1931-06-16

PRIVATE BILLS COMMITTEE

[Stage Direction]
Fifth report of the select standing committee on miscellaneous private bills.-Mr. Stinson.


[Stage Direction]
Hon. ALFRED DURANLEAU (Minister of Marine) moved for leave to introduce bill 22110-169
No. 96, respecting the international convention for the safety of life at sea signed in London on the 3llst day of May, 1929, and the international convention respecting load lines signed in London on the 5th day of July, 1930.
Some hon. MEMBERS:: Explain.


Mr. DURANLEAU:: Mr. Speaker, this bill is intended to ratify two international conventions, the first of which was signed at London on May 31, 1929, having to do with the safety of lives at sea, and the second of which was signed on July 5, 1930, having to do with the load lines of vessels. Thirty countries were represented; Canada was represented by the deputy minister of Marine, Mr. Johnston. These conventions were signed by the representatives of all those countries, and this bill is designed to ratify the action of Canada's representative.
Motion agreed to and bill read the first time.



PRIVATE BILLS


[Stage Direction]
Bill No. 95, to incorporate The Soldiers' Aid Society.-Mr. Sullivan.

[Stage Direction]
Bill No. 91, for the relief of Mary Ann Ventura.-Mr. Factor.
Bill No. 92, for the relief of Beatrice Marie Dumaresq.-Mr. Casselman.

[Stage Direction]
On the orders of the day:
Mr. D. M. KENNEDY (Peace River):: I should like to ask the Minister of Railways (Mr. Manion) if he can inform us when he will be able to lay on the table of the house the report dealing with the surveys made by the Canadian Pacific Railway in connection with the Peace River outlet.


Hon. R. J. MANION (Minister of Railways and Canals):: I have no authority as yet to lay the report upon the table of the house; it is a private report which was submitted to me. I may tell my hon. friend, however, that in the near future-I think within the next ten days-there is to be a meeting between Mr. Beatty, Sir Henry Thornton and myself at which the matter will be discussed. Perhaps then I may be able to find out when we may print and lay on the table of the house the report to which my hon. friend refers.



Importation of Russian Clothing
OLD AGE PENSIONS On the orders of the day:


Hon. PETER HEENAN (Kenora-Radny River):: I should like to ask the Prime Minister if it is the intention of the government to bring down legislation at this session to amend the Old Age Pension Act.


Right Hon. R. B. BENNETT (Prime Minister):: It has been intimated already that this will be done.



INQUIRIES FOR RETURNS

[Stage Direction]
On the orders of the day:
Mr. JEAN-FRANCOIS POULIOT (Temis-couata) (Translation): Would the hon. Minister of Marine (Mr. Duranleau) kindly inform me as to when an answer can be expected to an order passed by the house on June 1, and which he promised yesterday to bring down without delay.
Alfred Duranleau: I told my hon. friend yesterday
that I thought there were two letters, one from my secretary and one from myself, and I gave instructions last week, when the order was passed by the house, to have copies prepared. I think these will be ready within two or three days.


Mr. POULIOT:: I thank my hon. friend.
The minister is all right, but the officials are slow.
IMPORTATION OF RUSSIAN CLOTHING On the orders of the day:


Mr. S. W. JACOBS (Cartier):: Yesterday
I asked a question of the Prime Minister with regard to the importation of Russian clothing into Canada. I said:
If an effort is not made by the government to stop this, the population of this country will be dressed in Russian garb-we will have wolves in sheep's clothing.
Of course what I meant was that we would have sheep in wolves' clothing. I should like this change to be made, Mr. Speaker, so that future generations who dip into Hansard may see that my patriotism was unquestioned.


Richard Bedford Bennett: I promised the hon. gentleman I
would answer his question to-day. So far as the government is aware there is no warrant for the statement. No communications have been received in that regard.


Samuel William Jacobs: Of course that shows that
in relying upon the Montreal Gazette I was leaning upon a broken reed.



THE BUDGET


[Stage Direction]
The house resumed from Monday, June 15, consideration of the motion of the Right Hon. R. B. Bennett (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, the amendment thereto of Mr. Ralston, and the amendment to the amendment of Mr. Spencer.
Mr. ONESIME GAGNON (Dorchester):: Mr. Speaker, I am indeed very happy to rise to thank the Right Honourable the Prime Minister for having included in his admirable budget provisions which will prove beneficial to Canada, to my province and to the people of the county of Dorchester whom I have the honour to represent. May I say, sir, that this budget reflects the conditions which prevail at the moment, and is an illustration of the commendable way in which our party keeps its pledges. It is an honour to the comprehensive and genial mind which drafted it, in order to assure the revival of prosperity throughout this great dominion.
Is it necessary, Mr. Speaker, for me to remind you that at the last election the Conservative party received from the electorate of the Dominion of Canada a definite mandate to take special steps to relieve unemployment, and also to provide a sound policy of protection for farmers and manufacturers. Since July 28 last our leaders have devoted long days and sleepless nights to the achieving of such purpose. It may be said that their legislation is not perfect; but, Mr. Speaker, it is as perfect as human effort can make it. This is the second session we have had within six months, and the wrongs perpetrated by the last administration have been relieved to a great extent. Immigration has been curtailed, and our steady progress towards autonomy has been gloriously recognized in Canada and in England. Our national debt has been partly converted, and a way has been found to balance our expenditures and revenues. Closed shops have been reopened; about one hundred new industries have been created, mostly in Quebec and Ontario, and thousands of existing manufacturing industries have been protected by a sound legislation. Public works and other undertakings involving an expenditure of almost one hundred million dollars have been carried out in all provinces, more than seven millions days' work have been provided for the unemployed in Canada, and, fact worth mentioning above all others, hundreds of the unemployed are leaving the

The Budget-Mr. Gagnon
cities every day to return to the land, which some of them ought never to have left.
May I not say in all humility that this is a marvellous record indeed for eight months of administration. We can go back to the people and point to that record with pride and confidence. The people know that this government which is now at the head of affairs is one that is prepared to keep its promises and to redeem its pledges. We are keeping our promises to the farmers and manufacturers. Need I say that agriculture is the basic industry of Canada. You will recall, Mr. Speaker, the truism of Sully, the great minister of Henry IV, King of France: "L'agriculbure et l'industrie sont les deux mamelles de la France." The Conservative party, having at heart the best interests of the people, has always devoted its energies towards the development of agriculture and industry. We have been called on this side of the house to achieve such a purpose and we will stay here until our task is fully accomplished.
The people of my province and county happily recognize that the Conservative party is still faithful to the protective policy of Cartier and Macdonald, the policy which has been so happily called the national policy- a policy which Sir Wilfrid Laurier adopted in 1896 and sustained until 1911.
I referred a moment ago to my beautiful county of Dorchester, and I owe it to my fellow countrymen of that county to state to this house my reasons for loving that part of our dominion and for being proud of it. The county of Dorchester, named to commemorate one of our greatest English governors, and a true friend indeed of the French race, Lord Dorchester, is situated on the south side of the St. Lawrence, sixteen miles from Quebec and fifteen miles from Levis, extending in a sofitherly direction towards the American border. Its territory is .both picturesque and fruitful-'beautiful rivers flow through fertile valleys tilled by a contented people. I think I can safely say that the county of Dorchester is a miniature of what the entire dominion ought to be. You will find both farmers and manufacturers there; but the population, comprising for the most part people of French origin, but with a population also of English, Scottish and Irish descent, devotes itself principally to agriculture. In many parishes the Englishspeaking population is numerous, but French and English are spoken equally by everyone. The French and English live harmoniously side by side, and the bonne entente is perfect. I am therefore proud to record my native
county as being a model to the whole Dominion of Canada.
The lumber trade during the last twenty years, except for the past two or three, has been good and has given work to a great number of saw mills and similar industries. And although our industries are not numerous,
I am happy to tell the house that the county of Dorchester was one of the first sections of Canada to encourage industry which has been prosperous for upwards of a hundred years.
In 1829, more than one hundred years ago, efforts were made to develop industry in that part of Canada, and in this regard I might say that J. Gautron dit Larochelle began the construction of a carding mill which was put into operation in 1830. In 1832, he added a sawmill to his establishment, adding also, in 1837, grinders to mow the grain of the farmers living in the vicinity. In the course of years this industry was further extended, and in 1852 we find it already prosperous, a foundry and a fulling mill having also been added to the establishments I have enumerated.
I feel, sir, I ought to mention here that the Larochelle family played an important part in the development of agriculture and industry in the counties of Dorchester, Beauce and Levis. The most prominent member of that family was the Hon. Louis Napoleon Larochelle, who was the builder of the Levis and Kennebec railway. Up to 1874 there had been no railway communication between the city of Levis and the city of Sherbrooke. The Levis and Kennebec railway was constructed to link the two cities, and on July 1, 1874, the first locomotive arrived at St. Anselme. By a happy coincidence, it bore the name of the Hon. J. G Blanchet, the first president of the railway company. The Hon. Mr. Blanchet was at that time Speaker of the House of Commons and Speaker of the legislature of Quebec. He is the grandfather of my friend the hon. Solicitor General for Canada (Mr. Dupre).
Industry became more prosperous in St. Anselme at that time. The Hon. L. N. Larochelle built a shop for the construction and repair of cars and the manufacture of roadway material. The industrial establishment at St. Anselme underwent many hardships. It was destroyed by fire, and carried away by the breaking-up of the Etchemin river. But it has always been rebuilt by its owners after such accidents. And now the St. Anselme foundry is flourishing under the able management of Mr. J. A. Begin, who has invented a grinder known as the Begin grinder, which
2660
The Budget-Mr. Gagnon

is the only available Canadian grinder of the hammer type in the prairie provinces and in other potential Canadian markets. Last year a well known firm of high standing, Messrs. Coekfield, Brown and Company, made a survey of the foundry's operations. I find in a memorandum they have prepared that there are sold on the Canadian market to-day, particularly to the prairie provinces, about 2,500 grinders, all of these having up to the present time been imported from the United States. Under the new tariff, I am proud to say that the foundry in St. Anselme will be able to furnish the people of the prairies with all the grinders necessary to meet their requirements. In the name of that flourishing industry in my constituency, I beg to thank the right hon. Prime Minister for having given it such tariff protection as will permit it to compete both in the home market and abroad.
Might I mention also another industry in my county which is flourishing at St. Maxime' of Scott, that of brick manufacturing. Until recently, for a period of twenty years, industry had been theTe very prosperous. The lumber business which had been the outstanding industry has declined. Lately a brick manufacturing plant was erected and owing to the clever management of Mr. J. A. Lortie and his colleagues, the directors of the said concern and the skill of its workmen it is now giving employment to more that fifty workmen, and will be able to meet all competitors. A moment ago I was speaking about the St. Anselme foundry. The company although enjoying high protection has never paid dividends to its shareholders but this year it has spent $10,000 out. of its reserve in order to provide work for the unemployed during the winter months.
In certain parishes of my county, such as St. Luc., St. Louis, St. Cyprien, Ste. Justine and St. Sabine, the farmers have been manufacturing charcoal. Under the regime of the last government they were unable to find a market for their product which was being manufactured at a loss, but to-day, because of the action taken by the Prime Minister in putting a duty of $7.50 per ton on charcoal, they are able to sell their product at a profit.
The hon. member for Shelburne-Yarmouth (Mr. Ralston), speaking officially for the opposition, has presented an amendment in which he expresses his regret that the budget does not contain any provision with regard to unemployment. I was amazed to hear such a statement and I am sure the whole country has judged it upon its merits. Everyone who is not blinded by party prejudice wall understand that if this

government protects industry in Canada by raising the tariff, the number of men employed will be increased, as well as the rate of wages. If the rate of wages is increased and the number of employees is increased the farmers will receive a benefit because they will find that they can sell their products at a more remunerative price, provided they are given such legislation as will protect them against competition from abroad. This proposition is not only a practical idea but it is true to facts. Since the special session of last September there has been established in the provinces of Quebec and Ontario a total of eighty-seven new industries. In the city of Quebec the population is very happy and thanks the Minister of Finance for having given tariff protection for the shoe manufacturing industry. Every hon. member knows that during the last regime, despite numerous letters of complaint which were received by the hon. members for Quebec East (Mr. Lapointe) and Quebec South (Mr. Power), no effort was made to relieve the crippled state of that industry. I have received a memorandum informing me that prominent Liberals from Quebec who are. friends of the hon. member for Quebec East, for instance, Mr. A. E. Marois, who is at the head of the largest shoe manufacturing plant in eastern Canada, say that since the remedial legislation was passed last September the rate of production has been increased and a greater number of unemployed have received bread. I have received a memorandum stating that the John Ritchie Company Limited, and the Agnew Surpass, prominent shoe manufacturers, are satisfied with our tariff. Mr. Ludger Duehaine, who is a good Liberal, and Mr. Laureat Blondeau, proprietor and owner of the Children's Shoe Manufacturing Company, state that owing to the new tariff they have been rendered able to compete with shoes brought in from abroad. Might I mention also the Regina Shoe Company Limited, which has been established at Ste. Marie, in the county of Beauee, near the county of Dorchester and in which the hon. member for Beauee (Mr. Lacroix) is a shareholder. The other day the hon. member for Beauee, whom I respect greatly, stated to the house that the rural districts of his county would be ruined by the legislation of the Prime Minister. He did not mention the fact that this shoe *manufacturing company is prospering. Another shoe factory The Harmony Shoe has been organized at Ste-Marie and will also give employment to many wmrkmen. This legislation has rendered it possible for the shoe industry in the city and district of Quebec to

increase the number of employees and to continue manufacturing throughout the greater part of the year. May I mention another new industry which was established only a few days ago at St. Georges, the parish where the hon. member for Beauce lives. I have before me a clipping from the Montreal Star, outlining an interview by their special correspondent. This article mentions the St. George's Woollen Mills Limited and Henry Hamer and Sons Limited, and reads as follows:
With the impetus of the Bennett tariff the trail of textile industries locating in the province of Quebec is constantly extending and to-day there is much satisfaction here at the thought that work will be found for at least one hundred operatives at the St. George s Woollen Mills Limited ere long.
The article continues:
Key men will also be engaged in England, but work will be found for one hundred local operatives, more than half of whom will be women, it is stated.	,
This venture may not be the only one started by Hern-v Hamer and Sons Limited in Canada.
R. Prager, managing director of St. Georges Woollen Mills Limited and general manager of Henry Hamer and Sons Limited, told the etar that he has several other propositions m view and that something definite may materialize at a future date.
One of the shareholders of this industry is the hon. member for Beauce, who stated the other day that this legislation had been destructive of our economic system.
I cannot refrain from showing the fallacious attitude adopted by hon. members opposite with regard to unemployment. Last year a motion was moved by one of the hon. members on Your Honour's extreme left, which motion was supported by the hon. Minister of Railways (Mr. Manion) and the hon. Minister of Justice (Mr. Guthrie). The Progressive and Conservative parties were asking the Liberal party to adopt effective means of relieving unemployment, but what was said in the house? We heard the right hon. leader of the opposition (Mr. Mackenzie King) state that what was contemplated by the Conservative party-that the federal government should contribute along with the provinces towards the relief of unemployment-was a "vicious principle." I have before me Hansard of the session of 1930, from which I should like to give a few quotations. Let me refer you, Mr. Speaker, to a speech by the present minister of railways which will be found at page 1200 of Hansard of 1930 and in which he was quoting a clipping from the Toronto Globe. He said:
The Toronto Globe says that the Prime Minister-
The Budget-Mr. Gagnon
The present leader of the opposition.
-took this attitude, and this is the day after the deputation waited upon him. Quoting the Prime Minister,-
The present leader of the opposition.

it gayg [DOT]
"I can't understand why you gentlemen are stirring up and exaggerating this unemployment situation"-
He was speaking to the delegation.
-said the Prime Minister, after listening to complaints for two hours. "If the situation is as deplorable as you try to picture, why is not eastern Canada represented? lhe answer is that, generally speaking, the employment situation in Canada is not abnormal. I have a telegram from the government of the province ot Quebec that conditions there are quite satisfactory. You advertise that there is unemploy* ment, and the relief is to be sought from the dominion government, and immediately there is a rush to the cities."
A few minutes later the right hon. leader of the opposition, the then Prime Minister, in laying down the policy of his party, said I am quoting from page 1226:
The government received from the premier of Quebec a telegram, not to the effect that there was an unemployment situation demanding federal assistance, but saying that there was no such situation and that his province did not want any assistance. I should like to ask my hon. friends: Do they suppose there is no unemployment in Quebec?
After carefully reviewing the situation in all the provinces, the right hon. gentleman stated in conclusion:
How can we have a national unemployment problem if so far as each and every province is concerned its government reports prosperous conditions within its boundaries?
But just before the right hon. gentleman had made this statement:
Let me repeat that statement. I can see nothing arising out of a recognition of this problem as a national problem which obliges this federal government, having regard to our constitution and the division of powers under it, to collect taxes from the people generally in order to meet a situation which attecta only a certain group of people in some municipalities in this country, but which does not adversely affect the country as a whole. I am not saying we could not do such a thing; I am not saying that this federal parliament cannot vote money for any purposes for which it may desire so to do, but I am trying to make it clear that under our constitution I do not think it was ever intended that this federal government should become the agency through which problems which are primarily municipal and provincial should be dealt with.


Some hon. MEMBERS:: Hear, hear.


Onésime Gagnon: After hon. gentlemen
opposite have applauded that statement, how can they consistently support their amendment to the budget complaining that the gov-
The Budget-Mr. Gagnon

ernment is not doing anything to relieve unemployment?
I have quoted the words of the right hon. leader of the opposition to the effect that he had received a telegram from the premier of Quebec asserting in the most emphatic way that there was no unemployment in that province. Would you be surprised to learn, sir, that during the last session of the local legislature the hon. member for Hull, Mr. Guertin, asked premier Taschereau if it were true that he had sent such a telegram to the right hon. leader of the opposition, and that Mr. Taschereau stated that he had not? Now I respect the sentiments of hon. gentlemen opposite, but may I not reasonably ask, which of the two Liberal leaders is telling the truth?


An hon. MEMBER:: Both.


Onésime Gagnon: I have great respect for
the hon. member for Shelburne-Yarmouth. He is a distinguished parliamentarian and he has a very fine war record. But when he says that the government has done nothing to relieve unemployment, I am astonished to think that he has not heard that in Nova Scotia since December 1, 1930, public works and other undertakings have been carried out involving an expenditure of $2,338,875. Let me add that according to an official record which was published in the press yesterday, and which I am pleased to put on Hansard, Nova Scotia has received substantial benefit under the legislation passed last August for the relief of unemployment, 31,908 individuals having been given employment, representing 445,221 man-days' work. Let me give the house the official record:
Province
Prince Edward Island	
Nova Scotia	
New Brunswick	
Quebec	
Ontario	
Manitoba	
Saskatchewan	
Saskatchewan (drought area). . . '
Alberta	 '
British Columbia	
Yukon	'.
Direct relief	 ' "
Grade crossing fund	 '
Canadian Pacific Railway. . | \ ' ) Canadian National Railways. . . . Dept, of the Interior (Parks branch)
Banking Nova Scotia coal	
Administration	
Total cost of public works and undertakings $ 200,000 2,338,875 1,449,375 10,064,850 15,555,946 2,563,761 2,900,157 1,014,545 2,839.232 3,447,794 20,000
2,445,312
11,514,000
14,119.403
37,000
150,000

The various provinces, railway companies and departments of the government, which are cooperating under the Unemployment Relief Act, 19.j0, have furnished statistics showing the actual volume of employment given to ' ' 1 -Y 31, 1931. Details for each province are as follows:
Locality, etc.
Nova Scotia	
Prince Edward Island. .
New Brunswick	
Quebec	
Ontario (2)	
Manitoba	
.Saskatchewan (3) . . . . ,
Alberta	
British Columbia	
Yukon	
Canadian Pacific Ry. Co. Canadian National Rys. .
Totals	
Number (1) Indi-	of
viduals	mangiven	days'
employ-	work
ment	given
31,908	445,221
1,752	13,917
18,500	235,000
79.838	994,638
43,000	2.384.000
27,030	284,031
22,349	524,602
21.452	353,246
31,627	641,923
150	2,096
8,309	247,806
5,820	146,748
291,735 6,273.228
Now, sir, let me give the number of families that have received assistance under
this legislation:
IndiFamilies	viduals
granted	granted
direct	direct
Province	relief	reliefNova Scotia	
2,763	____Prince	Edward	Island.... 496New-	Brunswick.	.	.	400	....Quebec (1)	
36.309	including 182,735Ontario (2) and (3) . 19,000	....Manitoba	
13,465	including 40,127Saskatchewan	
20 174Alberta	
6.254	and 18d)18British Columbia. . .	5,487	and 14,961
This record proves conclusively that the government has taken effectual measures to relieve unemployment. Hon. members no doubt read in to-day's papers that the hon. Minister of Labour (Senator Robertson), speaking yesterday in British Columbia, stated that before the conclusion of the present session other measures of relief will be brought down for the consideration of parliament.
Now, Mr. Speaker, our friends on the other side of the house are trying to create an impression throughout the province of Quebec that the people are wholly dissatisfied with the way in which the government is dealing with the unemployment situation. Let me quote extracts from some of the letters that have been received from the governments of the various provinces by the Department of Labour. Let me deal first of all with the communications received from the province of Nova Scotia. The Minister of Highways, writing on February 17-

The Budget-Mr. Gagnon


Mr. MERCIER (St. Henri):: Addressed
to whom?


Onésime Gagnon: He writes:
We are pleased to know that our relations with your department in dealing with unemployment relief have been mutually satisfactory. We are very grateful to Hon. G. D. Robertson for the able manner in which he handled the whole problem, which was surrounded with many difficulties.
Further he said:
We wish to thank the minister, yourself and staff for the exceedingly satisfactory manner m which projects have been approved, agreements executed and accounts paid.
The other day I heard the distinguished member for Comox-Alberni (Mr. Neill) state that the government had done nothing to relieve unemployment. I have here a letter from Vancouver, which reads as follows:
May I congratulate you on the businesslike manner in which the whole of the administration of this unusual and difficult undertaking has been handled and thank you for your constant cooperation, which has resulted without any disruption of the ordinary system ot accounting followed by this province.
That is signed by the chief engineer, Department of Public Works, British Columbia. Here is a letter from the Deputy Minister of Railways, Labour and Industries, Saskatchewan. It is dated Regina, February 14, 1931, and reads:
Let me assure you. however, that we highly appreciate your position and tile responsibility placed on you by the minister in the administration of the $20,000,000 voted by parliament. and we feel we have at all times received the very best of treatment from you. Let me also assure you of our desire to cooperate with you in the most sympathetic manner in the work you are carrying on.
Hon. gentlemen opposite may say that I am simply quoting from letters from Tory administrations, so let me quote now from a letter from the assistant deputy minister, Department of Public Works, of the government of Manitoba, which certainly is not a Tory government. He says:
It was very gratifying indeed to receive your courteous letter of tile 9th inst., expressing the thanks of your department for the cooperation the Manitoba government has given in dealing with unemployment relief matters.	.
You ask if there are any points in connection with our mutual transactions which are not being carried out in a satisfactory manner.^ I can only reply with a most emphatic "No. '
That is from a Progressive government. Now I will quote a voice from Toronto:
I am unable to point to anything in connection with our mutual transactions under the Unemployment Relief Act which^ is not being carried out in a manner which is satisfactory to us. On the other hand, everything of this nature is most satisfactory, and vour cooperation has enabled us to carry on the work in Ontario to the satisfaction of the various municipalities and, I believe, the general public.
Now a letter from Fredericton, New Brunswick, signed by the Minister of Public Works of the province himself:
I think the administration of this fund has been carried out with general satisfaction to the public. No doubt some mistakes were made by our field men who were charged with supervision of the funds, but circular letters were sent to our various district engineers, giving them explicit instructions as to who should be employed, cautioning them against the employment of men who did not need this work in order to provide the necessities ot life and they were particularly cautioned against discrimination between political parties.
I "have substantial reasons to believe that these instructions have heen adhered to.
The letter is signed by the Hon. D. A. Stewart, Minister of Public Works at Fredericton.


