House of Commons un-v- ^Editions similar in principle to those which have been sanctioned by the parliament of the United Kingdom.
He was asked by the Right Hon. Arthur Meighen just what steps he proposed to take, and the Prime Minister declared that the government would consider the matter during the recess." Well, the recess 'passed, the house opened, and the Prime Minister informed the house that he proposed to call a conference with the provinces upon the question. Near the end of the session, on June 18, 1925, Mr. Meighen again asked whether the government had anything to lay before the proposed conference, and the Prime Minister replied that the government had considered no recommendations and had nothing to offer, but would take up the matter in the recess. Sir, there have been many recesses and many sessions since then, and I can only think that the gestures of the Prime Minister were made

The Budget-Mr. Spotton
for vote-oaitiohing purposes. I take it, sir that when I heard the Prime Minister in that grove at Exeter declare that he would reform the senate, either he meant what he said or he did not. If he meant it, what does he propose to do to-day about it? If he did not mean it, then I ask this house and this country what construction can they put upon future pledges when a pledge like this one was so solemly given and so lightly broken?
Again, speaking at Richmond Hill, and I remember that he spoke in the same way at Exeter, the Prime Minister said that he had been handicapped 'by lack of a majority behind him in the house. He had in the back of his head some great beneficent and benign legislation for the good of the people of this country, but he did not have the necessary majority to crystallize his ideas into legislation, and he pleaded with the people all through that campaign to send him back with a stronger following in the house, or he would refuse to carry on. Well, Mr. Speaker, he went to the country with 117 members behind him and he came back with 101 members, and still he hung on, notwithstanding that he was defeated; he tried to direct the government of this Dominion from the galleries, and he thought that I should not enter the house because I did not have a permanent leader at the time of my election.
Those were tiwo of the promises which the Prime Minister made. He also said that he would lower the cost of farm implements to the farmers of Canada. So far as Ontario is concerned, farm implements are no cheaper to-day than the day on which the Prime Minister made that statement. He also said that he would reduce the cost of living for the common people. Yet the Minister of Labour (Mr. Heenan) tells us that the cost of living is higher to-day than it was then. But I am not going to take up further time to enumerate further promises which this government has broken. This administration is long on promises and short on performance.
The Prime Minister said 'this afternoon that the government had done a great deal for the farmers of Canada. I have prepared a little budget for a 100-aere farmer in my constituency. He does not agree with me politically, but he has a good 100 acres of land, and that land with the implements and the stock on it are valued at about $10,000. I submitted this Little budget which I prepared and which was approved by some of my agricultural friends. This farmer has $10,000 invested in his plant. He has as good a right to have interest on his capital investment as any business man in this land, and 7 per cent
on $10,000 is $700. I know there are men in this house who think that anybody can farm at a profit. There are men who have made a success in other lines of business who think that anybody can make a success in the science of agriculture, but I want to tell you Mr. Speaker, that it takes a .man of special calibre, special fitness and special training to make any kind of success in agriculture at the present time. I am also allowing in this budget a salary of $1,200, or $100 a month, or $23 a week to the farmer. Surely the man who has the ability to manage a farm and toils from the rising to the setting of the sun should be allowed $23 a week, or as much as a mechanic in a factory; that is, $1,200 a year. His taxes and insurance cost him $100; depreciation on buildings and fences $200; depreciation on implements, work horses, harness, and so on, $100. His wife is more than a housekeeper; she spends at least half her time with the poultry and the dairy, and I am allowing her the magnificent salary of $12.50 a month; that would be $150 a year. He cannot run this farm alone, he usually has a son fifteen, sixteen or seventeen years of age, who, if he were in the city would be earning some money; I am allowing that boy $7 a week-$365 a year. Then, as governments always have a place for contingencies or incidentals, I am allowing the farmer incidentals of $185. This means that on his 100 acres of Land he would have to make $3,000 in order to secure a 'bare living. According to the Minister of Labour that would leave nothing for clothing and many other articles; it w-ouildi just be a bare living and interest on. his investment. Now, to make him prosperous I think he should have $1,000 a year to the good if he wishes to send his children to high school and later to university. This would give him $4,000 a year, which I think a man ought to make on 100 acres of land in my county before you can say farming there is prosperous. I leave it to the judgment of this house and, as government members say, "to the country"-they are always particular about the country-whether or not 100 acres of land should return the farmer-owner this sum of money annually.
A farmer-not of my political persuasion- has given this definition of a farm: "It is a piece of land surrounded by prosperity." Well now, if it is bounded on the east by banks and trust companies, on the north by great manufacturing and industrial concerns, on the west by brokers and so on, and on the south by departmental stores and chain stores, then I think the definition is correct.

