1932-04-11

Mr. SPEAKER:: I have the honour to inform the house that I have received notification of a vacancy having occurred in the representation of the electoral district of Maisonneuve in the province of Quebec, consequent upon the death of the sitting member therefor, Mr. Clement Robitaille.
I have accordingly addressed my warrant to the chief electoral officer for the issue of a writ.


Right Hon. R. B. BENNETT (Prime Minister):: Will Your Honour be good enough to state the date of that notification?


Pierre Édouard Blondin: My recollection is the document was received on the date it is dated, namely April 6, 1932.


Richard Bedford Bennett: Last Friday the right hon. leader of the opposition (Mr. Mackenzie King) asked a question with respect to the vacancy in the representation for the constituency of Maisonneuve. I find it a little difficult to understand why the inquiry was made in that form, inasmuch as the provisions of the

House of Commons Act set out the method by which the Speaker is to be advised of a vacancy. Two members did sign a notice addressed to the Speaker regarding this vacancy on April 6; on April 7 the chief whip of the opposition addressed a letter to the Speaker of the house in the following words:
Enclosed please find notice in due form signed by two members of the House ot Commons, Messrs. St-Pere and Deslauriers, advising you of the vacancy which occurred m the representation in the House of Commons, for the electoral district of Maisonneuve, by reason of the death of Mr. Clement Robitaille, K.C., of Montreal, member of the House ot Commons for the electoral district of Maisonneuve, and asking you to issue a new writ for the election of a member to fill such vacancy, in accordance with the provisions of section 10 of chapter 145, entitled "An Act respecting the House of Commons,' revised statutes of Canada, 1927.
In due course that letter was received by the Speaker, who on April 8 wrote the chief electoral officer enclosing the request in due form for the making out of a new writ for the election of a member to serve in the present parliament in the electoral district of Maisonneuve, Quebec. On April 9 the chief *electoral officer wrote the Speaker acknowledging receipt of the notice. It follows that on Friday last, which was the 8th, the chief electoral officer had not acknowledged receipt of the notification of the death of the sitting member and of the direction to issue a writ accordingly, although the question was asked on Friday. It was not until the Speaker received the notification, which for some reason best known to hon. gentlemen opposite was not given previously, that the notice was sent to the chief electoral officer. The chief electoral officer was notified on Saturday last; to-day the Speaker made known to the house the fact that this had been done, so the government had no opportunity before Saturday last of learning that notification had been made as provided by law.
In the case of Athabaska the notice required by law was given by two members of parliament and, owing to climatic conditions to which reference was made, the writ was issued immediately for the poll. As hon. gentlemen doubtless have noticed, that poll was much larger than the one at the general election, and I was told-and I believe it is true- that it would be impossible to hold an election in that constituency during certain seasons of the year, owing to the difficulty of moving over the land when it is not frozen, or until it has dried out after the spring thaw. Therefore the writ was issued for that constituency in order to have the election before spring came on.

Questions
I think with this explanation it will be apparent to the house that not until to-day was the government in a position to take any action which might be desired with respect to Maisonneuve.


Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: The statement
just made by the Prime Minister would leave the impression that an obligation existed in law on the opposition to bring to the attention of the Speaker any vacancy existing in the House of Commons. The law is that any two members of the house may notify his honour the Speaker of the fact that a vacancy exists, and my question arose out of some surprise which we on this side felt that no member or supporter of the government had drawn to the attention of his honour the fact that a vacancy existed in the constituency of Maisonneuve and that the session was being allowed to go by with no endeavour made to fill that vacancy. The opposition took the course it did take at the end of last week because it became only too apparent that unless we moved in the matter the vacancy would in all probability not be filled, but there was no obligation resting on any member of the opposition to draw the existence of the vacancy to the attention of the Speaker.


Richard Bedford Bennett: In order that there may
be no misapprehension let me repeat that any two members of the house can give the notice, but I challenge the right hon. gentleman to name any case in which notice has not been given by the opposition with respect to vacancies existing in constituencies formerly represented by members of their party. That always has been done; it has become a sort of custom.


William Lyon Mackenzie King: In answer to
that challenge I may say that I remember many occasions during the time I was Prime Minister, having vacancies in constituencies brought to our attention, and where we took action as a government without waiting for the opposition to give the notification.



QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk).

Mr. BEAUBIEN:: 1.	What was the total cost of the Stamp commission, appointed by the government to investigate the trading in futures?
2.	What amounts were paid to each of the
three commissioners:	(a) for fees; (b) for
expenses ?


U761-118
[Stage Direction]
3.	What lawyers were engaged by the government or any department of the government on the commission, and what was paid to them: (a) for fees; (b) for expenses?
Richard Bedford Bennett: The answer to the first
question, Mr. Speaker, is $9,21822, but that does not include any expenditures by way of salaries to permanent officials of the Departs ment of External Affairs.
In answer to the second question, no sum was paid for fees to any of the commissioners, but for expenses Sir Josiah Stamp received $2,120.57; Chief Justice Brown, $1,198.16; Mr. W. S. Evans, $1,101.73. Sir Josiah Stamp declined to accept any fee for his services, and, as has been intimated, a piece of plate was presented to him. Chief Justice Brown expects to be paid some small honorarium for his services, an appropriation for which will be included in the supplementary estimates, no amount having been determined.
In answer to the third question, the only legal adviser employed was Mr. S. T. Sweat-man, K.C. He has not yet been paid for his services. For expenses he received S988.50.
That is the only information at the moment that I can give the hon. gentleman, except to repeat that the disbursements do not include the salaries of the permanent officials of the Department of External Affairs, who, especially in the person of Mr. Pearson, gave some services to the commission.


SALMON TREATY
Mr. REID:: 1.	Have any representations been made by the province of British Columbia or any official of any department of the province of British Columbia, suggesting or asldng the Dominion government to consider the advisability of depleting the salmon in the Fraser river in the event of the salmon treaty now before the United States government not being agreed to?
2.	If so, are any such suggestions or recommendations being seriously considered by the Dominion government?


Richard Bedford Bennett: The answer is no, Mr. Speaker, unless the hon. gentleman includes an official letter written by one of the officials in western Canada to a gentleman in Ottawa. No representations have been made in the sense in which the question is asked.


NEW FACTORIES IN CANADA, 1921-1930
Mr. COTNAM:: 1.	How many new factories located in Canada during each year from 1921 to 1930?
2.	How many factories closed their doors, each year from 1921 to 1930?
3.	How many new factories located in Canada from September 1, 1930, to date?

Questions


Mr. STEVENS:: 1.	Information not available.
2.	Information not available.
3.	139 branch factories are recorded as having been located in Canada by outside capital (United States, Great Britain, and other foreign countries) since September 1, 1930.
RAW WOOL IMPORTS, 1931 Mr. EDWARDS:
1.	What were the Canadian imports, in pounds, of raw wool, from: (a) Australia; (b) New Zealand, for the year 1931?
2.	What were the imports, in pounds, of Cape wool, for the years 1929, 1930, 1931?


Mr. STEVENS:: 1.	Canada's imports of raw wool, in pounds, from (a) Australia, and (b) New Zealand, for the calendar year 1931, were:
(a) From (b) From
Classification
Wool in the grease	
Wool, scoured or washed.
Wool, pulled or sliped..
Hair of the camel, alpaca, goat or other like animal, not further prepared than combed. ..
Total imports of raw wool	
2.	No statistics available as to Canada's imports of Cape wool. During the calendar years 1929, 1930 and 1931 Canada's imports of raw wool, in pounds, from British South Africa were:
Classification	1929	1930	1931Pounds Pounds Pounds Wool in the grease..	-	18,655	12,683
Wool, scoured or
washed	
223,898	307,390	231,589Wool, pulled or sliped -	8,389	-Hair of the camel, alpaca, goat or other like animal, not further prepared than combed.	-	-	-2.	What quantity of Canadian wool was retained in Canada for the years 1930 and 1931?


Mr. STEVENS:: 1.	The estimated quantity of foreign raw wool retained in Canada for the calendar years 1930 and 1931, was:
	1930	1931
Imports of raw wool	Pounds	PoundsWool in the grease.. ..	2,501,761	3,322,061Wool, scoured or washed.	5,054,599	5,773,626Wool, pulled or sliped.. Hair of the camel, alpaca,	831,817	1,153,075goat or other like animal, not further prepared than combed. 1,070,821	604,739Total imports of raw wool	
10,458,998 10,853,501Australia	New	Less exports of foreign	Zealand	raw wool	70,904	26,776Pounds	Pounds	409,512	1,590,896	Estimated quantity of	381,747	162,192	imported raw wool	-	269,665	retained in Canada.	10,388,094	10,826,7253,609	91,699794,868	2,114,4522.	The estimated quantity of Canadian raw wool retained in Canada during the calendar years 1930 and 1931, was:1930	1931Pounds	Pounds
Estimated production of
raw wool	 21,000,000 20,000,000
Exports of Canadian raw wool	 4,382,000	4,770,000
Estimated quantity of Canadian raw wool
retained in Canada. 16,618,000 15,230,000


SOLDIER SETTLERS
Mr. WOODSWORTH:: 1.	How many soldier settlers are employed by the Soldier Settlement Board?
2.	Have these employees made their payments and paid their taxes up to date?
3.	If not, how much do they owe?
4.	How many of these men are single?
Total imports of
raw wool	 223,898 334,434 244,272


FOREIGN WOOL
Mr. EDWARDS:: 1.	What quantity of foreign wool was retained in Canada for the years 1930 and 1931?


Mr. GORDON:: 1.	35.
2.	Twenty have made their payments and paid taxes in full; fifteen in arrears are paying in monthly instalments.
3.	$3,357.45.
4.	One, single; one, widower.

Questions


NOVA SCOTIA INDIANS-PHYSICIAN
Mr. DUFF:: 1.	Who has been appointed physician for the Indians of Richmond county, Nova Scotia, and Chapel island, Nova Scotia?
2.	What salary or remuneration does he receive?


Mr. MURPHY:: 1.	The position of physician to the Indians of Richmond county and Chapel island has been advertised by the Civil Service Commission. No appointment has yet been made.
2.	Remuneration is at the rate of $300 per annum, with an allowance of $200 per annum to defray the cost of drugs.


UNEMPLOYMENT AND FARM RELIEF-ONTARIO AND QUEBEC
Mr. FERLAND:: What amounts were expended in the provinces of Quebec and Ontario to assist the farmers, pursuant to the act embodied in chapter 58 of the statutes of Canada, 1931, unemployment and farm relief?


Mr. GORDON:: Under the provisions of the Unemployment and Farm Relief Act, 1931, agreements were entered into with the provinces of Quebec and Ontario by which the Dominion government contributed to provincial expenditures for provincial works, including highways, and to municipal works to be carried out for the relief of unemployment. In addition the agreements provided that the Dominion government would contribute to the expenditures of the provinces and the municipalities for direct relief, that is for food, fuel, clothing and shelter, where suitable work could not be provided for the unemployed.
Full details of the agreements entered into and the commitments of the Dominion government to the provinces of Quebec and Ontario are included in the report of the dominion Director of Unemployment Relief which was tabled on March 9.
There is no information available as to what relief works were carried on by the provinces and the municipalities for the relief of farmers as distinguished from those following other callings.


IMPORTS AND EXPORTS, 1931
Mr. FERLAND:: 1.	What were the imports to Canada in 1931, from the following continents: Europe, Asia, Africa, Oceania, South America, and the United States?
2.	What were the exports of Canada during the same period, to said continents?
41761-U8J


Mr. STEVENS:: 1.	Canada's imports from the continents of Europe, Asia, Africa, Oceania, South America, and the United States, for the calendar year 1931, were:
Imports from-
Europe	$ 162,085,527
Asia	 19,559,668
Africa	 6,698,970
Oceania	 10,941,346
South America	 17,400,330
United States	 393,775,829
2.	Canada's domestic exports to the continents of Europe, Asia, Africa, Oceania, South America, and the United States, for the calendar year 1931, were:
Domestic exports to-
Europe	$ 251,885.183
Asia	 29,586,109
Africa	 12,368,431
Oceania	 10,278,041
South America	 10,167,169
United States	 257,078,170


CHAMBLY CANAL SUPERINTENDENT
Mr. GOULET:: 1.	Was the former superintendent Mr. Robitaille, of the Chambly canal, dismissed?
2.	If so, why?
3.	If he tendered his resignation, what was the reason?
4.	What was the age, occupation, and where was the residence of Mr. Cantin when he was appointed as superintendent?
5.	Was he then an employee of the government?
6.	If so, since what date and what was his occupation?


Mr. MANION:: 1.	No.
2.	Answered by No. 1.
3.	Answered by No. 1.
4.	Age, 51 years; occupation, acting superintendent, Chambly canal; residence, Chambly Basin.
5.	Yes; temporary employee.
6.	Since March 1, 1931, as acting superintendent, Chambly canal.


SPECLAL COMMITTEES
Mr. POULIOT:: 1.	What were the special committees:	(a)
of the House of Commons; (b) of the Senate during the session of 1931?
2.	What are the special committees: (a) of the House of Commons: (b) of the Senate for the present session (1932) ?
Questions


Pierre Édouard Blondin: Question 32 will be struck out. Information regarding the Senate should not be asked in this house. The hon. member can himself get the information from the records of the Senate.


GEDEON GRAVEL-EUGENE DUSSAULT
Mr. POULIOT:: 1.	What are the positions of and what duties are performed by Mr. Gedeon Gravel, in the city of Montreal, and Eugene Dussault in the city of Quebec, in connection with any department of the federal government?
2.	On whose recommendation were each of them appointed, and at what date?
3.	Why were they appointed?
4.	What is the salary of each of them?
5.	Are there, outside of the province of Quebec, federal government employees who perform such work?
6.	If so: (a) what are their names; and (b) in what provinces?


Mr. GORDON:: 1.	Messrs. Gedeon Gravel and Eugene Dussault are assistants to the Dominion Director of Unemployment Relief, Department of Labour. Copy of instructions issued to assistants to Dominion Director of Unemployment Relief is attached hereto.
2.	Both were appointed November 5, 1931, the appointments being recommended by the Minister of Labour.
3.	To carry out the instructions as set forth in the answer to No. 1.
4.	$225 per month.
5.	Yes.
6.	(a) P. L. Spicer, Lt.-Col. G. C. MacLean, Lt.-Col. J. B. Harstone, M. H. McGeough; (b) Nova Scotia, Manitoba, Alberta, British Columbia.
General instructions Staff
1.	No appointments can be made except by order in council.
Supplies
2.	Requisition for supplies needed should be forwarded to this office.
Rent of premises
3.	No premises may be rented except on authorization from this office.
Provincial reports
4.	Statistics and expenditure reports are received at Ottawa from province. Specimens of forms used will be furnished to you. Assistant to director will be called upon to secure any special reports from provincial authorities when necessary.

Cost of administration
5.	No portion of provincial or municipal administration charges may be paid (See general regulations P.C. 2043, clause 13).
Expenses
6.	All expenses for travelling must be approved by assistant to director for province and all expenditures over $2 covered by voucher. In the case of hotel expenses the statement of account issued by hotel to be attached.
Weekly report of localities visited
7.	A weekly report is required showing projects visited.
Correspondence
8.	Correspondence should be brief as possible.
Deductions
9.	Deductions from wages of workers are not allowed for any reason whatever, except in the case where the worker is engaged in camps at a specific rate of pay and a certain deduction is to be made for board. No amounts for taxes may be deducted from the worker's pay. Municipal authorities must pay the workers, in full, amount of wages due them for their work.
Percentage of labour to total cost of works
12.	Note clause 14 of dominion-province agreement, "of the amounts expended pursuant to provisions of clauses 6, 8, 9 and 10 hereof not less than forty per centum thereof shall be expended for labour unless a modification of this requirement is previously agreed to by the Minister of Labour."
Press comments
13.	Any articles appearing in the local press adversely criticizing the administration of the unemployment relief should be investigated when practical with a view to establishing the accuracy, or otherwise, of such statements, and steps should be taken to rectify any failure to comply with regulations.
Complaints
14.	In taking action on complaints referred to you, effect an adjustment if possible.
Relief camp conditions
15.	If relief camps are not properly organized as to housing, board, sanitary conditions, etc., direct the attention of the proper authorities to the matter.

Questions as Orders jor Returns
Correspondence
16.	Forward to this office copies of all communications addressed by you to provincial or municipal authorities. Address communications to "Dominion Director of Unemployment Relief, Department of Labour, Ottawa."
Direct relief
17.	See that only such relief be given as is specified in general regulations P.C. 2043, when said relief is being contributed to from federal funds.
List of approved works
18.	Lists of works approved under the agreement with province will be furnished to you. If you find any works being carried on to which it is proposed that the federal government should contribute, other than those appearing on the lists sent you, advise the dominion unemployment relief branch, Department of Labour, Ottawa.
Memorandum for field representatives of
Dominion Unemployment Relief Branch
Cooperation with provincial authorities
1.	Officials of the dominion unemployment relief branch will cooperate with the provincial authorities to the end that the need of the unemployed is relieved.
Technical detail covering projects
2.	Technical details of construction of projects are under the control of provincial and municipal authorities, or, in the case of federal projects, the appropriate department of the Dominion government.
Employment selection
3.	Duties should include protecting federal interests along the lines of seeing that those in need are given employment regardless of race, religion or political affiliation.
Employment service of Canada
4.	The employment service of Canada should be used wherever possible as medium for hiring labour.
Returned soldiers
5.	At least 10 per cent of men employed should be returned soldiers if available.
Married men
6.	It is preferable that married men or single men with dependents be given preference on work where they reside.
Elimination of case not in need
7.	On investigation if it is found that men not in need are employed, or men are not properly employed according to regulations,
such cases should be followed up with proper authorities with a view to correcting condition.
Hours
8.	The maximum day is eight hours, unless otherwise previously approved by the Minister of Labour.
Wages
9.	See that the wages as set forth and authorized by the province or municipality are being paid and that clause 8 of general regulations, P. C. 2043, is respected.
Deductions for board
10.	See that deductions for board (or medical treatment in relief camps) is according to provincial regulations.
Transportation
11.	A memorandum is being sent you setting forth the arrangements for reduced transportation charges for workers going to relief work.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. YENIOT:: What firms sold supplies to Department of Indian Affairs for the Indian reservations in New Brunswick in 1930 and in 1931?


MILITARY EQUIPMENT PURCHASES
Mr. DORICN:: 1.	From 1921 to August, 1930, did Canada purchase from other countries, arms, ammunition, and other military equipments?
2.	If so: (a) on what dates; (b) from what countries; (c) for what amounts; (d) what quantities as to arms, ammunition and equipments; (e) what was the total cost as to arms, ammunition and equipments?