Mr. NEILL:: I rise to a point of order, Mr. Speaker. The hon. gentleman is reading a lot of letters and he has not given the signature or the date, nor has he stated to whom they are addressed.


Mr. SPEAKER:: I cannot see that there
is a point of order there.


Onésime Gagnon: I am pleased to satisfy
the hon. member. All these letters are dated February. 1931, and are addressed to Mr. Harry Hereford, director of unemployment relief, Department of Labour, Ottawa. I think the hon. gentleman did not wish me to read a letter coming from the province of Quebec, but I think the house will be interested to learn how the Quebec government appreciates the unemployment legislation that was put through by the Conservative administration. The following letter was addressed to Mr. Harry Hereford by the deputy director of unemployment relief, Department of Public Works, province of Quebec, Mr. M. L. Guimont. He says:
We appreciate your letter of February 9tli, wherein a closer cooperation is sought between the federal and provincial authorities in the administration of the unemployment funds. All misunderstandings having vanished since your visit here, we feel that our present friendly relations cannot be improved.
He says further:
Other difficulties concern mostly complaints about insufficient supply of employment, though no remedy can be found for this special ailment as it should be borne in mind that rural municipalities are loath to increase their indebtedness so as to supply employment. They prefer to shift the burden on to the governments.
That is how the government of the province of Quebec looks at this problem. The letter continues:

The Budget-Mr. Gagnon
Barring these few exceptions we have only to congratulate ourselves on our friendly relations and on the smoothness with which the present system is working.
I am sorry, Mr. Speaker, that my forty minutes are expiring, and that I cannot devote time to other problems on which I could, I respectfully submit, give some interesting data.
I should not fulfil an imperative duty if I concluded my humble remarks without expressing my heartfelt gratitude and the heartfelt gratitude of all Canadians speaking French toward the hon. member for Toronto Northeast (Mr. Baker) and thank him very warmly for the kind words which he has said about the French language. Addressing the house last week in the French language he gave a remai kable lesson in tolerance and fraternity to those who in other provinces deny any rights to the language of the first missionaries in Canada, the first discoverers, the first pioneers, the first martyrs. I was deeply moved by the delicate sentiments of the hon. member, and I can assure him that the Frenchspeaking Conservatives on this side of the house will never forget it.
May I also at this time be permitted to extend to His Excellency the Earl of Bess-borough my most sincere appreciation and gratitude for what he said last week about the usefulness and necessity of the French language, and about the teaching of French in Canada.
Need I say, further, Mr. Speaker, that Canadians speaking French do not claim special privileges which they have not been given by natural law and legislation. They have lived, and will continue to live, harmoniously with all other races in this'great dominion, true to their aspirations, customs and traditions, and to cooperate with their brothers of other languages and other creeds, to the happiness and prosperity of our common country.


Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: Mr. Speaker, the presentation of the budget to parliament is always an event of interest. The budget which has been presented this year is a matter of very great and, may I say, exceptional interest for a number of reasons. One of these reasons is that the budget is presented at a time of vi 01 Id depression, a time when, not only in this country but in all countries of the world, there is a great deal of distress and of social unrest. The budget is also of exceptional interest at this time because it reflects as budgets ought the policies originated and initiated by the administration. It also reflects, to use another expression of my right

hon. friend the Prime Minister (Mr. Bennett), the spmt and attitude of mind of the administration towards the problems which are e ore country at the present time.
There is a third reason why the budget is of more than ordinary interest, particularly to all who are members of this house. It is the first time in the history of Canada that a budget has been presented to parliament by one who holds both the high office of Prime Minister and that of Minister of Finance. That gives to the budget a unique interest to those of us who are assembled in this chamber at this time. I feel that my right hon. friend upon assuming the office of Minister of Finance and presenting his budget to parliament must have experienced some slight regret that we in this country did not use the terminology of the old land in designating the head of the treasury. I aim sure he would rather have had his name recorded in history as having presented a budget in the dual capacity of the Prime Minister of Canada and Chancellor of the Exchequer. As Chancellor of the Exchequer there would have been the association with the past; the association with the legal profession of which he is a very distinguished member and also an association with Westminster, all of which would have been most congenial. May I say to him that when he brings in his reforms with respect to the treasury, I for one would welcome a change in the title of the Minister of Finance to that of Chancellor of the Exchequer. Canada is becoming a great country with a history of her own and I think the time has come when without presumption the honoured term "Chancellor of the Exchequer" might well be used in the parliament of Canada as it is at Westminster.
I have no doubt that when my right hon. friend decided to assume the dual role of Minister of Finance and Prime Minister he had in mind a very illustrious example, that of the Right Hon. William Ewart Gladstone, who in the year 18S0 in the capacity of Prime Minister and Chancellor of the Exchequer presented the budget to parliament. May I say to my right hon. friend that in seeking to imitate Mr. Gladstone he was following an example than which there can be none more worthy. I wish however he had introduced a budget more along the lines of those which Mr. Gladstone introduced in the course of his long public career. May I add with all deference that when Mr. Gladstone presented his budget in the dual capacity referred to he had enjoyed a much wider experience in the affairs of Great Britain and was much better qualified to essay the dual

The Budget-Mr. Mackenzie King
task than is my right hon. friend. Before Mr. Gladstone assumed at one and the same time the duties of these two offices he had experienced a half a century, to be exact, forty-eight years of strenuous public life.


Mr. BOURASSA:: Yes, but he was an
ordinary man.


William Lyon Mackenzie King: About twenty
years before, Mr. Gladstone had been Chancellor of the Exchequer in a previous ministry and had had a considerable experience in managing the finances of the country. When his budget was presented he was meeting the twelfth parliament with which he had been associated. In a previous administration he had been Prime Minister of the country for a period of five years and when he brought down the budget to which I have referred it was the first and only time, after that long period of years, in which he had essayed a task of the kind. My right hon. friend would have been wiser had he in this particular followed the example set by Mr. Gladstone and waited a little longer before assuming two such important offices along with others which he is holding. Undoubtedly my right hon. friend's present experience in the office of Prime Minister, coupled with his experience in other portfolios, will come in time to be of great advantage to him. The budget which he brought down discloses a lack of that experience of public affairs in a large way an experience which in the nature of things can come only to one who has held for a very considerable time the position either of Minister of Finance or of Prime Minister.
When Mr. Gladstone at a great age laid down the portfolio of Chancellor of the Exchequer he uttered words of wisdom which I commend to my right hon. friend for the good not only of his own health and reputation but as well for the advantage of the country. I quote from volume 3 of Morley's Life of Gladstone, page 99:
The basis of my action is not so much a desire to be relieved from labour, as an anxiety to give the country a much better finance minister than myself,-one whose eyes will be always ranging freely and vigilantly over the whole area of the great establishments, the public service, and the laws connected with his office, for the purposes of improvement and of good husbandry.
My right hon. friend followed his speech on the budget by a motion that the House go into committee of ways and means to consider the proposals contained in the budget for the raising of revenues and the proposals contained therein respecting the trade policies and customs tariffs of the country. To that
motion there has been moved by the opposition an amendment which expresses the views of the opposition in reference to the proposals contained in the budget. To the amendment moved by the opposition there has been presented to the house a subamendment, or amendment to the amendment, by certain of the hon. members who comprise the so-called independent group in the far corner of the house.
For the purposes of discussion and in order that hon. members may have before them the two amendments, may I be pardoned if I again place the amendments upon Hansard in order that my remarks by way of comparison and possible criticism of the amendment to the amendment may be the better understood.
The amendment moved by the Liberal opposition falls naturally into three parts. The first portion refers to the circumstances under which the budget is being introduced in this parliament and the circumstances in the light of which the opposition is reviewing at this time the action of the government. Hon. members will recall that the motion of the Prime Minister was:
That Mr. Speaker do now leave the chair for the house to resolve itself into committee of ways and means.
The Liberal amendment which was moved by the hon. member for Shelburne-Yarmouth (Mr. Ralston), and seconded by the hon. member for Vancouver Centre (Mr. Mackenzie) appears in the following terms:
That all the words after "that" be struck out and the following be substituted therefor: Whereas there exists throughout Canada grave depression accompanied by widespread unemployment and distress;
And whereas the depression has deepened and unemployment widened as a result of the fiscal policy of the government, set forth at the special session of 1930;
And whereas, as indicated by the fiscal measures now submitted, the government proposes to continue the policy then inaugurated; This house regrets that,
Then follows the second part of the amendment which is in the nature of a regret or a criticism of the action taken by the government. May I point out to hon. members that criticism or the expression of regret does not necessarily constitute a negative attitude on the part of the opposition. To prevent a wrong course is quite as much a contribution to the well-being of society as to point the way to a true course. We on this side of the house feel that in the circumstances of the present year the budget brought down indicates that the government in a number of directions is pursuing the wrong course, and
26G6

The Budget-Mr. Mackenzie King
therefore in the amendment we have expressed our regret in the fallowing words:
1.	The policies of the administration do not contain any provision for the relief of unemployment.
2.	The effect of the fiscal measures proposed
will be to intensify the stagnation of trade brought about largely by the disparity between the prices received by those who must sell their products in the world's markets and the prices which must be paid for goods and services in a highy protected market.	.
3.	The proposed increases in taxation, both direct and indirect, will fall most heavily on those least able to bear the burden thereof, whilst there are decreases proposed in taxation which will relieve those whose incomes render them most capable of paying a greater share of the expense of administration.
4.	The effect of increased customs tariffs and other restrictions and obstacles to trade will be to curtail consumption and the volume of exports upon which the buying power and prosperity of the country so largely depend.
5.	The legislation of the special session of 1930 which it is now proposed to supplement, deprives the elected representatives of the people of that direct and full measure of control of tariff and taxation which belongs to parliament.
Those are all pretty strong indictments, Mr Speaker, but I believe the justification for them will be borne out by an examination of the policies enunciated in the budget and the methods of taxation there proposed. That there may be no doubt in the minds of any as to the policies which the present opposition would advocate in the present condition of affairs of the country, the Liberal amendment goes on to express the views which we entertain as to the policies which would help most effectively to meet the situation as it exists in our country at this critical period:
And this house is of the opinion,
That the existing economic depression can only be overcome by policies which are of a character,
(a)	to relieve unemployment,
(b)	to restore to a condition of parity the
relation between the purchasing powers of all classes,	,	.
(c)	to bring about more equitable distribution of the burdens of taxation,
(d)	to encourage the expansion of the external trade of the country, and
(e)	restore to parliament its full authority over tariff and taxation.
That is the Liberal amendment, and, with the terms of that amendment most hon. members of the house are, I believe, in accord. Certainly a great many more than the official opposition are in entire agreement with it, and I should hope that most of my hon. friends of the independent group would sympathize with every line of it.
That being the case, Mr. Speaker, may I say I am somewhat surprised at the nature of the amendment to the amendment which has been moved, on the part of how many

I cannot say, but which has come from the so-called independent group. I shall read that amendment, in order that the comparison may be made clear. It is moved by the hon. member for Battle River (Mr. Spencer) and seconded by the hon. member for Southeast Grey (Miss Macphail):
That all the words after the word "whereas"-
That is practically the first word in our amendment.
-in the amendment be struck out and the following substituted therefor:
Then comes the first part of the amendment, which is in the nature of a review of the existing situation, very similar to that which appears in the official Liberal amendment, and which expresses its criticism of the government also in terms of regret wholly similar in two or three particulars to that expressed in the Liberal amendment:
This house recognizes that while _ certain commendable features are contained within the present budget, it is to be regretted that no provision has been made for unemployment relief and this house further regrets the proposed decrease in the income tax as applied to the larger incomes as a retrograde step and wholly unwarranted in the present state of the national exchequer and especially in view of the heavy additional taxation imposed upon the consumers of the country.
And whereas the general economic situation in the dominion as reflected in the financial statement contained in the present budget is extremely serious and indicates shrinking revenues consequent on business stagnation, and a tremendous decrease in commodity values accompanied by a corresponding decline in general purchasing power;	_	_
And whereas a further result of this condition is to greatly increase the burden of public and private indebtedness to a point where repayment would appear to be almost hopeless;
This house is of the opinion-
Then comes the second part of the amendment to the amendment, in which is set forth the opinions of the hon. members who are responsible for it, as to the matters of greatest concern at the moment. They are expressed in two particulars; one has reference to a matter of study and the other is more particularly in the nature of a concrete proposal, which will appear as I read it:
.... that the present economic conditions demand intelligent and intensive study and definite planning upon a national scale, with the view of substituting well defined cooperative principles in respect of production and distribution, together with the mobilization of our natural resources, technical equipment and financial machinery, in place of the highly competitive system under which we are suffering at the present time.
As it is apparent that these fundamental changes cannot be put into effect in the imme-

The Budget-Mr. Mackenzie King
diate future, and that the present situation requires some prompt action.
And as the present financial situation is in many respects similar to but more serious than that which prevailed in 1914 at which time extraordinary measures were taken by the government, including the suspension of the redemption of dominion notes in gold.
This house is of the opinion-
This is the one constructive proposal put forward primarily as such in the amendment to the amendment:
This house is of the opinion that it is expedient to again suspend redemption of dominion notes in gold in order that-
(a) Commodity price levels may be raised, thus increasing the purchasing power of those engaged in agriculture, mining, forestry, fishing and other primary industries and in this way promoting a corresponding increase in the volume of employment;
fb) That the burden of both public and private debts and the interest thereon may be lightened;
(c)	That the amount of currency and credit available for the purposes of trade and commerce within the country, may be increased;
(d)	That through the increased volume of trade thus secured there might result larger revenues without any increase in the rate of taxation.
May I say frankly, Mr. Speaker, that I find it impossible to support the amendment to the amendment, and this for very obvious reasons. In the first place, it moves to strike out all of the Liberal amendment, and I am not prepared that this step shall be taken unless something more worthy of the support of this house is proposed to take its place. I submit that in the amendment to the amendment we have nothing set forth which would better state the position that should be stated to the government at the present time with reference to the proposals they have brought down.
There is another reason why I cannot support the amendment to the amendment. It is this. Had my hon. friends who are responsible for the amendment not desired to place the official opposition in a position where it would be practically impossible for its members to support their amendment to the amendment, they would not have suggested striking out the whole of the Liberal amendment. They would have brought forward their constructive, concrete proposal as an addition to the amendment. My hon. friends in the far corner say a great deal about playing party politics. May I say to them that this amendment, as it is drafted, savours a good deal of party politics. It seems to me it has been framed deliberately so that the Liberal opposition will not be in a position to support it. We could not do so without voting against our own amendment in its entirety. Without this being understood it might appear to those
who are interested primarily in questions of currency and the like, that the Liberal opposition was not as sympathetic as it should be to their views. I do not wish to speak in any censorious way of an amendment of this kind, but- I do think this is a time when all parties in this house who feel and think alike at all might well seek to combine to as great an extent as may be possible in a common expression of view which in the public interest is so much needed at this time.
In analysing the amendment to the amendment, I may say that there are some features of it with which I am in entire accord. With the expression of regret that the budget contains nothing in the way of a proposal for ' the relief of unemployment, and with other features of the amendment to the amendment which are in common with clauses of the amendment moved by the Liberal opposition, of course I am in entire accord. But there is one particular aspect of the amendment to the amendment which I find it especially difficult to understand, coming from the particular group to which the hon. members who moved it belong, and it affords an added reason why I, for one, could not support their amendment. It strikes out of the Liberal amendment, and does not suggest any substitute therefor, that part which refers to the inimical effect of the tariff and trade policies of the government. So far as we of the Liberal opposition are concerned, I think I can speak for all of us when I say we believe that only by policies which will help to extend rather than to restrict trade will it be possible for this country to improve the very serious condition in which it is at the present time. And where the government of the day has brought in, as it has, proposals for increasing the customs tariff, not 10 or 20 per cent, but in some cases 50, 100, 200 and 300 per cent, I fail to see how any group of ladies and gentlemen, representing the rural elements in our country, can completely pass over any criticism of the administration on that score. That is what the amendment to the amendment does. It makes no reference whatever to the government's action with respect to higher tariffs and t>o all that higher tariffs imply in the way of the restriction of trade, higher cost of production, higher cost of living-the point on which most stress is laid in the Liberal amendment. Were the amendment to the amendment to carry, it would eliminate that portion of the Liberal amendment which deals specifically with that particular aspect of the situation.

The Budget-Mr. Mackenzie King
Let me say a word with respect to that portion of the amendment to the amendment which sets forth the necessity for careful and intensive study of the existing industrial system in our country, and the modifications that should be made therein. I am not only in hearty accord with the suggestion, but I believe, so far as the study of these problems is concerned, that every hon. member, irrespective of party, will agree that something of the kind is greatly needed. I cannot say whether that portion of the subamendment carries with it a further implication than the mere study of the existing sytem; I do not know whether it goes the length of suggesting that another system should be substituted. It does suggest, I think, that there should be a wider application of cooperative principles in industry, and with that suggestion I am certainly in most hearty accord.
The capitalistic system to-day is under fire, it is on trial, it is being investigated; and I hope, indeed I believe, it is being modified. I am not sure that it will be modified by this budget, but I believe it will be modified extensively by prevailing public opinion. I believe, Mr. Speaker, that industry will have to be viewed from an entirely different standpoint from that which has been taken for the most part by those who have large investments therein and who are reaping great profits therefrom. The capitalistic system, regarded from that point of view, is in the nature of an enterprise carried on in the main for the sake of profit, possibly also for the sake of affording employment to workingmen. Now I consider that industry should be regarded, in its nature, as social service, and social service of the very highest order-social service in which everyone who plays any part in its development must be considered an essential and important contributing factor. I do not see why the man who invests his capital should be given the primary place in the esteem of his fellow men with respect to the great processes of industry in our day. He is but one contributing factor. The man who gives his labour plays a part quite as essential, quite as important and indeed, I believe, much more important; because without labour no capital would come into being nor could it be accumulated- capital in fact is the fruit of labour combined with abstinence or saving. I say, therefore, that labour is as much entitled as capital to first, consideration. Moreover, capital investment may be made by a person who possesses no real capacity apart from being very fortunately situated, one who has inherited great 
wealth or has acquired it by one means or another, without having made in the process of acquisition any great contribution to society; such an individual may reap great rewards from his capital investments. I submit that managerial ability required to direct large industries, the kind of ability possessed by those who have a genius for organizing industry, who have the capacity to coordinate the contributions of capital and labour with the needs and rights of the community, but who may not possess any capital at all should be accorded as much credit for the service they render as the capital investor, and should have a degree of authority quite as great in the direction and control of policy as is afforded those who have capital invested in industry.
It seems to me, Mr. Speaker, that we have come to the time when we may assert, and assert very positively, that society itself is an equally important contributing factor to industry as it is carried on. After all, what could any capitalist do but for the services which, directly or indirectly, are performed by the community in its organized capacity as the state acting through government, or in other ways? It is largely through society itself that individuals who possess capital are able to invest it in large industries, that men of great managerial ability are enabled to wield the great forces which they do to-day. It is due to what society itself does that these particular factors are rendered as important as they are.
The state, representing society, is responsible for the maintenance of law and order. The state is responsible for the security of the country. The state is responsible for safeguarding and promoting international negotiations. All this is carried on at the expense of the community itself by the government, which functions in various ways through the taxes supplied by the people themselves. Thus the community plays a most essential part in industry. More than that i take the services of transportation and communication, the agencies of the post office, of the railway companies, of steamship companies, all of which operate to keep different quarters of the globe in active communication one with another. That is work which is carried on primarily by the oommunity through the agency of government, and with the assistance which government gives to undertakings of that character. Again, all invention is furthered by the state. Education is the work of the state. What would any capitalist, no matter what his wealth might be, be able to accomplish in !he way of reaping vast dividends for himself,

The Budget-Mr. Mackenzie King
were it not for what the people themselves do-what the state itself does in the way of educating its people and in providing these various agencies to which I have made reference and at which, in fact, I have only hinted.
I say, therefore, that the movement of our day which demands that the people themselves should have a more pronounced voice in industry, that they should play a more important part in determining industrial policy; the movement which demands for the workers of the country more of a voice in deciding the conditions under which they toil, and the share of the product which they shall receive by way of reward for their effort-this movement, I say, is thoroughly sound and is in accordance with principles which society will have sooner or later to recognize. To that extent I feel- that what my hon. friends, who have moved this subamendment, apparently have in mind, is a view with which I can entirely agree. Whether I would go as far as some of them in changing the social order, I am not prepared at this moment to say, because I do not know how far they would wish to go. But certainly anything which will be in the nature, of substituting cooperative policies and cooperative effort for individual capitalistic control will have my hearty support and will foe, I believe, in the right direction.
As to the one concrete proposal which is made in the amendment to the. amendment, namely that the government should suspend the redemption of notes in gold, did I believe that this would make matters any better, I am not afraid to say that I should be among those who would support it. But I cannot see, in the light of such information as has come to us, in this house at any rate, that we are sufficiently enlightened on the currency question to conclude .that this parliament should express its voice in favour of suspending the practice of redeeming notes in gold. That is a question which is giving rise to a great deal of study on the part of the most thoughtful economists and the most earnest of social reformers and workers, and there is at the present time no general consensus of view which one can say is accepted. Just why this parliament of Canada should take the initiative in declaring for a step of that kind is something I really cannot see. I am not at atll sure that if that step were taken it would not make matters worse than they are. Why fly to ills we know not of simply to get away from the ills which now beset us. The mere fact that a proposal is new does not give it any value. This world has not come to its present stage of development in a short time;
nations have been battling with this and similar questions for many years. Why should we at this time of all times, when we are in the midst of a depression, when conditions are very serious throughout the country and throughout the world, take a step which may make things worse than they are? There are times to experiment, there may be occasions which make it unavoidable to experiment along lines that are not too secure or too certain, but why just this particular moment?


Mr. IRVINE:: Will the right hon. gentleman permit a question?


William Lyon Mackenzie King: 
Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: -and when he fails to do so his followers, just as they are doing at the moment, are very ready to do so on his behalf. Now my hon. friends
opposite can hardly have it both ways. They had better make up their minds at once whether they are going to take their stand on world depression and seek to escape blame for the failure of their policies on that ground, because conditions are getting worse and worse, or whether they are going to blame existing conditions on the policies of the previous administration whose record fortunately speaks for itself. I say, they cannot have it both ways.
I repeat my right hon. friend when he was appealing to the people told them that the reason the country was in such a condition of depression was that unemployment had been brought about by the policies of the administration then in office. He said that if he was returned to power he would relieve unemployment-no, he went further, he said he would end unemployment. When he was in the rural constituencies he spoke of the markets which they had lost, of the markets which could not be found, and he said: Return me to office and I will see that every one has markets; I will blast a way into all the markets of the world. Now, what is the position to-day? Instead of unemployment being ended, it is infinitely worse to-day than it was when my right hon. friend was addressing the electors a year ago. Instead of having blasted Canada's way into the markets of the world, he has merely exploded a magazine in the country itself and helped to make conditions more difficult for industry. He has not as yet found a single new market for the manufacturing and agricultural products of this country.
Comparing conditions and speaking of legacies, as hon. members well know, Canada was in a veritable slough of despond when the Liberal administration came into office at the close of 1921. What hon. member who was in this house at that time does not recall, and did not then very often use, the expression whispers of death", when he was speaking of the direful condition of the country.


Mr. MOTHERWELL:: The Montreal Star.


William Lyon Mackenzie King: Every hon. member knows of the direful condition in which the Liberal government found the dominion. What happened after we had been in office a short time and our policies had had a chance to get underway? Instead of being longer in a slough of despond, the country was brought to a position of prosperity which has not been paralleled in its whole history. And that improved condition at that time is making my right hon. friend's task, difficult as it is to-day, much easier than it otherwise would have been.