expend the money voted, then a threat is made. I should be pleased if the minister would assure me that he was only joking. I shall have another occasion to do justice to this great harbour, which this winter accommodated twenty-two vessels carrying five and three quarter million bushels of grain.
I should like to have said something in regard to the mail service but the minister is not in his seat. I shall leave it for another occasion. However, let me give one illustration of economy on the part of the Postmaster General (Mr. Veniot). The Postmaster General has shown considerable human sympathy in my constituency and has done several things for me for which I am grateful. But consider this incident, of a rural mail carrier in the village of Auburn. Let us say the post office was where the Minister of Finance sits; they moved it down to where the Minister of Public Works sits. A distance of thirty-nine rods and a fraction was involved, and the department sent a highly paid inspector there to measure that distance. He found it to be thirty-nine rods and so they docked the man $10.48 a year. Yet this government is the friend of the working man.
This friend of the farmer has also shown its interest in agriculture. In 1912 the late government put aside $10,000,000 for agricultural instruction in the different provinces. My province was to receive $336,303.26 per anqum, and with the grant they got they built the Kemptville agrricultural college, and undertook to secure agricultural representatives in the various counties. In this regard I have a statement which I will ask the privilege of putting on Hansard. It shows how the grant was apportioned in Ontario: Ontario Agricultural College-
Salaries and expenses	 $ 9,000 00
Agricultural School and Farm-
(a)	Capital expenditure $ 3,000
(b)	Administrative and
teaching staff, and maintenance and equipment	 49,000
Instruction and Demonstration-*
Agricultural representatives.. ..
Extension work in household
science	
Demonstrations in vegetable
growing	
Cooperation and markets..	..
Short courses for winners of field crop and live stock competitions including travelling and
living expenses	
Lectures on horticulture	
Demonstration work on soils..
Drainage work	
Fall fair and field crop judges.. Demonstrations in live stock and
poultry	

Elementary Agricultural Education-
To provide for and encourage the teaching of agriculture in high and public schools	 24,000 00

But when this government came into power they did not know what to do. Their love for the farmer was great, but it is great only during election; and this money which was intended to assist in agricultural education they could not continue granting. They put up the sum of $200,000 for one year, and the minister said that they were going to bring in a resolution at the next session either to improve or to extend the system, or just to leave it as it was. However, the upshot of the matter was that the vote was cut off entirely, as were federal aid to the farmers for good roads and federal aid to the farmers' sons for technical education in my province of Ontario. The former administration had granted over $1,000,000 a year to my province to assist in agricultural education, to encourage good roads and to assist in technical education. They continued it during the war, but this government rudely cut it off.
Now I should like to devote a few moments to the sales tax. I think a mistake was made when the title of " doctor " was conferred upon the Minister of Agriculture (Mr. Motherwell) instead of the Minister of Finance. When this government came into office they found the sales tax at 3 per cent; they forthwith raised it to 5 per cent and then to 6 per cent. The consumer was carrying a bag on his back with three stones in it; this government placed three more stones in the bag and then each year took out one stone and said " What good fellows we are." They got into the elevator at the third floor; they went up to the sixth floor and then returned to the third, but in the meantime they extracted hundreds of millions of dollars from the buying public, the poorer class of people in this province. Time and again the party on this side of the house pleaded with the government to abolish that tax. They have more than abolished that tax now; when the Minister of Finance made the reduction from 6 per cent to 5 per cent he said it was a reduction of 16J per cent; when he reduced it from 5 per cent to 4 per cent it was a reduction of 20 per cent; when he reduced it from 4 per cent to 3 per cent it was a reduction of 25 per cent and now that it has been reduced from 3 per cent to 2 per cent there is a further reduction of 33 per cent. If we add those together we find that already the sales tax has already been reduced by 115 per cent. If next year it is
52,000 00 136,000 00 1,500 00
4.000	00
6.000	00
1,000 00 750 00
9.500	00 4,751 57 2,000 00
3.500	00
APRIL &, 1929
The Budget-Mr. Hepburn
reduced one per cent more that will be another reduction of 50 per cent, giving a total of 165 per cent, and a further one per cent reduction in another session will enable the minister to reduce the sales tax another 100 per cent making it in all 265 per cent; but the chances are that he will take it all off in one swoop before the next election. I commend him to the public; figures cannot lie.