ST. JOHNS, QUE., MILITARY SCHOOL
Mr. RHEAUME:: 1.	What is the number of officers attached to the military school at St. Johns, Quebec?
2.	What is the rank of each, respectively?
3.	What	is	the	monthly	salary	of	each,
respectively ?
4.	How many privates are there in the service at said military school?
5.	What	is	the	monthly	salary	of	each,
respectively?
6.	How many horses are in the service of said military school?
7.	What are the names of the purveyors, and their place of business, who supply said military sehool with the following articles: coal, wood, groceries, ice, meat, vegetables, bread, milk, medicines, hay, grain, straw, and what quantity, and at what price were each of said articles supplied to the military school by these purveyors, from January 1, 1931, to April 1, 1932?

Unopposed Motions jor Papers


UNEMPLOYMENT AND FARM RELIEF
Charles-Édouard Ferland: What amounts were expended in the provinces of Quebec and Ontario to assist the farmers, pursuant to the act embodied in chapter 58 of the Statutes of Canada, 1931, unemployment and farm relief?


UNOPPOSED MOTIONS FOR PAPERS
Mr. GARDINER:: For a copy of all correspondence, telegrams, and other documents, passing between the federal government or any department thereof and the provieial government of Alberta or any department thereof, in relation to unemployment and farm relief.


Richard Bedford Bennett: There should be some date stated within which this is to apply.


Robert Gardiner: Since the first of August last will be satisfactory.


Richard Bedford Bennett: Since the first of August, 1931.
Motion as amended agreed to.


POINT TUPPER, I.0UISDALE, POULEAMOND AND L'ARDOISE, N.S., WHARVES
Mr. DUFF:: For a copy of all papers, correspondence, reports and paysheets, giving in detail the name of each person employed and the amounts paid for labour as well as the amounts paid for material, and the names of the persons from whom it was purchased, in connection with the building of wharves at Point Tupper, and at Louisdale, Nova Scotia; and also the same information w'ith regard to repairs or extensions to wharf at Pouleamond, Nova Scotia; and also the same information regarding the extension or repairs of breakwater at L'Ardoise, Nova Scotia.


JOLIETTE, QUE., ARMOURY
[Stage Direction]
Mr. FERLAND;
For a copy of all correspondence, contracts, telegrams, publications and tenders, in connection with the work done on the Joliette armoury, in 1930, first contracted by Alphonse Durand and finished later by another contractor.

Charles-Édouard Ferland: For a copy of all correspondence, telegrams, Instructions, orders issued by the government or Post Office Department, in 1930, and all other documents in connection with the establishment of a letter-carrier service in the city of Joliette, including reports by the Civil Service Commission, the procedure of the latter, examinations, eligible list of the postmen in Joliette, and a list of articles which were forwarded to Joliette to organize the service of letter carriers.


WEST BACCARO, N.S., BREAKWATER
Mr. RALSTON:: For a return showing the tenders and quotations received for logs, iron and other material in connection with the expenditures of moneys in connection with the repairs of the breakwater at West Baccaro under the vote provided in the estimates of 1931-32 or under the Unemployment and Farm Relief Act of 1931, and a copy of all vouchers, accounts, bills, memoranda, papers or other documents in connection with procuring quotations or tenders and with the purchase of such logs, iron or other materials.


LOCKEPORT, N.S., PREVENTIVE OFFICE
James Layton Ralston: For a copy of all documents, letters, telegrams, reports, correspondence, and other papers containing any entry or relative in any way to the dispensing with the services of A. L. Peterson, as preventive officer at Lockeport, Nova Scotia, in the fall of 1931.


JANSEN, SASK., POST MASTERS HIP
Mr. TOTZKE:: For a copy of all correspondence, reports, evidence, petitions, and other documents, in connection with the dismissal of Ernest J. Symons, postmaster at Jansen, Saskatchewan, and the appointment of his successor.


SEED GRAIN-MANITOBA
[Stage Direction]
On the orders of the day:
Mr. J. L. BROWN (Lisgar):: May I ask
the Minister of the Interior (Mr. Murphy) if he is in a position to furnish the information we asked for last week when his estimates were before the house with regard to seed grain furnished to the farmers of Manitoba?


Hon. T. G. MURPHY (Minister of the Interior):: Yes, Mr. Speaker, the information
will be ready in the course of a day or so.


CANADIAN NATIONAL RAILWAYS
[Stage Direction]
On the orders of the day:
Mr. J. P. HOWDEN (St. Boniface):: I
desire to bring to the attention of the Minister of Railways a message which I have received with respect to the Transcona shops situated in my constituency. The message is as follows:
We the undersigned committee were instructed to forward to you the following resolution:
_ Whereas the shop employees of the Canadian National Railways at Transcona and Fort Rouge in mass meeting assembled, April 8th,

Insurance Tax
called to discuss the serious situation brought about by the threatened reduction of around 1,157 men, are determined to resist to their utmost any reduction in staff:
Therefore be it resolved that this mass meeting wire Premier Bennett, the Minister of Railways, the Minister of Labour, Sir Henry Thornton, and all Manitoba members of parliament, demanding the cancellation of the proposed reduction, and further demanding the establishment of the six-hour day, five days a week, in order to divide the work available amongst the present staff, and that we further desire them to understand that the officers of Division No. 4, who, without our vote or voice, put over both the wage reduction and the threatened reduction in staff, do not represent the shop employees of western Canada.
(Sgd.) W. Bain,
T. Mullock,
H. Walker,
W. McCallum,
Committee elected by mass meeting.
The question I wish to direct to the government is whether this matter is being taken into consideration and whether we may expect a statement in response to this communication.


Hon. R. J. MANION (Minister of Railways and Canals):: This matter has been brought
up in the house at least half a dozen times by other members in whose constituencies shops are affected, and I have stated on every occasion that the matter has been taken up by the government, through myself, with the management in an effort to have the number laid off as small as possible. The management claim that they have done this and that they are laying off really only about half the number that was originally intended, because of the fact that they succeeded in getting the representatives of the men to cut down the number of hours per week worked by each man, so that they spread out work over more men. I think since Saturday there has been a committee of the management from Montreal dealing with the question in Winnipeg, and I heard indirectly, though it is absolutely unofficial,, that they had come to some better understanding, though I am quite sure it will not be satisfactory to all the men, because the management claim they have a great many men for whom they cannot possibly find work. They take the attitude, naturally enough, that under present financial conditions they should not be expected to keep men for whom they have no work.
The government have done everything possible to have the work spread out, but the matter is entirely in the hands of the management. I have been asked by the hon. member for St. Ann (Mr. Sullivan) and by the hon. member for Westmorland (Mr. Price) in regard to the shops in their constituencies. All
the shops in the country are affected, but I am quite sure the management are doing' everything possible to make it as easy as they can for the men.


UNEMPLOYMENT AND FARM RELIEF
[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: I would like
to ask the Prime Minister if he is in a position to make a statement with regard to the conference of Saturday last with the premiers of the provinces, or if not, if he could indicate when such a statement might be made.


Richard Bedford Bennett: I do not propose to make a
statement now, but at an appropriate time, when the resolution providing for additional legislation is before the house, a statement will be made.


INSURANCE TAX
[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: I should like to ask the government if its attention has been directed to the following communication which appears in the Ottawa Journal of to-day, and which is a Canadian Press despatch by direct wire from Toronto, dated April 10:
The Dominion government has decided to withdraw the proposed 15 per cent tax upon gross premiums paid by Canadian policyholders in British and foreign insurance companies, Colonel W. H. Price, Ontario Attorney General, said to-night.
Colonel Price made the announcement on his return from Saturday's parley between the Dominion government and officials of the nine provincial governments.
I should like to ask if that statement indicates the intention of the government and, if it does, whether in the opinion of the government an announcement of that kind should not have been made in the House of Commons before it was made in any other quarter?


Hon. E. N. RHODES (Minister of Finance) :: I may say that it is news to me as to what is to be the attitude of the government with regard to this particular question. I can assure my right hon. friend that if there is any question of amending the proposed resolutions that action will be first brought to the attention of the house, which of course, is the proper procedure.


Mr. STEWART (Edmonton):: Another
newspaper gone wrong.
The Budget-Mr. Ralston


Richard Bedford Bennett: It will be noticed that nobody connected with the government made any statement with respect to it. No one connected with the administration made any statement; it was made by somebody else. In the same way, with respect to the conference itself, if there is anything to ibe said, it will be said in the house.


CANADIAN NATIONAL RAILWAYS
[Stage Direction]
On the orders of the day:
Mr. A. E. MacLEAN (Prince):: I wish to ask a question of the Minister of Railways. According to newspaper reports and a telegram I have received, with respect to the new time table for the Prince Edward Island railway, the second trip of the car ferry makes provision for passengers only as far as Summerside; no provision is made to carry them through, west. The same applies to the return trip in the morning; there is no connection west of Summerside with the first trip of the boat. This early connection was established to take care of the express shipment of live lobsters from that point as well as to accommodate passenger traffic. I would ask the Minister of Railways to bring this matter to the attention of the management in order that the same service that has been given for the past three or four years may be continued.


Robert James Manion: As the hon. gentleman implies, this is a matter for the management. However, I shall gladly direct his remarks to their attention.


THE BUDGET
[Stage Direction]
The house resumed from Wednesday, April Z, consideration of the motion of Hon. E. N. Rhodes (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
James Layton Ralston: At the very outset, Mr. Speaker, I wish to extend to my hon. friend the Minister of Finance (Mr. Rhodes) my sincere congratulations on his attainment to the very important portfolio which he now holds. I also congratulate him upon what I may term the businesslike budget statement which he has presented to the house. That does not mean that there is not in that statement a good deal which I shall have to criticize. At the same time I do believe that the country

will recognize in the hon. gentleman's budget generally a businesslike statement and one which succinctly sets out the position of the dominion as my hon. friend sees it.
It is somewhat unique that the hon. gentleman who moves the house into ways and means and the individual selected to reply should happen to be fellow townsmen. This, I suppose, is possibly a circumstance that does not happen in a lifetime. I want to say to and of my hon. friend that he and I have been personal friends for a good many years; as a matter of fact, Mr. Speaker, I sometimes make the boast, or perhaps I should say the confession, that I am responsible for the hon. gentleman's entry into public life. Some twenty-four years ago he and I ran an election and I permitted him to get the most votes. Judging, however, by the situation in which he found himself the other day, I doubt whether it would not have been distinctly to his advantage had I insisted on defeating him on that occasion. He and I have never expected nor given very much quarter in political life so far as public records or affairs were concerned; and while I shall criticize, and I must say condemn in unmeasured terms, some of the matters to which he has referred, at the same time that shall not interfere with the warm personal friendship we have, nor with my regard for him as a distinguished Nova Scotian who has attained a high and important place in the councils of his party. My hon. friend has delivered what is supposed to be a resume of the achievements of the government and of his party in matters which more closely affect the lives of Canadian citizens than any other, . namely, the country's financial condition. I have heard of colourless budgets, and I want to say -and everyone who heard the budget or who has read it will, I think, agree with me in this-that this was no colourless budget; if any budget was ever a deep indigo it was the budget delivered by my hon. friend a few days ago. My hon. friend, as a competent advocate, endeavoured to extract some crumbs of comfort for the benefit of his followers in the house, and I was amused to observe the three occasions on which any applause was given his statement, except such as was vouchsafed him at the beginning and at the end. It was interesting to note the points on which the applause was given.
My hon. friend made some statement like this: that Canada had reason to look back with satisfaction on the past year in view of the fact that all external debts had been met. There was some faint applause from my hon. friends opposite, following this statement. But let me ask you, Mr. Speaker: Have we ever

The Budget-Mr. Ralston
had to boast in this country about Canada having met her debts, either domestic, or external? Is there any particular reason for gratification that this country, with its resources, has at least been able to meet her external debts at this time? Is not the hon. gentleman's statement one which would rather create the apprehension that possibly we might not have been in the best position to meet our external debts?
I would point out to the house and to my hon. friend, who already knows, just how Canada did meet her external debts. Canada had $25,000,000 falling due on April 1 last, and paid that $25,000,000 in New York in cash. But what did she pay it out of? She paid it out of $100,000,000 borrowed the year before, $25,000,000 of which was set aside for the purpose of paying that loan. Canada also met $52,000,000 in, I believe, November last. How did she meet that? My hon. friend's budget statement shows that it was met in this way. It was met by refinancing seventy per cent of it under the conversion loan; which means that about, $39,000,000 was taken up and replaced by long term loans, twenty-five year bonds, under the provisions of the conversion loan-not paid off, mark you. What was done with the balance? What was done in connection with the balance of $13,000,000 almost sounds like shoestring financing. That $13,000,000 was offered by tender to the public; $4,500,000 was all that was subscribed of that loan, the balance having to be finally paid out of the national service loan'-another loan and another borrowing. I ask whether or not there was particular reason for applause on that statement from the Minister of Finance, which was one of the three points on which my hon. friend was applauded.
But I want to compare with that the record of the immediate predecessor, not of my hon. friend but of the government now in office. On August 1, 1929, there was due $60,000,000 on a loan. Was it paid by a conversion loan? Was it paid by a new national service loan? Did we have to ask for new tenders for a loan? That $60,000,000 was paid by the late Hon. James A. Robb, then Minister of Finance, out of the revenues of the country and was thus retired. That was the way loans were retired then. On February 1, 1930, there was an amount of $20,000,000 falling due. That $20,000,000 also was paid out of revenue; it was not financed by pushing it along twenty-five years or by putting a portion of it up for tender or having it paid for out of some other loan which had to be made; it was financed out of the revenues of this country and even after that was done, a surplus was shown.
My hon. friends may say that those were different times, but what about England? England borrowed $200,000,000 from the United States which was to fall due next August. Sometime early in March, or at least six months before that loan was due, $150,000,000 was paid back to the United States out of revenues which were raised under the British budget. I do not think there is very much to boast of in connection with the fact that so far our external debts have been met.
To what else did my hon. friend refer? What other bright spot did he find for his friends in his budget? I noticed he spoke of the conversion loan, which was mentioned also last year by the right hon. the Prime Minister (Mr. Bennett), when making his budget speech. At that time it was not a part of the financial record of the particular year which he was covering but he very properly mentioned it as it had taken place before his budget speech was delivered. My hon. friend mentioned it as being a part of the record of the financial transactions of the year which he was covering, and he pointed out that there would be a substantial saving in interest as a result of the financing which had been done by this government in connection with the conversion loan. I remember the applause which greeted his announcement that in 1935 there would be a saving in annual interest of $6,000,000 and I could not help wondering at the capacity of hon. friends opposite for being thankful for small mercies. If they had cast their minds back over a few years they would not have found much reason for congratulation in that statement. This conversion loan has been talked of a good deal, and I shall mention it further in a moment. In connection with this particular feature, let me remind the house and let me remind this country, if I may, that during the last five years of the Liberal regime $257,000,000 of the funded debt of this country was paid and this country was saved about $12,500,000 per year in interest. That amount was not saved by putting out a conversion loan for future generations to pay, it was saved by the simple expedient of paying off principal. That is a record which my hon. friends might emulate but unfortunately they have not been able to do so. They have already obliterated the debt reduction which was made under the previous administration by the increase which has taken place in the public debt since the present government took office.
While I am dealing with the conversion loan I shall mention another matter brought up by my hon. friend. I said that, generally speaking, his statement was businesslike, and it was,
The Budget-Mr. Ralston

but I think my hon. friend's hand slipped a little when he was writing the paragraph in connection with the conversion loan. Let me read his statement, which is as follows:
The time for this conversion loan was admirably chosen. Its execution was attended with outstanding success, and its effect upon our financial position has been marked. That this is so is due entirely to the vision of the Prime Minister whose conception it was and under whose guidance it was conducted.


Some hon. MEMBERS:: Hear, hear.


James Layton Ralston: The Budget-Mr. Ralston	,
the estimated revenues of 1931-32. I shall read just the last column:
Estimated Eevenues 1931-32
Customs duties	$ 122,000,000
Excise duties	 59,500,000
Excise taxes	 99,000,000
Income tax	 63,500,000
Post office	 32,675,000
Interest on investments..	..	8,800,000Miscellaneous	revenue	
13,776,000Total	$ 399,251,000
German reparation payment
and miscellaneous receipts.. 4,044,000

Then he goes on:
With estimated expenditures of $410,273,000 exclusive of expenditures on capital account and advances to Quebec Harbour Commission, but including the balance of $13,000,000 of the unemployment relief appropriation of 1930 and estimated revenues of $403,295,000, the deficiency in revenues under expenditures, based upon the estimates made, will be some $7,000,000.
But this is interesting:
The $13,000,000 for unemployment relief is a commitment actually made in 1930-31, and would more properly be considered in the accounts of last year, but under the government's system of book-keeping, the actual disbursements not being made until this year due to the time necessary for the usual accounting formalities, they serve to add to the expenditures of the present year.
Now:
Taking -this into consideration, the figures presented indicate a balancing of the budget by a substantial margin in respect of expenditures properly applicable to 1931-32, after excluding capital.
Let us examine into this. His total estimated revenue was $404,295,000. In order to
arrive at the taxation revenue, I deduct from that Post Office, $32,675,000; interest on investments, $8,800,000; miscellaneous revenue, $13,776,000, and German reparation payment and miscellaneous receipts, $4,044,000, or a total of $59,295,000, and I find that the taxation revenue which my right hon. friend estimated for in his budget was $345,000,000. I want to compare that with the statement made by the present Minister of Finance as reported on unrevised Hansard of this year at page 1897. My hon. friend shows there, in the annual statement of taxation revenues, that the amount of $273,348,000 was received in 1931-32. In other words, -my right hon. friend the Prime Minister was out in that budget he made-and in respect of which the principles of responsible government were going down to defeat if he did not carry them out-he is out the amount of $71,652,000. My right hon. friend also

claimed it would be a balanced budget. I shall direct my remarks to that in a minute.
Then in order that I may do no injustice, I wish to -compare his estimate of all revenues. So far I have dealt only with taxation revenues. His estimate of all revenues as contained in the 1931 Hansard at page 2169 is $404,295,000. At page 1898 of unrevised Hansard for the present session we find that the estimated revenue received for the year 1931-32 is $334,741,000. In other words the difference between the estimate made last year of the revenue and the revenue realized is $68,554,000. I mention that now, and I think we are entitled to bring the -fact sharply to the Prime Minister's attention, in view of the fact that he has indulged in a great deal of criticism, -condemnation and almost contempt with regard to the way in which previous Ministers of Finance have brought down their budgets. He has said time and again-and I notice in another ddbate he made this particular reference-that it is the essence of responsible government that these things should appear in the budget speech. He has tried it, and I want to .ask this house with all due respect whether it is better to have a budget without an estimate as to future revenue, and at the same time have it come out on the right side of the balance sheet, or to have a budget with estimates which is $70,000,000 out of line.
I shall deal with a few individual inconsistencies. My right hon. friend figured that customs duties would produce $122,000,000. According to the figure of my hon. friend the present Minister of Finance, customs duties produced only $102,891,000. In other words, my right hon. friend was out about $20,000,000 on that item alone. Remember, Mr. Speaker, these were customs duties which were estimated on the basis of business continuing as it actually was at that time. He was boasting about making an estimate. All he had to do was simply to have a clerk in his office figure out the amount of moneys that had been brought in in that particular year, and then figure the same amount of business but applying the new rate. No magic wand had to be exercised to make this estimate. The thing that needed judgment, a judgment which my right hon. friend seemed to lack, was to forecast business conditions for this year, and to know whether or not the same amount of imports would come in as came in last year. That is where he lamentably failed. That is in reference to customs.
With regard to excise duties he estimated that we would receive $59,500,000.	As a
matter of fact there was collected only