The Budget-Mr. Mackenzie King
That is the first inheritance which was left the present prime minister by the administration which preceded his own. His next inheritance was the improved condition of the finances. We found ourselves encumbered by a very heavy burden of debt, with legacies of many kinds from the previous administration quite enough, in fact, to thwart any succeeding administration. We left the finances of the country in a very much improved condition-in a condition which has made the task of hon. gentlemen opposite very much lighter than it otherwise would have been.
May I say to my right hon. friend that when a minister of finance presents his budget, he usually, in speaking of his predecessor in office takes care to review the fiscal year previous to the current year of which he is speaking as well as the current year itself. My right hon. friend did not go into a review of that kind. He left severely alone the fiscal year previous to the current one with which he was dealing. He said nothing about it.	Now, had he followed the example of past ministers of finance, he would have given a complete record. I submit that for purposes of comparison the last fiscal year in which an administration has had full control of its finances, whether it be a Liberal or a Conservative administration, is the only fair one with which bo make comparisons.
Now I am going to give my right hon. friend a few figures which may help to enlighten him. The Right Hon. Mr. Fielding, in his budget address of May 28, 1922, reviewed the last complete fiscal year of his predecessor in office. As I have just said, my right hon. friend did not follow that course. Perhaps I may be permitted to make good his omission in that particular. What was the position of things in the last complete fiscal year in which the Conservative party held office in this country? In the fiscal year 1920-21 the public debt had increased by $92,000,000. The total public debt had reached $2,422,135,S02, of which amount $1,381,833,600 had been obtained by the issuing of tax free bonds. I mention that because I want my right hon. friend to appreciate the load that we had to carry throughout our administration, a part of which he is being very rapidly relieved of, and of which he has in part been considerably relieved already.
The last fiscal year in which the liberal party had control was the year 1929-1930. Instead of a deficit thalt year of $92,000,000, there was a surplus of $45,000,000 at that time. Moreover, the public debt stood, at that time, at $2,177,763,959, in other words, it was $244,-
{Mr. Mackenzie King.]
371,841 less than on March 31, 1921. There is a legacy which was left by the previous Liberal administration to my right hon. friend. We have relieved him of an additional burden of fiver $244,000,000.
I wish to say just a word about how the relative positions came to be what they were. My right hon. friend has inherited certain legacies from us. We inherited certain legacies from our predecessors, who were of the same political complexion as himself. I want to take for purposes of comparison the years in which our party had complete control of its own affairs and compare them briefly with a corresponding period of years preceding, during which time the Conservative party was in office. The Liberal party had complete control for eight years. I am leaving out any mention of a couple of months in which we had a phantom administration in office, because I do not think my hon. friends would ask me even to make mention of that, though it added to our burdens, I count that hiatus in as a part of the eight complete years that we were in office, and contrast those years with the eight complete Conservative years preceding. I expect that the thought which comes into the minds of hon. gentlemen opposite at once is that of those eight years four were years of war. I admit that at once, and, in anything I have to say regarding the final comparison, I am going to separate the war finances, separate not only the cost of the war, but also the entire cost of demobilization.
From the fiscal year 1913-14 to the fiscal year 1920-21, both inclusive, during all of which the Conservative administration vvas in office, is a period of eight years. I class for purposes of comparison the Unionist government as being really Conservative. Included in that eight years is six years of war and demobilization, the years 1914-15 to 1919-20 inclusive. In that six year period there was a total deficit of $1,684,340,975. The total expenditures during that period on war and demobilization were $1,670,406,242. In other words, apart from all expenses of war and demobilization there was a deficit of $13,934,733 during that period. But in the year before the war commenced, the year 1913-14, there was a deficit of $21,000,000, and in the year after the war and demobilization, allowing six years for that period, there was another deficit in 192021 of $92,000,000. In other words, for the eight years preceding the year the Liberal government took office the deficit, apart from war and demobilization amounted to $126,000,000. That was what we inherited. That was the legacy left to us-a legacy of accumulated

deficits of 8126,000,000 in addition to the enormous deficits due directly to the war.
My right hon. friend must share that other legacy which was left by the government of the day to be met by subsequent governments, namely the total cost of the war and demobilization. Let me repeat that this legacy was the total cost of the war and demobilization. Not one dollar of the cost of the war and demobilization was met at the time out of current revenues. Every cent of it was met out of moneys borrowed for the purpose.
Apart from that, not only was most of the war financed out of borrowed money, but out of borrowed money secured from the sale of bonds which were made tax exempt, so that the source which is the one source above all others, which should have been available for purposes of taxation, was denied to the administration of the day. Throughout our entire period of office we were denied any opportunity of securing revenue from those tax exempt bonds. That period is beginning to disappear. Within another year or two, under this new conversion loan, many of these tax exempt bonds will Cease to exist, and my right hon. friend will be able to derive from moneys secured through income tax revenue which we had no opportunity to secure at all. So there is a great difference there in the legacies that we left to my right hon. friend, and the legacies that we received on coming into office.
Now, what was the position of the Liberal party during the years from 1922-23 to 19291930, both inclusive, a period of eight years? In the first of these years there was a deficit of 831,641,067. In the other seven years there was a surplus every year. The total surpluses in the period of our administration amounted to $273,000,000. That is a notable item in the legacy which we have left to my right hon. friend.
What is the third inheritance which he received from us, and which is in the nature of a legacy which must mean very much to him at this time, when the financial situation is so difficult? It is the legacy of lower taxation levels, making possible the imposition of new taxes under much less onerous conditions. Once the Liberal party was in office, in order that the country would not be going deeper and deeper into debt, it balanced the budget, this it did within a year or two. Once that was achieved, then steadily year after year we either abolished altogether certain taxes or we lowered the rates of the taxes, with the result that the total amount of revenues remitted which would otherwise have been collected from taxation went up
The Budget-Mr. Mackenzie King
into very considerable figures. First of all, in direct taxation, through the abolition of some taxes and reductions in the rates of others, it is estimated that at the end of five years there was an accumulated remission annually of revenues from taxation amounting at that time and thereafter to $116,000,000. Had the Liberal administration not managed its finances with a great deal of economy and care and skill we would never have been able to leave things in the position in which they were. The fact that we had in our time increased the exemptions under the income tax, reduced the sales tax from six per cent down to one per cent, the fact that we had reduced postage from three to two cents, the fact that we had wiped out all, practically all, of the so-called nuisance taxes, including the taxes on cables and telegrams, and the like, one of the few taxes which this administration has not renewed; the fact that we wiped out the receipt tax, and save with regard to cheques over ten dollars in amount, the tax on cheques -the fact that we were able to do all that and bring taxation down to the level that we achieved has left a very different problem to my right hon. friend than would have been the case if we had been imposing taxation at a high figure and had been spending money freely for different purposes. To this must be added reduction in indirect taxation as well, all that was saved through a lowering of the customs tariff.
May I point this out to my right hon. friend? Every bit of expenditure incurred during the time the Liberal party was in office, whether on current account or on capital account, was met-every bit of it- out of current revenues. We did not leave to my right hon. friend a single new obligation on capital account. I venture to say that he would have given a great deal if, when he read his own budget speech this year, he could have felt that at the end of a few years he was going to be able to meet all his capital expenditures out of current revenues, that he would not have to borrow in any particular. That is the position in which we left him. Moreover, all this reduction in taxation was accomplished, mark you, with a reduction at the same time in the public debt and with a total absence of borrowing. The inheritance of the present government was real and not merely apparent.
In addition to these achievements, as just mentioned the late administration made reductions in other forms of direct and indirect taxation. The customs tariff constitutes one form of taxation; the revenues raised from the customs tariff are in the nature of taxes.



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Not in any hit or miss fashion, not in a wholesale manner, but after very careful study and after due consideration of conditions in the country, we lowered the tariff little by little, year after year, and thereby reduced the burden borne by the people and the industries of this country. It would be impossible for me to estimate the extent of such reductions but I am sure a very large sum of money was involved in remissions of this character. All this however helped my right hon. friend in yet another way. These economies which we practised by reduction in direct and indirect taxation led to a return of prosperity; industry responded to the improved conditions in respect to taxation, and because of that improved condition Canada has been able to face the world depression in a way it could not otherwise have done.
May I at this time refer to another legacy which was left to my right hon. friend by the late administration; I refer to the improved conditions in trade brought about, I must frankly say, by the removal of a number of restrictions of a character I have already mentioned, restrictions pertaining to trade and arising out of direct or indirect taxation. In the fiscal year 1928-29 the foreign trade of this country had reached the highest point in its history, and Canada had become the fifth largest trading country in the world. Our total foreign trade in the fiscal year 1929-30 had reached a value of $2,400,000,000, brought about by markets gained in different parts of the world and the result of increased exchange of commodities. I submit that before hastening to make so many changes in tariff my right hon. friend would have been wise to have studied more carefully the methods by which that great advance in Canada's trade was brought about during the eight years the Liberal party were in office. At the moment the depression began to set in, the country's trade had been brought to the point I have indicated. As a result of the depression, trade has suffered, but if trade had not been in such a satisfactory, condition when the depression occurred I do not know where we would be at the present time. My right hon. friend has drawn our attention to the fact that in the fiscal year 1930-31 the total trade has dropped from a value of $2,400,000,000 to $1,700,000,000. I am afraid there will be a further considerable drop in trade values during the present year.
May I refer now to another matter to which my right hon. friend has alluded? When speaking of legacies he referred to the Canadian National Railways and sought to leave the impression in the minds of hon. members and of other people of Canada that in con-

nection with the Canadian National Railways his government has been burdened by the action of the late administration. At this point may I ask hon. members to direct their minds to railway conditions at the time the Liberal administration assumed office, and to contrast the position of the present Canadian National Railway system-one of the finest in the world and possibly comparable with only one other system-with conditions as they existed at that time. What was the position? The Grand Trunk Pacific, one part of what is now known as the Canadian National Railway, was in the hands of a receiver. Another part was being administered by the directorate of the Canadian Northern Railway which had direction of what was then known as the Intercolonial railway and what remained of the Mackenzie and Mann system. Talk about putting public money into railways! I think my right hon. friend has been more eloquent than anyone else in his references to the amount of money which was poured by a Conservative government into the coffers of the Mackenzie and Mann interests in taking over that bankrupt system. The sum of $10,000,000 was paid out of the treasury for stock which, according to the report of a commission appointed by the Conservative government authorizing payment, was not worth a cent. That is the way money went into the railways and helped to create the railway problem as we know it to-day. Then there was the old Grand Trunk Railway system which was in a state of bankruptcy, and was being administered by another board of directors. Hon. members will note that there were three boards or heads of the railways. First there was the Department of Railways and Canals administering the affairs of the Grand Trunk Pacific which had gone into the hands of a receiver. Then there was the Canadian Northern and Intercolonial railways under a separate president and board of directors, carrying on as best they could. Then there was the Grand Trunk Railways system in a state of bankruptcy and under the supervision of another president and board. That was the position in which we found those railways.
As my right hon. friend had to admit during the course of his remarks, inside of two years all those systems were brought into one organized system with unified control. What is more, several railroads were organized into one Canadian National Railways system. True enough a dilapidated condition existed with which we had to deal, and since that time if there have been moneys spent on the Canadian National railways they have been spent to make the condition of those roads better

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than they were in the bankrupt and neglected state in which they were when we took them over. That is why so much money has been spent. When any reasonable person compares the Canadian National Railways as organized and developed under a Liberal administration with their condition at the time we assumed office he will give proper credit where credit is due.
Let us consider the present position of the Canadian National Railways. While there has been a large amount of money spent in connection with them, where has it gone? It has gone into the making of new roads, the purchase of new rolling stock, new equipment, new branch lines, new terminal facilities, and to the taking over of a great number of smaller railroads in the different provinces of the dominion which were like so many mortgages upon the country. When those bankrupt railroads scattered throughout the different provinces became a part of the one great system, they were infused with new life. The fact is however that a large amount of money was necessarily spent to bring those different branch lines under the one great system and make them a part thereof. That program was canned on until we see to-day in 'Canada only two great systems, the Canadian Pacific Railway and the Canadian National Railways. A large amount of money was also spent in the construction of new branch lines which were very much needed. We did not have a chance to build them as early as we would have liked because of the fact that although we passed resolutions through this house the friends of my right hon. friend in another chamber threw those measures out as fast as we passed them.
My right hon. friend said he believed there was not a single major proposal of any kind made by the Canadian National Railways organization to the late government that it had not accepted outright. I do not know where he gets his information, I think he will agree with me however when I say that when the Canadian National Railways come forward with a proposal to which their directors have given consideration, they approach in the first instance-possibly they do not now, but they used to approach the Minister of Railways and Canals. They would tell him something about the proposals they had in mind, and the Minister of Railways would confer with the Prime Minister and other of his colleagues in an informal way before these proposals were brought before council for discussion. I assume that method is followed to-day though, as I say, I imagine my right hon. friend does not allow the Minister of Railways very much latitude in any confidential conversations.
Apart from that, however, may I make clear the point that over and over again proposals of different kinds were made to the Liberal administration, through one of its members, which were not accepted. Some were rejected entirely; some were postponed and some were accepted, but with regard to those which were accepted may I point out further to my right hon. friend that his friends were members of a committee of this house which approved of every single proposal of major importance brought forward by the Canadian National Railways and which was finally adopted. I do not recall any single discussion in this house during which my right hon. friend or those who sit around him took exception to the proposals which were being made by the railways and which were approved by this house at the time they were brought forward.


Mr. HANSON (York-Sunbury):: My right hon. friend must know that the three year branch line program was opposed in this house by Sir Henry Drayton, and that the Guysborough branch line was also opposed by him.


William Lyon Mackenzie King: I have just
alluded to the three year branch line proposal, and I said that proposal was defeated by the friends of my hon. friend in another house._ Those proposals were brought forward in the form of bills which were discussed here. I am now speaking of the proposals which came before the committee on railways and shipping, of which I think my hon. friend was a member and in the report of which at all events he acquiesced. So I say that so far as the Canadian National Railways are concerned, the legacy which was left hon. gentlemen opposite is one of which they, as well as those on this side of the house, might well speak with pride.
I wish now to go a step further and refer to the contention made by my right hon. friend that his predecessor in office should have anticipated the deficit at the end of the last fiscal year and should have levied more taxation. If my right hon. friend had that degree of foreknowledge which he says his predecessor in office should have possessed, how does he reconcile that knowledge and his hopes of attaining the position which he now holds with the promises he made throughout the campaign, that if returned to power he would, not by means of borrowing but by additional taxation, within a very short time construct a national highway, make grants with respect to unemployment, restore the grants with regard to technical education and agricultural instruction, give one hundred per cent of the
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cost of old age pensions to all the provinces, develop the St. Lawrence waterway, construct the Peace River outlet, build bridges in different parts of the country and see that they were exempt from tolls, build additional railways, and commit the country to a thousand and one other different kinds of public works? When my hon. friend says that last year anyone should have known what conditions would become, I ask him what he meant by telling the people of this country that if he were returned to power he would do all these things. To-day my right hon. friend is trying to make a reputation for himself as a gentleman who makes promises and also as a man of his word who keeps his promises.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: And his following say "hear, hear", and cheer. May I say this to my right hon. friend, that if these various promises, only a fraction of which he is attempting to implement or will ever be able to implement, which mean so much in the way of taxation to the people of the country, were to involve anything in the way of sacrifice personal to himself, I would see some reason for the applause of his followers, but when the promises which were made so lightly for the purposes of winning an election can be implemented only out of the taxes of the people; when in addition they mean increased taxation at a time of great distress; when they mean that the burden which is already upon industry is to be increased; when they mean that the burden which is already upon every family and household of humble means and circumstances throughout this country is being increased, I fail to see where there is any very great credit coming to him. The promises of yesterday are the taxes of to-day.
My right hon. friend did not tell the electors that when he was appealing to them; he led them to believe there was some invisible source from which he. would be able to draw all that was needed in the way of revenue in order to provide for the things he was promising. If he had been honest with the electorate he would have said, " While I promise this to you, you must be prepared for increased taxation of a very extensive nature, taxation that directly or indirectly must fall on every one of you." I did not follow my right hon. friend in the line of promises; I understood something of the responsibility which rests upon one who takes a position of leadership either of a party or of a government, as well as of what the public has a right to expect of him.

May I say again to my right hon. friend what I said the other evening in his absence:
I believe that to-day the people of this country would be much more ready to forgive him a little delay in attempting to implement at their expense some of his innumerable promises than they will be ready to commend him for carrying out promises which for many years to come will weigh them down with additional burdens of taxation, I say to my right hon. friend that I think he ought to consider that aspect of the question very carefully; before he continues in the direction of recklessly spending public moneys, in which he appears to have started, he should give consideration to what this is going to mean, this inevitable sequel of vast taxation at this time of great distress.
Now may I refer to another statement my hon. friend has made, and which his friends are continually quoting. It is this, that the policies of the Liberal administration were responsible for the conditions which now exist. In answer to that statement may I make clear to my right hon. friend and to the country what must everywhere be known, namely that the Liberal policies which were framed [DOT] deliberately and definitely for the purpose of meeting the situation which exists to-day were defeated and destroyed at the instance of my right hon. friend and those who sit around him. The Liberal policies designed to cope with the depression were never given a chance. The Dunning budget was framed with regard to the conditions existing in Canada at the time, conditions which the then administration saw would continue for some time. That budget was framed with the intention of helping to further trade between this country and Great Britain and other countries; it was planned to expand the trade of Canada. It was framed with reference to an Imperial conference which was to take place in London in the fall of the year, and it was designed deliberately to meet a trying and difficult situation throughout the country. No sooner was it introduced than my right hon. friend led the way in denouncing it, in misrepresenting it, in decrying it, in ridiculing it and in doing all that he could to defeat it. Between his representations with respect to the Dunning budget, not only in this house, but on platforms from one end of the country to the other, and the promises he made, he defeated the very policies that would have helped to put Canada in a very different position from the one she is in to-day.
So I say, Mr. Speaker, that there is very little reason why my right hon. friend should say the policies of the Liberal party are in

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any way responsible for the deplorable conditions of the present. May I ask him this: Was the Liberal party responsible for the fiasco which he made of the Imperial conference? I think he recognizes, as the world now recognizes, that that conference was a most dismal failure, that in every particular it left relations, not more pleasant and agreeable as between this country and the mother country, but rather distinctly unpleasant and disagreeable. The Liberal party cannot be blamed for that. Yet, as is known, the policies cif the Liberal party, with respect to trade with Great Britain, at the time they were enunciated in the house, caused men and women of all political parties in the mother country to enthuse at the prospect of the Imperial conference, and what it would mean to the different parts of the empire, and in particular to trade between Great Britain and Canada.
But not only did my right hon. friend before gaining power do what he could-and in which he was successful-to nullify the Liberal policies and prevent their being put into effect, but since assuming office he has brought in policies of his own which are diametrically the reverse of those advocated by the Liberal party. My right hon. friend called a special session of parliament, ostensibly for the purpose of dealing with unemployment; but in reality, as events proved, to alter the tariff of the country along high protectionist lines, restricting trade where the Liberal administration of the day had sought by the removal of restrictions to create further trade. Does he forget that by the very policies which he introduced at the special session of parliament he made trade more difficult, intensified the stagnation of trade, and made conditions worse than they were?
I say, therefore, that both with respect to the policies which he has introduced, and with respect to the policies of the Liberal party which he helped to destroy, my right hon. friend must assume responsibility for unemployment having become worse in this country instead of improving. He must shoulder also responsibility for the fact that the rural elements are finding it more difficult than otherwise would have been the case to secure markets.
May I point out what in my opinion the country believes to be the most serious aspect of what my right hon. friend has done and is doing. Time and again, in reference to the right hon. gentleman while pointing to what I believe to be his sincerity, and his faith in the objects he has in view, I have had to take
very strong exception to his judgment, and to his method of doing the things he attempts to do. I wish now to take very strong exception to the method my right hon. friend has adopted in dealing with the tariff of this country and to his judgment in matters of the kind.
He is not the first Minister of Finance who has had to do with tariff revision. We have almost the entire history of the country behind us to guide us in an understanding of what the leading men of Canada have regarded as the methods which should be adopted in matters of tariff revision. I say that there is nothing in the whole history of the Canadian tariff which will bear anything in the nature of a remote comparison or resemblance to what my right hon. friend has already done, and to the way in which he is proceeding.
From the days of Sir John Macdonald to the present moment, no Prime Minister, no government has thought fit to alter the tariff of the country in the way in which my right hon. friend has changed it; for he has made wholesale revisions in the tariff, reckless and ruthless in the extreme, raising the schedule to any point or on any item. Just so long as he is presented with some petition to put the tariff higher on any item, up it goes, still higher, until to-day we have a tariff which I venture to say even he himself could not describe to the people-a tariff beyond all description, so far as its height and general characteristics are concerned.
Let me review for a few moments the history of our tariff. Take the government of Sir John Macdonald. Look at the rates-of duties imposed by Sir John when he introduced the national policy and compare those rates with the duties enacted at the last special session and proposed at this session of parliament. Why, beside these- the rates imposed by Sir John Macdonald dwarf into insignificance. Yet I venture to say that Sir John Macdonald was as much concerned with the well-being of the manufacturers as is my right hon. friend. But Sir John had had an experience of many years which caused him, in matters that affected the whole financial, industrial and commercial structure of the country, to move with a good deal of caution. My right hon. friend apparently does not know the meaning of the word caution. His method of dealing with the tariff I have heard described as that of a running jump, a leap in the dark-any change so long as it is a change in the upward direction. Go through the revisions of the tariff made while Sir John Macdonald was in power, while Sir John Abbott was in power, or Sir John
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Thompson, or Sir Mackenzie Bowell, or Sir Charles Tupper, any of the sirs who made up the quintette of Conservative prime ministers of that day, and you will not find in regard to the administration of any one of them any changes comparable to those which my right bon. friend has brought about.
Let us come to the time when Sir Wilfrid Laurier took office. True, the Liberal policy with respect to the tariff was one which tended in a direction opposite to that of his predecessors in office and to that of my right hon. friend's policy. The changes made by Sir Wilfrid Laurier tended in the direction of reduced rather than of increased duties. But did the Liberal party when in office take hold of ithe tariff schedule and blue pencil tlhe whole of it, altering the levels and fixing purely arbitrary rates? Did the Liberal party make its reductions by wholesale altering of the rates by SO, 60, 90. 100 per cent? Yet, in the other direction, this and much more is what hon. gentlemen- opposite have done; adopting throughout an entirely arbitrary method. The Right Hon. Mr. Fielding was a very experienced Minister of Finance, of him I have heard my right hon. friend opposite speak in very high terms, as well he might; for every Canadian must respect the late Mr. Fielding's great capacity and ability as a Minister of Finance as well as his noble integrity. I ask hon. gentlemen opposite: How does the method adopted by Mr. Fielding with respect to tariff revisions compare with the method which my right hon. friend has followed and is following? Was there ever a minister of finance in Canada who enjoyed in greater measure the confidence of the entire manufacturing clas3 as well as of other sections of the community? Mr. Fielding, with his great experience, was exceedingly cautious. When introducing tariff changes he was always careful to stress the delicate relationship that existed between the tariff structures as a whole and the business and commerce and finance of the country. But my right hon. friend disregards altogether an example of that kind. In fact, he ignores it wholly: one might almost say that by the course he is adopting he seeks to ridicule it.
Coming to a later day, let us take the government of Sir Robert Borden, who came into office after a campaign which had been waged on the tariff as the, main issue. Sir Robert Borden made certain revisions in the tariff. He had as his Minister of Finance Sir Thomas White, who spoke for the government of Sir Robert Borden so far as tariff matters were concerned. Has my right hon. friend ever considered what method was adopted by these

gentlemen? Though he had a much longer experience in' public life than my right hon. friend, did Sir Robert Borden when in office go through the tariff schedule with a blue pencil, scoring out the old rates, making at random change after change, substituting always higher rates for those that then existed, and all without investigation? Look at the tariffs; they speak for themselves: the changes that were made were in most instances made with the greatest caution and care. Some were in an upward direction, while some tended downward; but they were made, as the government of that day believed, in some relation to the needs of the industry affected and as the result of careful examination.
Take the administration of the Right Hon. Arthur Meighen. Will anyone say that the Right Hon. Mr. Meighen was afraid to speak his mind or to take deliberate and far-reaching action if he thought it necessary so to do? And how did Mr. Meighen while Prime Minister deal with the tariff? He also campaigned the country on the necessity for a revision of the tariff upward, and he had as his Minister of Finance Sir Henry Drayton. When they were charged with the responsibilities of office those gentlemen were as careful as they could be in dealing with the great financial industrial and commercial structure of the country as it was affected by the tariff.
I wish now to put on the record one or two of the views expressed by conservative ministers. I give them to my right hon. friend because these gentlemen are members of his own party. This is the teaching on which the members of his party were brought up, and I believe that it is this teaching, rather than the example which my right lion, friend has set, that even to-day convinces them and more largely has their support. In -his budget speech of 1913 Sir Thomas White, the then Minister -of Finance, after touching upon the economic conditions of the day and drawing attention to the fact that there is always a delicate connection between business and a revision of tariffs, declared:
There is, I believe, a general consensus of opinion that anything in the nature of an extensive I'evision of the tariff is not called for by existing conditions and would be contrary to public interest.
That was Sir Thomas AVhite's opinion, that an excessive revision was contrary to the public interest. I do not know what Sir Thomas is thinking of the revision made by this budget; I should like to have a chance to talk in private with him concerning it.
In his budget speech of the following year, 1914, Sir Thomas White said:

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The evils of a high protective tariff are too well known to make it necessary that I should discuss them here.
What is the nature of tariff being enacted by my right hon. friend? It is not a low protective tariff, it is not even a moderate protective tariff. A word which indicated greater heights than the word "high" would not begin to describe it; it is the highest possible tariff that either he or the country could conceive of. "The evils of a high protective tariff" are the words used Iby Sir Thomas White. Hon. gentlemen who have been advocating protection have, I think very wisely, been saying that it must be moderate protection, must be protection having some regard to the relations of this country with other countries, and the business of this country with other countries. The word "moderate" has no place in my right hon. friend's vocabulary. Remember that Sir Robert Borden was the leader of the party at the time at which Sir Thomas White was the Minister of Finance.
Now I come to Sir Henry Drayton and his views. Sir Henry Drayton was Minister of Finance in Mr. Meighen's administration. In 1920, outlining the principles which should govern any revision of the tariff, he said:
As a means of raising revenues the tariff should be so adjusted as to place the chief burden upon those best able to bear it. Articles of luxury should be heavily taxed through the imposition of customs and excise rates. Food commodities and other necessaries of life, not produced or manufactured in Canada, should, if taxed at all, bear only such imposts as are necessary for revenue purposes. Those produced in Canada should be subjected to such customs duties only as may be necessary in the general national interest to be determined after strict investigation from time to time.
And later Sir Henry continued as follows:
For the purpose of encouraging the fullest development of our natural resources the tariff should be so adjusted as to permit machinery and the implements of production to be purchased at prices that will compare equitably with those paid in other countries for similar articles.
The Right Hon. Arthur Meighen, then Prime Minister, stated during the course of the budget debate of 1920 that we in Canada could not afford to have an immoderate or high tariff. I would suggest to hon. members on the opposite side of the house who come from the western provinces, and who are so lightly voting the tariff proposals of this budget into the statutes, that they listen to the words which Mr. Meighen used on that occasion. He said:
So I say we cannot have any immoderate or high tariff for the reason that it tends to exclude that healthy element of fair conditions,
namely foreign competition. Secondly, we have in Canada a territory of wide extent. We have a portion of Canada newer than the other portion-a more predominating agricultural country newer to manufactures and agricultural development and consequently the advantages of tariff do not accrue as yet.
Later he stated:
Upon account of these two reasons we must always have in this country nothing more than a moderate tariff under any conditions whatsoever.
Whether those conditions be depression or great prosperity, because the west is in a different position from the east. Mr. Meighen considered that "we must always have in this country nothing more than a moderate tariff under any conditions whatsoever." He continues :
That will be the purpose of the revision under the principles clearly set out and enumerated by the Minister of Finance to which we adhere.
That should help to convince hon. gentlemen opposite that it might be well to endeavour to persuade their leader that if he is going to be true with respect to the principles of protection which the party has championed in the past, he should return to the use of the word "moderate." or at least another term which would suggest some modicum of reason in the changes which he is making. The extremes to which he has gone and is going is one of the most serious aspects of the whole situation.
In contrast to the changes which have been made by the present administration and which are now being proposed, running, as I have said, up into the hundreds of per cent, let me enumerate some of the changes made by the Liberal party during the time it was recently in office. They were changes in an opposite direction, but they were effected only after the most careful examination. May I point out that it was under these changes that Canada reached the position of prosperity which she enjoyed just prior to the time the world depression affected *this country along with others. That is a point which I would like hon. members to consider carefully. We are dealing at the moment with the condition of the country in a state of depression, and are considering what is best for the country in order to get it out of that depression. We have before us certain changes which in the past were made, and which at a time of depression helped to bring about prosperity. With that example before them this government should be careful in proceeding too far in a direction diametrically opposite.
In 1922 reductions were made on sugar, agricultural implements, textiles, boots and
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shoes. In 1923 the tariff on goods imported under the British preferential tariff was reduced by 10 per cent wherever the regular rate of duty exceeded 15 per cent and where the goods were imported directly to a sea or river port in Canada. The duty was reduced on sugar.
These changes were made with a view to helping the country at a time of depression, and in order to make the cost of agricultural implements as cheap as possible, having regard to the effect of the tariff upon their price. At a time when the people were being hard pressed and finding it difficult to make ends meet, the rate oni articles consumed by the great body of the people, such as sugar and commodities of that kind, was reduced.
In 1924 the duty was reduced on instruments of production used in agriculture, mining, forestry and fisheries. That was an important and far-reaching revision. In 1925 there was a reduction on well-drilling machinery and engines used for fishermen's boats. In 1926 the duties on automobiles were reduced, also a most important revision. It led to an immediate and substantial reduction in prices to Canadian purchasers. The duties were reduced on sugar, tin plate and so forth. In 1928 further reductions were made on the implements of production in the mining and fishing industries, and fertilizers were placed on the free list. There was a revision of the textiles tariff to provide for a reduction of the maximum duty under the general tariff from 37^ per cent to 30 per cent, with but a single exception. In 1930 tea was made free under the British preference, thus effecting to the consumer a reduction in the price of tea of from ten to fifteen cents per pound. Porcelain and chinaware were made free of duty under the British preference, which preference was extended to many products of the iron and steel industry. Fresh vegetables and fruits were made free under the British preference which applied to Bermuda and the West Indies.
The changes made during the time the Liberal administration was in office were of a character to help to meet the needs of the situation, to help to meet the condition with which the country was faced. Speaking broadly, the Liberal party during the time it was in offiee helped to bring the country out of a slough of despond similar to what we have at the present time into a position of prosperity which continued up to the moment the present world depression began to affect this country. It is important briefly to review the more important steps taken to that end.

In the first place, the Liberal party sought to effect economies in public administration. When we came into office there were many public services that had grown up during the period of the war. These were no longer necessary and were gradually eliminated. As I have already said, public expenditures were kept well within current revenues. We did not borrow to meet any expenditures on capital account. We found when we came into office, just as hon. gentlemen opposite find to-day, that the choice lay between increased taxation or the discontinuance of certain obligations created by grants which, under the circumstances, we felt we would not be justified in renewing. I refer to the different grants in aid that had been instituted prior to our coming into office. There the Liberal party found itself encumbered in a way in which the present government does not find itself encumbered. There had been placed on the statute book prior to the time we came into office measures which required annual payments of large sums of money to the provinces in addition to the subsidies provided for by statute-I want that point to be kept in mind-in addition to the subsidies which were fixed by statute this country was committed to large annual payments on account of technical education, on account of agricultural instruction, on account of highways, on account of coordination of employment offices, loans for housing, and several other services that I might mention. On June 2, I placed before the house a statement of what these various grants in aid came to, and I think I was able to show that if they were brought together into a ten-year period they would mean a payment to the provinces of something like $50,000,000 over and above the sums to which the provinces were entitled by way of subsidies paid in the regular way. The subsidies only amounted to between two and three times the amount that as grants in aid the previous Conservative government had committed this parliament to pay in addition to aid provincial governments to carry out obligations which were primarily their own.
The hon. member for Dorchester (Mr. Gagnon) who spoke this afternoon, could not refrain from making the same misrepresentation members of his party have been continuing to make about the use of the word "vicious" as applied to a certain system of financing. He sought to convey the impression that I was opposed to the federal government having to do with these various services. I have never spoken in opposition to the federal government undertaking for itself work which came within its own sphere

The Budget-Mr. Mackenzie King
and carrying through that work under appropriations made by this parliament and over which this parliament could exercise control. I have not been opposed to old age pensions, I have not been opposed to highways, I have not been opposed to the payment of unemployment relief-I have not been opposed to technical education, agricultural instruction, or to any of these services. But I have been opposed to the principle of one administration raising the taxes and handing the money thus raised over to another government to spend and itself having no control over the expenditure of the money so raised. I have very good authority, I think, for the unwisdom of such a course of action.
It may have cost us something in a political way to seek to protect the treasury by not continuing these various measures as the time for their renewal expired. There were two reasons for not renewing them. One was that when they were passed by this parliament it was never intended that they were to become perpetual. They were granted for a term of years, and at the end of that term, after giving due notification, we allowed the various grants in aid to run out. The other was we did not think the federal treasury should be thus further burdened. To that extent we have saved my right hon. friend a tremendous load at the present time; he is not encumbered as we were by such commitments. His encumbrances to-day are not in the nature of anything that has been left to him by the Liberal party. They are encumbrances shared in part in common with ourselves from a previous Conservative administration which left the whole obligation of the war to be met by others by reason of its failure to raise any revenues for the purpose at the time and which issued the tax exempt bonds. He has been freed by our action from the encumbrance of continuous expenditure on the grants in aid to which I have referred. The real encumbrance he has is one which he has put around his own neck-the encumbrance of promises of all kinds which he made and which he is obliged to meet, to the extent that he meets them at all, by the imposition of more in the way of taxation. That is where my right hon. friend's dilemma is to-day. He is increasing taxation on every side, not because he believes in the wisdom of the course he is taking, but simply that it may not be said that he was not prepared to act regardless of the consequences. I am the last one to suggest that any promise should be broken, but, as I have already said, I think my right hon. friend could well afford to say to the people: Before I continue to reenact various statutes in the nature of grants in aid to the provinces, I will
call a Dominion-provincial conference; I will discuss with the provinces the whole question of the relation of the finances of the provinces and those of the dominion, and after we have gone over the ground together and considered what amounts should be paid from the federal treasury to the provinces, I will bring down to parliament the measures that may be agreed upon. I suggest that he consider adopting that course. I think he would be justified in saying before dealing further with promises, given for purely political reasons, that in view of the present depression, and the extent to which it is involving increased burdens of taxation upon industry and individuals, he intends to have a discussion with the provinces and settle what is a fair and just distribution of the burden between them and the dominion. He might then assume to the full the federal obligation which is his and ask them to assume to the full the provincial obligation which is theirs. That would effect economy, that would avoid extravagance.
Another reason wthich accounte for the position to which we were able to bring the country was that our policies so far as the tariff was concerned aimed directly at two things of first importance in the development of trade. One was the reduction of the costs of production, and the other a reduction in the cost of living. Look over the tariffs that were introduced, study the different items, and you will see that an effort was made to free the great primary industries of agriculture, lumbering, mining and fishing of some part of the burden which the customs tariffs of the day were placing upon them. We did that believing that only as production costs were lowered would it be possible for those engaged in the primary industries to hold their own in the markets of the world. That was the first step. As these primary industries increase and prosper, so will all the secondary industries increase and prosper as well. The trouble with my right hon. friend's legislation is this, that so far as the industrial pyramid is concerned, he is viewing it upside down. He is focusing all his thoughts upon the secondary industries. All his legislation relates primarily to special privilege for the manufacturing industries, whereas the degree of success dependent on manufactures must in this country at least depend in the long run upon the successful development of the great basic industries of agriculture, lumbering, mining and fishing. If my hon. friend's government would do what the Liberal administration did, seek to make production in these great primary industries more profitable, he would find the trade of the country expanding, he would find our products getting
3682	COMMONS
The Budget-Mr. Mackenzie King
markets in all parts of the world, and he would find that in return there would flow back into
the pockets of those engaged in those industries what is needed in the way of purchasing power to supply a home market for the manufacturers. But he has gone the other way about it. His whole thought is focused on the secondary industries, and he is not doing at all what he should in the way of development of the primary industries.
Similarly with regard to the cost of living. This budget, when you consider it in relation to the tariff and taxation, means a vast increase in the cost of living to the people of this country, and as the cost of living increases in Canada it is going to have itscffect on the cost of manufactured articles as well. Those additional costs will be passed on to the products of the primary industries as well. Canada to-day, if she is to hold her own, must hold it in world markets as well as in the domestic market, but these increased costs will further handicap her. So I repeat this house might well afford, before it passes this budget, to consider the steps taken after careful study and investigation by the previous Liberal administration in helping to bring the country to the position of prosperity which it attained.
Again, there was under Liberal administration the removal of different barriers to trade, which are indicated in the tariff changes made and in the measures with relation to taxation to which I have referred. But there was another step equally important, and that was the care with which the administration of the day sought to make an equitable distribution of the burdens of taxation. When we found the condition of the country depressed, we sought to remove the taxes from those least able to bear them, and we sought to impose the burden of necessary taxes upon those best able to bear it. Look over the record of the Liberal administration and you will see that that is true. But my right hon. friend's policies in all these things have been in a diametrically opposite direction. He has reversed our policies. Take the matter of public expenditures. He had not been in office above a few hours before, without authority of parliament, he extended a contract on the Welland canal amounting to $2,000,000, as though this great capital expenditure would not have to be met by taxation a little later.


Robert James Manion: We did not extend any contract on the Welland canal at all.


William Lyon Mackenzie King: My hon. friend has already played upon the word "extend." May I say that the government entered into

a new obligation for the expenditure of a further $2,000,000?


Robert James Manion: We did not.


William Lyon Mackenzie King: I will just ask my hon. friend this question. If the government had given no undertaking of any kind whatever to anybody would the additional $2,000,000 have been spent before the fiscal year was out?


Robert James Manion: Absolutely it would. My right hon. friend (Mr. Mackenzie King) and his government during their term of office let the contracts, and we simply allowed the men to go on and continue their work, as they had a right to do under the law.


William Lyon Mackenzie King: What was done was this: The Liberal government of the day asked parliament to vote an amount to spend on the Welland canal sufficient for that fiscal year. Parliament voted that amount, $7,000,000. Parliament, not the government, voted that amount, and I say that when parliament voted $7,000,000, and did not vote $9,000,000, the present administration had no right to allow the contractors to go on and get another $2,000,000. However, that is the way in which taxes are speedily increased-like the various grants in aid, which my right hon. friend is continuing.
May I say a further word or two with respect, to - grants in aid and other public expenditures for political reasons? My right hon. friend, when in opposition, expressed himself very freely and very fluently and very strongly with regard to the duties of the head of a government, and with regard to what should be done in order to protect the exchequer. He was very strong upon the necessity for having a sinking fund. Over and over again he said that it was a necessary precaution against the pressure that would come from political supporters. Well, no man has had more political pressure brought to bear on him than my right hon. friend has had in the short time he has been in office, but he has not introduced any sinking fund, although, to listen to his words, which I shall quote, one would have thought that he would have done so at the earliest opportunity. On March 13, 1928, the present Prime Minister spoke as follows :
I say that we should place upon the statute books of this country at the earliest possible moment-
That is not a year hence:
-a provision by which a sinking fund will be set up such as they have in Great Britain and in other countries, so that we shall be enabled, within a period to be mentioned, absolutely to wipe out and eliminate the national debt of Canada.

Criminal Code-Bail
What is the province of Ontario doing? Do hon. gentlemen realize that in Ontario they have provided for the setting aside, of $3,000,000 every year so that at the end of forty years their debt will be entirely wiped ont, half being provided by public utilities, and the other half from the taxpayers of the province itself? Do hon. gentlemen realize that?
Suppose we seek to retire only $1,500,000,000 of this debt by a statutory sinking fund, by means of a provision placed upon the statute books of this country, so that the demands and pressure by political supporters would not induce the finance minister to part with public moneys because he would have to meet these sinking fund payments. It would ensure economy in the public service, and what is more, it would make the people of this country increasingly proud as they saw what President Coolidge has described as this greatest menace to our economic development, this great load of debt hanging over our necks, being gradually retired. . .
Is this country to continue to be menaced by this economic evil, by this debt hanging over our heads? Are we to continue, of all countries in the world, to make no provision for the future? Are we to be content to expend our patrimony day by day, without putting anything aside to take care of the long days of the future that are before us? I say it is unfair to ourselves, it is unfair to the taxpayers of this country to extract from them each year these increasingly large sums of money and make no provision for the retirement of our national obligations. . .
It has been said that no government is ever defeated because it is extravagant. That well may be. It well may be that the people may be debauched with their own revenues, and be taught that all you have to do is to spend their taxes freely among them and then you have succeeded, but what is the effect upon the life of a nation as a nation?
Has my right hon. friend changed his point, of view since he came into office and had the responsibility of being Prime Minister? Has he given up thinking about the nation as a nation and what it is going to come to? Is he to-day seeking to debauch the people of this country by their own taxes for the sake of remaining in power, when only a short time ago, standing here in this house, he was full of virtue in his admonition of the government of the day? I ask my right hon. friend whether he thinks that sort of thing constitutes the consistency, of which he likes to speak so often as a jewel.
I do not know where my right hon. friend's colleague the hon. Secretary of State (Mr. Cahan). is at the moment, but he, too, held very decided view's in regard to this important matter of distributing public moneys to provinces for all kinds of purposes, and the effect it was likely to have upon the exchequer. Let me read what the present Secretary of State said in this house on April 15, 1926:
I suggest, Mr. Chairman, that in the recent political history of this country we have proceeded altogether too far in the way of cooperation between the federal government and the provincial governments in respect, for instance, to road appropriations, which are within the proper jurisdiction and control of local legislatures. The same refers also to certain build-ding schemes in which there was cooperation, but in respect of which the federal treasury, which provided the money, really had little or no control over the management of the funds and little or no supervision over the actual expenditures made. I do not want to stress the matter, but I went through for several weeks, as counsel, an investigation in my native province of Nova Scotia which clearly disclosed to me that when provincial governments or provincial legislatures are expending moneys which are not raised on their own credit and responsibility, and in respect to which their sole responsibility is that of expenditure, it leads to wasteful expenditure and very wide latitude indeed in the making of those expenditures.
May I say to my right hon. friend and his colleagues, who when in opposition gave to' the administration of the day the advice to which I hare referred, that I think at the present time they could not more fittingly carry out the wishes of the people of this country than themselves to take to heart and to follow out with some degree of consistency the policies with respect to economy and political behaviour which they were so fond of outlining during the time they were in opposition.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock. PRIVATE BILLS



SECOND READINGS

[Stage Direction]
Bill No. 74, respecting The Railway Employees Casualty Insurance Company.-Mr. Mercier (St. Henri).
Bill No. 86, to incorporate The Sarnia-Port Huron Vehicular Tunnel Company.- Mr. Gray.


[Stage Direction]
Mr. FINLAY MacDONALD (Cape Breton South) moved that the house go into committee to consider Bill No. 46, to amend the criminal -code (regarding bail).
Motion agreed to and the house went into committee, Mr. LaVergne in the chair.
On section I.-Bail.
26S4
Criminal Code-Bail
Mr. GUTHRIE:: Explain.


Mr. MacDONALD (Cape Breton):: Under the present section 1019, if a person is convicted and wishes to lodge an appeal against the conviction, he is obliged to go to the chief justice or the aicting chief justice in order to do so. This sometimes occasions considerable inconvenience and expense, because in the ease of country lawyers they must go to the provincial headquarters, where the chief justice resides, and prepare all their papers and notices and so on. This amendment simply entitles the trial judge, if an appeal is lodged in the proper way, to grant hail. As a matter of fact I have known of cases where- bail has been refused by the trial judge and the person has remained in jail for three months, after which the conviction was set aside, because sometimes the chief justice has very strong views as to whether bail should be granted at all. This is simply to enable the trial judge to grant bail, if, in his opinion, the case is one which should be reviewed by the appeal court.


Paul Mercier: The bail would be allowed by the same judge who conducted the trial?


Finlay MacDonald: Yes.


Paul Mercier: I see the word "court" is used instead of the word "judge".


Finlay MacDonald: Possibly the word "judge" would be better.


Mr. CRAY:: I wonder if the Minister of Justice would explain to the house what section of the ' criminal code is affected, and whether this will be applicable to the whole of Canada.


Hugh Guthrie: Yes, it is applicable to all Canada. This bill proposes to amend section 1019 of the criminal code, which provides that the chief justice, the acting chief justice or a member of the court of appeal designated by him, may, if he deems fit, on the application of an appellant, admit the appellant to bail pending the determination of his appeal. In practice I do not think any great inconvenience has resulted from the present section. The courts of appeal in the various provinces usually sit at a central point; all parties know how to reach that point. The means of communication are good in all parts of Canada now, so that no very great inconvenience arises from the fact that a man who has been convicted and who desires to appeal must apply for bail pending the hearing of his appeal either to the chief justice of the

court of appeal of the province, the acting chief justice in case of the illness or absence of the chief justice, or to any other judge ot the court of appeal designated for that purpose.
My hon. friend who has introduced this bill desires to give that power to the trial court or the court of appeal. The court of appeal is defined in our act, and I am inclined to think that the wording of the bill would involve application to the full court of appeal, which would make the matter more difficult than it is at present. "Court of appeal" as defined in the criminal code includes, in the province of Ontario, the appellate division of the Supreme Court of Ontario, which means the full court. And so in all the other provinces. I think the language of the proposed amendment is objectionable in that, respect and I would suggest that my hon. friend amend it. I believe his intention is that the application for bail may be made to the judge who has conducted the trial, the trial judge, or to a single judge of the court of appeal. I do not see any very great objection to the principle of this bill. It seems to me that the trial judge, who is seized of all the facts, having heard the evidence, would be a very fit judge before whom an application for bail should be made. I agree that any judge of the court of' appeal would be a proper judge to whom such an application might be made. I do not see any objection in principle to the amendment, though I believe it might involve some little inconvenience; but I think the language should be changed. Instead of the words "triaj court" there should be substituted the words "trial judge." But I think it should be a judge of a superior court of the province, and not a judge of the district or county court. At present application must be made to a judge of the court of appeal who is either the chief justice or acting chief justice. We should provide that application should be made to the trial judge, if a judge of the superior court of the province, or to a judge of the court of appeal in the province. If an amendment were made to that effect there would be no objection to the bill.


Paul Mercier: The court of appeal has always a judge in chambers sitting for the purpose.


Hugh Guthrie: But I am afraid that, as
the bill now stands, application would have to be made to the full court, which would be more inconvenient than the provision contained in the present section, which requires application to be made to the chief justice

Criminal Code-Trade Marks
or the acting chief justice or to a designated judge.


Ross Wilfred Gray: Will not "trial judge," as the
amendment stands, include a county judge?


Hugh Guthrie: I am not so much in
favour of applications for bail in appeal cases being made to county judges, but rather to judges of the superior court.


Ross Wilfred Gray: The minister misunderstands
me. I suggest that trial judge here must include, of necessity, county or district judges as well as judges of the superior court.


Hugh Guthrie: Yes, if the present language is retained. But I am suggesting, "trial judge, if a judge of a superior court".


Mr. BURY:: What is the effect of this proposed amendment if the crown appeals?


Paul Mercier: It seems
strange to have the trial judge fix the bail. Let a superior court continue to do it.


Finlay MacDonald: I am
content to accept the amendment suggested by the Minister of Justice.