Mr. M. F. HEPBURN (West Elgin):: Mr. Speaker, I believe it is usually in order to congratulate the preceding speaker, and I desire to take this opportunity to pay tribute to my good friend from North Huron (Mr. Spotton). I am always interested in his speeches and particularly in the dramatic manner of his delivery. If one did not know the other side he probably would take a literal interpretation of his whole speech.
My hon. friend made an accusation against the Minister of Public Works (Mr. Elliott), claiming that the minister was unfair to the constituency represented by my hon. friend. On behalf of the Minister of Public Works I want to say he is not that type of man; I think our Conservative friends are in a position to know that full well, because within one year they tried on three occasions to defeat him in his own riding. At each election he increased his majority; the last election gave him a majority of 2,660, and I think any candidate who opposes him at the next election will proibaibly lose his deposit. I want to say that we new and inexperienced members from southern Ontario owe a great deal to the Minister of Public Works; any one of us would rise to his defence on an occasion of this kind.
The hon. member for North Huron went further and made some caustic references to the Prime Minister of this country. This afternoon we heard the Prime Minister deliver an address which in my opinion was a masterpiece; I do not think any man could add to or take away from that speech. Today, despite all the unfair criticism of the Tory press in years past, the Prime Minister stands high in the estimation of the people of Canada, and after he appeals to the country at the next general election I think our Conservative friends will be found still gazing with longing eyes at the treasury benches across the floor of the house. I think the Prime Minister has demonstrated in no uncertain way that he is well able to emulate our grand old chief, Sir Wilfrid Laurier, especially in the way he picks his cabinet, because we feel that the men who grace the treasury benches at present are the ablest and best body ever to hold office in the history of this country.
I say this government need have no fear with regard to what may happen at another general election, because they are carrying out a policy applicable to the needs of this growing young country. During the last three general elections our Conservative friends appealed on the old protectionist platform, but on each occasion they came back in the minority. The policy applicable to the needs of Canada certainly is one of trade expansion, and I want to say that that policy is being well carried out by the present Minister of Trade and Commerce (Mr. Malcolm). That fact is demonstrated by his successful negotiation of trade treaties with many countries throughout the world, so that now our goods are moving freely into the world markets. We do not need to go back very far in history to ascertain how the restricted trade policy brought grief to this country; each time our Conservative friends were in office they created such hard times that we had economic revolts, especially in the rural sections, as witness the formation of the Grange Patrons of Industry and the United Farmers of Ontario. In order to ascertain the effects of such a policy we need only point to the sad plight of the American farmers, due to the fact that they subscribed to the very doctrine expounded by our Conservative friends here. Because of the trade policy of this government I think we are probably the most prosperous country in the world.
But of course our Conservative friends shout hard times when in opposition; then they create hard times when they are in power. During last session I was very much interested in listening to the various members from the city of Toronto get up in this house and tell us of the terrible conditions existing in that city. I do not doubt but that some of them were wise enough to realize that- such conditions did not exist, but like the little birds in the nest they all held together for fear they would all fall out. When it comes to calamity howling, however, they have to yield the laurels to the hon. member for Hamilton, because I think he may be well dubbed the "Calamity Ann" of this house. However, after listening to all this talk of the terrible conditions in Toronto I had occasion to attend a banquet in that city, at which the mayor of Toronto said that his city was the most prosperous city not only in Canada but on the North American continent. That was enough to make me gasp with amazement, but the mayor elaborated the point, quoting all the building figures and telling of the preparations they were making to provide for a population of 1,000,000 happy people.
The Budget-Mr. Hepburn


Mr. RENNIE:: There are two members
from Hamilton in this house; to which one did my hon. friend refer?


Mitchell Frederick Hepburn: They are both pretty
good calamity howlers but I meant the other hon. member, the one who specializes in it.


George Septimus Rennie: I am asking a question;
which member did my hon. friend mean?


Mitchell Frederick Hepburn: I said I meant the other member, the one who spoke of people of Hamilton going out on the Hamilton mountain and living on the grass that grew thereon. Now that my hon. friend has brought the matter back to my mind I remember reading in the press that during the last municipal election in Hamilton there were so few unemployed that they could not find enough men to man the polling booths. I say all this talk is made for a purpose; there is no substance to it; it is just political talk, and it recalls to my mind a quotation from Shakespeare:
All the world's a stage
And all the men and women merely players:
They have their exits and their entrances;
And each man in his time plays many parts.-
It seems to me that the last part of that quotation may well apply to the hon. member for South Wellington (Mr. Guthrie) and the genial doctor from Fort William (Mr. Manion), because I recall that at one time they were pretty good Laurier Liberals, although now thqy are gracing the front benches of the Conservative party. I recall the first political meeting I attended, at the age of five, when I heard the then brilliant orator from South Wellington expound true Liberal doctrines. Since then he has changed, but he has joined a group which also changes; in 1911 hon. gentlemen opposite told us that the American market was of no value to us at all, that we wanted no truck or trade with the Yankees. They had their poor, deluded followers throughout the country; I remember one man who got up publicly and exclaimed dramatically that he would rather have his right hand cut off than have reciprocity with United States. He happened to be a cattle drover; a little later the price of cattle rose on the Buffalo market, and he was scurrying around trying to buy up cattle to sell on that high priced market. Now, however, the situation is so serious that the red-blooded gentleman from Fort William is advocating red-blooded Canadianism-I think he got the expression from reading Andy Gump-is advocating a special session of parliament to deal with this question of retaliation. The American congress is going to be called together to enact legislation which will make the American people pay more for their

necessities of life. They are going to make the consumer pay more for the bread he eats and the butter he uses; they are even going to make the baby pay more for his milk. And our Conservative friends, headed by the genial member for Fort William, wants us to call a special session of the Canadian parliament to enact similar.Jegislation.
I am sorry the hon. member for South Essex (Mr. Gott) is not in his seat, because I wanted to take his remarks as an example of the gross exaggeration which has taken place in many instances with regard to the trade of these two countries. The hon. member, speaking in this house on March 1 of last year, said that in 1924 alone $494,349,000 of farm produce and foodstuffs were imported from the United States. He said that these importations consisted of produce and foodstuffs which could and would have been produced in Canada had the proper protective policy for the farmer been in operation. Apparently he had unbounded confidence in the protective tariff, but, unfortunately, he was away out in his figures. I do not desire to blame him because I think there might be extenuating circumstances. When he came down to this house first I recall that he talked of nothing but a tariff for onions; the next year he had it as a tariff for tobacco; and the third year it was a tariff on fruits and vegetables, but I think, through his early association with onions, that he must have got some onion juice in his eye and it has prevented his having the right perspective ever since.
I desire to deal with that remark of his which appears in the revised Hansard, because I believe it to be absolutely untrue. I went to the trouble of obtaining figures from the Bureau of Statistics and the Department of National. Revenue, and I find that we made the following importations in that year:
Agricultural and vegetable
products	 $125,671,000
Animals and animal products 45,026.000
Total	 $170,697,000
That figure is considerably short of the figure quoted by the hon. member in Hansard. But he also said that there were importations which could and would have been produced in Canada under a protective system. Among the many articles coming in we find the following :
Citrus fruits	 $11,500,000
Currants, raisins,	etc	 11,500,000
Sugar	 49,000,000
Tea, coffee, spices	and cocoa..	18,000,000
According to the statement of the hon. member, all of this stuff could and would have been produced in Canada under a protective tariff. I think the hon. member for