The Budget-Mr. Ralston
$48,688,000. I find more difficulty with regard to the sales tax. His estimate combines two figures. First he takes the figure of $38,000000 which he shows opposite excise taxes on his statement of revenues collected for the year 1930-31, plus $52,500,000 which he shows as estimated increase in sales tax, making a total of $90,000,000 estimated revenue from sales tax. That is, of course, if the first item refers to sales tax alone. Actually there was collected for sales tax instead of $90,000,000 only $41,271,000. That means of course that the trade of this country has gone down, and at a later time I will deal more at length with that point. I should like my right hon. friend to remember that there is one of the best examples of the condition of domestic as well as import trade in this country. We find that the receipts from sales taxes drop off nearly 50 per cent, when the rate was increased from one per cent to four per cent. In other words there was an increase in rate of 400 per cent. With regard to the income tax my right hon. friend might have said this, in explanation, "Well, I made that estimate expecting the income tax would produce'very much more than it did, because of the fact that I proposed to increase the income tax." Strangely enough however he is deprived of even that comfort, because after having left the income tax at its old rate and not having increased it, he collected practically as much last year as he estimated under the new rate. So he gets no comfort from that at all.
And then we find that he was about a million dollars out in his estimate in connection with the Post Office Department. Let me point out that he estimated there would be an increase in post office revenue of about $2,175,000. How was that post office revenue going to be produced? It was going to be produced by the increased revenue derived from the additional one cent tax on letters. What happened was that the receipts fell off to the extent of about a million dollars, or more accurately, about $900,000. In other words, about $900,000 less of one cent stamps were sold than my right hon. friend expected. The trade which used the post office had fallen off under the regime of my right hon. friend.
Let us survey the expenditures. First, I should like to give my right hon. friend credit; he was not very far out in connection with his expenditures. What was the situation? He is only $25,000,000 out, and that may be explained-and I am willing to give him the benefit of the doubt-that may be explained by the fact that there was an expenditure of $25,000,000 in connection with unemployment relief. The expenditures which he estimated were $410,273,000. The expenditures which were made were $454,246,000. Then we should add to his estimates the capital account, which he did not include, of $18,484,000, and for the Quebec harbour commission $1,700,000, making a total of $430,457,000, leaving an increase over his estimated expenditure of $23,786,000. As I say, $25,000,000 was spent on unemployment relief. I think my hon. friend the Minister of Finance said he actually included the $25,000,000 expenditure in last year's statement.
But what is the sum total of it all? The situation is this: My right hon. friend intimated in the statement which I have read that the figures indicated a balancing of the budget by a substantial margin, in respect of expenditures particularly applicable to the year 1931-32. Let us see how near he came to balancing his budget. The actual expenditures were $454,246,000. We will take from that the $13,000,000 for unemployment relief, leaving $441,000,000. We will take off another S25,000,000 for unemployment relief which he says he did not count on, leaving $416,000,000. The actual revenue which was to balance that budget, according to my right hon. friend, was not $416,000,000, but $334,000,000, or a shortage of $81,000,000. That is what my right hon. friend regarded as a balanced budget. I am mentioning these facts because I hope he will not again in this house throw slurs with regard to people who do not make estimates concerning their budgets. People who live in glass houses should not throw stones. I put these facts on record so my right hon. friend will find that it is possible even for him to make mistakes with regard to estimates, and to present to the country a statement which is entirely misleading, as the facts actually show when the time for reckoning arrives.
I should like to make comment on my right hon. friend's remark about this being a budget. " Now " he infers, " We are going to present a budget what is a budget"-as the Irishman says. In the light of the facts it would seem that this budget is a good deal more like a bedtime story than it is like any statement of facts upon which we could depend, or a real estimate showing the country's financial condition. Because, after all in his remarks on the revenue items of the budget his emphasis was on the ability to make predictions,' and in those predictions he has entirely failed. Let me read an extract from the remarks of a gentleman who, my hon. friends will agree, is an authority in financial matters, the remarks of a gentleman in whom my right hon. friend
The Budget-Mr. Ralston

the Prime Minister will perhaps place some credence. They are:
The Chancellor of the Exchequer, in delivering his budget address in the British parliament, is always held to the strictest account to the extent to which he has been able to realize his expectations; and the extent to which his representations agree with the facts of the year under review.
Those words are found in Hansard of March 13, 1928, at page 1244, and they are the words of the Hon. R. B. Bennett when leader of His Majesty's loyal opposition.
On this point last session I said to my right hon. friend:
Now let me say a word more with regard to my hon. friend's boast in regard to his budget. He boasts that this is a budget, and I presume he pledges himself to the estimate which he has made as being a fair forecast of what is going to take place with regard to financial operations this year. My hon. friend quotes scripture in this house occasionally, and I want to remind him of this scriptural injunction:
Let not him that girdeth on his harness boast himself as he that putteth it off.
Let us wait until next year and see whether or not his predictions with regard to revenue and expenditure will come true. I wish I could believe that his forecast is correct, and that only to the extent for which he has budgeted the revenues would be reduced, but I am afraid that will not be so. I warn him that people on this side of the house, and not only here but throughout the country generally, are very much concerned as to the situation in Canada and as to the policies which he has adopted towards our trade.
My right hon. friend has girded on the harness and he has put it off, and my hon. friend the Minister of Finance (Mr. Rhodes) is now taking the load of that office. I respectfully suggest that my right hon. friend cannot rid himself of the responsibility which he undertook last year when he criticized the budgets presented by his predecessors, neither can he escape responsibility for the forecast which he made on that occasion, and in view of what has actually happened since then I think it will -be agreed that if what he presented really was a budget, he has not handed over the portfolio to the present minister a day too soon.
My right hon. friend the Prime Minister has had a number of hobbies in his time-stabilization of economic conditions was one of his hobbies upon which he expressed himself very emphatically during the election; "blasting" as a trade policy was another hobby; "balancing the budget" was yet another, and he was also fond -of expatiating on maintaining the balance of trade. There must 'be no mistake in the house or in the country that this budget is not a balanced budget. Some of our newspapers seem to have an idea that the budget has been 
balanced. Let me point out that my hon. friend was very careful in thait respect. He was rather adroit, but he was quite frank when he said that 'balancing the budget would extend to the "usual current governmental services"; ithait was as far as he thought we should go. He added ithaJt as to financing, the Canadian National Railways and unemployment relief would have to be left to take care of themselves. He admits that the estimated expenditures do not cover the figures for unemployment relief or our indirect liabilities with respect to the Canadian National Railways. I do not find any fault with him in regard to the latter liabilities 'because this financing has been dealt with separately since 1922; but in regard to unemployment relief, I submit after the experience we have had during the last two years a halt should be called in rolling up like _ a snowball the debt of this country in connection with current expenses which are incurred by reason of the default of my hon. friends opposite to fulfil their election promises. They promised to end unemployment.


Some hon. MEMBERS:: Didn't they do
it?	'


James Layton Ralston: They promised work for
all who were willing to work. They have not been able to make good those promises, and I am going to point out some of the reasons for their failure. I submit the reason why this budget is not balanced to-day is that my hon. friend the Minister of Finance-as a member of the government, not personally- has not the courage to face the people and endure the criticism he knows would be levelled at him if he imposed the taxes that are necessary in order to balance the budget. That is the situation, and the country might just as well understand it. Some people are saying of this budget, "Well, it might be worse." It might be, and the question is whether it should not have been worse if the government had done its duty. The government is throwing over to future generations the obligations for unemployment relief, which after all, is a current obligation-just as they did with regard to war expenditures, when they never levied a dollar's taxation to take care of those expenditures. I do not believe my hon. friend has done his duty in his first budget speech when he has not let the people know the exact position into which he and his government have driven this country-and the only way the people can know it is by paying taxes.
If my bon, friend expects there will have to be $25,000,000 spent for unemployment relief

The Budget-Mr. Ralston
this year, it would take another five per cent excise tax on imports in order to cover just that expenditure alone. You will understand now, Mr. Speaker, why my hon. friend does not put on that taxation. There would be different comment in the press if he had imposed that taxation. This talk about the budget "not being so bad" would have vanished into thin air, for the people would have realized who are in power and into what position the country was being led. There is not in this budget anything in regard to the wheat bonus. There is no announcement of the government's policy in regard to this matter. Nothing has been suggested in regard to a bonus to the fishermen, although a strong delegation met the cabinet a few weeks ago urging assistance along the same lines as the bonus to the wheat producers of the west. There is no provision whatever for additional subventions in connection with coal, although my friend the acting Minister of Mines (Mr. Gordon) says the government are considering the matter. I submit that these matters should be in the budget, and we should know what we are going to spend this year, instead of just having the usual government services provided for, but these other expenditures left out entirely and will not be dealt with until probably just before the close of the session. So I submit my hon. friend the Minister of Finance has not done properly by the country, or perhaps by himself, in leaving these matters on one side and not making in his budget the provision that was necessary for them. He should have taken the house into his confidence with regard to all the expenditures which will have to be made, for after all these expenditures involve taxation.
With regard to unemployment relief, I find a great deal of difficulty-no doubt my own fault-in understanding exactly what commitments have been made. My hon. friend was good enough to instruct his officers to give me all the information possible, and I desire to express my appreciation of his courtesy, but I did not know of that until Friday or Saturday morning, and it was only this morning that I was able to get together some of the data I desired. I have not had an opportunity to digest some of the information in regard to unemployment relief. The information which I get from the budget speech does not seem to correspond with the information which wlas given by the Minister of Labour or the right hon. Prime Minister as to the commitments of the federal and provincial governments in regard to this matter. I am simply going to take the statements which have already been made in this
house. By and large it has been said that the government has become responsible, either by way of contribution to the provinces and the municipalities or directly by way of dominion public works or for direct relief for about $50,000,000; the provincial and municipal authorities and the railways have become responsible for $90,000,000-a total of $146,000,000.
I deprecate this practice which has grown up whereby the federal government is loaning to the provinces certain amounts of money, and to some extent making the provincial subservient to the federal authority. I say the thing which should take place is a reconstruction of the financial relationship between the provinces and the dominion, so that the provinces will be supreme in their own sphere and the federal government supreme in its sphere. This idea of swapping cheques between the provinces and the dominion is not good for either party; when you find that $11,000,000 of the national service loan has been invested in treasury bills of one of the provinces and when you find that there is a l'oan of $22,000,000 on the books, it seems to me to indicate a state of affairs that is not good for our country if we want to maintain our constitutional relations, and it is not going to be good for the autonomy of the provinces either. Therefore I say there should be some adjustment and settlement of this matter. This conference which was held last Saturday should have been held long ago in order to make that adjustment and in order that this position of debtor and creditor, this position of subserviency of the provinces to the dominion, should not be set up as it appears in the public accounts to-day.
I leave it at that for the moment, and my other point is this: If the amount I have given is correct-and no matter if the amount should be reduced the principle still applies-it seems to me apparent that this system of affording unemployment relief by forcing the provinces and the municipalities to pledge their credit is basically wrong and is going to lead to financial disaster in this country. For two years my friends opposite have been working on the problem of unemployment relief. They promised to relieve unemployment, and in September of 1930 they brought down their $20,000,000 legislation. It was expected that in February or March of 1931 they would have a definite policy, but they came here and asked for the blank cheque and for full power, and they were given what they asked1. They came again this year with no policy and asked for a makeshift renewal for one month. I say to you, Mr. Speaker, that a proper policy to
The Budget-Mr. Ralston

develop employment, which hon. members opposite promised, is long overdue; this situation whereby between the federal, the provincial and the municipal authorities the country has been plunged into debt to the extent of $140,000,000, is something which will be laid at the doors of my hon. friends opposite because of their lack of a policy and their lack of courage to deal with the matter.
My hon. friend omitted from his budget some items which have appeared in the past. One item to which I refer particularly is a comparison of the debt from year to year. My hon. friend said that the net debt of the country had been increased by $119,500,000. I did not hear any applause from either side of the house, but I took occasion to compare the statement of the funded debt of this country, as it appears in my hon. friend's budget statement, with the statement of the funded debt of this country which appeared in the budget statement of the right hon. Prime Minister a year ago, when he was Minister of Finance. I find quite a difference in the figures. On March 31, 1931, the unmatured public debt represented by bond issues on which the Dominion of Canada was directly responsible was $2,319,196,847.39. That appears in the speech of the present Prime Minister at page 2328 of unrevised Hansard for 1931. According to the statement of my hon. friend the Minister of Finance, the unmatured public debt of this country as on March 31 this year amounts to $2,501,782,733.23, so there is a net increase of $182,585,885.84, which is rather different from $119,500,000. I asked the Department of Finance for, and was furnished with, a reconciliation of those figures. I just received it before luncheon and I do not have it under my hand at the moment, but I think I can give most of the items. The reconciliation showed that something like $41,000,000 was owing by the Canadian National Railways; that this $22,000,000 was loaned to the provinces; that $12,000,000 was loaned to harbour commissions, and that there was a certain amount of cash on hand. But I point out to you, Mr. Speaker, that this is not the way we figure the debt of the dominion when we come to find out exactly what has to be paid and what are our obligations. There is some doubt as to whether or not some of these loans will be repaid.
This question has 'been raised previously in this house; the real question is what is the solemn obligation of this country on unmatured bonds on which we have to pay interest, and that amoilnt is the amount I just gave, which shows an increase of $182,000,000. I have pretty good authority for that contention, or at least I am sure my hon. friend will

regard my authority as good. I quote from a speech by the present Minister of Justice (Mr. Guthrie) in 1929. He said:
We have never had very serious controversy about the funded debt of the country, but I am glad to note that in his speech last Friday the minister for the first time took serious account of w'hat we know as the funded or bonded debt or, as he put it in his remarks, the dead weight debt of the Dominion of Canada. That, after all, is the important item in the financing of this country. The net debt is not a matter of the greatest consequence; in England they never refer to it at all. There they use the one term "dead weight debt," and I am glad that the minister has used that term on this occasion, because that is the debt which counts. It is the amount for which the government of this country has issued in solemn form its bonds and obligations, signed, sealed and delivered, which bonds are now held by people who have invested in our securities. These bonds have to be paid at maturity, and in the meantime interest must be met. They therefore constitute the real burden which the people of this country are compelled to carry.
The net debt is comparatively unimportant: it is a matter very largely of book-keeping and depends upon how you see fit to estimate the value of your assets. We have assets that are certainly good liquid assets, but we have a lot of assets in this country which we carry as non-active assets, and if you want to transfer some of these non-active assets to the active list you can immediately decrease your net debt. It is, I say, a matter largely of bookkeeping. But the debt which counts is the dead weight debt.
I say to you, Mr. Speaker, that on that basis the debt of this country, instead of being increased by $119,000,000, as my hon. friend suggests, has been increased by $182,000,000-I should like to show just how far hon. gentlemen opposite have gone in the matter of debt increase, and I should like to. compare the funded debt as of March 31, 1930, when Hon. Charles A. Dunning delivered his budget speech, with the funded debt as it appears to-day. On March 31, 1930, the funded debt was $2,194,746,563.57; I have already given the figure for March 31, 1932, so under the administration of my right hon. friend the present Prime Minister, in the last two years there has (been an increase in the funded debt of Canada of $307,036,168.66.
I am not going to trouble the house with extended references to the debt reductions made during the last five years of Liberal administration, except to remind hon. members that in that period reductions in the funded debt totalled $257,866,939. Now we see that this whole reduction has been wiped out in two years under this government and we are $50,000,000 worse off than we were before. Let me remind the house also that from 1921 to 1930, when the government of my right hon. leader was in power, the interest saving

1S89
The Budget-Mr. Ralston
was $20,500,000, and of that sum $5,100,000 was saved through conversion loans. The Prime Minister seems to think that conversion loans are his own idea, but note this; that $5,100,000 was saved by the refunding of maturing loans at lower rates of interest; in other words, there were conversion loans even in the days before the right hon. gentleman became Minister of Finance.
There is another matter I wish to discuss, and on this point I wish my right hon. friend were in the house. I said that the Minister of Finance had made certain omissions with regard to possible expenditures for unemployment relief-wheat bonus, bonus to fishermen, subventions on coal and so forth. But there is a definite obligation he also omitted. The Minister of Finance has attempted to list the indirect obligations of the Dominion of Canada, and I do not find anything here about the seven or eight or ten millions-no one knows just how much it is-which has been guaranteed, so the newspapers tell us, by this government in connection with the Beau-harnois project. Not a dollar is mentioned with reference to this matter; no information is given concerning it. The story is that there have been guarantees but they have not been mentioned in this statement which has been submitted by the Minister of Finance. Let me say, with regard to that project, that in my opinion the general feeling is that it is being bedevilled at the present time by the vacillation and the lack of policy on the part of my hon. friends opposite. There was a project which was a perfectly good one; that was the report of the engineers and of everyone who had anything to do with it. It is a project in which a good many small investors have money. But at the present time, for some reason or other, my right hon. friend who has taken hold of it is simply dandling it and nursing it, but he will give no information concerning the matter. No information can be obtained at all by those people who have their money in it and who naturally are interested in the undertaking. They do not know" what is going to happen to what is probably the greatest power project in North America. I protest against the fact that there is no statement here with regard to what direct or indirect obligations we are undertaking in connection with this project, nor with regard to what policy my hon. friends opposite intend to pursue so far as Beau-harnois is concerned.
Time is passing, but I should like to put on record one or two facts with regard to the Canadian Nation! Railways-facts which have been mentioned before but which it seems to 41761-119
me ought to be reiterated in the presence of those who have to do with the country's business and particularly with the country's finances as affected by this great national enterprise. The Minister of Railways (Mr. Manion), even this session, has made two or three illuminating speeches with respect to the Canadian National Railways, and the Minister of Finance (Mr. Rhodes) has put on Hansard some figures bearing on the subjecv. I venture to say, however, that even now it is not clear in thei minds of the public just exactly in what the financing of tha Canadian National Railways -consists. In the first place, successive governments have advanced to the various constituent railways which go to make up the present Canadian National railway system-that is to say, the Canadian Northern, the Grand Trunk, the Grand Trunk Pacific and the Canadian National-something like $604,000,000, in addition to which there have been appropriations on account of government roads of something like $405,000,000, making a total of about $1,000,000,000. But there is also added to this-and this has been mentioned repeatedly in the house- interest on this amount as if the present Canadian National Railways would have to pay it. May I direct to the attention of the house the fact that the Minister of Finance, in the statement he has brought down, do-es not even include interest, in connection with these advances in the non-active assets. No mention whatever is made of it. With regard to the $604,000,000, this has 'been called a bookkeeping item by the Minister of Railways; it has been called a bookkeeping item by the present Minister of Justice (Mr. Guthrie). Well, everyone agrees that it is a bookkeeping item. Nevertheless, that amount is being rolled over and over and is always being talked about.