Hugh Guthrie: If the hon. member
would allow the bill to stand for a day or two we could draft a clause which I would submit to the law officers of the department. Otherwise, there is no objection to the principle of the bill.


Ross Wilfred Gray: The Minister of Justice is cognizant of the fact that there are cases in which the district or county judge has power to grant appeal, and I trust that in the drafting of the new7 clause that power will not be taken away.


Hugh Guthrie: It will not.
Progress reported.




[Stage Direction]
The house resumed from Friday, May 15, consideration in committee of Bill No. 34, to amend the criminal code (trade marks)- Mr. Geary-Mr. LaVergne in the chair.
On section 1-Forgery.
Alan Webster Neill: The last time the bill was before the house the hon. member for South Toronto (Mr. Geary), who has charge of it, omitted to make the customary explanation on the second reading, and in committee he was allowed by the chairman to make a few remarks regarding the general principle of this legislation under the section which we are now discussing. Under the same privilege
I was allowed to reply to him, and I trust that privilege will be extended to me now to .continue my remarks. As a matter of fact, it does not make a great deal of difference, because there are only three sections in the bill and they are all so interlocked that one could not very well discuss any one section without discussing the principle of the bill, and vice versa,
I see two objections to the bill but first I would point out, if I might presume to do so, being a layman, that it is what I would call rather sloppy legislation. The explanatory note reads:
The object of this bill is to cover omissions in the present wording of the relative sections in the criminal code relating generally to forgery of trade marks, labels, etc.
Where, how and when anyone could forge a label I should like to know. You might as well charge a man with forging a chair or a horse. You can forge something printed on a label but you cannot forge a label; you might as well speak of forging an envelope. The whole tenor of the bill is based on the mistaken idea that you can regard a label as a trade mark, and speak of the forging of a label, constituting a criminal offence in that respect, I shall deal with that point later on. At the moment I would point out to the Minister of Justice the initial difficulty with which we are faced when we speak of forging a label. I have never heard of foiging a label, but a trade mark can be forged.
The principle underlying this bill-and I would ask the house whether it is in the best interests of Canada to recognize that principle in legislation-is one of encouraging crime. It encourages, stabilizes, regulates and thereby admits the practice of what is commonly known as bootlegging. It is a principle which is denounced by all authorities on parliamentary law. Many years ago in England the Contagious Diseases (Human) Act was repealed for this very reason, that it condoned, encouraged, legalized or at any rate recognized vice. In adopting this principle we are putting bootlegging almost on the level of an occupation. It is an occupation which should be regarded as disreputable and one that should not be recognized by law. It is very obvious that that is the idea because I referred to that when the hon. member for South Toronto was introducing the bill. At that time the hon. member stated that the bill was introduced at the request of certain persons who were interested, and then later on he said:
At least it is creating difficulties among the consumers of certain of the manufactures of those industries.

Criminal Code-Trade Marks
I then asked the hon. member what those industries were, and the hon. member for Gloucester (Mr. Veniot) interjected the word "spirits." Perhaps that remark was made in a spirit of humour, but the hon. member for South Toronto continued:
[DOT]-commodities in the production of which Canada I understand stands second to none, are sometimes deceived by reproductions of the product being forged upon them at the price of the original and proper product. We do not want that to occur, because it would seem to be a dangerous practice.
I assume the hon. member was referring to the customers. At that time I had made only a casual inspection of the bill and I did not understand the meaning of it until I read the hon. member's statement in Hansard. Since then I have had further enlightenment as to the purport of the bill through seeing the following statement in one of the Toronto papers, I believe the Mail and Empire. This article first comments upon the fact that the hon. member for South Toronto had introduced the bill, and then it says:
Probably a good deal of liquor is peddled under forged labels,-
There is the mistaken idea that you can forge a label. The article continues:
-and the dominion and provincial governments suffer loss. But the greatest victim of the practice is the unwary customer who takes it for granted that an official-looking label guarantees the purity of the contents of the bottle.
The hon. member who introduced the bill has stated that it is necessary-in whose interests? In the interests of the consumers of the contents of the bottles, whatever they may or may not contain. It may be said that that statement conflicts with my previous statement that we were encouraging, legalizing, regulating and thereby giving a legal status to bootleggers, whereas this bill deals with the customers of bootleggers. That is one end of the question, but I was talking about the other end. In these cases there are always two criminals involved, and we are asked to look lightly at the one and severely at the other, but the criminality or the responsibility rests as much on the one as on the other. If it were not for the customers there would be no bootlegging, and when we take steps to protect the customers of the bootleggers are we not putting the bootlegger himself on a legal basis and giving a sort of qualified assent to his engaging in the business? I do not know but that on some occasions the customer is the more guilty and more reprehensible of the two. Which is the worse, a young profligate who frequents a house of ill-fame or the wretched inmate who has been 
driven by extreme want to engage in that business? If I had to defend one or the other, not perhaps at the bar of conventional morality but at the bar of divine justice, I think I would rather take the case of the inmate than that of the customer. I shall not press the analogy too closely in this case, but still it remains. One does not need to go to the bootlegger unless he wants to, and if everyone keeps away from the bootlegger then this bill would not be necessary.
At this point I want to raise a point of order, not based on the rules of the house, under which I have been somewhat weirdly unfortunate of late, but rather on the common sense and fairness which is in the mind of every hon. member trying to legislate for the common good of Canada. I ask this committee:	Does it think it is good legislation
to pass this bill under the circumstances? Last year this house legislating on behalf of Canada cut this country off from a revenue of something like $20,000,000 by prohibiting or refusing clearances to those people who were shipping bootleg liquor over to the United States. Why did we do it? Was there any money in it for us? Not at all, we lost $20,000,000. Were we compelled by any legal compulsion under the terms of a treaty with a friendly nation? Not at all, we were instigated solely by the idea that it was the decent thing to do, that we should not be made the vehicle for illegal transactions or the breaking of the laws of a friendly nation which, whether rightly or wrongly, had adopted the principle of prohibition. This country was being made the jumping-off ground for the breaking of that law, and we took a big, wide viewpoint and said: We will not be a party to it, even though it costs us a lot of money.
If this bill is passed, its provisions will apply to all of Canada. If it were restricted to Toronto alone I might have less objection to it-let that city work out its own solution of its own troubles. The legislation to which I referred was passed last year, and every member of the committee knows what happened this year. An hon. member opposite introduced a resolution aimed at the repealing of that section of the law, and the committee knows how it was received. It was not necessary to take a vote, and if a vote had been taken there would probably have been only one vote recorded in favour of the resolution, whereas last year eleven hon. members stood up and voted against the bill being passed at that time. Public sentiment has crystallized and has informed itself, and the other day the house was practically unanimous in favour of continuing this legis-

Criminal Code-Trade Marks
lation. If this bill is passed, in what position do we place ourselves? We will be reversing our policy and going back to encourage this practice. The very minute you begin to regulate a practice you acknowledge its existence and give it a sort of status quo. We would be encouraging a practice in connection with which we already have taken a very definite step to forbid.
There have been cases in the past where a law has become obsolete or by long nonusage has been allowed gradually to fall into disuse. Under such circumstances there might be a need for legislation such as this, but that is not the present case. The province of Ontario, like many of the other provinces, has in its good judgment passed a law under which its citizens can buy liquor and beer of any description in practically unlimited quantities. This liquor is sold at government stores under very careful regulations; the quality is guaranteed and the price is regulated, presumedly on a satisfactory basis or else there would not be so much of it sold. The hours during which these stores remain open have been fixed by the representatives of the people at Toronto and apparently are satisfactory to the residents of that province. I have before me a press despatch dated Toronto, May 9, headed "Ontario's Liquor Profits More Than $9,000,000." This article reads as follows:
Revenue from the sale of liquor and liquor permits,-
I must admit this figure includes the permits.
-gave the Ontario provincial government a total profit of $9,315,967.30 last year, according to the Ontario Liquor Control Board's annual report.
The article contains other data which I need not read. The committee knows that a very comfortable profit was made. I think it would be safe to assume that if the net profit was $9,000,000, the gross tum-over probably would be $40,000,000, and that in one comparatively-well, I will not call it a small province, but at all events in one province of Canada. Multiply it by nine and you get some idea of the liquor that is bought and sold in these hard times throughout the dominion. This is Ontario alone that consumes $40,000,000 worth, and all of it- because it is recorded in that way by the liquor board-is sold legally under government auspices. That leaves out possibly the large amount that goes through the bootleggers' hands, with which this bill concerns itself.
Now this is the situation. These people who consume $40,000,000 worth are not satisfied; they must go out and patronize bootleggers, because certainly if there were no demand for illicit liquor there would be no bootlegging. Then when they get stung, to use the common expression, they squeal about it and come to us for protection. Even men whose liquor is hi-jacked know better than to do that; they take their medicine and say nothing. I recall a good many years ago going with a party of young men who went for what we now call bootleg stuff. We went down a back lane, a dark alley, clambered over some loose boards and finally reached an iron-clad door.


Mr. MORAND:: You had a wonderful experience.


Alan Webster Neill: I am only using it as an
illustration, but possibly it has awakened in the hon. gentleman some memories of when ho too was young and innocent. I was describing this mythical Bill Jones' career-if I may put it in that way. He came to this iron-clad door-he discovered afterwards why it was so protected-in which he found a little shutter He gave a certain knock, the shutter was opened, he shoved in $5 and received a bottle with a whispered injunction not to open it until he got out of town because the place was being watched. After getting into a thirty below zero atmosphere some distance out of town he opened his bottle and found that it was tea-very good tea, but a little dear at $5 a bottle. Naturally his first impulse was to go back and tear the house down, but after a while he laughed and acknowledged that he had been stung. Did he go to the legislature for redress? Not a bit of it. I believe on one occasion a man-he was probably a thrifty soul-went to the chief of police and complained. The chief asked him, "Were you buying tea?" The man said: "No." "Well, what were you buying?" "I was buying liquor." "Well, get out of here. You had no business buying liquor." That is all the sympathy he got. He never came to the legislature and complained that when he shoved $5 through the wicket he got tea instead of whiskey.
I remember seeing a small boy run to his mother and complain that his little comrade Bill Smith had hit him on the nose. Rather to my surprise the mother did not at once take his part; she probably knew her offspring better than I did. She said, "What were you doing to Bill Smith before he hit you on the nose?" This and a few other questions elicited the fact that he had thrown a stone at his little comrade and had nearly torn his ear off. So the mother very wisely

Criminal Code-Trade Marks
impressed on her offspring the moral: Leave crime alone, and you will not get into trouble. I think the illustration is a very appropriate and timely one.
If we pass this bill we will place ourselves in the horrible position of compounding a felony. I ask you again, sir, is it to stop bootlegging? If that were its purpose I would be for the bill with both hands. But it is not: its purpose is to protect the customer Tighten the law against bootlegging, if you like, but, as I shall show, there is no genuine attempt to do so here. The purpose of the bill is to protect whom? The person who goes to an illegal place for an illegal purpose. That person deserves no sympathy if he does not get what he expected. Will hon. members kindly listen to this quotation from the Mail and Empire?
The greatest victim of the practice is the unwary consumer who takes it for granted that an official-looking label guarantees the purity of the contents of the bottle.
So evidently it is the customer whom it is sought to protect.
Out in British Columbia we have a worse condition of affairs. There the danger is not so much the buying of bootleg liquor as the selling of narcotics which are far deadlier than liquor. The trouble there is to secure convictions, because of course, the man who buys narcotics is equally guilty with the peddler and on conviction can be given a jail sentence. But the law looks on the addict in a different light from the way in which it regards the bootlegger, for the addict is a man of weak will. The man or woman who falls a prey to narcotics has practically no will power left at all, and it has been proved that an addict will commit murder under the impulse to satisfy the craving for drugs. Consequently the law does not treat the addict so severely as the man who peddles narcotics. Then of course these wretched people who are ready to do anything to obtain their supply often get very inferior stuff. This is common knowledge. At the very best they will get a cheap grade although they pay a price appropriate for heroin which I think is the highest grade of that particular stuff. Suppose someone from Vancouver were to bring in a bill providing that when one of these wretched men went to a peddler he should be guaranteed the quality of the drug he was buying? That might be fair, but it would not appeal to the good sense of the house. That is because the purpose of our law is to prevent the illegal sale of narcotics as well as of liquor, which is the principle on which the whole system hinges.

There is a theory of law, I understand, which is expressed somewhat in this way, that he who seeks equity must do equity. In other words, you must come into court with clean hands. You cannot plead your own turpitude, is the English of another Latin law maxim -I wonder why lawyers express their best thoughts in Latin. I have in mind two cases which very well illustrate my point; one occurred a number of years ago and the other, curiously enough, happened within the last two or three months. A man murdered someone whose life was heavily insured in his favour. He was indicted on a charge of murder and convicted. In the death cell it occurred to him that the insurance policy was made payable to himself. Whether he was conscience stricken and wished to give the money to the children of his victim or to pass it on to his own wife and family I know not, but he sued the insurance company for the policy moneys. The insurance company said: We are not trying to evade our obligations, we are simply asking for the ruling of this court-one of the highest in England- whether it is consistent with public policy that we should pay this money to the murderer of the insured victim. In that, as in the other case, the court decided that while the insurance policy was quite valid, the money should not be paid over to the claimant because it was against public policy and would be tantamount to encouraging murder.
Let me give the committee another illustration before I conclude my remarks. Many years ago an act was introduced in the British House of Commons to legalize marriage with a deceased wife's sister. One of the members, Colonel Biggar, was very anxious to marry his deceased wife's sister and took a very prominent part in soliciting support for the bill. The thing became a joke, and I believe for many years it was known among lawyers in the old country as the Biggar Relief Bill I am very much afraid that if we proceed with this bill something similar will happen It will be known as the Bootlegger's Customers' Protection bill, and the name of my hon. friend who introduced it will inevitably be associated with it. I would not like that. I would ask him, looking down the corridors of time to the future, what would be his feelings if someone, say, his little granddaughter, ran in from school one day and in childish innocence asked, "grandad, why do they call you Bootlegger George?" That would be a very sad situation, and I suggest that in view of that aspect, which perhaps has not occurred to my hon. friend, he would perhaps be not unwilling and might even be

Civil Service Act-Returned Soldiers
relieved, if I moved, as I do now, that this committee rise.
Motion negatived.


Hugh Guthrie: Notwithstanding the very lengthy and strong condemnation of the proposed measure, I think my hon. friend who has just discussed it (Mr. Neill) has taken a rather narrow view of the whole question. This amendment applies to the forgery or counterfeiting of all trade marks, not in particular the trade marks or labels of liquor, but of all registered or recognized trade marks. It is a matter which has aroused considerable attention throughout the business community of Canada. In so far as the object of the bill is to protect liquor trade marks, I only desire to inform the committee that a great many of the provincial governments have asked for and have approved this legislation.


Alan Webster Neill: This particular bill?


Hugh Guthrie: Yes, and the liquor boards of many provinces have also approved it. I have the communications here. The government of British Columbia, through its attorney general, has approved the bill. The liquor board of the province of British Columbia has done likewise.


Alan Webster Neill: Approved this particular bill, not legislation such as this?


Hugh Guthrie: Approved Bill No. 34, the telegram says. The government of the province of Saskatchewan has done likewise. The government of the province of Ontario, through its attorney general, has approved the bill. The chairman of the liquor board of the province of Ontario approves it, but desires another amendment to section 479 which is not provided in the present bill. The government of the province of Quebec, through Mr. Taschereau, the premier, has approved the bill. The liquor commission of that province has done likewise. The government of the province of New Brunswick and the liquor commission of that province have likewise approved the bill. I think those are all the provincial approvals that I have received. So the matter is of rather more serious concern than one would be led to understand from the speech that has just been delivered by my hon. friend opposite. In its present form the bill is not altogether acceptable and does not quite carry out all that has been asked by the various provincial governments, and by the liquor board of the province of Ontario in particular. They want an additional amendment protecting forgeries of government seals. This is not provided for in this proposed amendment.


Alan Webster Neill: Quite so-sloppy legislation.


Hugh Guthrie: What I would ask my
hon. friend the mover of this bill to do is to allow it to stand in order that we may prepare another amendment to cover the request that we have received from the liquor board of the province of Ontario. While the bill does affect forged liquor labels it also affects all commercial trade marks, apart altogether from intoxicating liquors. It is for the greater protection of trade marks used throughout the Dominion of Canada. I should think the ob- , ject to be attained by the bill a most laudable one. Counterfeiting in trade marks does go on. Personally I conducted a prosecution within three years in western Ontario where the forgery was of the trade mark of Vernor's ginger ale, not intoxicating liquor at all, but a trade mark registered in Detroit and also having registration in Canada, and I remember well the difficulties we had to overcome in regard to the wording of the present section in the Criminal Code of Canada. It is to meet eases of that kind, not especially in regard to intoxicating liquor, but in regard to everything which is the subject of commerce, and involves property rights which we recognize in trade marks and in designs. What I would ask is that the bill be allowed to stand. My present view is that the bill should be adopted, and I think it might well be included with other amendments to the criminal code which the government proposes to introduce at a not very distant date.


Mr. GEARY:: I shall be very happy, Mr. Chairman, to accede to the suggestion of my hon. friend the Minister of Justice.
Section stands.
Progress reported.



CIVIL SERVICE ACT AMENDMENT


[Stage Direction]
The house resumed from Tuesday, May 19, the adjourned debate on the motion of Mr. Boulanger for the second reading of Bill No. 18, to amend the Civil Service Act (returned soldiers' preference).
Mr. 0. L. BOULANGER (Bellechasse): As the hour for public bills has almost expired I shall content myself with moving the second reading of the bill.
[Stage Direction]
2690	COMMONS
Civil Service Act-Returned Soldiers
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. LaVergne in the chair.
On section 1-Preference to Canadian nationals only.
Mr. POWER:: When this bill was last before the house, I gave notice of an amendment which I proposed to move. It will be found in Hansard of May 19. The object of the amendment was while preserving to Canadian soldiers and to those who had served in the Canadian army or in the army of the British Empire the returned soldiers' preference, to exclude those who served in the armies of the Allies and who had come to Canada after the date of the passing of the act. It was the purpose also to exclude those who served in the armies of the empire other than the Canadian army who may have come to Canada after the passing of the act. That is to say, anyone who was living in Canada prior to the passing of this act and who had served in any of the forces of the empire, either naval or military, still keeps the preference which was accorded to him by the Civil Service Act of 1919. Any who come in the future however will be excluded from that preference. To my mind the suggestion is broad enough; as a matter of fact a great many people have told me that perhaps it is too broad. At any rate however it amply preserves all the rights and privileges of people who at the present time are citizens of Canada and who fought the battles of the empire. On the other hand it enables young Canadians if they so desire to qualify for service in the civil service of Canada and not to be excluded from entering that service by being brought face to face with a preference in favour of persons who by no right or privilege which we can grant them should be allowed a preference over our own people. The amendment which I propose to section 29, subsection 4, of the Civil Service Act, would read as follows:
In all examinations for entrance into the civil service, the persons named on such special list, who are found to possess the necessary qualifications, shall be named in the order of merit on the list of successful candidates above all other candidates, and all other persons who have been on active service overseas, in the military or naval forces of His Majesty during the late war, and were at the time of their enlistment domiciled in Canada, who have left such service with an honourable record, or who have been honourably discharged, or when any persons who have served overseas as aforesaid, have died owing to such service, the widows of such persons, and who, in either case, obtained sufficient marks to pass such examinations, shall, irrespective of the marks they have obtained, be named in the list of successful candidates next after any candidates who

are in the special list mentioned in subsection 2 of this section, and above all other candidates.
The wording of the proposed amendment is substantially the same as that which is already in the Civil Service Act except that it omits reference to members who served in the allied forces.


George Reginald Geary: I have no doubt that the hon.
member (Mr. Power) has made a good presentation of the case he has in mind. I find it somewhat difficult, however, to grasp the full purport of his amendment simply from a reading of it. I do think that those ex-imperials, ex-territorials or men from the old land who were in Canada at the time of the call to the colours should be maintained in any position they already enjoy.


Charles Gavan Power: Yes, they are.


George Reginald Geary: The first contingent from Canada was made up largely of such men. They were good men and are entitled to every consideration this government can give them.


Mr. ARTHURS:: They were not Canadian nationals?


George Reginald Geary: No, that is quite right. While in England I have seen come into camp a regiment of Canadian Mounted Rifles, for instance, from the vicinity of High River, in which were hundreds of men who I venture to say were not Canadian nationals but were from the old land, had settled in Canada and rallied to the colours as soon as the call came. I want to protect such men. I have no doubt there are. many who joined the allied armies, not British regiments, who may not be entitled to special privileges. It may be that they had just arrived in the country or that they came here under such circumstances and at such a period of time after the war that they were not entitled to special consideration. With my hon. friend I agree that some differentiation might be made in reference to those men. I must say however that as I understand my hon. friend's proposed amendment I am not in a position to support it. I may have grasped the general sense of it, but I think the details might be subject to some redrafting. I have no doubt my hon. friend will agree that at the moment his amendment is not in the form he would like it to have. As I said, the general idea is sound, and if we could not only hear but see in print the suggestions my hon. friend has in mind the changes might commend themselves to many hon. members of the house who are not at the moment prepared to vote.


Charles Gavan Power: I read into Hansard at
least two weeks ago the amendment which I

The Budget-Mr. Mackenzie King
proposed, so that hon. members might be familiar with it. The whole Civil Service Act is extremely badly drafted, and any amendment to it I suggest might not cover the points outlined by my hon. friend. I do wish however to assure him that in this proposed amendment there is the intention to preserve the rights of those men who were domiciled in Canada or who enlisted in the Canadian army.


George Reginald Geary: Oh, I know that.


Charles Gavan Power: There is the intention
also to preserve the rights of those men who may have come to this country since the war but who served in the army or navy of His Majesty.
Progress reported.



BUSINESS OF THE HOUSE


Pierre Édouard Blondin: Before proceeding to the
next order of business I should like to refer to order No. 51, Bill No. 43. Although Bill No. 43 appears in the last position in the order paper, it should appear as No. 46. By some misconception standing order No. 15, subsection 4, was applied. For the information of hon. members I shall read the standing order:
After a private or public bill has been considered on Tuesday and Friday evening and debate thereon has been adjourned or interrupted at 9 o'clock, it shall be placed at the foot of the list of such bills on the order paper.
Bill No. 43 was last discussed on Friday evening, but the debate did not continue until nine o'clock. As I recall it, the discussion closed about half past eight. At that time consideration of the bill was adjourned and other bills were taken up. Consequently Bill No. 43 will be restored to its proper position on the order paper. It would not have been reached to-night because most of the time was taken in consideration of Bill No. 34 followed by consideration of Bill No. IS.