The Budget-Mr. Hepburn
South Essex would be quite safe in guaranteeing to eat all the agricultural food products of a competitive nature coming into this country that year in excess of S30,000.000.
This gross exaggeration of facts is one of the difficult things we have to contend with. . These statements are published throughout the country, and it is very difficult for us to get the truth before the people.
We have heard considerable about the policy of retaliation. The only products with which we are concerned are the competitive products such as dairy products, live stock, meats, potatoes, grain, vegetables and fruit. I have analyzed the trade figures and I find that we imported $28,385,000 worth of -competitive products during 1928, while we exported $62,174,000 worth. These figures would Show that we are not losing very much in that trade. But our Conservative friends say that we should retaliate if the Americans go on with the proposed plan and enact higher tariff legislation during the coming session of their congress. How is this going to work out in a practical way? In dairy products we imported $242,000 and exported $10,385,000. A policy of retaliation would not be very effective there. In live stock and meats we imported $5,837,000 while we exported $28,733,-
000.	Again a policy of retaliation would not foe very effective there.
I desire to call the attention of the house to another gross exaggeration which was placed on Hansard the other day by the hon. member for South Essex. During the course of his remarks he quoted a telegram which he had sent to the Prime Minister last July, wherein he stated that American potatoes were coming into Canada at the rate of 300 cars daily. I looked up the trade figures as they referred to the United States, and I find that we imported last year $798,000 worth of potatoes, while the value of the exports of potatoes was $4,593,000. The total weight of the potatoes imported into this country amounted to 300,647 hundredweight. A produce merchant has informed me that about 400 hundredweight could be placed in one car, and upon dividing that total amount it will foe found that the total importation into Canada amounted to only 751 cars. If they were coming in at the rate of 300 cars per day it is certainly fortunate that the member for South Essex sent a telegram to the Prime Minister because the total importations could have come into Canada at the rate of 300 oars per day while a letter was on its way to Ottawa. Figuring it out on the basis of value quoted by him in Hansard, at $3 per bushel there were 266,000 bushels imported. At 650 bushels to the car, this would mean that only 409 cars of potatoes came in. According to the figures given by the hon. member, the total importation would have been completed in a day and a half. It is quite true that a tariff on potatoes might hold back the early importation of American potatoes, and while the farmer might expect a slight seasonal advantage in price for a week or two, that advantage would cease when the main Canadian production, came on the market. What would be the inevitable result? If the farmer subscribed to this policy he could only expect to be retaliated against, and he would then lose a potential market for his entire surplus in the United States. I do not think the farmers in southern Ontario are very seriously considering increased tariff on potatoes.
I will take one -concrete example to show what this retaliation would mean to the farmer. The trade figures show tha-t we imported last year $6,425,000 worth of feed corn. This was imported very largely into southern Ontario because -of ou-r proximity to the American cornfields, the tow freight rates, and1 our proximity to the high-priced American market f-or our finished products. We buy the corn, we feed it at a profit, and we sell our goods on the American market.
If the American congress should enact this legislation, which might -mean that we would receive about $4,000,000 less for -the $39,000,000 worth of .dairy and meat products exported to -that country, our Conservative friends are going to adjust this matter for us by making us pay another million dioLla-rs for the corn we have to import. I cannot see the sensible farmers of southern Ontario seriously considering a project of tha-t kind either. Instead of turning the other cheek, as far as tariff legislation is concerned, it would be a case of going over and battering -our heads against the first wall w-e could find, provided we could find one hard enough.
A great deal has been said about -the dairy industry by mem who, from their arguments, I do not believe kn-ow very much about this particular industry. I have been interested in the dairy industry for ma-ny years: I have operated a cheese factory -and I have .made a study of this question. I -admit frankly th-at it is somewhat of an anomaly for a dairy country like Canada to be importing butter; but what is the cause? The cause is this that many farmers in southern Ontario and Quebec are taking full advantage of their geographical position and are shipping -a perishable commodity in -the form of sweet milk and cream to -the United States market. Our exports of sweet milk and cream to the United States increased as follow:
Year	Value
1923	 $2,300,000
1927	 8,739,000
The Budget-Mr. Hepburn