Robert James Manion: To avoid any misunderstanding, will my hon. friend allow me to say this. There is another item which the hon. gentleman has not mentioned but to which he has alluded, namely, interest owing to the government amounting to $350,000,000. It is not in the Public Accounts, and no doubt that is why the Minister of Finance does not mention it. But it is mentioned, as it always has been mentioned, even under the regime of my hon. friends opposite, and mentioned continuously, in the books of the railways. That is where the figure appears.


James Layton Ralston: I would point out to my hon. friend that that amount of interest is not even carried or regarded as a non-active asset, let alone an active asset. It is carried

The Budget-Mr. Ralston

on the books of the railway to the prejudice of the railway. It never should be on the books of the Canadian National Railways any more than the 8604,000,000 should be. The fact is, there has never been a definite reorganization of the capital of the railway, with the result that not only does the Canadian National system carry on its books that interest, but it carries principal as. well. The Minister of Railways will agree with me also that there should be a reorganization of the corporate units going to make up the Canadian National railway system-there are anywhere from one hundred to one hundred and twenty-five of them-so that people might be able to think clearly about them. The $604,000,000, the $400,000,000 for Canadian government railways, the $350,000,000 for interest, are items which we might as well forget all about so far as our public accounts are concerned. And what does that leave? It leaves the moneys advanced from time to time, since away back in 1878, amounting to $1,276,000,000, of bonds which have been sold periodically and on most of which the Dominion government is liable. That is what is called the debt to the public. That is the amount which is charged to the railway, and when there is a deficit in the railway accounts it is arrived at after the railway has been charged with the interest on these bonds. That is the situation with regard to the Canadian National Railways.
May I point out that even this year the Canadian National Railways more than met operating expenses. It had a balance of from $2,000,000 to $3,000,000; but when interest on the $1,276,000,000 is charged, you get a deficit.


Robert James Manion: That is not the money
owing to the government.


James Layton Ralston: No. I repeat that the
money owing to the government we have put to one side. We have set aside both the money owing to the government and the interest thereon, because the interest is not even carried by the government as an indebtedness of any description. Let us forget it, because everyone has agreed that we might as well do so. As I say, the Canadian National Railways' operating account had a surplus this year of two or three million dollars, which is eaten up and much more than eaten up by the interest on the $1,276,000,000 due to the public. That statement will, perhaps, help to an understanding of the situation. The deficit, after you have charged that interest which is due to the public, is something like $52,000,000.
My hon. friend in one statement was not quite fair to the Canadian National Railways,

and I presume it was a slip. In dealing with the finances of the country he said that Canada, in common with all other countries, had experienced a period of depression. But when he dealt with the Canadian National Railways he did not suggest that the Canadian National, in common with all other railways, had also suffered a period of depression. I want to give the figures to compare the Canadian National Railways with the Canadian Pacific Railway and the roads in the United States. From 1928 to 1931 the revenues of the Canadian Pacific Railway fell off 35.8 per cent, while the revenues of the Canadian National Railways -I have not the revenue figures but I have the traffic figures and they will be practically the same-fell off a little more, 37.65 per cent. For 1931-32, the revenues for the Canadian Pacific Railway fell off 23 per cent, while the Canadian National showed a falling-off of 20.3 per cent; and on all North American railways it was 20.7 per cent. So that the Canadian National railway system is entitled at least to this credit, that it is doing as much business as the rest of the railways; and it is in common with those railways that it is suffering this period of depression.
One thing more. It has been repeatedly said that there has been a large amount of capital expenditure on the Canadian National Railways. I referred to this briefly last year, but since then I have looked up the records of the special committee on railways, and I find that these expenditures, which were made, have been voted every year by that committee unanimously, without objection. I have here the record which I could read if I had time. I have the yearly record of the committee and the yearly reports which were presented to and adopted by this house. Everything was concurred in and passed by the committees and the reports were passed by the house. All of this in connection with capital expenditure. For the purpose of reference, I refer particularly to the journals of the house for 1926-27, page XIII; for 1928, report of the special committee, page VIII; for 1929, page IV and for 1930, page 3.
Last year I quoted the statement of the Minister of Justice (Mr. Guthrie) in which he boasted of the success of the Canadian National Railways, alleged that the real credit should be laid at the door of his former leader, the present leader of the Senate. I do not intend to bother again putting that on record, but I desire to sum up with regard to these roads which make up the present Canadian National Railway system. In the first place, they are a conglomeration of railways, obviously not built with the intention of being one system but which had to be put to-

The Budget-Mr. Ralston
gether in order to make one system. Secondly they are the combination of the policies of all governments. The other day someone intimated that the trouble was caused because three transcontinental roads had been built. It was the policy of everybody that three transcontinental roads should be built.


Some hon. MEMBERS:: No.


James Layton Ralston: In 1904 my friends voted to have a second transcontinental railway built as a continuation of the Intercolonial. In 1913 and in 1914 guarantees were given in order that the Canadian Northern might be completed from the Pacific coast to Montreal. Everybody agreed that there should .be three transcontinental railways. There is no use of my hon. friends gainsaying that fact; there is no use of their going back into ancient history and talking about the past.-everyone was vying with each other in order to have the railways developed, and it was only a question of method. The Canadian National Railways is a combination of the policies of all governments. Thirdly, the advances made by the government have been wiped out by common consent. Fourthly, the Canadian National Railways' capital expenditures have been approved by both parties in this house. Fifthly, the revenue losses on this road .have been no greater than they have been on other roads. Sixthly, I ask the house to note this: The capital structure of the Canadian National Railways are not represented as they are in private railways by common stock on which no interest or dividend is paid unless warranted by the earnings. The capital is represented by bonds which are an annual charge against the road and which show up much more clearly than they do in the case of roads whose capitalization consists partly of bonds and common stocks. In other words, the Canadian National Railways is in a class by itself. Naturally, its financing is more difficult since the annual charges always come before the public in the shape of bond interest.
Seventhly, the management of the railways has been approved of by all parties, and in this connection I refer to the statement of the Minister of Justice. And, finally, there has been a surplus on operating account for many years.
But there is no doubt that the problem of financing is a difficult one. It must be faced squarely but I shall say nothing more in view of the fact that as the Minister of Finance has said that there is now a commission engaged in considering the whole railway problem of this country. I simply bring these facts to the attention of the house and the country.
I come now to what is the interesting but after all the most sombre part of my hon. friend's address, and that is in connection with the ways and means of finding funds to carry on government. In one fell swoop he provides that the twenty per cent discount on income tax put into effect by the former government shall be wiped out. He provides that there shall be a five per cent surtax on the tax on incomes above $5,000. He next provides, and I think this the most difficult feature to justify, that exemptions for married men shall be reduced to $2,400 and that this charge shall apply to last year's salary. What is the effect of this? I think my hon. friend sees and knows the result which will follow. An individual who received last year an income of $2,800 found it pretty close going for himself and family. He did the best he could to live within his income and made his expenditures believing that he would have no income tax to pay as he was exempt up to $3,000. However, this year he finds that notwithstanding the fact that he has spent his $2,800 earned last year, his salary is cut-'he may be a civil servant or employed in a factory or anywhere else-wages are down, and he has now to pay a tax on his last year's salary out of his reduced salary of this year. This hits the man with a modest income and it falls particularly hard upon the civil servant. My hon. friend has said that he was picking out the civil servant in order to make a levy upon him; he is making a levy of ten per cent by reducing his salary and in addition he is collecting a tax on last year's, salary. This tax will fall heavily upon a lot of people. My hon. friend has not given us the figures but he probably knows how many incomes there are between $3,000 and $2,400. I venture to say there is a large number and I question whether the collection of this tax will be worth the expense, my hon. friend probably has made an estimate. But he ought to realize that this tax falls heavily on the man receiving a small salary and who has to face a reduction this year.
What would have been the obvious thing to do? The obvious thing to ha/ve done would have been for the Prime Minister to have gone ahead last year with his income tax proposals instead of taking such a personal dislike to some remark which was made about one feature of the measure which favoured those who enjoyed large incomes. He jettisoned the whole question of income taxation. Had he not done so probably sufficient taxation would have been raised from the higher bracketed incomes to have made it unnecessary

The Budget-Mr. Ralston
to reduce the exemptions this year. Because of a little pique, or considerable pique as a matter of fact, the right hon. gentleman dropped his income tax proposals; he would have nothing more to do with them, and the result is the burden falls not only on the man with the large income but on the man with the small income which has already been considerably depreciated. This rearrangement of the income tax will be difficult for my hon. friends to justify.	_
We now come to our dear old friend the sales tax. Two or three years ago this tax was roundly reviled by the Secretary of State (Mr. Cahan) and the Prime Minister termed it the poor man's income tax. This is what he said as appears on page 397 of Hansard of 1927:
And that sales tax is the poor man's income tax-the tax upon his clothes, the tax upon the commodities that enter into his everyday life-[DOT]
In 1928 my hon. friends introduced a resolution asking for the abolition of the sales tax which was then only three per cent. At that time the Secretary of State said:
They then discovered that this rate was an intolerable burden on the country, increasing exorbitantly, as every per cent of it did, the cost of living. They first reduced it to 5 per cent, then to 4 per cent, and now they propose to reduce it to 3 per cent-just where they found it on attaining office. I think the opinion on both sides of the house is that when making their last reduction they should have announced the abolition of this tax, for thereby they would have done more than by any other single act of government to reduce the average cost of living in this country, which is so high in comparison with the cost of living in the same state of society across the border.
The Prime Minister is reported on page 1253 of Hansard of 1928 as saying:
AVe contend that the sales tax should be abolished. Why? The Minister of Finance asks, where shall we get the revenue from? If economy were practised in this country, if an annual sinking fund were put away-
Where is that sinking fund to-day?
-money being earmarked for this purpose when derived from the sales tax, then I could understand my hon. friends desiring to continue the tax.
The Minister of Justice is reported on page 1124 of Hansard of 1928 as saying:
I have only one other observation to make, and I have but a few minutes in which to make it. There is another aspect of the budget I do wish to mention, and it is in regard to what I call the iniquitous sales tax. On a former occasion during the present session I mentioned the sales tax, and I told the Minister of Finance that so far as it was in the power of an opposition to make demands upon the government, this opposition was going to demand the abolition of the sales tax during the present session of parliament. I regret that the tax has not

been abolished; it has merely been reduced to that point at which it was seven years ago when the Liberal government took office. The sales tax was imposed as purely a war measure. The war has been over for ten years, but this administration still maintains that iniquitous burden on the people of this country. My hon. friend the Finance Minister may wave his hand and announce that he has made another cut in the income tax, and the wealthy men of Canada will appreciate that no doubt; but if he had wiped out the sales tax he would have conferred a benefit, not upon the wealthy, but upon the people of the dominion least able to bear that tax.
Then for a moment he turned aside to discuss the changes in the tariff rates on woollens and later he came back to the sales tax; it seems to have been on his mind. He said, referring to the Minister of Finance:
Now, cannot I warm up his heart in regard to the sales tax? I agree that ours is a cold climate in the winter season; people must wear woollen clothes. By retaining this sales tax of three per cent- '
Only three per cent, mind you!
-a man has to pay an extra ninety cents on a $30 suit of clothes. Do the people of Canada yet realize that they are paying this iniquitous tax into the treasury? Do they know that this war burden is still in force? I know the complaint is made from time to time that the retail merchants are still keeping up prices, but do the people realize that on $100 worth of purchases of boots and shoes, clothing, furniture, everything save food, they have to pay to-day $3 into the treasury of Canada to help in the reduction of the national debt? I do not believe they realize that. Four per cent they paid last year, five per cent the year before, and 6 per" cent for a while, and with what a grand flourish the ministers of the crown announced these reductions! Last year the minister said: We have reduced the sales tax 20 per cent. It sounded like a large reduction, but it is only one per cent as a matter of fact-one cent on a dollar. The other day the minister announced: We have reduced the sales tax 25 per cent. The ordinary people thought: It must be gone this time sure. But only another cent has been shaved off the top, and for every $100 worth of clothing, hats, mitts, boots and shoes, to be worn in this cold climate of ours, $3 must be paid into the treasury, although the war was over ten years ago. What did the minister say last session? "Why," he said, "how can I do it?"
Then the Speaker called time. I have no doubt my hon. friend will have a good deal of enjoyment in making that same speech in cabinet councils as they discuss the new 50 per cent addition to this iniquitous sales tax. Let me point out to him that if a family spends, say $750; they paid $7.50 sales tax under the rate as it stood when the Liberal party went out of power, whereas under the rate this year they will pay $45.


Charles A. Stewart: In this cold climate.

The Budget-Mr. Ralston


James Layton Ralston: Yes, in this cold climate, and I understand also some of the articles of food are going to be removed from the exempted list. But even that is not the worst of the situation. My hon. friend said: People do not realize this. He is quite right; the people do not realize how much they pay. Last year I noticed a letter sent, I believe, to all the members from the secretary of the Wholesale Grocers' Association, and this is the naive way in which he put the matter with regard to sales tax. He was arguing against the turnover tax. He said about the sales tax.
It is being enforced fairly, working smoothly, and equitably, and seldom comes before the public eye as it is buried in the price of an article, and is almost an unknown and unheard-of quantity.
It is there just the same and the people will be paying it this year.
And besides that the government are going to be offending against another principle which was laid down by the present Prime Minister. In this house in 1927 he waxed most eloquent with regard to this matter of taxing a tax. Does he realize that the sales tax is imposed after the duty and, indeed, after the dumping duty are imposed on an article? This is what the present Prime Minister said as reported at page 402 of Hansard of 1927, it will be noticed that he had the cart before the horse, although I think this was just a slip of the tongue. He said:
It is not sound to tax a tax. and under the present tariff regulations the sales tax is added to the cost of the article and the duty computed upon the sales tax and that cost.
He was wrong about that; it was just the other way about. The duty was added to the cost of the article and the sales tax computed upon the cost of the article plus duty.
That is the present position. It would be in the interest of trade and the development of commerce that that should be removed if at all possible.
That is just one more thing with regard to which my hon. friends have made protestations, promises and professions and which they will have to face when the time comes. When the six per cent sales tax was imposed in 1923, we found the tax already pyramided; as everybody knows it was practically six per cent then. Further than that we had a legacy of debt which was the result of the previous administration and which had to be paid off. Our hon. friends have a legacy of surpluses, of reduction of debt, and still they are increasing the sales tax by fifty per cent in this
year alone after increasing it from one per cent to four per cent last year.
I say nothing with regard to the nuisance taxes. They will probably be dealt with when the resolutions come before the house. I will say just this at the moment: Sometimes I think, in order to make people realize not only in budget speeches, but in other ways, just how difficult things are with my hon. friends in power, these taxes should be raised so high that we shall not be able to enjoy * any more luxuries such as Pullman cars and that sort of thing. I am, however, making no protest now as regards nuisance taxes, something will be said about them on the resolutions themselves.
Let me come now to the matter of tariff. The subject of tariff and trade is perhaps the most interesting and certainly the most disquieting part of my hon. friend's speech; on trade depends the whole structure of our financial system. You cannot collect any sales tax if you have not transactions; you cannot collect any duties if you have not imports; you cannot collect income tax if there is not any income, and the amount to be collected on cheques, telephone messages and telegrams all depends on the amount of trade which is being done in this country. Further than that, you cannot make the Canadian National Railways or the Canadian Pacific Railway or any other railway pay if you cannot give them traffic. That is at the bottom of the whole trouble in Canada at the present time and the budget figures, viewed in that light, are most disquieting. What is the budget, when you come to size it up? Our trade has been depleted 50 per cent, and I have already spoken about the increase of debt, the deficits and the increased taxation. The government's statement amounts only to this: We have no remedy under the sun to suggest, but we are simply going to impose more taxes. There is not a. policy, not a suggestion of improvement to throw a little light into the darkness except the possibility of something coming from the Imperial conference. I think the way in which my hon. friend put it was: We are near events which may have some sort of happy augury for the future.
The budget figures, as I say, show a reduction of 50 per cent in our total trade in two years. There is no need of this. My hon. friend began his address by indicating the present difficulties throughout the world. Let me point out this to him:	Canada is in a
unique position because she sells the necessities of life. She is therefore a country which should be in the best position to recuperate most quickly and to take advantage of

The Budget-Mr. Ralston
Excessive Rates Due to Increase of Tariffs-Arbitrary Fixing of Exchange Rate and Applying Dump Clauses (includes 1 per cent Excise Tax and 4 per cent Sales TaxJ
Woollen and cotton blankets.. ..
Gloves and mitts	 **
Children's socks and stockings. . Fabrics, wholly or in part artificial silk	
No fabrics are more used to-day Printed or dyed cotton fabric.. Linen tablecloths	
Pritish preference
Old	New	Percentagerate	rate	increase214	94	350214	43	10023i	99	300191	75	300than these:	191	461	15019	41	110General tariff	Old	New	Percentagerate	rate	increase35	167	400364	90	150364	161	35036	133|	300281	83	200
I do not think there are many linen table-


An hon. MEMBER:: Not of that class.
cloths manufactured in this country.


Mr. GUTHRIE:: Yes.


Hugh Guthrie: Oh, yes, there are.
Cutlery, plated, not steel.. ..
Earthenware dishes	
Axniinster carpets	
Cotton sheets	
Pillow cases	
Silk fabrics (France) ..	..
Silk fabrics (Switzerland) ..
Old
rate
21J 194 23| 161 16


James Layton Ralston: I do not think so.
New	Percentage	Old	New	Percentagerate	increase	rate	rate	increase481	100	364 314	90	15043	125	701	13386	275	46	185	45	175	31	75	15030	75	150
I am putting those figures on record, Mr. Speaker, in order that people may know exactly how the tariff has been raised, because they will not find those figures in the tariff schedules. I need not say those figures include sales tax, excise tax, the exchange rate and the arbitrary fixing of the value for duty purposes by the Minister of National Revenue.