THE BUDGET


[Stage Direction]
The house resumed consideration of the motion of the Right Hon. R. B. Bennett (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Ralston, and the 22110-171J
amendment to the amendment of Mr.. Spencer.
William Lyon Mackenzie King: Mr. Speaker, ft-is desirable that the house and the country should have a concrete statement of the terms and objective of the government's tariff policy. I say this because, while the Prime Minister in his own utterances has been very definite with regard to the terms and objective of the government's tariff policy, I find that both in this house and throughout the country many of his colleagues do not take the view that he does with respect to the government's policy. I find also that while in Canada one view is accepted as to the objective which the government has in mind in its policy, in the old country when the same policy is 'being discussed by the representative of this government in England and others, an entirely different objective is put forward as being that of the government. For this reason I deem it desirable, now that the right hon. Prime Minister is in the house, and in the presence of us all, that any difference in view be threshed out between us so that we may know definitely what the views of the ministry are, and whether the objections which we are raising to his views are rightly taken.
I shall endeavour, in giving what I understand to be the Prime Minister's view, to express it in his own words and as a part of his own statements made under circumstances and amid surroundings which I think admit of no misunderstanding. If I take, with regard to Great Britain, what was said1 by himself at the Imperial conference when he was presenting the views of the government to the British government and the governments of the other dominions, I think I shall be doing him full justice, and as regards Canada if I give his view as expressed in this house when the budget was introduced on the 1st of June, in the hearing of all present, and state his tariff policy as it is recorded in Hansard, I hope again I will be adopting a course which will admit of no contradiction.
With respect to the statement at the Imperial conference, it will be found in the summary of proceedings of the conference of 1930, which was presented to parliament by command of His Majesty in November, 1930. That is the British copy; it will be found also in the reprint which I think has been distributed to hon. members of this house. I have in my hand the summary of proceedings presented to the British parliament, and I will quote from page 82, which contains the statement made by the Prime Minister of

The Budget-Mr. Mackenzie King
Canada on October 8. Here the Prime Minister sets forth what he describes as the fiscal policy of Canada. I need not read the whole statement, thought I hope if hon. members have not done so they will take occasion to read it; I will quote just a few paragraphs which seem to me pertinent with regard to the policy in so far as it relates to trade within the empire. At page 82 the Prime Minister is reported as having spoken as follows:
And so I propose that we of the British Empire, in our joint and several interests, do subscribe to the principle of an empire preference, and that we take, without delay, the steps necessary to put it into effective operation. First, we must approve or reject the principle. I put the question definitely to you, and definitely it should be answered.
I need not read the whole of that part, but I come to the next paragraph:
Until this principle is accepted it would be profitless to discuss the application of it in any great detail.
Then a little further on the Prime Minister said:
I shall, however, outline in a broad way our conception of the manner in which it may be employed, and shall qualify the generality of my proposal by indicating the method of its application.
I offer to the Mother Country, and to all other parts of empire, a preference in the Canadian market in exchange for a like preference in theirs, based upon the addition of a 10 per centum increase in the prevailing general tariffs, or upon tariffs yet to be created. In the universal acceptance of this offer, and in like proposals and acceptances by all the other parts of empire, we attain to the ideal of empire preference. I amplify and explain this offer in the following ways:
In the first place, the rate I have mentioned cannot, be uniformly applied. The basis of the proposal is the adequate protection to industries now existent, or yet to be established. Because of this, we must ensure a certain flexibility in the preferential tariff, having regard to the fundamental need for stability in trade conditions; and must take account of such prevailing preferences as are now higher than the general one I suggest.
I think that is sufficient to give to the house in concrete form the essence of my right hon. friend's proposal. May I reverse the order of his presentation and restate in a very few words the proposal in its essential particulars. First, the basis of the proposal is adequate protection to industries now existent or yet to be created. There can be no mistake about that; as far as Canada is concerned, the proposal he makes with regard to trade with the mother country and the other self-governing dominions is based upon adequate protection to industries in existence or yet to be established-that is, of course, industries in Can-
[Mx. Mackenzie King.]
ada. What is meant by "adequate protection" the Prime Minister has indicated at different times, and I will endeavour to show from his references in this house exactly what he means.
That is the basis of the proposal, and what is the offer to Great Britain and the other dominions? After there has been adequate protection for Canadian industries, a preference in the Canadian market is offered in exchange for a like preference in their markets, based upon the addition of a ten per centum increase in prevailing general tariffs or upon tariffs yet to be created. That is to say, there must be tariffs before any preference can be given; there must be tariffs in Great Britain as well as in Canada. No preference can be given unless there are tariffs in the different self-governing parts of the empire which wish to trade with each other. That is why my right hon. friend's proposals were found so difficult not only of acceptance but even of understanding by the people of Great Britain, because they involved a change in the fiscal system of Great Britain, which is not a protectionist but a free trade system. So the next proposal is that as far as Great Britain is concerned, she must change her fiscal policy if she wishes to get any trade with Canada.
How are the preferences to be brought about? The preferences are to be brought about in the language I have just read; not in the way in which we in Canada are accustomed to speak of giving a preference, namely by lowering the tariff as against some other part of the empire in order to give that part a preference in our market. The preference hereafter is to be given by increases in the tariff against other parts of the world, either tariffs which now exist or tariffs yet to be created. That is the next point to understand clearly. A tariff is imposed in Canada, and as a matter of fact before my right hon. friend started out for the Imperial conference he increased the tariff against Great Britain to such an extent as practically to do away with the British preference on many articles. Now that he has raised the tariff, as far as textiles, iron and a few other things are concerned, to a point which virtually prohibits their importation into Canada, he says to the British government, "If you wish to trade with us we will trade with you on the basis of a preference, but the preference can be brought about only by our adding to the tariff which we have already made against the rest of the world, and by your giving us a preference which will put us in a better position, as far as your markets are concerned, than other parts of the world by you

The Budget-Mr. Mackenzie King
also erecting a tariff which will keep others out and let us in". Then, having made clear what he means by the preference principle, and describes as mutual preferences, he says that until this principle is accepted it would be profitless to accept the application of it in detail. Britain and the dominions must approve or reject the principle; they must subscribe to the principle of empire preference,-not the principle of empire preference as it had been understood by all other dominions or by the British government heretofore, but the principle that all parts of the British Empire must have tariffs, in the first instance, affording adequate protection, and then grant their preferences by raising their tariffs still higher as against other countries.
Now, that is the position so far as Britain is concerned. Is it any wonder that my right lion, friend was unable to get anywhere with a proposal of that kind? As I said before, speaking on this subject in the debate ion the address, I do not believe that any government, Liberal, Conservative or Labour, in Great Britain would ever be able to negotiate with Canada a trade agreement on the basis of excluding, at the very outset, British goods through a tariff being raised in Canada to that point which the right hon. gentleman would describe as adequate protection for the industries of this country.
So far as the postponement of the conference is concerned, what boots it one way or the other? If my right hon. friend holds to the ground he has taken, he will get nowhere if he has conferences every year from now to doomsday. He cannot succeed in negotiating with the British government on the basis he has laid down. I say, therefore, that he will either have to change his policy or abandon all idea of effecting inter-imperial trade as between Great Britain and Canada or to any appreciable extent as between Canada and the other dominions.
Let me come now to the position which my right hon. friend has taken, and which the house will find clearly indicated in Hansard of June 1, 1931. at pages 2337-38. Speaking of treaties and the making of agreements with other countries, the Prime Minister says:
That rule is this: Treaties must be mutually advantageous; if they are not they fail, and unless there is a clear appreciation of that fact there cannot be other than failure. This rule was stated very clearly the other day by the president of the United States Steel Corporation. Speaking to the National Foreign Trade Convention on May 28, he said: It is a sound economic principle to sell in markets where the product is needed for consumption and where there is no surplus of the same commodity.
May I point out to the house that all the domestic trade of this country which represents imports is foreign trade to some other country. If hon. gentlemen opposite will only get in their minds that fundamental thought they will realize that this government on the one hand, desires to maintain the economic principle to which Mr. Farrell referred, and on the second hand, to realize to the full that every import brought into this country from abroad represents foreign trade to some other country. Our business is to see that we do not expand the foreign trade of any other country when we ourselves are producing or can produce the goods so imported.
Now, what does that mean? If I were given to the kind of comments which hon. gentlemen opposite so frequently direct to us on this side of the house, I would say that it is extraordinary that my right hon. friend when he is dealing with matters of this sort, should always seek his authorities in the United States. He quoted ex-President Cool-idge with respect to what should be done in regard to public finance, and now he quotes the president of this corporation in the United States. What does Mr. Farrell's statement amount :to? The right hon. gentleman tells us that Mr. Farrell says:
It is a sound economic principle to sell in markets where the product is needed for consumption and where there is no surplus of the same commodity.
I cannot for the life of me detect any principle in that. It is a veiy obvious truism that the best place in which to sell is where someone wants to buy something which he has not got and which he can get only from you. But is that to be the principle on which this country is to carry on trade with other countries? Is it to be the principle that there shall be trade only with some other country that needs something which it cannot itself produce and which we out of a surplus are in a position to sell to it? Are we to trade on that basis and on no other? Are we to understand that we are not to trade in something we are capable of producing and which the other country is also in a position to produce, but only in those things which they cannot produce? That sounds extreme but that is exactly what he means. Listen to what the Prime Minister says in answer to a question of mine. It is in the next paragraph:
Mr. Mackenzie King: How does my right hon. friend propose to expand the foreign trade of Canada under rules of that kind?
Mr. Bennett: It is very simple. Does the right hon. gentleman for a moment mean to say that there are not countries which do not produce the commodities which Canada produces and which they require?
In other words, we are to be limited in our trading to such countries as do not produce the things that Canada produces but which

The Budget-Mr. Mackenzie King
they require. Let me read again what he says immediately following:
Does the right hon. gentleman for a. moment mean to say that there are not countries which do not produce the commodities which Canada produces and which they require? That is what he is trying to say, and I can tell him that the whole theory upon which trade within the British Empire will ultimately be built up is upon the proper appreciation and realization that the requirements of each part can be filled by requisitioning the production of such commodities from other parts of the empire.
In other words, trade within the empire is to consist in obtaining from other parts of the * empire only those things which cannot be manufactured or produced in Canada but which we must have, while our export trade with other parts of the empire is to be restricted to the things they need, the things which they must have, but which they are not producing or manufacturing. That is what the right hon. gentleman's language means, if it means anything at all. Let me repeat the statement he makes:
Our business-	[DOT]
That is to say, our trading policy.
-is to see that we do not expand the foreign trade of any other country when we ourselves are producing or can produce the goods so imported.
If we are producing or can produce the goods so imported-


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: Evidently
there is no misunderstanding of the Prime Minister's words. If we are producing or can produce the goods so imported, then our tariff is to be so adjusted as to make it impossible to bring in anything from these countries.


Some hon. MEMBERS:: No.


William Lyon Mackenzie King: To bring in
anything from those countries; I repeat that statement. If I am wrong I wish to be corrected. Let me once more quote the Prime Minister's words:
Every import brought into this country from abroad represents foreign trade to some other country. Our business is to see that we do not expand the foreign trade of any other country-
Or, to put it in the alternative, our business i3 to see that we do not import anything that we ourselves are producing or can produce.
That is the trade policy of the Prime Minister, and he is specific about it. But throughout the country we find exactly what we find in this house to-night-that while the Prime Minister by his silence acquiesces, for he cannot contradict his own statement, some of his own followers take an opposite point

of view, or seek to take it. I fancy that if some of the hon. gentlemen supporting the Prime Minister will stop to consider these policies of his as they affect the parts of the country which they represent, they will be somewhat more hesitant in endorsing those policies and riveting them upon this country for years to come.
The Prime Minister's policy with respect to trade comes down to this: it makes an isolated economic unit out of this dominion. He believes that in Canada we can produce everything we require up to a certain point, and that anything we can produce here we ought to produce, no matter whether it can be obtained elsewhere at greater relative advantage to the consumers of this country. That is to say, the doctrine which my right hon. friend lays down is that of absolute advantage. There must be only absolute advantage. He leaves out of account altogether what is fundamental in all international trade, namely, comparative advantage in exchange-comparative cost of production as between different countries producing things of the same kind. Let me illustrate. Under the Prime Minister's doctrine of absolute advantage, there could be trade between a country like Canada and, say, Cuba. Canada could send wheat, flour and potatoes to Cuba because Cuba needs those things and cannot raise them, and we could get from Cuba oranges or lemons. That is one kind of trading which would be possible under the lines laid down by my right hon. friend. The tariff must be so adjusted as to make that kind of thing possible, but the kind of thing that must be made impossible is for Canada to send to Cuba wheat, flour and potatoes in exchange for refined sugar or cheese, because those things are manufactured or made in Canada or could be manufactured and made here. That is the doctrine of absolute advantage in trade. I would say that anything of that kind restricts trade to the narrowest possible margin.
Let me give another example to illustrate what is meant by comparative advantage in trade. Take a country like Australia. That country can produce wool and manufacture automobiles; Canada can produce wool and can manufacture automobiles; each country can perform the same functions in those particulars. However, Australia has an advantage in the production of wool which Canada does not possess, and Canada has an advantage in the production of automobiles which Australia does not possess. Australia with her climate and her regions available for pasturage and the like can raise sheep and produce wool at a much lesser cost than Canada can, and

The Budget-Mr. Mackenzie King
Canada with her higher development of manufacturing can manufacture motor cars and the like in a way which Australia cannot begin to do. An exchange between Canada and Australia of automobiles for woo! cannot be other than profitable to both. The example which I have given is an example of the only kind of thing which makes possible trading to any great extent. Canada confining her labour and capital relatively to the manufacture of automobiles and Australia confining hers relatively to the raising of sheep and the production of wool, the two countries, exchanging their respective products on the basis of the greater relative advantage which each possesses would be in a better position as respect both wool and automobiles than if each were to devote their capital and labour in like proportion to the export of both wool and automobiles. International trade is carried on on the basis that a given quantity of labour and capital applied to the resources in certain localities will produce better results than an equal amount of capital and labour applied to similar resources in other parts of the world. When you deny that basis of trade, you make trade to any extent impossible.
Under the theory adopted by the Prime Minister I submit that it would be impossible to arrive at any agreement with a sister dominion like New Zealand. Australia, being in a semintropioal zone as compared with Canada in a temperate zone, offers possibilities. For example, oranges which we cannot grow may be set off against lumber and other things which Australia needs but has not. Undoubtedly an agreement could be made with Australia even along the lines suggested by my right hon. friend, but could a similar agreement be made with New Zealand where the climatic conditions are similar to those of Canada? Could an agreement be made with the other self-governing parts of the empire? There is hardly anything which Great Britain i3 manufacturing or producing which we are not capable of manufacturing or producing here, but Great Britain has certain advantages in the production and manufacture of certain things, and we have a very distinct advantage in regard to the production and manufacture of other things. We can offer to exchange those things in which we have a relative advantage for the things in which Great Britain has a relative advantage. That is the basis upon which all trade must be promoted. If we take my right hon. friend's policy as enunciated it means a complete restriction of trade, notwithstanding that the only solution of our industrial and labour problems, especially the problem of unemployment, lies in the extension and development of our trade.
I believe the Prime Minister will agree that I have stated his point of view and his objective wholly correctly. I say that the nearer he can come to making this country a self-sufficing economic unit the nearer he will come to the attainment of his ideal. As he says, if there are some things we are still wanting which we cannot produce, but which have to be brought from other parts of the world, then those things must be brought to Canada from other parts of the empire to the exclusion of other parts of the world. I think that is his point of view. If I may be permitted to put it in a graphic way, he would make of each self-governing part of the British Empire in the matter of its production and manufactures a watertight compartment. If he applied to the other parts of the empire the same doctrines which he has applied to Canada, he would have them produce and manufacture within their own boundaries all that they are capable of producing and manufacturing, and if there are some things which they cannot produce and manufacture then he would throw up tariff walls as against the rest of the world, thereby giving a preference to them as against the other parts of the world, and establish what he terms mutual preferences. Over and above this structure and superstructure created by tariff walls there would be what might exist in the way of the opportunity of freedom of trade with the rest of the world. There is just about as much likelihood of trade flowing into this country under conditions of that kind from nations other than those of the British Empire as there is of the waters of the St. Lawrence flowing over the Laurentian hills. Can a country develop trade with other countries under a policy of that kind?
In connection with the carrying out of his policy my right hon. friend has three powerful weapons at his disposal, and he is using them effectively. I do not think there ever was a man who went ahead with more steam on and with less thought or caution-


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: I do not
know what my hon. friends are applauding, but I just said "with less thought or caution." He is going ahead with full steam on but with no thought or caution; it is just a leap in the dark, a running jump in regard to every one of these things. That is the fashion in which my right hon. friend is legislating at the present time.

The Budget-Mr. Mackenzie King
His first instrument is the majority which he possesses in this house and which has permitted him to alter the customs tariff in the most extraordinary manner and which will help him to enact any kind of legislation. As I said this afternoon, no other country has ever altered its tariff in such a manner. He is raising the tariff without rhyme or reason to a height almost beyond imagination. He is making changes in the most reckless fashion, all for the purpose of making of Canada economically a watertight compartment. As he finds that certain changes do not work out he sets to work to make other changes. One of the daily journals compared my right hon. friend to an untried hand in a power house who pulls out one lever after the other, trying them all in turn just to see how they are going to work. When my right hon. friend finds that one will not work, he changes it, as in the case of glass, of potatoes, of gasoline and the like. If it were not the important business of the country that is being tampered with in this fashion, there might be some humour in the situation.
May I give another simile which to my mind is almost as apt. It seems to me that my right hon. friend is like a novice who for the first time tries out a pipe organ. He begins by pulling out the stops at random; he pulls out as many as he can and then one by one puts them back or manipulates them in and out in different order in the hope that by some lucky juxtaposition harmony will ensue. My right hon. friend, as we will know, pulled out one stop, put it back, pulled out another and put it back, and what has been the result?


An hon. MEMBER:: Good music.


William Lyon Mackenzie King: My hon. friend says "good music." I do mot know what sort of an ear he has for music. It may sound like good music to my hon. friend's ear, but to most of the people of this country it sounds like discord indescribable. That is what my right hon. friend has produced thus far.
_ As I have said, he has changed the tariff in the most reckless and ruthless fashion; he has acted in the most reckless and ruthless way just to see what the particular result will be. That is one instrument that he has used-the power of parliament which he possesses in virtue of his majority.
The next instrument to do his will is the power he has obtained from parliament to do as he pleases by order in council, to get away from this House of Commons, to get away from parliament al'togther and do everything just as he wishes by order in council. He has

by the majority at his back been able to get this parliament, to give him the right to legislate by order in council, and then by order in council he proceeds to give tariff rulings tomorrow that will upset some rates in effect to-day. What he seeks is to be free to do just as he pleases under that power of order in council.
The third instrument which the Prime Minister and his colleagues are using is the old fashioned one of propaganda-propaganda used as I have never heard of it being used by the government of any country. The extent to which my right hon. friend has abused the office of government by spreading Tory propaganda at the expense of the treasury is something which I think ought to attract the serious attention of this house and of the country.
Let me say a word or two on this question of propaganda. I see the Minister of Trade and Commerce (Mr. Stevens) begins to open his eyes and look across at me. He knows pretty well what the propaganda has cost and how the propaganda is being used. Last fall, not very long after having got into office, my hon. friend had a series of advertisements inserted in the press of this country, alt the country's expense.


An hon. MEMBER:: And they were good ones, too.


William Lyon Mackenzie King: That may be my hon. friend's point of view, but I think once 'the public has read them it will not think much of his judgment. These advertisements were inserted in the press generally throughout the country-with a good deal of political discrimination. A return was brought down the other day as to the papers in which these advertisements appeared. There were a number of papers not on the list; for instance, the London Advertiser, which has a pretty good reputation, and the Vancouver Sun, another very good paper, but they did not happen to be thinking the way my hon. friends opposite were thinking, so they were not favoured with advertising. If you look through the return you will find that some of the papers received a very much larger consideration than others, and from the sums paid you will not have much difficulty in ascertaining the political complexion of those thus favoured.
These advertisements have been circulated throughout the country. What is the nature of them? Here is a series of reprints. Each advertisement is in the form of a letter, communication, or epistle, signed by "H. H. Stevens, Minister of Trade and Com-

The Budget-Mr. Mackenzie King
merce." They bear the coat of arms of the dominion and at the top the official title "Department of Trade and Commerce, Ottawa." Now, these advertisements are addressed to all kinds of persons, and each one has a little heading all its own. I ask my hon. friends opposite, can they tell me anything that more resembles a Tory handbook than these advertisements? A Tory handbook- that is all it is, using the public treasury to exploit Tory propaganda on protection.


An hon. MEMBER:: You did the same
thing.


William Lyon Mackenzie King: Never. That, at best, however, is a very poor justification. My hon. friends are getting ashamed already of What they have done. Just listen to this:
To my fellow citizens, in every part of the dominion. To give Canadians work, buy Canadian products!
The next is:
To women, everywhere in Canada. Protect your breadwinner's job!
Then follow others such as:
To Canadian citizens, everywhere in Canada. Do you want more branch factories?
To wage earners, everywhere in Canada.-


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: Hon. gentlemen opposite are ready to applaud nothing; I have not given even the title. But let them listen to what the wage earners were told:
Don't be penny wise, pound foolish!
And then some others:
To retail merchants, everywhere in Canada. Yours is a grave responsibility!
To Canadian manufacturers, in every line of business. Remember the Golden Rule!


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: That is a pretty good injunction to manufacturers.
To government departments, municipal councils, public utility commissions, school boards, etc., everywhere in Canada. Keep tax collections circulating at home!


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: Undoubtedly there will be plenty of tax collections to be kept circulating.
To heads of families, everywhere in Canada. Cooperation-the keynote to progress.
Not a word about cooperation between nations.
To Christmas shoppers, everywhere in Canada. Choose gifts that give Canadians jobs!
To Canadian citizens, everywhere in Canada. Suppose everybody rocked the boat!
To Canadian consumers, everywhere in Canada. More for your money, and of better quality!
To Canadian citizens, everywhere in Canada. Bring the boys and girls back home!
Will my right hon. friend say that that has not the familiar sound of Tory propaganda? And all this is paid for out of the public treasury, out of the taxes of the people, at a time when they are struggling and having the hardest time they have had for years. Here are some other samples:
To my fellow citizens everywhere in Canada.
This was on December 27-we were getting near the New Year.
Ring out the old, ring in the new!
That sounds like the Minister of Trade and Commerce.
This . set of advertisements is very similar to a series of open letters which was addressed to me by the same firm of Gibbons Limited just before the general election of 1925. Hon. members will recall that at that time a series of open letters was published as advertisements in the press throughout Canada, all in the nature of Tory propaganda. There is something I can respect about that kind of thing. That was Tory propaganda paid for by Tories, and no doubt by those special interests that hoped to benefit from this advertising. But what I have, just been reading is Tory propaganda not paid for 'by the special interests that are going particularly to benefit, but by money taken out of the public treasury, money which represents taxes collected all over the land. I say that is entirely wrong and should not be countenanced for one minute.
My hon. friend says "ring out the old, ring in the new." He would have done much greater justice to the poet whom he is quoting if bearing in mind the view which nations throughout the world must soon be taking of a policy of protection each against all the rest instead of printing only that fine, he had published this verse of Tennyson's, which is a part of the poem he has quoted:
Ring out a slowly dying cause,
And ancient forms of party strife;
Ring in the nobler modes of life,
With sweeter manners, purer laws.
If my hon. friend would publish that sort of thing, something that has truth in it, something that is calculated to help the tone of politics in this country, I imagine the people would forgive him even for using public funds for the purpose. But I say it is an abuse of office and certainly an abuse of power for any administration to take out of the treasury money to circulate Tory propaganda of the type which these advertisements contain.
In this last letter my hon. friend makes reference to a Christmas gift. Having for the

The Budget-Mr. Mackenzie King
purpose of Tory propaganda used the cloak of patriotism in the way in which he has, and having tried several other cloaks in different ways he now turns to the use of ecclesiastical terminology for his appeal on behalf of protection. He makes his appeal in terms that are familiar to those who attend Sunday schools and churches. My hon. friend has the following:
Ring out the old habits of carelessness in buying. For 1931, let this be your creed.
Then he starts in with the creed. After putting it in the form in which he has it, he
says:
If you are willing to embrace this creed, a copy of same artistically executed in colours, and on heavy stock suitable for use as a wall hanger or for framing, is yours for the asking. Just clip and fill in the coupon herewith. Address your envelope as shown on the coupon. Mail it without affixing stamp, for this particular letter will be carried free.
No increase of postage on that particular letter.


An hon. MEMBER:: Read the creed.


William Lyon Mackenzie King: My hon. friends are anxious to hear it read. I have it here, and I have it in the choice illuminated form -illuminated also at public expense.


Mr. STEVENS:: I hope my right hon.
friend has one hanging in his room.


William Lyon Mackenzie King: Yes, this one will be hanging in my room for a long time to come. First of all let me describe it. It has the coat of arms of the dominion and the coats of arms of all the provinces-all illuminated at the public expense-the maple leaf-


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: The crown-more applause. It has everything in the nature of the insignia of patriotism except the beaver. Why the beaver should be left out I do not know. Here is the creed, and in connection with this may I read what is said at the bottom of it?