Or an increase of nearly 300 per cent. While we are diverting our milk in that way, we must of necessity import for our home consumption and so we are buying butter from our New Zealand cousin who is not so favourably situated that he can take advantage of this special market which we now enjoy in the United States. Our Conservative friends tel! us that this is wrong. Here is the transaction exactly. We are selling at a high price in the United States market, and I am going to give the price because the other day I telegraphed to the manager of one of the big dairy plants in southern Ontario which is dealing particularly in this kind of business. He informed me that in the last four months they have been paying the Southern Ontario farmer about 64 cents per pound of butter fat for his milk. Worked out in terms of butter that means about 75 cents per pound for butter. We are bringing in our necessary supplies for home consumption at 45 cents a pound as a maximum price. As we are selling our butter at 75 cents, on the transaction we are making a profit of 30 cents a pound. On the 16,000,000 pounds we are bringing in from Australia we are making, looking at the matter from a national standpoint, approximately $4,800,000 a year, figure it as you may. But of the brains of the Conservative party, as represented on the front benches by the very able leader (Mr. Bennett), by his first lieutenant (Mr. Guthrie) and by the distinguished accountant, the hon. member for Vancouver Centre (Mr. Stevens) of customs probe fame, who certainly has a nose for investigation, not one as yet has caught cn to the fact that we are making a profit on the transaction. I should like to include another hon. member across the floor from Vancouver-I forget his constituency

but I am afraid he is more or less in the position of a doubting Thomas. When he is in Vancouver he supports the Australian treaty, but when he comes down to Ottawa and his mind becomes permeated with the talk of his Conservative friends, he is somewhat against it. Our Conservative friends advocate a tariff to keep out this Australian butter, but if we place a tariff on this butter, one of two things will happen: we shall have to divert milk from those high priced markets to other sources or the people of Canada will have to go back to conditions which prevailed when our Conservative friends were in power, when they had to eat oleomargarine, a mixture of intestinal fats and southern oils imported largely from the United States. It is only going to have the effect of diverting milk from high priced markets into

butter production. There is no such thing as the saturation point of consumption, and when we go back into the export market with butter we shall be right where we started; the farmer will be getting the world .price for butter the same as he always has, but he will be wiser in that he will have had the fallacy of protection demonstrated to him.
On account of the grading of cheese which was brought into force by the Minister of Agriculture (Mr. Motherwell), Canadian cheese manufacturers are getting from one and a half to five cents a pound above the world standard market price for cheese. The whole situation is summed up in this way: the Canadian cream producer who sells his product. to the United States market is able to enjoy that higher price. He is in a very favourable position and if our friends across the way were to go down into the county of Elgin and visit the farms of the men who are enjoying that high priced market, they would be impressed by the fine accredited herds, the fine farms, the improved roads, the splendid schools and everything else that goes along with prosperous agricultural conditions.
My time is slipping along and I shall have to digress a little. I was very much amused -and I use the word advisedly when I received to-day a copy of the Border City Star. It tells about the very eloquent address made by the hon. member for South Essex (Air. Gott) which in some way established a precedent in the house. It said:
The South Essex member was heard with marked attention throughout, and when his forty minutes had expired, he appealed to the Speaker to be allowed a couple of minutes to submit some suggestions for the relief of the tobacco growers. Although earlier in the day members had. protested against this privilege being extended to another member of the opposition and it had been refused, Mr. Gott was allowed to continue.
In this way the hon. member for South Essex was given a special privilege, and worse than that, the article goes on to say:
When Mr. Gott sat down amidst the applause of his party and other members, Mr. Speaker Lemieux left his place and went over and congratulated him on making one of the best speeches of the session.
I do not know to whom to give credit for this publicity, whether to the hon. member for South Essex or to the reporter who signs himself E. C. Buchanan. If Ananias and Sapphira were to return from the grave I am sure they would rush up to a reporter with such a vivid imagination and grasping him by the hand would say, "Shake brother, shake!"