Mr. STEVENS:: How does my hon. friend justify the last two items, covering silk from France and Switzerland? I could not quite understand that.


James Layton Ralston: I want my hon. friends to justify them.


Henry Herbert Stevens: My hon. friend misunderstands me. I quite understand his compilation in regard to Great Britain, but how does he arrive at those increases with regard to the last
two items?


James Layton Ralston: I am giving the two rates; I have the actual computations here, taken from actual invoices, which I will let my hon. friend see.
That is the position with regard to increases in duty. The situation in this country is that a man does not have to ask for protection; he is given more than he would ask for. A letter was sent out some time ago, and no doubt received by other members as well as myself, signed by Mr. James R. Dickson, representing the automobile dealers of this country, and with regard to the amendment passed last year
which prohibited the importation of automobiles this is what he says:
The foregoing amendment goes further than had been generally requested or anticipated, and places this commodity on the list of prohibited goods under tariff item 1215.
Further on the letter states:
. . . the government is being commended for the manner in which it has now so effectively met the issue, by going even further than was requested in the public hearing.
The request was only for an additional ad valorem duty of fifteen per cent. My hon. friends rush out to find people in order that they may give them the benefit of protection. It does not seem to be a case of asking for it, and there does not seem to be any idea of having anyone prove their right to it.
What has been the effect? Later on I shall show the effect so far as the increase in price is concerned. If my hon. friend wants to find out why the amount collected in customs duties this year is 820,000,000 less than it was last year, in spite of the astounding increase in the tariff at the last session, he can get his answer from just such instances as I have quoted. He is simply drying up the sources of revenue; people are not going to import goods. I would not mind so much if it had done the domestic industry any good, but I propose to show that it has not.
What else has it done? It has produced a state of uncertainty in this country among importers and consumers, and they have just as
The Budget-Mr. Ralston

much right to be considered as people in special industries. The effect of this uncertainty is hard to estimate. There is not a man who, when he gives an order for goods, can be certain that the duty on those goods will not be changed overnight. There is not a man who can send out a traveller to take orders for goods which he has to import without making some sort of reservation, because he may be caught by the fact that while to-day the duty is so much, under the special power given the Minister of National Revenue the duty may be increased 100 per cent before the goods arrive. That makes for uncertainty in business. I remember very well the pledge of the Prime Minister during the election, " The stabilization of economic conditions and the freedom from manipulation of home and foreign tariffs." Could there be any greater chance of manipulation, or any opportunity of which greater advantage has been taken than is the case here, with my hon. friends opposite sitting day after day in the east block passing these orders in council?
I say this is producing a state of uncertainty which is leading to greater difficulties than exist with regard to industry itself. Probably there are ten thousand importers in this country, and perhaps they have more people employed than are employed in the industries themselves. These people form the backbone of our nation; the consumer has a right to be considered, but no one can get or give absolute quotations because at any time the Minister of National Revenue may raise the value for duty purposes.
What has been said about this power? This quotation has been given before, but a good thing is well worth repeating. Back in 1923 a provision was placed in the statute with regard to some fifty items of natural products on which the value for duty purposes might be increased. I think that power was used only once or twice in the whole Liberal regime, and finally the provision was repealed. What was said about it by the gentleman who today leads the Senate in support of my right hon. friend?
There should never be an unrestrained discretion in the hands of any minister or any government. There should be some principle laid down by this house to which the government must abide, and beyond which they cannot go. That is sound, sensible legislation. That is the protective principle democratically and fairly applied. What is proposed here is the protective principle, autocratically, and perhaps unfairly, applied.	[DOT]
For purposes of valuation the minister can fix the value where he likes, on any basis lie likes, to suit any interest he likes, as low as he likes, as high as he likes, and when he likes.

In a word, this simply puts into the power of the minister the whole elevation of the tariff of this country.
The minister can put on any valuation he thinks fit. In other words, it virtually enables him to fix the tariff where he pleases, and the house is asked to support the minister in that.
That statement was made with regard to the fixing of values for duty purposes on about fifty items of natural products out of a tariff list containing some eleven hundred items. This present provision applies to every item in the schedule, and what is more, this power is being exercised every day, as these orders in council, memorandums and bulletins show.
So much for uncertainty, Mr. Speaker, and so much for excessive rates. Now what about the effect on prices? I want to be as serious as I can with regard to this matter, but with all due deference I do not think there ever was any greater joke perpetrated than the suggestion that you can raise the duty as high as Haman's gallows and still not increase prices. I do not believe anyone in this house or in the country doubts that prices are being kept up in this country because of the fact that the duty has been raised. Let me give one or two figures. In a letter issued by the Bank of Nova Scotia in March I find the following:
At the end of seventeen months ....
Following the depression of 1920.
.... the index of Canadian farm products was 50'5 per cent below the 1920 maximum; the index of manufactured goods was 38 per cent below. ... To date ....
Since the present depression began.
.... the index of Canadian farm products has fallen by 46 per cent-a decline little less abrupt than that of 1921; the index of manufactured goods has fallen only by 15 per cent.
I ask you, Mr. Speaker, what is keeping up the prices of manufactured goods at this time? The tariff is responsible for the prices of manufactured articles to-day, and the farmer, the miner, the fisherman, the lumberman and all the people on the streets of our towns and villages, the ordinary, everyday people, are buying these articles and paying these artificially maintained high prices. While the products the farmer and the other primary producers have to sell are down fifty per cent in price the articles he has to buy for everyday use are down only fifteen per cent. Let me refer to the figures issued by my hon. friend the Minister of Trade and Commerce to show the fall in the prices of a number of articles:
	August,	February	
1930	29,1932	DecreaseGrains	. 64-3	43-1	21-2Live stock. . . .	. 95	65-9	29-1Dairy products .	. 85-9	59-3	26-6Textiles	. 79-7	71-6	8-1
The Budget-Mr. Ralston
I have just read some of the duties imposed on artificial silk by reason of the power given the Minister of National Revenue to fix values for duty purposes. On artificial silks the price has actually gone up. The index figure was 62.4 on August 1, 1930, and 64.9 on February 29, 1932, or an increase of 2.5 per cent. In farm products the fall, as I have indicated, has been between 29 and 21 per cent. Take carpets; I also mentioned the high duties. The price figure was 92.4 on August 1, 1930, and 93 on February 29, 1932. In rolling mill products, the figure was 93 on August 1, 1930, and 92.2 on February 29, 1932. Take cast iron and steel: on August 1, 1930, it was 89.19 and on February 29, 1932, 84.19, or a drop of 5. In hardware it was 91.7 on August 1, 1930, and 88.6 on February 29, 1932, or a drop of 2.8. On wire it was 89.3 on August 1, 1930, and on February 29, 1932, 82.8, or a drop of 6.5. On boots and shoes it was 98.3 on August 1, 1930, as against 93.7 or a drop of 4.6.
The farmer sells his farm products, his live stock at 29 per cent less, and his grain at 21.2 per cent less, but he pays only 4.6 per cent less for his boots and shoes.
So much as regards prices. Let us look at the effect on domestic industries. Has the policy of putting a barbed wire fence around Canada helped the domestic industries and added to their number and developed trade as my hon. friends believed it would? Has the home market turned out to be the thing they boasted of? Employment is lower than ever in this country. Let us take employment by classes of industries, as taken from the Labour Gazette for March 1, 1932, page 328:
Aug. 1	Feb. 1	Aug. 1	Feb. 11930	1931	1931	1932All industries. .	118-8	100-7	105-2	98-7Manufacturing.	110-2	90-1	94-7	85-9Trade	126-4	123-1	120-9	117-2
And look at the unemployment figures, as taken from the Labour Gazette, March, 1930, page 334:
Jan. 1 Aug. 1 Jan. 1 Aug. 1 Jan. 1 1930	1930	1931	1931	1932All	
10-8	9-3	16-	15-8	22-
Has protection made us rich? Has protection developed the industries of the country? Has it had the effect which my hon. friends predicted and boasted of when they put into force this policy of building an impregnable tariff wall around Canada? Let us look at employment in those industries in connection with which imports have decreased. My hon. friends opposite have said that if you decrease the imports, stop them coming into Canada in competition with Canadian
industries, we shall have more employment for Canadians in the industries so protected. Let us take two or three. Fibres and textile products is one industry that has been helped a good deal. According to Trade of Canada for the calendar year 1931, the imports in 1930 were 8149,000,000, and in 1931, $90,000,000. Well, if therei is that much less in the way of imports there must have been a correspondingly greater activity in Canada. But let us look at the employment figures. On February 1,1930, it was 103.5, and on February 1, 1932, 96.3. The diminution in imports does not seem, therefore, to have added to employment in Canada. Take farm implements; the imports in 1930 were $21,900,000, and in 1931, $3,900,000, five times less; but the employment figure was 47.9 in 1930 as compared with 29.7 on February 1, 1932. In machinery the imports in 1930 amounted to $50,000,000, and in 1931, $29,000,000, whereas the employment figure on September 1, 1930, was 113.4 and on February 1, 1932, 81.8. In rolling mill products the imports in 1930 were $46,000,000, and in 1931, $23,000,000; but the employment figure was 102 in 1930 and 67.4 in 1932. In automobiles and vehicles the imports were $47,000,000 in 1930, when the employment figure was 97.9; and in 1931 the imports were $23,000,000, but the employment figure was 70.3. In electrical apparatus the imports in 1930 were $30,000,000 and the employment figure was 157.9 and in 1931 the imports were $16,000,000 and the employment figure 124.9.
These figures show conclusively that not only has the tariff done no good to domestic industries, but apparently employment in domestic industries has gone down instead of up with the decrease of imports in connection with these different manufactures. That is the situation with regard to the moveable tariff legislation of my hon. friends.
My hon. friends, since I have been speaking somewhat critically, will not expect any suggestions from me, but I do venture to tender one or two. I submit that they had the [DOT] opportunity to make the first gesture towards remedjung this situation, buit they threw away that' opportunity when the Minister of Finance, in his budget speech, informed the house that nothing would be done regarding tariff until after the imperial conference. There was a chance, if ever there was one, for my hon. friends to make a gesture towards imperial preference, giving a reciprocal concession for the concession which had already been extended by Great Britain. Great Britain had imposed a tariff upon certain articles, but she had provided that it should not apply to goods from Canada, and there was a golden
The Budget-Mr. Ralston

opportunity, it seems to me, if my hon. friends opposite were really looking for an occasion to cement relations in anticipation of the imperial conference and to create an atmosphere in which a great deal of good might have been accomplished. The policy of hon. gentlemen opposite has been far different from the policy which was proposed two years ago by the then Minister of Finance when he brought down his budget in anticipation of an imperial conference. What did we find in the budget at that time? There were decreases on 270 items coming from Great Britain and increases on only 11; 589 items out of 1,188 were made free under the British preference. Hon. gentlemen opposite suggested that it was only a paper preference, but remember that that preference applied to $200,000,000 worth of goods which were imported into this country. That, it seems to me. was the kind of gesture which my hon. friends might have made; indeed, Mr. Speaker, it would not have been any mere gesture but genuine evidence of their desire to cooperate with Great Britain and with the various dominions of the commonwealth.
And is it not worth while endeavouring to encourage such trade? I sometimes think, Mr. Speaker, that the people of this country do not appear to realize what sort of customer Great Britain has been-to Canada; they seem to have the idea that we have been doing all the giving and Great Britain has been doing all the taking. Well, from 1921 to 1931 Great Britain bought from Canada $4,057,000,000 worth of goods. How much have we bought from Great Britain, British preference and all? We have bought SI,823,000,000; in other words, there has been a trade balance as between Canada and Great Britain of $2,234,000,000 in our favour. That is the sort of customer with whom the Hon. Charles Dunning and the government of which he was a member thought it worth while to deal; that was the sort of country toward which we deemed it wise to give preferences, and to adopt tariff schedules with definite provisions indicating our desire to trade with them. Let me quote to the house the words which the Hon. Mr. Dunning used on that occasion:
In other words, we do not intend to meet the other countries of the British commonwealth in a spirit of petty bargaining, but rather in the broad spirit of willingness to become in ever-increasing measure good customers to those who treat us in like manner. This is the spirit in which we desire to meet all nations, but we believe that within the British community of nations lies the greatest measure of opportunity for mutual development of trade because of our common heritage, kindred institutions, and a common patriotism.

That was an expression of faith, but it was an expression of faith accompanied by very practical works in the shape of a revision of the tariff. My hon. friends are coming to realize that there is something in this method of approach. When the Prime Minister went over to the imperial conference in 1930 he was not in that attitude of mind; barter was strongly in his mind and a bargain was the thing to be striven for. He said:
I offer to the mother country and to all the other parts of the empire a preference in the Canadian market in exchange for a like preference in theirs, based upon the addition of a ten per centum increase in prevailing general tariffs or upon tariffs yet be be created.
He accompanied his address with such expressions as these:
Take without delay the steps necessary.
No room for compromise.
No possibility of avoiding the issue.
Time for plain speaking.
The day is now at hand.
Decide once and for all.
Delay is hazardous.
The time for action has come.
Other projects have been carefully canvassed and while we would avoid anything which might savour of premature condemnation, we are constrained to state that none of them can be accepted by Canada as alternatives at all likely to achieve the purpose.
Universal acceptance.
Deliberations must be governed by the time factor.
If this change in our economic relationship is to be made, it must be made without delay.
These are the words he uttered when he left Great Britain:
But if her proposal is thus to be contemptuously rejected Canadians can only accept the rejection and act accordingly by embracing other means at hand of further strengthening her economic position in the world.
I do not hear very much to-day from the Prime Minister along that line. The Minister of Trade and Commerce (Mr. Stevens) has been on the road to Damascus, or at least on the road to Montreal, because in the issue of a day or so ago of the Montreal Gazette I find this expression:
I hope with all my heart that no delegates to the forthcoming imperial economic conference at Ottawa will arrive with any quid pro quo attitude; nothing could be farther than this from the minds of tile Canadian delegates.
And again:
There can be no question of what each is to ask. We shall all gather with the mutual desire and determination to work out general principles on which the economic well-being of the empire might be advanced and put on a firm basis. In this working out matters of detail affecting many industries will require careful study and consideration.

The Budget-Mr. Ralston
That is apparently the most he hopes for from the conference; it will be a conference for the working out of general principles and the details will be settled later. The following is the important part of the minister's remarks:
But the conference will under no circumstances develop into a market wherein bartering for terms will take place.
I hope that is to ibe so, and I hope that that indicates that my hon. friend realizes the situation. That is the only position which the Canadian government can take if it expects any successful results from the imperial conference. I regret that the government did not take the opportunity of holding out a hand to Great Britain and saying: We are not adopting a quid ipro quo attitude; these are the terms which we are willing to give and which are shown in our budget immediately preceding the conference.
The Liberal party stands not only for the statement of principle which I have already referred to, but it stands on a record of performance going back to 1897. I refrain, as did my hon. friend, from discussing the imperial conference policy in detail, but I do want to say that the Liberal party will welcome in every way possible every arrangement which my hon. friends can make for the development of trade between Canada and Great Britain. That has been and will continue to be the policy of the Liberal party.
But let me remind the house that we want trade not only with Great Britain but with all the world. Keeping in mind the assurances of the Prime Minister during the elections, let me sum up just what has happened during the past two years. This government has had a substantial majority in this house to carry all its proposals; it has had a free rein in the working out of its policies; it has had the treasury of the country at its disposal, it has had unlimited power, but what have been the results? They are found in the budget speech and in the facts which I have brought out. We had a deficit last year in the net debt of $119,000,000, and we will have a deficit this year, at least to the extent to which unemployment relief has to be provided for and for expenditures in connection with other items not mentioned in the budget. There has been an addition to the funded debt amounting to $302,000,000, while the shrinkage in total trade has amounted to 50 per cent, taxes have been increased enormously and unemployment has been worse during the present year than at any other time in the history of the country. This is the record presented by this government to the people.
The government has tried every possible expedient. It has proved conclusively that the home market is not sufficient to make it possible for our producers to produce, to sell and to make a living. I ask my hon. friends opposite in all seriousness: Do they believe that Canada as a storekeeper can market the commodities she produces under their policy of restricting trade? The National Revenue report for February, 1932, gives the following as the principle items of export:
Wheat.
Wheat flour.
Fish.
Furs.
Meats.
Cheese.
Blanks and boards.
Wood pulp.
Newsprint.
Automobiles and parts.
Copper (unmanufactured).
Nickel (unmanufactured).
That is what Canada has on her shelves to sell to the world. The only manufactured article mentioned is automobiles, and the export of automobiles has dropped from $15,000,000 in 1931 to about $3,000,000 in 1932, notwithstanding the prohibition of the import of used cars. Employment in the automobile industry during the same period has dropped from 87.9 to 70.3.
Do my hon. friends think that we can sell these natural commodities by putting up tariff walls? They have had two years in which to try, and they ought to know. They should know what the result has been and the reasons for that result. We might just as well talk of Canada selling commodities 'like these and finding a market behind the tariff walls which my friends have put up as to talk of a storekeeper solemnly barricading his front and back doors and sitting down in his shop to swap jackknives with his family across the head of a barrel and thinking he is carrying on trade. It cannot be done. My hon. friends have blocked up every possible chink; they have attempted to preserve the home markets for the sheltered industries.
They would be better employed to spend their time studying the tariff schedules to find out not how little but how much they can buy. They should realize that the more they buy, the more they can sell. The Prime Minister is fond of quoting from scripture, but I would remind him of the old saying:
A giving that doth not impoverish, a withholding that doth not enrich.
There is a buying which does not hurt a country. My right hon. friend is also quite fond of quoting Gladstone, and I refer him to a recent book on Gladstone as a financier,
The Budget-Mr. Ralston