Some hon. MEMBERS:: Read it all.


William Lyon Mackenzie King: I am coming to it. I would have thought that by now my hon. friends would have learned it off by heart. I never before in my life heard hon. gentlemen opposite so anxious to have a creed. It says at the bottom, " Presented by the Honourable Henry H. Stevens, Minister of Trade and Commerce, New Year's, 1931." Presented by him! I noticed in the press around Christmas time that my right

hon. friend and his colleagues were making a great ado over the fact that they had done away with the sending out of Christmas greetings by ministers at the expense of the government, that the ministers had all been told that they must cease this business of having the printing bureau print their Christmas cards and greetings. But this one goes with the compliments of the Minister of Trade and Commerce, and it is a New Year's greeting. Let me now read the creed:
My Creed
I believe in Canada.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: That is all new, I suppose, to my hon. friends.
I love her as my home.
Only faint applause that time.
I honour her institutions. I rejoice in the abundance of her resources. I glory in the record of her achievements. I have unbounded confidence in the ability of her people to excel in whatsoever they undertake. I cherish exalted ideals of her destiny as a leader among world nations.
Very, very faint applause. Any reference to other nations does not get much applause from hon. gentlemen opposite:
To her I pledge my loyalty.
My hon. friends are going back on the King, are they?
To the promotion of her best interests I pledge my support. To her products I pledge my patronage. And to the cause of her producers I pledge my devotion.
I understand that this creed has been distributed in the homes and workshops and factories and schools of this country. You can get any quantity of them for nothing. All you have to do is to ask for them. They are being printed by the millions, I imagine, at the public expense. I was surprised, however, the other day to learn that the Minister of Education in one of the provinces, to be specific, the Minister of Education of British Columbia, had given orders that this creed was to be read once a week in the schools of British Columbia. May I say that if we are to make use of the first words in the apostles' creed, in order to substitute throughout our country the worship of Mammon for the worship of God-if we are to do that sort of thing, it would seem that it ought to be begun in the churches and Sunday schools instead of in the public schools of the country. Why have they not given instructions to have this creed placed up in all the Sunday schools of the country? That surely is the place for creeds that are worthy of the name! This

The Budget-Mr. Mackenzie King
is for the purpose of educating the young minds at the public expense. This federal government is going into the business of education with public money, putting this creed into the public schools, and Tory ministers of education are giving orders for it to be read there by the children once a week. I notice that my hon. friend the deputy speaker does not seem to like that. He does not like any interference by the federal government with the schools of the country, and what they are teaching there, but he is supporting the administration which is using the public schools of this country for this purpose.
Mr. LaVERGNE:	If my right hon. friend
would allow me, would he tell me what is wrong with that creed?


William Lyon Mackenzie King: There is a time and place for everything. As my hon. friend asks me the question, I say that it is not the business of the federal government to be publishing creeds and distributing them throughout the schools and homes and factories of this country. That is not their business.
May I point out to my hon. friend and to others who think like him wherein I see very grave consequences in this kind of thing. If the young mind is to be taught by means of this literature and this creed that they must buy only "made in Canada goods" in order to be good citizens of this country, what is going to come in the way of confusion of mind when, as they grow up and are taught the responsibility of being citizens of the empire, they are given the gospel, not according to Mr. Stevens, who is a member of the present administration, but the gospel according to the Hon. Howard Ferguson, High Commissioner for Canada and representative of this government in London, who preaches a quite different gospel

not "Canada first" but "Empire first"? My right hon. friend has said that the high commissioner's duty in London is to reflect the policy of this administration originated and initiated in Canada; that, further, his duty in London is to reflect the spirit and attitude of mind of the administration with respect to the problems which they have over there. My hon. friend the Minister of Trade and Commerce has given us the protectionist policy in Canada in terms of "Buy in Canada." What has Mr. Ferguson been saying in London? I have here a statement taken from an address delivered by Mr. Ferguson as high commissioner, speaking at the luncheon of the Canadian chamber of commerce on March 10, 1931. This is what he says:
When I see in England such slogans as-
This, remember, is the Canadian government speaking in London. It is the man who, in England, speaks, as the Prime Minister said, as a member of the administration:
When I see in England such slogans as "Buy British goods made in England by British labour" it seems to me to be forgotten that goods of Canada and other parts of the empire are equally British. Imperial consolidation cannot be effected on the lines of discrimination.
What is a child to do who has been brought up on this creed of the Minister of Trade and Commerce, and then finds himself a citizen of the empire as well as a citizen of Canada? The Minister of Trade and Commerce tells him to buy only goods made in Canada by Canadians, and such like, and Mr. Ferguson tells him and all citizens of the Empire that the term " British goods " applies equally to all parts of the empire-in other words are the same in Canada as Canadian goods or rather that "buy British goods" is not right in Britain when in Canada "buy Canadian goods" is all right. The same kind of narrow doctrine that is preached here in Canada by the minister of Trade and Commerce and his protectionist friends Mr. Ferguson objects to when it is preached in England by the protectionists there.
May I quote one line from the opening letter of the Minister of Trade and Com-, merce, in which he urges people to buy Canadian goods to provide work for Canadians. Keep in mind what Mr. Ferguson says to the person who advocates buying English goods: "It seems to be forgotten that goods of Canada and other parts of the empire are equally British." This is but the equivalent in Britain of what Mr. Stevens has said in Canada:
Every time we buy an imported article-
One from England.
-when we might just as easily have found a Canadian article to serve our purpose equally well, we are helping to do some fellow Canadian out of a job, and making the job of some foreign workman just that much more secure. Conversely, every time we purposely give the preference to a Canadian article, we are helping to create employment for Canadian workers, and doing our bit towards making Canada as a whole more prosperous.
No one in Britain, according to an identical doctrine, would be permitted to buy any Canadian goods, Mr. Ferguson nowithstanding. From the beginning to the end of this series of letters there is not a word which suggests that empire products are to be regarded in any way different from other products. At the same time Mr. Ferguson in London admonishes the British people to remember that

The Budget-Mr. Mackenzie King
all empire goods are British goods and ought to be placed on a parity with goods actually made in Great Britain. How are these policies to be reconciled? First of all I should like to ask the Prime Minister-and I hope if he speaks again he will tell us-which of these policies he supports. Does he support the policy of his government as enunciated in Canada by his Minister of Trade and Commerce, or the policy of his government as enunciated by his representative in London?
What, by the way, does the Prime Minister of Canada say about his London representative interfering in the domestic affairs of Great Britain? I should like to know what business the High Commissioner for Canada has to comment on any policy of the British government or any action of the British people.


Some hon. MEMBERS:: None.


William Lyon Mackenzie King: I wonder what the Prime Minister would say if to-morrow morning the High Commissioner for Great Britain in Canada criticized the letters issued by the Minister of Trade and Commerce for Canada in the same way as Mr. Ferguson has criticized the slogans for which British protectionists are responsible. Not very long ago my right hon. friend had something to say in this house about interfering in the domestic affairs of other countries. At that time an hon. member was discussing the affairs of Poland and the Prime Minister made the following observation:
When you begin to discuss the internal government of a friendly power, you are on very llangerous ground.
I hope we have not reached the time when we do not regard Britain as at least a friendly power.
It is not the duty of this dominion to undertake to advise people how they should govern themselves.
Well, Mr. Ferguson is doing that. He is telling the British people how they should govern themselves in trade matters. That is something which is entirely their own business. Then the Prime Minister goes on to say:
There is an obligation upon us as a member of the League of Nations, and it is a rather serious obligation, not to reflect upon the other members of that league.
Great Britain is a member of the league just as we are, and I say to the Prime Minister that long before this I think he ought to have taken his high commissioner to task for interfering, not only in this particular but in many other particulars as well, in the domestic affairs of Great Britain.
Speaking of the "Buy in Canada" slogan, may I refer to the fact that recently Canada

was visited by a mission representing what is known as the Federation of British Industries, the report of which mission has recently been issued. According to the statement of its members the mission was invited to Canada by the Hon. Minister of Trade and Commerce. He is the hon. gentleman who issued all these "Buy in Canada" advertisements. He says, "Buy only Canadian goods." Well, for the information of hon. members may I repeat that he is the hon. gentleman who invited representatives of the Federation of British Industries to visit Canada. What do this mission say? In their report they speak first of all of the different meetings they held. In reference to a meeting held in England while the Imperial conference was in session I find in the report the following statement:
Of special importance were the meetings with the Right Hon. R. B. Bennett, Prime Minister of Canada, and the Hon. Mr. H. H. Stevens, the Minister of Trade and Commerce.
Before leaving, the mission held several conversations with the Hon. Mr. G. H. Ferguson, the High Commissioner for Canada in London, and a letter was addressed to him setting out the objects of the visit.
Owing to the serious illness of Mr. Stevens, the mission did not leave until April 18, 1931.
Everywhere the mission was most cordially and frankly received. The Prime Minister, during a busy session, gave a long and friendly interview. Mr. Stevens was especially helpful, and the government officials placed themseives unreservedly at the service of the mission.
Then the report follows in the form of a memorandum.
" Canada first " is the policy of this government. Now we shall see what this mission which was invited by the hon. the Minister of Trade and Commerce to come to Canada, has to say concerning the government's policy. This very interesting report is as follows:
The empire has evolved during recent years into a commonwealth of self-governing nations. The aspiration of the citizens of each nation has been towards self-expression and self determination.
The original political bonds have been loosened, and to-day the dominions are only linked to the empire by the authority of and their allegiance to the crown, and their acceptance of the Privy Council as the highest court of appeal. Such freedom is in accordance with the high traditions of British empire development, but the units of the empire tend to look on themselves as separate nations, forgetting that their force as nations and their security depend entirely on the strength of the British empire as a whole.
The dominions as separate entities are not great nations and Great Britain without the empire loses its unique world position.
Now follows the interesting part of the report:

The Budget-Mr. Mackenzie King
Politicians, the public press and public speakers have raised the cries of "Great Britain first," "Canada first," "Australia first," "South Africa first," and have introduced thereby an undesirable atmosphere of rivalry into empire discussions; but inasmuch as empire unity is essential for the continuing welfare of the British races, national policies should follow the larger issue, and the one cry should be "Empire first".
Hon. members will notice that in this report the statement is made that public speakers have raised the cry of "Great Britain first.''
I think my right hon. friend will take exception to the fact that the cry of "Great Britain first" was the first cry of that nature which was raised. My right hon. friend was the first one to raise such a cry, and his cry was "Canada first." Following him somebody else said "Great Britain first." I do not think he ought to be deprived of the first position, and on his behalf I wish to correct the error which has been made in this report.
I would ask hon. members to notice carefully the language of this report-[DOT]" an undesirable atmosphere " in empire discussions. Speaking of undesirable atmospheres, it is interesting to read what the High Commissioner for Canada has had to say. The High Commissioner for Canada has had some statements to make concerning the Imperial conference, and in the light of some of these statements we are beginning to understand why that conference was the failure it turned out to be. Evidently there was design in it. In a speech at the chamber of commerce in London on March 9, to which I referred a minute ago, the high commissioner is reported as follows in an Associated Press despatch:
Hon. Mr. Ferguson referred to the coming Imperial conference at Ottawa.
This statement was reported on March 10. At this time the high commissioner was thinking cf the conference to be held at Ottawa, though he was referring to the recent Conference in London. The despatch continues: It was not expected that the recent Imperial conference would produce more than the development of a certain atmosphere, he said. The problem involved the whole reconstruction of the economic fabric of the empire.
According to the statement of the high commissioner the conference in London was intended only to produce " a certain atmosphere." The report of the mission of the Federation of British Industries states that the atmosphere which was created was an undesirable one. When one recollects the parting words of the Prime Minister as he left Great Britain there can no longer be doubt as to the undesirable nature of the atmosphere. After spending weeks at the
conference, and after one representative at the conference had made the comment that certain proposals which I have referred to to-night were in the nature of humbug, the right hon. the Prime Minister of Canada gave this parting word which certainly is suggestive of the undesirable atmosphere referred to by this British mission. After referring to the conference to be held in Ottawa-which, by the way, may or may not, as we now know, be held many months or years hence-the Prime Minister writing to the British press, said on the eve of his departure from London:
I have said it is with genuine regret I refer to this statement of the Secretary of State for the dominions. But, in justice to my own country and in justice to the great cause of closer economic unity, there is no other course open. For if this statement indicates what is to be the attitude of the United Kingdom at the conference to be held in Ottawa within the next twelve months, then I have little hope that any agreement which Canada may reach with the other overseas dominions will include the United Kingdom. Holding these views, it is but right that I should express them. Time is running against us. Canada, in her own interests and in the interests of the commonwealth, is honestly working for closer economic association. But if her proposal is to be thus contemptuously rejected, Canadians can only accept the rejection and act accordingly by embracing other means at hand of further strengthening their economic position in the world.
That was the farewell word to Great Britain of my right hon. friend, after he had spent his time at the conference, all ostensibly because the proposal which was outlined tonight in the presence of the house was referred to by one member of the British parliament and government as being in the nature of humbug. I think we have all long since come to the conclusion that such was a correct characterization of the proposal.
Now may I go one step further? While we had the visit from the delegation representing the Federation of British industries, one of the members of the delegation gave an address here in Ottawa. Little by little these things unfold what is apparently at the back of the unpleasant atmosphere which has been created, the atmosphere which the high commissioner said the conference was intended to create. Sir James Lithgow addressed the Canadian Club of Ottawa on May 10, and spoke in the presence of the right hon. Prime Minister. Apropos of the Imperial conference, confirming what I have been saying, Sir James Lithgow, according to the Ottawa Citizen of May 11, said:
"You all know that the Imperial conference at London was pretty much of a failure," Sir James continued. "That is the reason we are here-

The Budget-Mr. Mackenzie King
They were here because the conference was a failure. At whose invitation?
-because Mr. Stevens (Canadian Minister of Trade and Commerce), thought the anti-free trade vote in our federation justified British and Canadian industrialists getting closer together-
What for?
-to see what could be done while the political elements are preparing the way for the next
step."
I wonder what the country will think of this kind of arrangement between the antifree trade forces of different parts of the empire. The Minister of Trade and Commerce for Canada goes to England and says to the protectionists there, " Send out a mission to Canada; we will meet your mission and talk with them about trade between the different parts of the empire, while political forces behind the scenes are getting ready for the next step." Apparently the next step was to postpone any further conference until there is a Tory government in office in England. I say to my right hon. friend that this is hardly the way in which a minister in any country should proceed. I say further to the right hon. Prime Minister that if he is interested in the preservation of the British Empire, as I believe he is, he will cease at once, and have his ministers cease, any kind of alliance with protectionist forces in other parts of the world against any government that may be in office in Britain or elsewhere. The 'surest way to break up the British Empire is to begin to have the political forces in different parts of the empire seek to unite against other political forces, particuarlv the forces of special privilege against those who in different parts of the world seek something in the way of freedom. Sir James Lithgow went on to say:
We admit that unless one looks to the success of one's own business, there can be no general
success.


Richard Bedford Bennett: Hear, hear.


William Lyon Mackenzie King: But Sir James followed with these words:
But the best way to look after one's self is to look after one's customers.
That came home pretty direct from England. He goes a step further:
But the public is being led away by slogans, ....
That was said in the presence of the Prime Minister.
"Canada first" attributed to Mr. Bennett, I believe, and "Britain first" attributed to Mr. 
Thomas. (Laughter). They mean the same thing, these slogans, they mean empire trade. (Applause).
Canada first; Britain first; they both mean the same thing. Where is the applause on the other side now? Then Sir James went on to say:
We are full of hope that the Ottawa conference will not repeat our disappointment of the London conference.
Well, it will not disappoint them this year.
The empire spirit may be greatly injured by the turn of a phrase or an undesirable interpretation put upon some phrase. Here is an opportunity then for the "Canada first" policy.
Is it any wonder that there is confusion in the minds of the people of this country and of Great Britain as to what is the policy of hon. gentlemen opposite? Is it a policy of Canada first or is it a policy of empire first? That is the question we would like to have answered.


An hon. MEMBER:: They mean the same thing.


William Lyon Mackenzie King: They are not the same thing; they cannot mean the same thing. Here are two policies which are diametrically opposed. If they are the same, why does Mr. Ferguson find fault in Great Britain with a similar expression of policy to that, of "Canada First" in Canada?
May I say this:	In Canada, to serve a
national purpose we have the horse of "Canada first", carefully groomed, cared for, and trotted out by the Minister of Trade and Commerce as a member of this government. Then in Great Britain we have the horse "Empire first", groomed, eared for, and trotted out-instead of "old Fred"-by the high commissioner for Canada in Great Britain. The Prime Minister is trying to ride both these horses at the same time. My right hon. friend has told us many times that he is going to perform many things or perish in the attempt. Let me tell him right now that if he tries to ride these two horses at the same time, "Canada first" and "Empire first", he will find that he has two forces which sooner or later will either collide or so completely separate that he ^ will hasten materially that destruction which he has prophesied for himself. I say it is time the people of this country and the people of Great Britain knew what the government opposite is standing for in the matter of trade relations within the empire.
Now, Mr. Speaker, time does not permit me to develop as I should like to develop-


Some hon. MEMBERS:: Go on.


William Lyon Mackenzie King: Very- well, I
will go on.

The Budget-Mr. Mackenzie King
What is the result, then, of this policy of economic isolation which hon. gentlemen opposite have begun to put into effect? My right hon. friend said it was intended for what purpose? It was intended to blast a way into the markets of the world. Speaking in Vancouver on June 18-


An hon. MEMBER:: You have said that a hundred times.


William Lyon Mackenzie King: Yes, and it will be said one hundred times more. Speaking in Vancouver on June 18, my right hon. friend said:
If Mr. Mackenzie King thinks I will not so build up our agricultural and industrial life that its strength will drive our products into the markets of the world, then he is wrong. For that I will do. If he thinks I will not establish new markets for these products, strive with all my heart to retain them, drive our products with all my power into new markets, into old markets, into reluctant markets, he is wrong. For that I will do.
What has he done up to the present time? Instead of gaining markets he has been steadily losing markets. First of all, he has closed the door against Britain, and I am not sure that he has not slammed it shut, when one considers the parting word with which he left Great Britain after having put up to the British government the proposal which he brought forward with regard to the only basis on which trade would be carried on with Canada. In regard to Russia we know he has slammed the door.


Some hon. MEMBERS:: Hear, hear.


William Lyon Mackenzie King: And hon. members praise him for so doing. In regard to Cuba I do not know; perhaps he can tell us whether Cuba has been putting up her tariffs against this country recently because of the treatment he has meted out or was about to mete out to that country, among others, by raising the tariff of Canada.
Let us next consider New Zealand. My right hon. friend strove the other day to have it appear that in some particular the government that was in office before the last election was responsible for the present situation between Canada and that dominion. May I say to him that the government which was in office at that time did give six months' notice to terminate the then existing agreement. He will recollect that it was hon. members of his own party, who were then on this side of the house, who moved a resolution on going into committee of supply, to the effect that the extension to New Zealand of the Australian treaty should be abrogated. They spent months spreading propaganda for the
abrogation of that agreement. When notice was given to New Zealand, care was taken to advise that dominion that on the expiry of the six months, so far as the one article which was occasioning all the discussion was concerned, the duty would be fixed at 4 cents per pound, that being the amount which was suggested by the National Dairy Council of Canada as satisfactory to them. The matter was left in that form, so that the government of Canada could continue negotiations with New Zealand without breaking any agreement or treaty, but with the object of effecting a revision. And that arrangement with New Zealand was apparently satisfactory to that extent, for Mr. Forbes, the Prime Minister of New Zealand, passed through Canada on his way to the Imperial conference, coming here before the period of six months had expired, so that some new negotiations might be entered into and a modus vivendi found for carrying on the agreements between the two countries, with the modification I have mentioned pending the consummation of a new agreement or treaty.
Now, what happened? The very day Mr. Forbes came here my right hon. friend slammed the door in his face. On that very day he put up the rate of duty on butter to 8 cents per pound, making impossible any negotiation meanwhile on the basis which the previous Liberal administration had arranged. In case it may be said that I am wrong in this regard, may I read a Canadian Press despatch from New Zealand which apeared in the Montreal Gazette of June 5, dated Wellington, New Zealand, June 4:
The Prime Minister-
That is, Mr. G. W. Forbes.
-said he hoped Canada would agree to send her minister of trade to New Zealand to negotiate a new trade treaty.
He is making a nice approach.
New Zealand had been forced-[DOT]
Note the word.
-forced to show a strong hand-in placing Canadian imports on the general tariff scale- in view of Canada's "complete failure to listen to representations regarding the butter duty," he said. Mr. Forbes added that, on the day he had arrived in Ottawa,-
That was when my right hon. friend was in office as Prime Minister.
*-Canada had taken an unfriendly action by raising the butter duty.
And then follow these words which are in quotation:
"Canada slammed the door in New Zealand's face at the very time when she was anxious to negotiate," the Prime Minister said.
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Could words be more direct than these? The Prime Minister of New Zealand makes the statement to his own parliament that on the day he came to negotiate an agreement, having come here in the expectation of being able to come to an understanding, ''Canada slammed the door in New Zealand's face at the very time when she was anxious to negotiate."
That is the method which my right hon. friend adopts. Here is an indication of where we are getting to. Who is to blame for the present relationship between New Zealand and Canada? Could anything be more emphatic or direct than the words I hiave just quoted?
Come next to Argentina. The other day we had a very interesting talk by the minister without portfolio, the right hon. member for Argenteuil (Sir George Perley), who acted as government chaperon to the Canadian manufacturers and members of the Canadian chamber of commerce on their trip to the Argentine. He spent a great deal of time there, and he occupied considerable time in the house telling us about the different places visited by the delegation, and indicating the hopes there were for expansion of trade with that country. What has happened in this regard? This government, under the tariff which they propose, have put up the duty on Indian corn and meats from the Argentine. Surely this country, with the equator lying between it and South America, can hold its own in competition as regards corn and meats coming from the Argentine. But the doctrine of my right hon. friend, of absolute advantage, makes it necessary in his eyes to shut out this trade in meats and corn, though this action on the part of the government is going to prejudice the position of many consumers, as will be readily apparent. The right hon. gentleman seems to think, however, that he must shut it out. Apparently he cannot realize that there may be some comparative advantage in taking some corn and meats from the Argentine, and allowing our producers to ship to the Argentine or elsewhere what they can more advantageously produce, instead of devoting their effort to the sole endeavour to satisfy the Canadian market with all in the way of trade from which those countries are now excluded.
That is the position with regard to the Argentine. We have pretty nearly lost the possibility of coming to an agreement with that country. These ruthless and reckless changes, one after the other, might be described at length, but unless hon. members wish to have them now I will reserve them for another occasion.
Not being satisfied with altering the tariff in the way he has done, my right hon. friend 
has gone a step further and presented to the house a bill to create a tariff board. This is interesting. Observe the way in which the right hon. gentleman works. Either a tariff board is of some service or it is not. If it is of any service, matters affecting the tariff ought first to go before that board for consideration. But my right hon. friend had not been in office an hour before he abolished the tariff advisory board, a board that had been in existence four or five years and had rendered splendid service to the country. He abolished that board. Why? Because he wanted to bring in his changes in the tariff without the possibility of any amendment to refer the proposed changes to a tariff board before they should be carried into effect. He now takes care to put through his budget before the new tariff board is created, so that all the changes will become effective without reference to even a body of his own creation. That shows the amount of faith he has in his changes, and his frame of mind as respects the view which the different interests immediately concerned are likely to take of them.
There is one feature of the proposed board to which I hope my right hon. friend will give a little consideration before he advances his bill any further. He proposes to appoint nominees of his own to that board and to give them a tenure of office of ten years. Now, I have no objection to his choosing, as advisers on tariff matters, any body of men he pleases. But he has no right, after he has made of this country a watertight compartment through his tariff legislation, to try hermetically to seal the whole concern by appointing for a period of ten years those who will have the final say in the interpretation of the tariff as it is being applied, and who with respect to the administration of the tariff will be the last court of appeal from any decision. The government proposes to have the board, with these powers, fastened down upon all possible subsequent administrations within this period of ten years. The thing is entirely wrong. I appeal to my right hon. friend to amend his bill when it comes before us so as to make the appointment of members of the board not for ten years but during pleasure. Let him give his appointees any security he likes. He will find a good many declarations of his own, wherein he has made it perfectly clear that no government, particularly on a matter which admits of as much difference of opinion as fiscal questions, has any right to bind its successors.
I know there are those who think that a subsequent government could repeal such legislation. But let me point out, though a change in administration may not 'be distant, that by the time another government comes into

The Budget-Mr. Mackenzie King
office the chances are that the senate will again be in the position it was politically when the late Liberal administration came into office. During the whole time we were in power we were faced in that house with a majority politically opposed. Legislation put through now, will bind subsequent governments as well as the present administration. Lnless his object is simply to help his own favourite special interests, the Prime Minister had better see to it that the change which I urge upon him is immediately made in the legislation he proposes.
I have tried to picture what I conceive to be the thought in my right hon. friend's mind with respect to the reconstruction of Canada and the reconstruction of the empire, as he evidently has it in view under the legislation which he is introducing. May I in a word say to the Prime Minister what I conceive to be the inevitable outcome of his fiscal policies. If my right hon. friend should succeed in what he is seeking to bring about there is no doubt that there would be a considerable change in the social relations of the different classes of this country and a change in the industrial relations which would be very marked as between the different parts of the country. If I take my right hon. friend's own words as being indicative of what he is aiming at, I gather that what he wants to build up in this country, at all costs, is a number of large manufacturing industries. By means of a very high tariff he believes he can accomplish that end.