The Budget-Mr. Hepburn
I find that at, the time this eloquent address was delivered there were barely enough members in the house to form a quorum, and I can hardly imagine this thunderous applause described in a manner that would lead us io believe that it jarred the rafters and even shook this building to the point that the peace tower might have taken on the aspect of the leaning tower of Pisa. But as regards the Speaker leaving the chair, I know the Speaker has never left the chair to congratulate any member, much less the hon. member for South Essex.
The article goes on to tell how the hon. member made an eloquent plea for the tobacco growers. The hon. member certainly believes in a protective tariff. It reminds me of the quack doctor who stood on a soap box selling his wares to the public. He was trying to tell them that the particular pills he had would cure indigestion, and when the crowd protested that they did not have indigestion, he said: "Well, take them anyway; these pills will prevent indigestion." The hon. member goes on that principle that the tariff will prevent any ailments and cure all ailments. If an industry is prosperous and making money, then it should have more tariff; and if it is being managed in an inefficient manner and has obsolete machinery, the same principle should apply-increase the tariff and everything will be all right. The hon. member advocated an increase in the tariff on tobacco; in fact he charged that this government is not friendly to the tobacco industry in southern Ontario. As a matter of fact, that industry in southern Ontario owes its very existence to the British preference which was brought in as a policy by a Liberal government, a policy which has been maintained and strengthened by this government.
The hon. member informed us that we needed a marketing system. That is quite true, because the tobacco producer in southern Ontario is, I believe, very much in the hands of a monopoly. That is, the tobacco buyers have the situation so much in hand that there is very little competition. A sincere effort was made a year ago to form a tobacco pool, but what happened? Despite the fact that we tried to impress upon the farmer that he must show his faith in the proposed organization; that he must take the initiative; that he must organize and then come to the government with his problems; despite all the careful plans laid by officials of the Department of Agriculture, Conservative members from southern Ontario felt that there might be some political gain if this pool were made a success, and so what did they do? From every platform they told the farmers that 78594-91
all they needed was protection. Many farmers believed them, with the result that the pool movement was a loss and one of the contributing factors to that loss was the argument advanced by my Conservative friends that a tariff was the only thing that would help those farmers.
I want to deal with the tariff on tobacco because the hon. member for South Essex stated that an increased tariff would mean an increased price to the grower in southern Ontario. A short time ago there was a hearing before the tariff board and experts in the tobacco industry gave evidence. This very question came up as to whether or not a tariff would be of any value to the tobacco grower in southern Ontario, and Mr. Richardson. speaking on behalf of the cigar manufacturers of Canada, said:
The issue having been raised that restoration of the 1913 2S cent leaf duties would seriously affect domestic production, we are prepared to prove that, on the contrary, it would actually benefit the grower of cigar leaf in Canada.
These men are all experts in their particular line; this question was carefully studied from all angles, and this is what they find: under the 28 cent tariff in 1919 the farmer was getting 25 cents a pound for his tobacco. The Conservatives increased' the tariff to 40 cents a pound, and would you believe it, the price actually dropped to 10i cents a pound to the farmer the following year, showing that the tobaccos that came into Canada at that time were not competitive tobaccos any more than they are to-day. The manufacturer has to import a certain amount of American tobacco, for he puts out a standardized product and he must maintain it. If a tariff did not help the farmers then, it could not help them now, and in my opinion it would injure them. I can understand the position of the manufacturer. If we further tax his raw material entering Canada that goes into the finished product, which sells at a price which does not vary, either he has to increase the price to the consumer or lower the price to the producer, and he is in a much better position to lower the price to the producer than to increase the price to the consumer.
In regard to the price of the finished product, I have a word of criticism against my hon. friend the Minister of Finance. There is only one way in which the government can help the tobacco industry in southern Ontario other than by following the trade policies now pursued, and that is to lower the excise tax on manufactured tobacco. This particular industry seems to be the subject of a very high tax. The excise tax in Canada is such that it just about equals the wholesale price in the

The Budget-Mr. Hepburn

United States, and when a Canadian visitor in the city of Detroit for example sees there two packages of tobacco selling for 25 cents while one package of the same brand sells for 25 cents in Canada, the temptation to smuggle is almost irresistible, and under the conditions I do not blame particularly the man who smuggles. I say that this extreme tax should not be maintained. In the hearing held before *the tariff board I was pleased to see that Mr. Darby of the Canadian Council of Agriculture in making his comments said:
Thanks to the returning prosperity and the general improvement of economic conditions, the national revenues are showing considerable buoyancy and several successive reductions of taxation have been possible. The prospect is that still further reductions in taxation will shortly be possible. In these circumstances, Mr. Chairman, the claims of the consumers of cigars and cigarettes to some alleviation of the taxes falling upon these commodities may properly be given careful consideration.
Another gentleman, Mr. Deaehman, the Secretary of the Consumers League, had this to say before the tariff board:
I support the application on the ground of its obvious reasonableness. There appears to be every evidence in what has been submitted that the taxation is now so high as to curtail the revenue, both by restricting consumption and by encouraging smuggling. I can see no reason why a tax which is so high as to defeat its purpose should be longer retained, and it seems to me this ease is so palpable as not to need further argument.
I have confidence enough in the Minister of Finance to feel, that when he brings down his next budget, which I hope will be another tax reducing budget, cognizance will be taken of this inequality and that equity will be done to all parts of Canada.
There is another matter which I want to bring to the attention of the house. Our friend from South Essex referred to the fact that he did not think there was unanimity of opinion on the government benches. I would like to counter by asking how much unanimity there is on the Conservative benches with regard to a speech made a few days ago by my good friend the hon. member for Cumberland (Mr. Smith). Speakmg on behalf of the province he represents, he was advocating an increased tariff on coal, and he said:
I know there are many difficulties in the way of the application of the tariff in its relation to the coal industry, but I am not by any means abandoning what I have always maintained to be one of the things necessary to help the industry, namely, a higher tariff on coal. I have heard the slur cast across the floor of the house many times, but I do not think there is any disagreement, so far as the members on this side of the house are concerned, with
[Mr. Hepburn.)
respect to properly and adequately protecting every legitimate industry in this Dominion. That has always been the stand of the Conservative party, and that policy has never been abandoned by that party so far as I am able to ascertain.
That is a very broad statement, and I watched with considerable interest to see how it would be received by members on the opposition benches. The applause was most enthusiastic. One would judge that they were sincere in leading the house and the country to believe that there was unanimity of opinion with regard to increasing the tariff on coal Coming from the province of Ontario, where we have to import our coal and use 13,000.000 tons per year, I would like to have something more definite in the way of a policy with regard to coal from the opposition members. I would like to ask if the policy enunciated by the hon. member for Cumberland is the policy of the great Conservative party, because we who have to import coal want to know it before the next general election. In the railway committee a year ago I opposed the idea of subsidizing Alberta coal. I said that the thing was not feasible, and that has since been proved to be the case. A tariff on coal would not have the effect of making the consumer in southern Ontario use a single ton more of Alberta or Nova Scotia coal. The only effect it would have would be to increase the cost to the consumer. I would like to ask the leader of the opposition what is his policy in that regard. I do not hope to get a definite answer because I recall an answer that he made some time ago. He had been complaining loud and long about the amount, of farm implements coming into this country. He did not believe in allowing farmers to buy their implements as cheaply as they could, and he said that the government had the tools in its hands to stop this importation. But when the Finance minister got up and asked him if he would stop it if he were in office by the application of a higher tariff, I was amazed at the dexterity by which the leader of the opposition evaded that, question. He said that he was too old a politician to be caught by such a question. I want to tell him that he is going to be caught by these two questions when he comes to southern Ontario, because we are going to know whether he is fooling us or whether he is fooling the people c.f Nova Scotia in regard to coal, and we are going to know as farmers what he is going to do about the tariff on agricultural implements.