which contains the following quotation from that great statesman:
Though we cannot in every particular case assume an immediate trade outwards when we create a trade inwards, yet it is manifest that upon the whole such is the law which must govern our commercial transactions.
Will my hon. friends get that idea into their minds? It seems to me that by this time they should have realized this fundamental truth. Last year I quoted references by great economists in various countries to the effect that high tariffs were strangling the trade of nations; I do not need to quote similar references this year because it can be heard on the streets, on the trains, in the clubs, or anywhere where men meet together. I do not know why my hon. friend does not realize the force of this truism. He should accept it, and his first step should be towards reversing the tariff policy which has been adopted by his government.
I have quoted Mr. Dunning's budget speech of 1930, and I submit that the statements which he made at that time as to Canada's trade policy hold just as true to-day as they did in 1930. They are even truer, because we have had the experience of my hon. friends dealing with the other sort of policy and making the mess of it that has been made during the last two years. This is what he said:
Canada will not engage in a tariff war with other countries.
I commend that to the Minister of Railways (Mr. Manion), who has been so red-blooded.
The world shows at the present time too many examples of disaster following such a course. As a great exporting nation our course must be the contrary one of facilitating trade with those who facilitate trade with us. Those who raise prohibitive barriers against our products entering their markets must expect that we will extend favour to our own good customers rather than to them. I speak in no spirit of retaliation. I would much rather extend lower tariff favours to those who extend them to us than to impose prohibitive tariffs in return for like treatment.
Lower tariffs to those who buy most freely from us make for trade extension and wider markets for our products, while prohibitory duties to meet prohibitory duties generally applied -would constantly tend to restrict our export markets.
These tariff favours tp those who favour our products are not the result of any bargain with any other country but of an attitude in international relations which we believe to be mutually beneficial and are an expression of the spirit in which Canada will approach the Imperial economic conference in a few months' time.
In the light of that enunciation of principle, in the light of the bitter experience
rMr. Ralston.]
which we have had in the last two years and in the light of the very different experience which this country had from 1921 to 1930 and from 1896 to 1911, the policy that we on this side of the house advocate is one of expansion rather than restriction of trade. It is the policy of the prudent salesman dealing with a good customer; it is not that of the warrior trying to overcome an antagonist or of a sharp trader bartering for the most and giving the least. It is a policy which recognizes that there are no finer industries in this country than those of farming, fishing, mining and lumbering and that on those industries Canada depends for her basic wealth and prosperity. We believe in the policy which will set flowing again the stream of external trade which is the dominion's very life-blood. We believe in giving Canadian enterprise room to breathe. We believe in throwing open the windows. We believe that what Canada wants at the present time is the fresh air of trade upon the seven seas.
The Minister of Finance calls for courage and endurance. Canadians have plenty of both. In spite of all that this government has done, Canadians are still courageous and resourceful and can still endure. Canadians have , not lost faith in their country, but if they are effectively to bend their backs to the burden of taxes, they must have the right and opportunity to produce and to sell. So they demand that the measures which for the past two years have stifled and throttled the country's prosperity, be abandoned, and that the government, even at this eleventh hour, recognize that in a policy not of simply imposing taxation and calling upon people to bear it bravely, but of stimulation and revival of trade and the resumption of production, lies our hope for improved conditions, for which this government piously hopes but which it does absolutely nothing to bring about.
Therefore, Mr Speaker, I move, seconded by the hon. member for West Edmonton (Mr. Stewart):
That all the words after the word "that" be struck out and the following substituted therefor:
"this house is of the opinion
"that increases made by the present administration in the customs tariff have been arbitrary, ill-considered and inordinate, and have had the effect of stifling agriculture and other industries, restricting trade and commerce, and increasing unemployment;
"that the fixing of values for duty purposes by orders in council is an interference with the inherent right of parliament to regulate duties and determine taxation, and has had an unsettling effect on commerce, a depressing effect on business, and has been detrimental to the interests alike of producers, importers, distributors and consumers;

that a reversal of the present fiscal policy m relation to customs tariffs and an immediate resumption of parliamentary direction and control with respect thereto are essential to a revival of trade, and improvement in business, and to the ultimate return of prosperity in * Canada."
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Henry Herbert Stevens: revival of trade, and improvement in business, and to the ultimate return of prosperity in Canada.
I submit, and shall show during 'the course of my remarks, 'that a reversal of the action, taken by this government during the past year and a half would result in precisely the opposite to what my hon. friend indicates in this amendment to be his desire. I shall not further analyse the amendment, but as I proceed with my remarks I hope to deal with practically all the points there raised.
Before addressing my remarks to the subjects I intend particularly to discuss I wish ito deal with two or three matters raised by my hon. friend, and to dispose of them briefly and without labouring the points-.
My hon. friend was put to pretty extreme limits when he went back to the old cry which years ago was proven to be false, namely, that the Conservative and Union governments during the war did not raise one cent from taxes for war expenditures. That statement has 'been disproved over and over again. It is well known that several hundred million dollars of the war costs were raised by taxation and paid in cash. I am surprised that my hon. friend would direct the attention of the country back to something which he thinks perhaps, the memory of the people being short, he would be able to get away with. I simply brand it as a statement absolutely without any foundation in fact.
Then he referred to the conversion loan in rather sneering tones. I think the people were proud of the achievements of the country and of its Prime Minister, its leader, in that conversion loan. My hon. friend went to great pains this afternoon to indulge in some not commendable quips about the Prime Minister n connection with that loan. The conceiving, he organizing, and the selecting of the time vvhen that loan should be put out was a masterly stroke, I care not who did it. Furthermore, its absolute success is proven by the result. Now my hon. friend says, "Oh, but there are people to-day who are sorry they converted their bonds." I have not heard of complaints from any persons in Canada regarding the conversion of their bonds; there may have been some, but I have not heard of them. But what will that conversion loan mean for the country is the question to be asked; that is the test for the whole business. The result will mean a progressive saving in interest to this country of one, two, and ultimately around five or six million dollars a year. That is an achievement. That financing had been hanging over the governments of this country for several years. I recall

very well a few years ago ministers of finance of the government of my right hon. friend opposite reminding the house that the time was coming when those large war loans were maturing and that some serious financing would have to be done. The 1 serious financing" was done, and it was successful largely because of the foresight and the skill with which it was handled by the right hon. leader of this government.
My hon. friend criticized the action of the government in coming to the assistance of the provinces. He was rather careful, he did not take the stand definitely that the government ought not to have assisted the provinces; he would not put in the form of an amendment a motion to condemn the government, but he hinted and insinuated that there was something sinister, something lacking in statesmanship on the part of this government or its leader in coming to the assistance of the provinces at this time. Mr. Speaker, we welcome manly criticism, criticism frank and open with reasons for it. My hon. friend gave no reasons this afternoon for his position. He simply suggested that in some way or other there was something sinister in the action of the government. What are the facts? They are clear and simple. The two old provinces, and indeed the maritime provinces as well, with their well-established methods of finance, have been able to finance themselves up to the present. It is true the federal government had in some respects to render them assistance in the movement of gold, but generally speaking those provinces have been quite able to look after themselves. When, however, we come to the four western provinces, new, young provinces where there has been an outpouring in very large measure of extravagant -shall I say?-costs in constructing roadways, public buildings and all that sort of thing for a number of years, the position was different. It may be charged that those western provinces have been extravagant, but the fact is, confronted as they were, in regard to three of them, with collapse in their main item of revenue, namely, the wheat crop, for three successive years in many places, and two years in others; confronted with that and other difficulties, they found themselves in the face of the collapse of the international exchange market unable to meet some of their obligations abroad except at costs that would be unwarranted. Rather than put them to that necessity, rather than force them into a position of delinquency-shall I say?-this government considered it was the part of wisdom in the interest of the credit of Canada to render some assistance to them. So because

The Budget-Mr. Stevens
we were able on the markets of the world and within the dominion to secure funds for the purpose, we properly, and I think wisely, having in mind the credit of the country at large, came to their assistance and offered them some advances-nothing very extravagant up to the present. I say to hon. gentlemen opposite, if we are properly to be subject to the criticism of the hon. member for Shelburne-Yarmouth on this head, let those criticisms be put in the form of an amendment to the budget, thus placing themselves on record as condemning the government for their western financial policy.
My hon. friend also harked back to the transcontinental railways. In this he was unhappy, very unhappy. Seeking by the way merely 1o justify the position of his party during the years they were in office regarding the expenditures by the Canadian National Railways, he said in sweeping terms, "Why, every man in the house, every party in the house, the old government, the Borden government, all endorsed this measure, all stood for three transcontinental railways." They did not. Turn to the debates of 1903 and 1904-


James Layton Ralston: I have.


Henry Herbert Stevens: -and read what Sir Robert Borden said. I recall it very well. I have not had time to bring those debates here, and I should not want to read lengthy excerpts from them, but anybody who desires can do so. What was Sir Robert Borden's proposal on behalf of the Conservative party of the day? I ask hon. members opposite to consider it and then give to that right hon. gentleman, that venerable statesman, credit for an insight into the future that is seldom found in any man. What did Sir Robert Borden say? He said:	Secure the Canada
Atlantic, extend it to North Bay and make it a common road for the Canadian Pacific and the Grand Trunk; follow the Canadian Pacific from North Bay to the head of the lakes, double track it if necessary, but let that railway be occupied by the two systems that you propose; then when you get towards the prairies where the broad wheat fields are located spread your line out, have two or three railway systems there if you wish; then carry your line through the Yellowhead pass, to give you a good grade, down to Kamloops, two hundred and fifty miles from the coast; double track the Canadian Pacific from that point to Vancouver, and there again make it a common road. I ask hon. members this question: Had the people of Canada accepted the advice of Sir Robert Borden would it not
have saved this country hundreds of millions of dollars of investment in railways? Of that there is no doubt. Sir Robert Borden and the Conservative members of the day did their best to persuade the then government against three transcontinental railways. I would not have wasted the time of the house to point this out but for the fact that my hon. friend brought up the subject and indulged in what I think was grossly unfair criticism.
Regarding income tax, he criticized the retroactive feature, and suggested that one of the reasons prompting the Minister of Finance and his colleagues in amending the income tax, in proposing the five per cent surtax and withdrawing the twenty per cent discount, was that we wanted to injure the civil servants of this country. He said that we had deducted ten per cent from their wages and increased the income tax to spite the civil servants of Canada. As a matter of fact those receiving under SI,200 will not be touched at all by the income tax proposals. Those who will be affected by the present income tax proposals of the Minister of Finance are those who, to use the common phrase, are most able to pay and most able to bear the burden.
In the course of my remarks, Mr. Speaker, I shall refer to other observations made by the hon. gentleman, but I will not at the moment follow his speech further.
In presenting his budget the Minister of Finance gave to the country a clear, concise outline of the financial affairs of the country. There were no evasions and no equivocations. It was an unadorned statement of fact, and for this I think he should be complimented and commended. He fearlessly laid bare to the country losses in revenue, a falling off in trade and an increase in debt; he tells us that we must curb expenditures and increase taxation. All this may be very disagreeable, and it may be useful material for the destructive critic to take before the people, but it was necessary, and to my mind it was wise and courageous. I contend, Mr. Speaker, that the minister has discharged a difficult task with such marked ability that the country will share with us a feeling of confidence in his capacity to guide us wisely and safely through these troublous days.
Referring to the budget, with which I shall now deal briefly, my hon. friend (Mr. Ralston) indicated that the only safe way to prepare a budget was carefully to avoid mailing any estimate of revenue. The ministers of finance of the party opposite did not bring down budgets in which estimates of revenue for the coming year were given; they simply presented to the house abbreviated statements of past
Revised edition
The Budget-Mr. Stevens

revenues and expenditures. Last year the right hon. leader of the government presented to the house certain estimates. It is now argued that those estimates fell short of what was actually realized, and to-day the right hon. gentleman is arraigned by my hon. friends opposite for failure to realize the estimated revenue of last year. In fairness to the government and to the Prime Minister I invite the house to consider the facts, and in doing so we are not seeking quarter from those who refuse to recognize any argument or any reason for the course pursued by the government. I do think, however, it is wise to consider the facts.
The failure to realize the amount of revenue estimated is due to certain causes. First there was the dropping off in commodity .prices during the past year, amounting to at least ten per cent. I shall deal with that in considerable detail a little later, but for the moment let me point this out: The drop in commodity prices, under our system of revenue, with sales tax, excise tax and customs duties, necessarily must be immediately reflected in a falling revenue. There is no question at all of that. The only thing that remains is to analyze the causes of the drop, which I shall attempt to do later, in order to see if there is anything we can do to correct it. Then there was a drop in volume of business which was unforeseen. It may be argued that the government should have foreseen it; indeed, this afternoon my hon. friend stated very definitely that the government should have known what was ahead. I notice, however, that in no part of the world is there anyone who claims that he could foresee the extent of this depression, the drop in prices and so forth. Even some of the most skilled economists, who predicted in part something of this kind, never dared predict the length to which this depression would go. There was a drop in volume of business of from ten per cent to thirteen per cent, so these two factors alone, over which this government had no control whatever, account for over twenty per cent of the drop in the revenues of this country. I do not think, therefore, that it is the part of fair criticism to point a finger at the Prime Minister to-day and say that last year he failed properly to estimate the revenues of the country. The fact remains that we come forward and show what are the true facts, and we are quite ready to take whatever responsibility is ours.
If it were possible to do so briefly, and if I felt warranted in doing so, I might remind my hon. friends of how frequently in the past they measured the burden of taxation upon the people of Canada by the amount of revenue raised through taxation.


John Livingstone Brown: Oh, no.


Henry Herbert Stevens: Oh, yes. When it suits their argument hon. gentlemen opposite frequently state that the rate of taxation is measured by the revenue produced or collected from the people. In my long experience in this house I recall having heard that argument frequently.


John Livingstone Brown: That came from hon. gentlemen opposite.


Henry Herbert Stevens: Be that as it may, here are the facts:	Last year taxation produced $273,000,000 in revenue, or more than $122,000,000 less than was raised in taxes during 1928-29. I do not advance that as any argument to support the position of the government at the present time; I merely cite it as a fact. This is the point I wish to make; when there is a drop in commodity prices- which my hon. friend ignored this afternoon, and to which he gave no weight-it is reflected in a drop in revenue such as I have indicated. Inevitably it results in a lessening of taxation to that extent; there is no escape from that argument.


James Layton Ralston: Except that there is an arbitrary value fixed upon which the duty is collected.


Henry Herbert Stevens: That has nothing whatever to do with my point at the moment; I will deal with that matter later. There is also the suggestion that there has been an increase in expenditure. Again I invite the house to look at the facts. My hon. friend said, quite truly, that the total expenditure was $454,000,000, but this included over $49,000,000 for unemployment relief and the wheat bonus, leaving a total expenditure of about $404,000,000. That represents an increase over 1929-30, the last full year hon. gentlemen opposite were in power, of about $6,500,000. The question may be, and is, properly asked: How does this government account for an increase of $6,500,000 in expenditure over last year? I will account for about $31,000,000 of it, and I think my hon. friends will see that the expenditure of this $31,000,000 which I shall now cite was unavoidable and inescapable.
First there were provincial subsidies, which were increased by $1,000,000. We took a census, and under the British North America Act the subsidies were arbitrarily increased by over $1,000,000. That is expenditure number one, unavoidable and inescapable. Then there was the old age pension legislation, .vhich was introduced by hon. gentlemen

The Budget-Mr. Stevens
opposite. Our share was increased to 75 per cent by the amendments put through a year and a half ago, and in consequence the direct charge against the federal government was increased last year by 88,700,000, another inescapable and unavoidable expenditure. Then let us take war pensions. Due to the legislation of 1930, in which the whole house and parliament generally concurred, war pensions were increased by $8,000,000. Then there is the care of ex-soldiers, a special charge upon the government, representing an increase of 82,700,000. Next, take maritime freight rates legislation introduced by my hon. friends opposite and concurred in by parliament, something over which we have no control whatever; the application of that legislation resulted in an increase of $3,800,000 last year, due largely to the decline in the movement of commodities over that section of the railways. Then take census and Canada Grain Act: these two account for another $3,240,000 instead of $3,500,000, or a total of $31,000,000 in increased expenditures, which neither this government nor any other could have controlled in any way. In others words, while we show an increase of $6,500,000 in expenditures, $31,000,000 was inescapable, which indicates at least a retrenchment of about $25,000,000 on the part of this government during that period.
Now I turn to the question of the public debt. Here again I think it is well for the house to be frank and fair in considering this matter. We find there has been an increase in the public debt; but during the period that hon. gentlemen opposite were in office there was an increase of guaranteed obligations. Prior to 1922, in very large-measure the Canadian National Railways' obligations were absorbed into the public debt of the country in the form of estimates and payment in cash. My hon. friends introduced the process of settling these by guaranteed bonds, guaranteed securities. I am not complaining about it, but let us look at the facts. On March 31, 1922, these guaranteed securities amounted to $465,000,000; on March 31, 1931, they amounted to $954,000,000, or an increase of $489,000,000 in guaranteed securities, which were not reflected at all in the public debt as reported by hon. gentlemen opposite during their term of office. If we deduct from that sum the decrease in the public debt during the same period, it will show a net increase of the debt obligation to this country during their term of office of $329,000,000. I submit that it is only fair, it is only common sense, it is only wisdom for the people of this country to recognize that, because it has been by ignoring 41761-120^
the piling-up of the capital charges of the Canadian National Railways that we find ourselves in the position we are in to-day in connection with that great undertaking.
My hon. friend referred to the deficit, and I am going to mention some of the items that went to make up the $219,000,000 to which he referred. Provincial Government Relief Act, $22,000,000:	Were we wise or not in
incurring that?


James Layton Ralston: The sum of $11,000,000
was advanced to them in order to pay loans in New York, and 810,000,000 was on account of the relief act.


Henry Herbert Stevens: It is the same thing; the total is $22,000,000.


James Layton Ralston: Yes, but it is not all
relief; that is a very different thing.


Henry Herbert Stevens: It is all in connection
with the condition in which the prairie provinces find themselves owing to the failure of crops there at the present time, and it is all advanced to them on that account. Was the government right or wrong in that regard? That is the test of the whole thing. Ought we or ought we not to have done it? Are we to be condemned or are we to be commended for having done it? My hon. friends condemn us for doing it; they hold us up to public obloquy because we have done it. They say it is bad administration. Well, we assert that we were right and that it was the wise thing to do. The Canadian National Railways took $41,000,000, which appears as a cash advance by the Minister of Finance. Again I ask, were we justified or not? Should we or should we not have made that advance? My hon. friend would not offer an opinion on that-not for a moment. He does not condemn us and he will not condemn us now for making that advance to the Canadian National Railways. He knows perfectly well that it had to be done if the Canadian National Railways were not to be thrown into liquidation. Does he want the railways in liquidation? I think not. Do my hon. friends opposite want it in liquidation?


Charles A. Stewart: What is new about it?


Henry Herbert Stevens: Nothing new about it
except that he condemned us this afternoon for this expenditure-


James Layton Ralston: I beg your pardon.
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Henry Herbert Stevens: -when as a matter of fact it was absolutely necessary.


James Layton Ralston: The hon. gentleman is
setting up a straw man and knocking it down.


Henry Herbert Stevens: My hon. friend made a
long attack upon us in connection with this matter; he spoke bitterly about the $219,000,000.