Raymond Ducharme Morand: He is doing it.


William Lyon Mackenzie King: An hon. member says " He is doing it." But the Prime Minister is not thinking equally of the great primary industries. The other evening the Prime Minister read a list of the new factories and industries which had been established. One of his supporters now says ''He is doing it." My right hon. friend did not tell us at that time how many industries had been established in previous years before his tariff policy was inaugurated, nor did he tell us the extent of capital invested in the establishments he mentioned. He did not tell us whether those establishments were in the nature of mere selling agencies, or the like, or how many people they employed. What was more important, he did not tell us how many failures there have been in industry over the same period of time. My right hon. friend stated that since August there has been an influx of new concerns, eighty-seven of which had been already listed. The Canadian National Railways annual report for
1927 contains a list of new industries which had been established along their line, to a total of 456 new manufacturing establishments. The capital expenditure in this regard was $44,211,000, while additions to establishments along the lines were made to the extent of $29,000,000. This was a period of Liberal administration. In 1930 the Canadian National Railways reported 340 new industries, and if the figures compiled by the Canadian Pacific Railway Company had been issued they would have probably shown a corresponding number. Four hundred and fifty-six new industries in one year, three hundred and forty in another, and yet my right hon. friend is boasting of the fact that eighty-seven new industries have been established since August, 1930. The following is a list of business failures for the last few months:
1930-	Manufacturing Total
August	
30	159September	
40	192October	
44	216November	
46	222December	
47	239January	
48	240February	
36	188March	
40	178
In other words 331 manufacturing industries died in eight months while 87 were born in ten months. To quote the words of my right hon. friend uttered on a previous occasion, "another such achievement and we are undone."
When my right hon. friend gave that list to the house he made it quite clear that what he had in mind was a special privilege to special interests of a special class. At that time I drew his attention to the fact that all of these industries were, with one or two exceptions, being established in two provinces, and he agreed with my statement. They were all manufacturing industries. Did my right hon. friend have any word in that list to represent any service rendered to the agricultural industry in all of its branches, dairying, horticulture, live stock raising, grain raising and so on? Did he have one word of encouragement for the lumber industry? Did he have anything for the fishing industry? Did he say anything of cheer for the mining industry? No, the benefits were all enjoyed by manufacturing industries which are secondary in character. What does that mean? Should my right hon. friend's plan succeed it will mean that we will in Canada be building up an industrial feudalism. That, in a word, will be the effect of his policies, and is, I believe, his objective. There will be an industrial feudalism whereby all the primary industries will be obliged to pay tribute to these secondary

2706	COMMONS
The Budget-Mr. Mackenzie King
manufacturing industries. It will be, as I have already said, building the pyramid of production on its apex instead of on its base.
More than that, beside tributary industries we will have tributary provinces, we will have the provinces other than the central provinces paying tribute. This industrial feudalism will mean, on the one hand, that certain classes of industry will be. paying tribute to another class, and, on the other hand, there will be a geographical feudalism and payment of tribute.
My right hon. friend has made it quite clear that that is what is in his own mind. In this budget he has made provision for what is intended to be a sort of compensation to those parts of Canada which have to pay this tribute. He has given compensation to the maritime provinces in the form of increased subsidies and duties on coal. He has given another form of compensation, as he thinks, to the western provinces in the form of a five cent per bushel subvention on the transportation of grain for the purposes of export. British Columbia and Alberta receive something in the way of compensation for coal shipped abroad, as well as the supposed benefits ^ of a tariff on coal. If the maritime and prairie provinces, and British Columbia are prepared to accept these sops as compensation for the special privileges given to the manufacturing industry of Ontario and Quebec, then I tell them that they are selling their birthright for a mess of pottage. That is what is going to develop, and it will become more and more marked as the years go by. I put this question to the house: Do we want to build up in this country an industrial feudalism of that sort? Do even the people of Ontario and Quebec, assuming that this plan can be realized, want to see great manufacturing industries built up in their provinces to which other parts of Canada, both industrially and geographically, will have to pay tribute? That will mean a great difference in the social relations of the peoples who go to make up our dominion; it will mean a great difference between the east and west of Canada, between the maritime and central provinces and between western Canada and the central provinces. As time goes on we will have more in the way of difference than of unity in this country.
If this compensation which it is proposed to give in the form of coal duties and subsidies towards defraying the cost of transportation of coal and of wheat for export were bo come out of the pockets of the manufacturers who are to benefit by these special privileges, then something might be said for it, but this compensation is to come in part out of the people

of the maritimes, out of the people of the west and the people of British Columbia. There subsidies are only another word for taxes. They are going to have to pay part of the taxes, they will have, along with Ontario and Quebec to help to meet the cost of subsidies. What seems to be such a generous act on the part of my right hon. friend is of quite a different character when it is closely examined.
The treatment which is to be accorded to these special interests is further heightened and emphasized when one considers the taxation features of the budget. What do they disclose? They disclose that the burden of taxation is being placed upon the backs of the people least able to bear additional taxation; those who are to profit most by these special privileges are the ones who to a considerable degree are going to escape taxation. Who will be the wealthiest men in this country under this scheme if they are not already the wealthiest? Will they not be those who will make their fortunes out of these industries that in this way are receiving special privileges? And these largest fortunes of all are to gain from the exemption feature of the income, tax. What there is in the way of loss of revenue from such exemption will have to be made up by taxes raised in another way. Where does my right hon. friend expect to get most of his taxation? He expects to get it out of the sales tax and from the excise tax of one per cent on everything that comes into this country. What does that mean? The sales tax, as we all know, bears most heavily on the great mass of the people, yet the wealthiest people are receiving a partial exemption on their income tax, and that additional burden is placed on the great body of the people through the sales tax and the excise tax of one per cent on everything imported. Talk about the "death knell of protection"! This is the death knell of everything in the shape of freedom of trade.
Not a single thing can be brought into this country now, no matter where it comes from, that will not have to pay a tax of one per cent; not a single thing. That is where again I object to my right hon. friend's method of doing business. No discrimination whatever is shown. At a time when above all times there should have been some discrimination shown, when there is a heavy burden on the people under present conditions, no matter what my right hon. friend may want to do in the course of years, this year he should have been very careful to see that the burden was not being placed on those least able to bear it. Even in good times in a country such as Canada there has been all through the years on the part of

The Budget-Mr. Mackenzie King
past governments a certain regard for burdens imposed by our climatic conditions. No matter what may be said in favour of the tax on anthracite coal, there is a great deal to be said under conditions such as prevail to-day for not having that tax put on the people of Ontario and Quebec next winter. If it were going to bring anthracite coal from the maritimes or from the west to the central provinces, something might be said in favour of the tax, but it will not. I remember at one time during the period of the war that the government of Canada was very glad to have the United States help us out in a critical situation. When we had a severe winter and had not sufficient coal we sent special emissaries down to Washington and asked the Americans to share with us their supply of anthracite coal so that our people would not freeze and our industries would not be closed down.


An hon. MEMBER:: And they did.


William Lyon Mackenzie King: Yes, and they did. Suppose we have some industrial troubles in this country or there are such troubles elsewhere and our supply of coal is restricted, and we have difficulty in getting coal, what is going to be the effect of this tax which my right hon friend is putting upon the people, thus making them pay so much more for their coal? The extra price will not consist merely of the tax; there will be an addition to it when the commodity is sold.
Then take the sales tax. Every government in imposing this tax has made some discrimination between the things that the great mass of the people use, and those things which are not so generally used. For example, oranges are a necessary food for little children. We do not produce any in this country. One might describe them as a poor man's luxury they have almost become a poor man's necessity. Why this year of all years put a duty on oranges? And why put a duty on seeds? And why a duty on all periodicals coming into Canada. No discrimination is shown. He pulls out all the stops and then as he gets complaints pushes them back one by one. [DOT]
This building up of a feudal system in which the wealthy capitalist is to be the modern lord is not a desirable thing for this or any country. The other evening the Minister of Trade and Commerce referred to the fact, speaking of income tax exemptions, that those who are fairly wealthy were going to pay a little bit more than formerly because of the increase of 2 per cent in the tax on corporations. But he did not tell the House that the Prime Minister had stated in 22110-172}
his budget address that if incomes are derived from dividends received from Canadian corporations, the income is exempted up to the amount of $10,000. Now, from what source are the men in Canada that are fairly wealthy, the wealthy industrialists, getting most of their revenue or income today? They are getting it from these very sources that are going to be exempted, dividends from Canadian corporations. The more one examines the budget, the more one discovers there has been real ingenuity shown in taking the burden off the shoulders of the rich and putting it on the backs of the poor.
Just here may I say that I am very much surprised at the Prime Minister-who, I think in most of these matters is very careful-bringing into the debate the name of one who is a civil servant and not in a position to answer for himself. When my right hon. friend was speaking of the information that he had obtained on the income tax, and proposals he was making he introduced the name of Mr. Walters, commissioner of income tax. I submit that the Prime Minister should not have done that. The government must take full responsibility. They alone can answer for their acts. No civil servant is in a position to speak with regard to any public matter that is being discussed in this house. I repeat, the government must take full responsibility and not try to put blame on the shoulders of anyone else.
If time permitted I think I could show wherein this industrial feudalism now being set up is a complete counterpart of the feudalism of the middle ages. The other day I was looking at Hallam's History of Europe in the Middle Ages to recall just what some of the incidents of feudalism were. Here are some of the more important as enumerated by Hallam.
First there was the right of coining money. The modern parallel is the integrated industrial and financial control by which through interlocking directorates of banks, investment houses and industrial corporations, the regulation of credit may be used to serve the interests of manufacturing, and increase the fortunes of those who hold privileged positions of wealth.
Second, there was the right of waging private war. The modern parallel is found in the relentless struggle for monopoly or combination which is characteristic of the present industrial order when operating behind the walls of a high protective tariff.
Third, there was the exemption from all public tributes except the feudal aids. Here we have a parallel in the exemptions granted
2708	COMMONS
The Budget-Mr. Mackenzie King
to those receiving large incomes under the revisions of the income tax rates as proposed in the present budget.
Fourth, there was the right of freedom from legislative control. It would seem that under the present government manufacturers are to be placed under the special protection of the governor in council. Tariff control has been taken largely out of the hands of the legislature and placed in the hands of the executive.
Fifth, there was the right of exclusive exercise of original jurisdiction in their dominions. Here we have as a parallel the character of the proposed tariff board and the wide powers conferred upon it-a veritable fortification of privilege.	_
IHallam also had this to say of the influences that supported feudalism in the
middle ages:__
Nor were motives of interest left alone to operate in securing the feudal connection, the associations founded upon ancient custom and friendly attachment, the impulses of gratitude and honour, the dread of infamy, the sanctions *of religion, were all employed to strengthen these ties, and to render them equally powerful with the relations of nature, and far more so than those of political society.
Could any statement more accurately describe the influences brought to the support of the industrial feudalism of the present day? The house has listened to the appeal to religion in support of the embargo against Russia, but not until the feudal barons had demanded that their home market should be kept inviolate. Public money has been expended in an appeal to patriotism and sentiment in order to preserve the home market for the manufacturing interests of this country by creating a sales resistance to goods from other countries, regardless of the effect of such a policy of trade _ restriction on the primary industries of agriculture, mining, lumbering and fishing. No appeal to religion, prejudice or patriotism has been omitted in the effort to give Canadian manufacturers a position of privilege under the policies of the present administration.
There is one thing further. Feudalism demanded of its people the oath of fealty and homage. A central feature of feudalism in the middle ages was the oath of fealty and homage which the vassels pledged to their lords. Even here the parallel is suggestive; for the Minister of Trade and Commerce has supplied, at public expense, a creed of which the following are the concluding words:
To Canadian products I pledge my patronage. And to the cause of her producers I pledge my devotion.
I wish to conclude, Mr. Speaker, with what I regard as the most important part of what

I have to say. I have reserved to the last what I feel to be the most serious t5mission of the government, the most serious mistake that it has thus far made, though it has made a great many, and that is the complete indifference it has shown towards the problem of unemployment.
My right hon. friend and his party got into office by promising those who were unemployed throughout Canada not merely that they would find work for them, but that they would end all unemployment. I need not go over the list of those promises, though I am very much tempted to give them to my right hon. friend while he is sitting in a position of responsibility. Their whole campaign in some parts of the country was waged on what they would do to end unemployment. They would call a special session, and they would introduce measures to end unemployment. The whole unhappy condition would be over in a short time if not immediately. To-day the conditions are worse than at any time in the history of Canada.
How did my right hon. friend start out to deal with the situation? First of all he took care not to have a Minister of Labour in this House of Commons but to see that he was in the other chamber of this parliament where he would not be subject to questions from day to day by the people's representatives. Where is the Minister of Labour at this hour? Is he in this parliament ? Is he in this city? He is out in the city of Victoria in British Columbia. Why in the city of Victoria while parliament is in session? So that there cannot be any information obtained from that particular source. Was there ever a greater admission on the part of a government of its complete ignorance of a situation existing throughout a country than that disclosed where the Prime Minister has to delegate his Minister of Labour to go to the Pacific coast, and then later to the Atlantic coast, to discover whether people are unemployed in Canada at the present time, and if so, to what extent? I say that that action on the part of the Prime Minister is of itself evidence sufficient to show how little the government begins to appreciate what the situation in Canada is at the present time.
What has the Minister of Labour said, what has the government said, as to the government policy on unemployment? I asked my right hon. friend at the beginning of the session if he would tell this parliament and this country what he meant when he said, "I will end unemployment." He promised to do so, but he has never said one word which gives us the slightest indication of what he

The Budget-Mr. Mackenzie King
had in mind. He has not spoken in reply to the many motions that have been made on going into supply. He has said nothing when the estimates were up for discussion. He made no reference to unemployment in his speech on the budget. He has ignored the subject altogether. We do not know if the government has any policy on unemployment. Its ministers give us contradictory statements. The Minister of Trade and Commerce the other evening said that this was not the time to ask what measures the government was going to introduce, that we would find out at the end of the session. But I find that the Minister of Labour has made a declaration on the subject. What is it? As it appeared in the Ottawa Citizen of June 6 last it is this:
"The federal government's policy on unemployment.' Senator Robertson said yesterday, "will continue to be one of reasonable assistance to the provinces and municipalities to cope with their respective problems."
That is what the Minister of Labour says, and the Minister of Trade and Commerce says: "We will tell you our policy at the end of the session." What is the country to think of that kind of thing? May I say that if the policy of the government is simply to repeat what they did last session, they will not get much thanks from the unemployed or anyone else. What has been the effect to date of their policy? They have spent not all of the $20,000,000, but they have forced numerous municipalities into bankruptcy, according to the statements of the municipalities themselves. They have compelled provinces to spend more in the way of public money than they otherwise would have spent just in order to receive part of the federal dole, but they have not helped beyond a very limited extent in solving at all the problem of unemployment. If what the Minister of Labour says is to be the government's policy, the government had better let us know it in plenty of time. Whatever its policy is, let us at least have an opportunity to discuss it on the floor of this parliament, and let parliament vote the appropriations that are necessary while parliament is still in session. I say to the ministry that they will have no right in relation to unemployment relief to use governor general's warrants this year for any purpose whatever. Last year when there was a general election and an Imperial conference there was a situation, through lack of time, which would have justified the administration in using a governor general's warrant until the moment parliament could be brought together, but if they do not deal with the unemployment situation at this session and are forced to have money
for the purpose of meeting it next winter,, their only course will be again to call a special or regular session of parliament so that we may discuss here in parliament the situation as it is throughout the country.
May I say that one thing that is greatly aggravating labour at the present time is the view which the ministry apparently is taking, that conditions of unemployment do not amount to so very much, after all. My right hon. friend set the example when he was at Regina. He stated when he came back that conditions in the west were not as bad as they were reported to be. He was followed by the Minister of National Revenue (Mr. Ryck-man) who also said that the people of the west were beginning to take an interest in protection and that things were not as bad as they were reported to be. The Minister of Labour at Hamilton made a similar statement, and the Minister of Railways and Canals and the Minister of Trade and Commerce have been telling the country that somewhere just around the corner prosperity is waiting. Yet they know well, if they understand anything, that conditions instead of getting better are getting worse daily. Here is something that is truly amazing and something that if I am not mistaken will affect very much the labour people of this country. I quote from the Ottawa Citizen of to-day:
Victoria, B.C., June 15.-Dominion-provincial summer conference on unemployment was not advisable, Senator Gideon Robertson, Minister of Labour, stated before the conference here to-day of mayors and reeves of British Columbia cities and municipalities. It was too early for such a conference, the minister said. Conditions were already changing because of crop improvement and curtailment of immigration had not become effective. . . . Senator-Robertson said Ottawa had felt apprehension' particularly because of reports of drought in prairie provinces. Recent copious rains had changed matters and only in Saskatchewan were crops damaged in places to the extent that only feed would be harvested. West of the great lakes the situation was more acute than in eastern Canada because of the grain situation. Conditions were improving in the last month. Forty grain vessels had left Montreal, indicating betterment.
So it goes on, the government taking the position, in the face of all that has been said in this parliament, in spite of all that people throughout this country know about conditions* that there is no need for calling any conference this summer because conditions are so much improved. May I say that it is this inability of the government to grasp the situation in the country that is exasperating the people to-day-these declarations that there is no great unrest, that there is no great amount of unemployment. Thesa

The Budget-Mr. Mackenzie King
statements are being read by men and women in distressed circumstances and by others who have become despondent by reason of crop failures bringing them to the verge of bankruptcy. The whole situation has been intensified to the point of exasperation by the budget which my right hon. friend has brought down, imposing the very heavy additional burdens of taxation on the people at this time, and distributing the burden in the manner in which it has been distributed.
May I say to the Prime Minister that I believe that there never was anything done by any government which met with such universal resentment as his action and that of his ministers in exempting from the 25 to 50 per cent graduated scale of income tax those who have the largest fortunes in the land. I say I do not care what the number is of those exempted. If there are only very few of them, so much stronger the reason against the action of the government. ^ The fact that it has been done at all indicates the mentality of the government. It indicates their utter inability to grasp the psychology of peoples, which is a first requisite on the part of all who seek to govern. I do not for one moment suggest that in their action my hon. friends have been governed by personal motives. They would not be permitted to sit in this parliament an hour if hon. members generally believed anything of that kind. What however is suggested by their action? It is that in their minds some advantages can be gained by bringing about a condition where we will have in this country a lot of wealthy feudal lords-industrial lords-who will exercise dominion of a social, industrial and political character. That is a significant fact, and I wish to say that I place the responsibility not alone upon the Prime Minister but upon every member of his government for having permitted legislation of that kind to be brought down in the budget now presented to the house. Knowing hon. gentlemen opposite as I do, I cannot understand how among their number there was not one who was strong enough to stand up and say, "In the name of the people of this country I will resign my portfolio before I will submit to this. If one single minister had gone to the Prime Minister, as was his duty when he saw a condition threatening which was bound to arouse in the people throughout the country a state of resentment greater than has ever been known before, and had handed in his resignation, we should not have had legislation of this kind proposed. That hon. gentlemen opposite have at this time permitted
{Mr. Mackenzie King.]
this legislation to be brought down indicates that they do not possess the first requisite of members of a ministry, namely a due appreciation of what a government owes to the people they are governing at such a critical period as the present.
If I may I should like to conclude with one constructive suggestion. The ministry have done nothing to meet the present situation and I should like, if I may be permitted to do so, to make one suggestion which I would ask its members to consider. The Minister of Labour has said that there is no need for any conference at the present time. I say there is need for two conferences. There is need for a conference between the dominion and the provinces to discuss financial arrangements, and to come to some method of delimiting the fields of revenues and expenditures and so arranging matters that taxes in municipalities, provinces and the dominion alike will not be unnecessarily increased at a time such as this. There is need for a second conference namely a conference of employers and employees, representatives of trades unions, representatives of associations of employers, representatives of provinces and manufacturers, of transportation companies, of agricultural organizations, of representative women's organizations, of all those different bodies which represent an informed public opinion. They should immediately all be brought together here in conference to discuss the best means of meeting the present situation and that which is likely to develop through the approaching winter. At a conference of the kind there should be organized an unemployment relief board which would be in charge of the management of the whole unemployment situation.
During the period of the war it was thought advisable to have a purchasing commission to look after the purchase of supplies required for purposes of war. It was thought desirable also to have a fuel board or a fuel controller to look after the supply of fuel. It was thought advisable also to have a food board with several controllers in charge. The British government found it desirable to have a munitions board to see that the supply of munitions was maintained, and in Halifax at the time of the explosion it was found desirable to have a relief commission which had to do with the expenditure of 820,000,000, the same sum as -was voted for unemployment at the special session of parliament last year. I would suggest that the Prime Minister bring together all the representative bodies I have mentioned, that the gathering be non-partisan in character, its members representing whomever they may so long as they

Questions
are in a position to speak for large representative groups of the community. Let the conference itself construct or name a board to handle unemployment relief for this year so far as the federal government's obligation is concerned. Let that board seek to coordinate the work between the provinces, the municipalities, all public bodies and private organizations. Why should not the Red Cross Society and like organizations be utilized in times of peace as well as in times of war to perform useful services in connection with the unemployed and the needy? I am sure its members would welcome the opportunity.
In Canada to-day there are people who are nearing the verge of starvation and many more are greatly distressed in mind because of the position in which they are placed through no fault of their own. I do not refer merely to the casual labourer, or the trade unionist who happens to be out of employment; I do not refer simply to the man or woman who works with his or her hands. I say, that in many of the homes in this country to-day people of all sorts and conditions are wondering if they are going to be able to keep up premiums on their insurance policies, life, accident, sickness, unemployment and the like; whether they will be able to continue to make provision for the education of their children. In the homes of this country to-day numbers of people are wondering whether they shall be able to continue to carry the mortgages that represent practically all of their savings over a period of years. That is the situation as we have it in Canada today ; and the government sits idly by, exempts the multi-millionaires from a portion of their former taxation and allows the poor of the country to suffer. I say, Mr. Speaker, that unless the Prime Minister and his colleagues take some very speedy steps to meet the situation they will find themselves face to face with a condition in this country with which they as a government will be unable to cope. I make my suggestion in all good faith, not as the leader of a party- and the Prime Minister laughs at it; the Prime Minister laughs!
On motion of Mr. Manion the debate was adjourned.
On motion of Mr. Bennett the house adjourned at 10.55 p.m.
Wednesday, June 17, 1931.