Richard Bedford Bennett: The Minister of National Revenue will answer that.

The. Budget.-Mr. Irvine


Mitchell Frederick Hepburn: In the few moments I have left, let me say that I am going to vote against the amendment of our Conservative friends with considerable gusto. It is just a foolish gesture intended to lead the farmers up a blind alley. I am happy to say that the Canadian farmer is the only farmer the world over who has not succumbed to the high tariff policies enunciated by so many Conservatives all over the world, policies which are restricting world trade. If any country in the world to-day needs wider markets, it is Canada, and if there is any country in the world where the policy of higher tariffs is not applicable to-day it is this Dominion.
With regard to the subamendment of the Progressives, I would like very much to support it because I believe in the principle of the British preference. I believe, further, that if by the proposed legislation of congress they make it. harder for us to sell the products of this country to the United States, we shall have to market our goods in other countries, and the great field ahead of us in that respect, I believe, is in developing further the British preference. But that is the policy of this government, and I cannot for one moment see the wisdom of nullifying all the good that has been done in bringing down this budget by voting for the subamendment, although I believe in it in principle. So I shall have to vote against it and support this government, believing that in doing so I am representing the sentiments of the people of the county of Elgin, which county has returned to the Liberal fold after being for thirty years under Conservative domination.


William Irvine: Mr. Speaker, I want to take a very few minutes of the time of the house to reply to the argument which was put forward to-night and especially directed against the amendment to the amendment by the hon. member for Labelle (Mr. Bourassa). I do not know whether we should take the arguments on the budget, the amendment, and so forth, as seriously as some of us do, particularly after what the Prime Minister (Mr. Mackenzie King) said to-day, that this is no place for an amendment, that the only thing an amendment can possibly mean is a vote of censure on the government. Then in reply to my question, what was the use of moving an amendment, the Prime Minister informed us that there was a place for such things. I have been a member of the house for five or six years, but I have never yet discovered that place. I suppose if we were to move an amendment to any single item of the budget
78594-91 i
when it reaches committee of the whole we would be met by precisely the same argument.
However, I wish to address myself in particular to the remarks of the hon. member for Labelle. The hon. gentleman is always interesting; at times he is refreshing. His erudition is unquestioned. I always admire his wide knowledge of affairs and his great ability in presenting his views to the house. However, the interpretation which he at times put upon certain facts of history might be very sharply questioned even by gentlemen who may be equally well informed. He attacks the amendment to the amendment on the ground that it favours a protective policy, and he proceeds to prove his case on this assumption. I must say that, considering all the speeches I have listened to from the hon. gentleman, he has made a poorer job at proving his case to-night than on any other occasion that I can recall. So far as I am aware, there is only one way in which an increase of the British preference can possibly be interpreted as protection, and to that way the hon. member did not direct his argument. If in our amendment to the amendment we were to ask that the tariff be increased against all other countries in order that the British preference might be correspondingly increased, then there would be grounds for the argument that it was a method of protection. But no such thing is advocated. Our amendment to the amendment suggests a reduction of the tariff against Great Britain in order that we may increase the preference. By what manner of means the hon. member for Labelle was able to satisfy himself that this meant increased protection, I cannot understand.
The hon. gentleman proceeded to tell us that he agreed with the policy as announced by the Prime Minister this afternoon. That policy, in a word, was that Canada was from now on to adjust her fiscal policy according to circumstances. That is a new policy for the Liberal party. I have no criticism of the policy; in fact I endorse it. It is the utterance of statesmanship. It makes due allowance for that great invisible government- circumstances-which more or less controls the activities of all governments. But I do want to say that the Liberal party never won an election on a platform of that kind, and I venture to say that they never will. But that was not the only policy announced today by the Prime Minister. In the platform of the Liberal party I find this policy:
That the British preference be increased to 50 per cent of the general tariff, and that the Liberal party hereby pledges itself to implement by legislation the provisions of thi' resolution when returned to power.
The Budget-Mr. Irvine