James Layton Ralston: I spoke about the increase in the funded debt.


Henry Herbert Stevens: Yes, and the hon. gentleman took great care to leave the impression that there had been an increase of $219,000,000. Those are the figures he gave.


James Layton Ralston: Will my hon. friend permit me-


Some hon. MEMBERS:: Order.


Henry Herbert Stevens: I am going to show how that $219,000,000 is made up.


James Layton Ralston: I said that the difference between the two net debts was $119,500,000, but the increase in the funded debt for the year is $182,000,000. There was no $219,000,000 mentioned.


Henry Herbert Stevens: The only reason I refer
to this is that my hon. friend laboured it and had this very statement in front of him. He laboured the point and left the impression on the minds of those who were listening to him -the papers will undoubtedly show it tomorrow-that there was an increase of this sum.


James Layton Ralston: I never mentioned that
amount; I must correct my hon. friend. I never mentioned $219,000,000.


Henry Herbert Stevens: Then my ears played me false, although I listened with great care.


James Layton Ralston: You are mistaken.
Mr..STEVENS: Now let me turn to the
question of deficits. Last year there was a deficit for which we are being condemned here and now. May I, for one purpose only, invite the attention of the house to a consideration of the deficits of various countries of the world, and I do so not to justify a deficit in this country but rather to impress upon the minds of hon. gentlemen the fact that the causes of our difficulty are causes that are common to all countries; and if we are to remedy the situation we must seek the remedy amongst the different countries of the world

rather than singly in Canada. The deficit of the United States for the current year is estimated at $2,123,000,000; Germany, $167,000,000; France, $120,000,000; Canada, $51,000,000; Belgium, $55,000,000; Italy, $47,000,000 for the first period and $176,000,000 for 1932. I cite these, not as an argument to justify a deficit in Canada but rather to show how worldwide is the crisis through which we are passing.
Now, my hon. friend used a most extraordinary argument in connection with exports and imports. I think I have him right in this, because I made a note of it, and I do not wish to be accused of misquoting him. The exports do not exceed the imports, he said; he declared that it is a misleading statement that the government is giving out, that during the last nine or ten months exports have exceeded imports. He says it is not true. He says it is grossly misleading to say that. The truth is, he says, that imports are less than exports. Can anyone make anything out of that? It is like saying that it is not right to say that black is not white, but that you should say that white is not black. That is exactly the form of his argument. As a matter of fact, there are some very interesting figures regarding the decline of trade. I shall cite these figures for a purpose which I shall show in a moment, namely, that this thing with which we are confronted is not something that can be lightly treated by this or any other country; it must be faced as an international problem. We find the following percentages of decrease in exports:
Per cent
United Kingdom	 39-9
United States	 36-9
Canada	 31-8
Germany	 23-5
France	 28-9
Holland	 23-7
Belgium	 1U5
Italy	 17-1
I have a list of the figures applicable to other countries, but those I have given show the decrease for the leading countries of the world. It will be noted that there is a uniform decline in exports, and the same applies to imports and total trade, in almost the same percentages. I shall not weary the house with all the figures. There has been a decline of trade throughout the whole world.
The question is, what are we here for? Are we here to indulge in interminable bickerings on narrow interpretations of obscure points in [DOT] international law? Are we here to discourse more or less learnedly on theories of social systems? Are we here merely to settle

The Budget-Mr. Stevens
parochial disputes as to whether Jim or Tom shall have the appointment as fish guardian or locktender or what not? This is for the hon. member for Gloucester (Mr. Veniot).


Mr. VENIOT:: As my hon. friend has
mentioned my name, I may remind him that it was he who took up so much time in 1929 doing that very thing.


Henry Herbert Stevens: I took up very little time. Rather, is it not our first duty to face courageously the economic problems which confront this country in common with others, and attempt to arrive at a solution? There is no royal road to prosperity any more than there is to learning: alike, the peer and the peasant must climb to its abode.
I think I have passed the controversial point in my remarks, and I invite hon. friends opposite to consider certain matters. The machinery of government is much more complex to-day than it ever was before; its contacts with commerce are much more intimate. Commerce, industry, agriculture and finance are all operating to-day with machinery much more delicate than that employed a few years ago. In my opinion, the chart of 1919, of which the right hon. the leader of the opposition has so often spoken, would not serve to guide the country to-day in the way in which he and others expected it would at that time. Times have changed, conditions have changed, contacts between government and business are altogether more intimate and critical than they ever were before. A question which we might very well ask is, what about the future? We hear a great deal nowadays about economic planning and I ask the question-can we plan for the future? I think we can. I do not think it can be done by laying down precise schemes in which all humans are to be treated as parts of a machine, to be fitted in here or there as the commissary or manager may dictate; it can be done by taking the know'n factors, now' a part of our confusion and distress, and directing them so that the results of their operation may move towards orderly progress.


Charles A. Stewart: That sounds like the Ottawa Citizen.


Henry Herbert Stevens: My hon. friend may laugh at me, but I am serious about this. If the editor of the Citizen or any other paper will face these facts and attempt to appraise properly the factors which are operating today, attempt to understand them and see if it is possible to guide them for the benefit of
this and other countries, then he will be doing a service to this parliament and to the world which should not be laughed at.
There are four factors to which I should like to invite attention-price levels, debt, interest and trade. Price levels are admittedly the most disturbing factor to-day. If we could restore the levels of 1928 for wheat, copper, paper, lumber and fish, we would restore prosperity to Canada. I say to hon. friends opposite that it is not sufficient to reply to this statement by saying: yes, we were in power when those values obtained. The fact is that certain international factors have been in operation and price levels have been seriously affected. What is the cause of this drop in commodity prices? Prices are expressed in terms of currency, and in the leading countries of the world the value of currency is attached to gold. If gold is scarce or is being hoarded, if gold is in abnormal demand for debts, then inevitably commodity prices will fall simply because people will be anxious to dispose of their commodities in order to secure gold to meet their obligations. We are confronted with this situation and it is admitted by everyone that gold is scarce. To my mind that is perhaps the underlying cause of most of our troubles to-day. That there is a scarcity of gold is so clear and so definitely admitted as to make it unnecessary for me to pursue my argument any further. We must now' admit, and I think it will be admitted, that the value or purchasing power of mone}' does vitally affect commodity prices.
My next point is that the most injurious thing to the economic w'orld to-day, or for that matter, at any time, is fluctuation in the value or purchasing power of money. As an illustration, I invite the house to consider this fact: The purchasing power of money is oscillating violently these days. In 1928 a ton of copper equalled two thousand pounds, and in 1931 it equalled two thousand pounds. In 1928, a ton of copper equalled $360, in 1931 it equalled $120. In other words, copper when measured in terms of money to-day is worth just one-third what it was worth three years ago, whereas in terms of weight it is worth exactly the same. Let us take wheat; in 1928 a bushel of wheat equalled 60 pounds, as it did in 1931, while in 1928 it equalled $1.20 and in 1931 only 60 cents. The weight or bushel measurement did not vary, while the cash value did. I shall ask a question which, although it may seem foolish to some is to me very important. What would happen to an economic system where the weights and measures fluctuated as do the values of
The Budget-Mr. Stevens

money? In my opinion we are not giving sufficient consideration to the subject of the stabilization of the value or purchasing power of money. It seems to me that the first and most important step we should attempt to take is to secure the stabilization of the value or purchasing power of money. That is not something for which this government is to be blamed; it is of international importance, and I think the government and parliament should direct their attention to the study of the problem and along with other governments attempt to arrive at a solution.
Bet me now deal with the question of debt, my second factor. The world is sunk in a veritable morass of debt. Of that there can be no doubt. International debts are overshadowing the relations of the various nations of the world, one with another, as no other influence is affecting those relations to-day. Let me put it in this way: Germany this year is not budgeting for the payment of her reparations; she says simply: It is not possible; I cannot do it. Why is Germany not budgeting for the payment of her reparations? Because the burden of debt incurred during the war being, due ,to the fall of commodity prices, increased by one, two and in many cases, three times what it was, she is unable to face the situation. Let us carry this a step further and look at it in the light of federal, provincial, municipal and private debt. The fact is that the weight of debt in this and other countries has been doubled due to the drop in commodity prices. Therefore the fluctuation in the price level is a vital factor in matters affecting debt.


Some hon. MEMBERS:: Hear, hear.


Henry Herbert Stevens: I notice my hon. friends
angularly opposite, as we used to say( agree with me in this analysis. If the price level continues to fall, the burden of the debtor increases accordingly. If the price level rises, then the creditor loses. It is admitted that the present burden of debt is unbearable, not only as regards nations but in many instances as regards individuals. The question then introduces itself: How, then, can the debt burden be modified? My answer to that is this: it can be modified by a raising of the price level, and this in turn reintroduces the currency question.
May I give an illustration regarding the debt of Canada? My hon. friend this afternoon said: What are the things that Canada exports? He cited wheat, paper, copper and a few other items of that kind, and, he said, as these are the things that Canada exports, we

should seek to open up markets for them in other lands. He overlooked this very significant point with which I shall now deal: Canada has to pay her debt abroad. She is paying it at present in the United States' to the extent of $250,000,000 a year in interest. My hon. friend did not recognize .that. He says: These things are paid for by exports. I do not think he said that this afternoon, but he will agree with me that ordinarily is a correct interpretation of his remarks. All right; we have to pay the United States $250,000,000 a year in interest.


Mr. ARTHURS:: Not the dominion.


Henry Herbert Stevens: The whole of the dominion; that is for the $6,000,000,000 obligation we have oyer there. The price of paper dropped one-third. We export nearly all our paper to the United States; that is the way wp pay our indebtedness to that country. In -other words, for every ton of paper we ship -over there we fell down, as compared with 1927-28 price levels, one-third in meeting that obligation. Copper is a very large item of export to the United States and its price has fallen to one-third of what it was; in other words, we fell down two-thirds in -meeting -our obligation in copper. The price of lumber has dropped to about one-half; wheat we do not ship over there; but if we take that obligation to the United States alone, my point is this; separating the United States for the moment from all other -countries, we ought to be exporting to it about $200,000,000 to $250,000,000 a year more than we import from it. But what does my right hon. friend's free trade policy do for us in this regard? Supposing we wiped out all the tariff barriers between Canada and -the United States, will they increase their buying fr-om us? No, he must know they will not. His policy does not meet that difficulty at all, and before I finish my re-marks I shall show how this works in regard to other countries.
Let me turn to the third factor, that of interest. I say this advisedly; I say it after a good deal of study and thought, and I ask my hon. friends angularly opposite to accept it in regard to not only agriculturists but industrialists and merchants, because it is only by having some degree of sympathetic contact among the different branches of activity in this country that we -are going to make any progress. No agriculturist, no industrialist and no merchant -can afford to pay ten per cent interest for the money he uses in his business; it simply -cannot be done; normal business will not permit of that rate of interest. Moreover, no bank can afford to take a loan at ten per

The Budget-Mr. Stevens
cent, because it is too risky. When a loan justifies a rate of ten per cent, in my opinion it is too risky a loan for a bank to take at all and ought not to be accepted. Whether or not that can be covered by arbitrary statutory legislation is another question. That can be discussed next year at the revision of the Bank Act. I am laying down what I consider to be sound business principles directly affecting our welfare, and the same principles are operating in every corner of the world to-day affecting the business of the world and affecting us along with the other countries. But I lay down the principle that a rate of interest around eight or ten per cent makes successful operation of the ordinary business activities impossible and unprofitable.
Let us look for a moment at a farm mortgage in the light of commodity prices. Again I come back to this one point, and I am going to invite my hon. friends opposite to join me in this study. Let us look at it in this way: on a farm loan of $2,000 at eight per cent, in 1928 the interest would be $160 payable in 133 bushels of wheat, whereas in 1931 the interest is still $160 but it is payable in 266 bushels of wheat. In other words-let us get this as clearly as possible-interest is not something that is made by money but something that must be taken out of the productivity of the country and paid upon the money that is lent. That commodity prices have dropped to the unwarranted levels of to-day simply means that the farmer, in paying the interest on his farm loan, must take 266 bushels of wheat to do what he did with 133 bushels two years ago. Precisely the same principle applies to an industry. Take one that has for its basic product copper, lead or zinc, operating in some manufacturing concern. Suppose they borrowed $50,000 three or four years ago. In the payment of interest on that money, where they formerly calculated an output of a given amount would serve to meet that payment, it would to-day take an output of two to three times as much to discharge the obligation. So it again becomes clear that the price level is the chief factor in all the economic problems with which we are confronted.
I turn to the question of trade, which is the fourth factor that I think should challenge the attention of the house. I have already intimated that Canada is a debtor country. Our borrowings abroad amount to $6,250,000,000 and our loans abroad amount to about $1,250,000,000, leaving, roughly speaking, obligations to be met abroad in interest and recurring principal renewals pf approximately $5,000,000,000. This is of importance and must be recognized and remembered. It was ignored by my hon. friend this afternoon. It is ignored
very largely by those hon. members presenting the policy of my right hon. friend opposite. We are a debtor country-let us understand that-and the fact that we are makes all the difference in the world and calls for a different policy, from that adopted by a creditor country. We differ entirely from England. England is and has been for generations a creditor country; the United States is a creditor country, and France is a creditor country. As I said a minute ago, Canada being a debtor country to the extent of $5,000,000,000, she must find $250,000,000 per year in interest alone, besides renewals and repayments.
It is said that we must buy if we are going to sell; I think my hon. friend said that this afternoon. Let us test that statement by the free trade theory which is the ideal of my hon. friends opposite. There is one strange thing about my hon. friends opposite. They are very strong on free trade theories, but they never come forward and risk their political existence on the doctrine they profess. They will not do it now, Mr. Speaker; they had a chance to do it, but they would not. They do not do so in this attenuated, emasculated amendment moved to-day. They will not do that. They have theories, but they will never stake their reputation or political existence upon them. As my hon. friends opposite are advocates of free trade I think I am entitled to put the following question to them:	Assuming that a country with a
depreciated currency were suddenly to commence shipping goods into Canada at prices obviously below the cost of production, and further assuming that such goods were on the free list, and that Canadian industries were threatened thereby, would Canada be justified in adopting effective measures to prevent such goods from entering to the detriment of Canadian industry? That is the question I put to my hon. friends opposite. Those are the circumstances which have been the basis for the action of this government which has been so bitterly condemned by hon. gentlemen opposite, and which is condemned in the amendment now offered to the house. I repeat the question: If a country with a depreciated currency were suddenly to commence shipping goods into Canada at prices obviously below the cost of production, and further assuming that such goods were on the free list and Canadian industries were threatened thereby, would Canada be justified in taking effective measures to prevent the influx of those goods? Would she or would she not?


Some hon. MEMBERS:: Yes.


An hon. MEMBER:: No.

The Budget-Mr. Stevens


Henry Herbert Stevens: Their answer is no, and
they condemn us for doing it. Our answer, Mr. Speaker, is a decided yes. Canada was daily confronted with that problem.
This afternoon my hon. friend spent a great deal of time in an effort to leave the impression upon the public that the government headed by my right hon. friend the Prime Minister had dealt unfairly and falsely with British exporters of goods to Canada. He laboured the question. What are the simple facts? On September 22, I think it was-


James Layton Ralston: It was September 28.


Henry Herbert Stevens: No; anyway it was in
September last-


Mr. CAHAN:: September 21.


Henry Herbert Stevens: Yes, on Sepember 21,
Great Britain unexpectedly went off the gold standard. The action of the mother country was not known to anybody-except the hon. member for Vancouver Centre (Mr. Mackenzie) ; he knew all about it. As the Prime Minister had said not even the leading bankers in New York or in other parts of the world had any idea or expectation of such action by Great Britain. They went off the gold standard, however, and what was the result? The result was that goods held in Great Britain at a pound value of $4.86 became available for export to other countries, Canada included, at a pound value of $4. $3.86, S3.76 or figures in that vicinity. That was a condition which no country could meet. Had we done nothing, what would have been the result? It would have been such as described by the writer of the memorandum from which my hon. friend quoted so freely this afternoon, the head of Robert Simpson Company, Limited; I recognized the figures he quoted. The result would have been highly satisfactory to that importer, because he could have imported goods, irrespective of the interests of Canada, at figures below what they originally represented in cost in the old country, simply because of the exigency of England going off the gold standard, simply because of a temporary financial catastrophe which overtook Great Britain. What did we do? Recognizing that there was an hiatus between the time that a country depreciated its currency, and the time the costs in that country could equalize that depreciation-recognizing there was an hiatus it became the duty of this government to provide safeguards against an absolutely inequitable and unfair competition. That is all we did.


James Layton Ralston: 
Henry Herbert Stevens: And I will tell my hon.
friend why we changed it; if he will contain himself for a minute I will tell him. We were faced with a condition, and it was impossible to estimate what the results would be.


James Layton Ralston: You had had a week.


Henry Herbert Stevens: I am afraid my hon.
friend is too restless; wait a moment. What did we find? We found that immediately certain large buyers of goods in this country were recognizing the fact that here was a chance to make very large and unwarranted profits.


James Layton Ralston: Oh, oh.


Henry Herbert Stevens: What I am telling is the
truth.


James Layton Ralston: The consumers might have had a chance.


Henry Herbert Stevens: No, they would have received no benefit.


James Layton Ralston: They might, possibly.


Henry Herbert Stevens: I should like to state the
facts. Those buyers began cabling very extensive orders to the old country which would have flooded this country with goods during the period of hiatus I mentioned. In the meantime the pound had fallen to S3.S6. The result would have been disastrous to Canada and unfair to everybody concerned. Very little if any benefit would have accrued to the consumer; great benefit would have accrued to the speculator. We said, "No, it is not going to happen."


James Layton Ralston: No, you did not.


Henry Herbert Stevens: So we fixed the rate at


James Layton Ralston: No, you fixed it first at the exchange rate.


Henry Herbert Stevens: Wait a moment; having recognized these things about which I now speak, we fixed the rate at $4.86.


James Layton Ralston: And you changed your
mind again.