We have heard those things somewhere before. But the point is, if the hon. member for Labelle regards the preference amendment which we have moved as equivalent to protection, and for that reason cannot support it, I am at a loss to understand how he can support the policy of the Prime Minister when to increase the British preference to 50 per cent of the general tariff is the policy of the Liberal party, and was specifically referred to by the Minister of Finance (Mr. Robb) as being the keystone. It is moved from 50 per cent of the general tariff to be the keystone; next they will have a chart, and after that a star. You know all great mariners guide their vessels by the stars of the heavens, but they never expect to lassoo those stars and pull them down to the deck where they can look at them. So the policy of the Liberal party is very much like the star that guides the mariner; they always leave it in the heavens to guide them because next year they might need it to bring them into the port of power.
But to return to the argument of the hon. member for Labelle. He was not at all convincing in stating that the increasing of the British preference by reduction of the British tariff could by any possible means be construed as a high tariff policy. In fact he said himself that such a policy would result in bringing into this country German goods, French goods, Belgian goods and goods from every European country, which would be shipped over here from Britain with the British stamp on them. That was his argument. Well, if the policy of preference is going to result in greater importations, is that the usual result of a protective policy? Surely he is lacking in logic there. The logic of the increase of the British preference would be this, that those countries outside the preference, if they desired to trade with Canada, would have to lower their tariffs; and in such circumstances I presume we would be prepared to lower our tariffs in so far as they are concerned, and thu3 make a step towards the great star which guides the Liberal party.
But the platform of the Liberal party as announced to-day by the Prime Minister is not only a new policy of shaping legislation according to circumstances, but it includes also, as I have pointed out, the preference policy of increasing the British preference to 50 per cent of the general tariff. The

Liberal party has been elected on that platform on three successive occasions. Now it appears that the Prime Minister is afraid to implement it for fear of what the United States may think or may do. But in any case I would defy the hon. member for Labelle to vote against our amendment to the amendment on the basis of the argument which he advances, and at the same time still hold to his view to vote for the policy of the present government.
Now, of course, I welcome the new policy of the Liberal party-if they will only adhere to it during the next election. But let them go to the west, for instance, and say: Now, Mr. Farmer, we don't know really what we will do if we are elected. We are going to fix up our next budget according to circumstances, and all the budgets of the next parliament will be so fixed. We don't know what the United States is going to do, we don't know what anybody is going to do; therefore we don't know what we are going to do. So if you elect us, what will happen? Why, we might have to raise our tariff in order to meet circumstances, or we might have to lower it, or leave it as it is, according as circumstances might dictate. That would be precisely what the government would do in so far as their action might ba concerned. But would they go to the people on that policy? I venture to say they would not. But to me the policy means to-day either that the carefully worded clauses in the budget-worded I presume by the Minister of Finance-are intended as a veiled threat of retaliation to the United States, or else that the government will wait until the American fiddle plays and then dance to its tune. It means one of these two things so far as I am able to interpret the Prime Minister's speech and the budget itself.
In conclusion, Mr. Speaker, let me ask the hon. member for Labelle-I hope he will read my speech to-morrow in Hansard, because I have no doubt he will make another speech on the amendment-let me ask him, I say, to tell me what he advises under the circumstances. He makes the charge that such a policy as we advocate in the amendment to the amendment involves certain sentiment, that it is not business, that it was fathered by sentiment; and he suggests that we throw all sentiment overboard so far as policy is concerned. I agree with him in that regard. But I was wondering whether there was not

a considerable amount of sentiment in his opposition to that subamendment. Are we the only people who are swayed by sentiment? Is the hon. member for Labelle absolutely void of it when he makes such a speech as he has made to-night against the amendment to the amendment? I do not wish to impute that to him, but at least it is suspicious; and if he is suspicious of our policy as being sentimental, we can at least return the possible suggestion of the same being the case with respect to himself. But let me assure the hon. gentleman that it is a matter of business with the western agriculturists; it is not a matter of sentiment. The western farmers have said again and again that they are not interested in the colour of the whiskers of any man with whom they do business; they do not care what part of the country he comes from or what country he lives in. They want to trade with him. That is not sentiment but business. But I want the hon. member for Labelle to tell us what we are going to do. The United States has shut us out of its market for farm produce. We do not wish to retaliate by asking this government to raise tariffs against that country. But at the same time we must find a market for our goods, and so we suggest that we lower the tariff to Great Britain, increasing their preference, and thereby probably finding a larger market for our produce. And it might be that such an action would have an effect upon the United States, in that if it desires to trade with Canada it might see fit not only to refrain from raising its tariff against us but to reduce it very materially. I hope therefore that if the hon. member for Labelle favours us to-morrow with another portion of his wisdom he will kindly go a little more into detail and prove not only to his own satisfaction but to the satisfaction of reasonable members of this house-and they would not be very many-that a reduction in the tariff to give a greater preference to Great Britain need not be construed as having no other meaning than an increase in tariffs.
On motion of Mr. Bock the debate was adjourned.
On motion of Mr. Lapointe the house adjourned at 10.55 p.m.
Questions
Wednesday, April 10, 1929