Henry Herbert Stevens: My hon. friend was not
interrupted this afternoon. I spoke to him once but he did not answer me. Then, we went on for a period of several weeks, knowing that some change in the situation was bound to eventuate, either that the pound would sink lower or that Great Britain would

The Budgel-Mr. Stevens
adjust her difficulties and the pound would recover. We expected it would drop lower; two or ithree weeks demonstrated that we were right in our expectation. We realized that $1.86 was too wide a spread (between the actual selling price of goods, and the par value, and therefore we lowered the fixed value to $4.40.
I wish to say that from experience and from trade records of the last six months, it would seem that $4.40 was about as fair, equitable and happy a figure as we could have chosen. It is true we could have kept on fluctuating through the whole winter, but we considered that S4.40 would serve fairly and equitably the purposes of Canadian industry and Canadian trade, and at the same time admit goods from the old country under conditions (that were more favourable to them than they were before. Because the test is this; there was considerable increase in the export of goods from Great Britain under the fixation of price at $4.40.
Now, Mr. Speaker, I go a step further. My hon. friends say that raw materials should be on the free list, that there should be free movement. The right hon. gentleman has frequently used the phrase "We must buy so that we can sell." He has laid that down as a cardinal doctrine in economics. He also implies, as does also his party in their literature and their presentation of trade questions, that the more freedom there is to the movement of goods, as a result you get naturally an entree into the market of the other country. Let us look at certain commodities on the free list that are of very great importance to us- raw (rubber, hides, silk, coffee, Egyptian cotton, pineapples. I could give dozens of other commodities, but these are rather important because their movement is fairly large. Take raw rubber. It is on the free list right across the board: anybody can ship raw rubber to Canada. Consequently, if my right hon. friend's theory is correot, we ought to have entry into the market where our rubber is produced. That is logical.


An hon. MEMBER:: No.


Henry Herbert Stevens: Some one says "no." That is not a Liberal "no." But I say it is logical. If there is any advantage in having the movement of goods as free as possible, surely if raw rubber is on the free list it ought to result in the movement of Canadian goods out to the rubber-growing countries in return for our imports of raw rubber. What are the facts? We import ninety-eight per cent of our raw rubber from the United Sta/tes, where there is not a pound of rubber produced. Where does your free trade come in there?
But that is not the whole story; here is the balance, and it is very, very fatal to Canada. The Trade and Commerce department have trade commissioners in the areas where practically all the rubber, ninety-eight per cent, is produced, that is, the Malay peninsula, the Dutch East Indies, and Burma. What do those countries tell our trade agents. "You buy no goods from us. The United States is our big buyer. Therefore we favour their goods against yours." That baldly is their answer to us. Is that a condition we are warranted in continuing? Roughly, we import 60,000,000 pounds of raw rubber, and yet for the purchase of those goods we get no access to the markets of the countries that produce them.
Now let me take hides. Hides come from the Argentine. We import them through New York. Last year we imported some $3,000,000 worth. During the same period our Canadian National boats running to the Argentine lost in operation $500,000; the hides that come to Canada from the Argentine were brought in American and other bottoms to New York. Those hides are on the free list. The Argentine is saying to us, "We should like to buy more of your goods, but you do not buy much from us."
Next I take silk. Roughly speaking, we buy about $5,000,000 annually from Japan. It comes in through New York chiefly; some may come in by Vancouver, but very little, most of it goes through the Panama to New York, whence it is merchandised into Canada. It is on the free list right across the board. Japan says to us, "We are buying from you about twice as much goods as you buy from us. We should like you to buy more." No credit comes to us for this $5,000,000 worth of silk. As I say, it is on the free list and moves to us from New York. The same thing applies to coffee and to Egyptian cotton. The latter we use in very considerable quantities. The same thing applies also to Cuban pineapples. My hon. friends from Prince Edward Island have been after me to get Cuba to take some of their potatoes, and we have been doing our best to secure the Cuban market for them. But although we buy thousands of dollars worth of pineapples from Cuba, she gives us no credit for those purchases because the pineapples are sold to American dealers at New York whence they are imported into Canada.
Now, the point I am making is this: Where is your doctrine of "Throw down the bars, put commodities on the free list so that trade can move freely, and so restore prosperity to Canada."
The Budget-Mr. Stevens


James Layton Ralston: The bars are down to us.


Henry Herbert Stevens: Precisely, the bars are down and have been down for years, but the goods do not flow to Canada, they are merchandised in another country, and we get no' credit for them at all; we get no return trade. It is very easy to stand before the public if you do not attempt to analyse your proposals and say that if you will just let trade flow in its natural channels you will have prosperity. I assure my hon. friend that where there is the fullest opportunity for goods to flow in their natural channels they are not so flowing and we are not getting the benefit of our imports for the marketing of our goods in those producing countries. What wre ought to do, and what we must do in my opinion, is so to adjust our trade policy that we will get full credit in those countries from whom we buy so that we can sell to them in return. I have been told by some that I am foolish, that I do not know what I am talking about-


Mr. YOUNG:: What do you propose in that regard?


Henry Herbert Stevens: Just a minutee. Let me quote in this regard Mr. Carlisle's address at the shareholder's meeting of the Goodyear Tire and Rubber Company. Mr. Carlisle is perhaps one of the most outstanding business men of Canada, certainly he is one who understands his own business, the rubber business, thoroughly, and a man whom all those who know him hold in the highest esteem. He said this, in part:
The depression that we are in, is a world condition and can only be solved by world solution.
Our export market was affected adversely- due to excess tariffs in different countries, some places prohibiting the importation of products, a decrease in purchasing power and a very keen competition.
Then he goes on:
The export market at the present time does not look good. I think it will be decidedly poor for 1932. It is going to continue to be poor until we get a world readjustment, which will not come this year, next year or the year after.
I cite that part as the opinion of a thoughtful and practical business man of note. He goes on:
Our progress is measured almost entirely by the amount of materials and articles which we export. To my mind, export business can only be improved through a closer contact in operating conditions within the British empire or commonwealth.
Then he utters these very significant words:
It is rather surprising, if you make a study of this question, how many things we can buy

within the British empire. We can buy one hundred per cent of our rubber without inconvenience or loss of profit and we can buy a lot of our cotton from the same source.
Then he goes on with some other citations of a similar character. The point I wish to emphasize in this respect is that here is an outstanding authority on this subject telling us that if we address ourselves to the problem we can buy this rubber direct from British sources and bring it to Canada direct.


Some hon. MEMBERS:: Hear, hear.


Henry Herbert Stevens: These are the opinions that this government is seeking to work out in anticipation of the Imperial economic conference. My hon. friend opposite and soma of those associated with him sought to instil into the public mind and to send across the water to Great Britain the idea that this government is standing in a position of resistance against closer trade relations with the mother country. It is an absolute misinterpretation of our attitude and is not a fair interpretation of the efforts we are making. What we are hoping to do is this: In connection with many of the things we are now buying in other parts of the world, by readjustment of our trade facilities and trade policies we want to give to the mother country a larger share of those markets in Canada; we want to buy more within the British Empire, direct from the countries of production, and thus open a larger part of their markets for our business.
Now I must hasten, Mr. Speaker; I have one further thing to say and then I shall conclude. There is a great deal of talk of blue ruin, I was going to say; we are told that the country is going to the bow-wows, but there are still a few bright spots. I have a few here to which I should like to refer. Let us consider the production of gold which is up to a very marked degree. The 1931 gold production amounted to 855,000,000, and I think that is encouraging. Take leather footwear; in February, 1932, the total production was
1,500,000	pairs, an increase of 40 per cent over January, of 22 per cent over February a year ago and of 8 per cent over February two years ago. That is an industry of very considerable magnitude and importance, in which there is a steady increase in business. Take the export of bacon and hams; in February we exported 2,437,000 pounds as compared with 470,000 pounds in February, 1931, a marked increase. In February, 1932, we exported 23,000,000 pounds of copper, more than twice the amount exported during the same period in 1931. My hon. friend took dollar values. The dollar value of copper is

The Budget-Mr. Stevens
only one-third what it was two years ago, but when you come to the quantity value you have double the export of a year ago. The export of concentrated milk products amounted to 1,300,000 pounds, a gain of 200,000 pounds over February of a year ago.


Edward James Young: Could the minister give us
comparative prices for the same period?


Henry Herbert Stevens: No, I cannot, but the
price is very markedly down. What I am trying to do is show that as far as production and export are concerned, in some cases they have shown distinct gains. Take the export of flour to the West Indies. I have not the exact figures, but there is a marked increase in weight, though the value is down, of course. We are, exporting more wheat this year than we exported last year or the year before.


James Layton Ralston: No.


Henry Herbert Stevens: I think so.


James Layton Ralston: I think the minister will find from his own reports that on December 31 the exports were: about 17,000,000 bushels less than in the preceding year, while the value was down by $64,000,000.


Henry Herbert Stevens: I will mot dispute that
statement, but I looked up the figures a short time ago and at that time the exports showed an increase. I have not the figures before me, so I will accept the correction of my hon. friend. The export of butter for the twelve months amounted to 10,800,000 pounds as compared with 1,170,000 pounds during the ' preceding twelve months, and for the same period we exported 85,000,000 pounds of cheese, a considerable, increase over last year. I just cite these few figures for this purpose: Undoubtedly the dollar value of exports and of trade in general has fallen tremendously, but the quantity value has not fallen to anything like the same degree.
In conclusion I should like to read from an article which came to my notice some time ago, and I have a brief comment to make in regard to it. This article is entitled "The Lesson of the Day," and reads:
It is a gloomy moment in history. Not for many years-not in the lifetime of most men who read this paper-has there been so much grave and deep apprehension; never has the future seemed so incalculable as at this time. . . .
In France the political cauldron seethes and bubbles with uncertainty; Russia hangs as usual, like a cloud, dark and silent upon the horizon of Europe; while all the energies, resources and influences, of the British Empire are sorely tried, and are yet to be tried more sorely, in
coping with the vast and deadly Indian insurrection, and with its disturbed relations in China.
It is a solemn moment, and no man can feel an indifference (which, happily, no man pretends to feel) in the issue of events.
Of our own troubles no man can see the end. They are, fortunately, as yet mainly commercial; and if we are only to lose money and by painful poverty to be taught wisdom-the wisdom of honour, of faith, of sympathy and of charity-no man need seriously despair. And yet the very haste to be rich, which is the occasion of this widespread calamity, has also tended to destroy the moral forces with which we are to resist and subdue the calamity.
Good friends-let our conduct prove that the call comes to men who have large hearts, however narrowed their homes may be; who have open hands, however empty their purses. In time of peril we have nothing but manhood, strong in its faith in God, to rely upon; and whoever shows himself truly a God-fearing man now, by helping *wherever and however he can, will be as blessed and beloved as a great light in darkness.
This article, Mr. Speaker, appeared in Harper's Weekly of October 10, 1857. I read that for one purpose only, to indicate that while times undoubtedly are difficult, while we are labouring under stress and discouragement and in some cases almost despair, the fact is that the world has experienced conditions of this kind in the past. Little will be gained by merely attacking the one or the other, by seeking to load upon any government the full responsibility for all our distress. On the other hand, perhaps out of the depression and despair of these dark days we may learn principles of fortitude and of economy that will be of advantage to us in the future. But the solution of these troubles will not come from the efforts of any one nation; it must be found in the cooperation of the nations of the world, and to that end I say, as I have already said during the course of my remarks, that I invite study on the part of the house of the problems with which we are confronted so that the government may be guided, assisted and supported in its efforts to deal with these problems in conjunction with governments in other parts of the world.


Mr. A. A. HEAPS (North Winnipeg):: Mr. Speaker, this afternoon and this evening the house has been privileged to listen to two excellent addresses, both of a very informative character. I wish to say that with some of the remarks made by my hon. friend the Minister of Trade and Commerce (Mr. Stevens) I am in hearty agreement. When he spoke on the question of international debts and price levels he received no greater encouragement and support from any part of
The Budget-Mr. Heaps

the house than he received from this corner; in fact it was rather surprising how little support he did receive from his own party when he dealt with those two very important questions which so vitally affect our everyday lives.
There was another part of his speech on which I wish to commend him and with which I very heartily agree. I refer to that part of his address in which he dealt with the assistance given by the federal government to the provinces during these difficult times. I think one of the unfortunate parts of the address this afternoon by the hon. member for Shelburne-Yarmouth (Mr. Ralston) was when he inferred that it was wrong for the federal government to give financial backing to the provincial governments. I do not know what the provincial governments would have done during the past six or twelve months if they had not been assisted by the federal treasury. The hon. member for Shelburne-Yarmouth said that one of the reasons why the assistance might have been withheld was that constitutional difficulties might ensue. I wish to make just one observation in that regard. When people are hungry, when they are starving, all these constitutional technicalities are of very little consequence, because constitutional technicalities will not feed anyone. In this instance the federal treasury was the only source from which the provinces could obtain assistance, and T think that the federal government was fully justified in giving that assistance to the provincial authorities. If there is one thing for which I would commend the government, one of the few points on which I do agree with hon. gentlemen opposite, it is in regard to the assistance they have given the provinces in these difficult times of stress and strain through which they are passing.


James Layton Ralston: The hon. gentleman will
read in Hansard just what I did say, but I can assure him that I did not say what he attributes to me.


Abraham Albert Heaps: I am very sorry if I have
misrepresented the hon. gentleman's point of view, but that was the impression he left on my mind when he spoke this afternoon, for I remember his having dealt with the constitutional difficulties that might arise in consequence of the assistance having been given by the federal government for purely provincial purposes.


James Layton Ralston: I pointed out the desirability of a financial rearrangement with the provinces so that that situation would not arise.


Abraham Albert Heaps: It is difficult for me to interpret my hon. friend's point of view, but I will say this, that when the provinces were not in a position to obtain funds on their own account there was only one source from which they could get assistance to carry them through and that was the federal treasury. However, I leave the point there.
Let me now refer again to some of the remarks of the Minister of Trade and Commerce. He spoke of the tremendous dead weight of the national and international debt and showed how that would have to be adjusted before we could approach more prosperous times. To a certain extent I am in sympathy with that view; yet, when I ask myself what hon. gentlemen opposite have done in that regard, I find that they have done exactly the opposite of what we have been told they ought to do. In fact, they have not only increased the debt by enormous sums, but they have done something for which I cannot forgive them. When they wanted money recently they offered the highest rate of interest ever known in the history of this dominion, and that rate of interest on federal bonds reflected itself in all other classes of bonds in Canada. We find, therefore, that this action of the government in offering 51 per cent interest on gilt edged securities of the federal treasury meant the adding of millions upon millions of dollars to public debts in this dominion; because the moment the federal government issued bonds at 5i per cent our provincial government had to pay 6 and 6| per cent on money it wished to borrow. The securities of the city of Winnipeg are second to those of no other city in Canada; yet in Winnipeg they had to pay 6f per cent before they could borrow money. In other words, they had to increase the amount of interest charges by approximately 50 per cent before the banks would lend them money.
Very commendable as have been certain aspects of the statement made by the Minister of Trade and Commerce, it seems to me that both hon. gentlemen who have spoken today have approached the budget statement in exactly the same way as a director or a financier would look upon a bank statement. But may I point out that in government there is something more than finance; there is more than that in running the affairs of a country. There are in this country ten million human beings, besides the financial interests of Canada, and when the Minister of Trade and Commerce says that we should study our social problems I would add that in my humble judgment the needs and desires and the well being of the ten million inhabitants of Can-

The Budget-Mr. Heaps
ada have a prior claim over the financial interests of the dominion.
I wish to offer a few words of comment on the budget statement made to this house by the Minister of Finance (Mr. Rhodes). Last year the house was treated to what was commonly called a real budget. This year no such description has been used of the budget, but the result of the first real budget we had in 1931 is that we find ourselves now with a deficit of $55,000,000; and in order to make that deficit as low as it was the government found it necessary to cut the estimates by $55,000,000. Now bon. gentlemen opposite come along requesting great increases in taxation. I am not going to blame them for making these increases; it seems to me that if they wanted to balance the budget, increases were absolutely essential. And how are they going about these increases? Of the $55,000,000 that they propose to raise, approximately two-thirds will come out of taxation of the necessaries of life by way of an increase in the sales tax or by a two per cent increase in the excise duties. I do not disapprove, in fact I approve of the action of the government in increasing the income tax. I realize that if they had to balance the budget, they have taken, under the system which now prevails in this country, the only logical course which it was possible for them to take-that of increasing the income tax. It was stated by the Minister of Finance when he introduced the budget that, with one exception, he did not intend to make changes in the tariff structure of the country. I think that there was one very important change in the tariff, however, and that was when he increased the excise duty from one to three per cent. I regard that as a very fundamental change in the whole tariff structure of the country, because an increase from one to three per cent means, on the average, roughly speaking, an increase of about ten per cent in all protective duties in Canada. In 1922, when the Liberal party were in power, they found themselves in somewhat the same position as the present government now find themselves in, and they resorted to almost the identical methods which the Conservative party are adopting to-day; that is to say, they increased the sales tax to six per cent. It is quite true that subsequently it was reduced until it reached a level of about one and a half or two per cent, but now we find the sales tax back at the figure it was about ten years ago.
If capitalism demands a balanced budget, then I say that there is practically no alternative to what has been done by the
government on the present occasion. To me, however, the only other alternative is to make a complete break with the existing economic system. But in this house we find very little desire on either side to break with the system. What do we find further? We find that the government, in following out the policy of curtailment in expenditures in the attempt to balance the budget, are merely following the dictates of the financial interests of the country. I go a little further and say that parliament finds itself under the nominal control of those institutions which control the finances of this and other countries of the world. Our municipalities, our legislatures and even this parliament can hardly move without their consent. Our provincial governments find themselves more or less at the behest of the financial institutions; they are being told to balance their budgets, otherwise they will not be permitted to do any more financing.
Where does the real power lie? Does it lie inside of parliament or in the hands of a comparative few outside? We boast of our democratic institutions; perhaps we have good reason to do so, but they are being successfully challenged by those who own and control finance. We claim that we are living under a form of democracy, but I contend that we are living under a form of political democracy which exists side by side with a financial autocracy; in other words, we are half a democracy and half an autocracy. These two forms of government cannot continue to go on indefinitely side by side; sooner or later one must give way to the other. I think it was Lincoln who said during the civil war in the United States that that country could not exist half free and half enslaved. We cannot exist in this country one half a democracy and one half a dictatorship; the one must ultimately give way to the other. I am satisfied that when democracy comes to grips with financial autocracy there can be only one ultimate end to the struggle.
I come now to some of the desires expressed by the Minister of Trade and Commerce (Mr. Stevens) and I shall deal with some aspects of the social question. We have been told that we are suffering from certain financial difficulties. At various times during the present session hon. members have discussed the fact that in this country' we have too much coal. Other hon. members have told us that we have too much fish. We have been told we have too much wheat, too much meat, a surplus of railway equipment and too many railway's. On another occasion we were told there were too many doctors; we have been
191S
The Budget-Mr. Heaps

prevailing economic conditions. What hope is
the government bolding out to those who at present find -themselves out of work? The Minister of Trade and Commerce waxed eloquent when he was pointing out that world conditions are to an extent responsible for our internal situation. In a sense it may be quite true that to-day no nation can live entirely unto itself. But may I put this question to the minister and the house: Is it logical for one to assume that because we cannot sell our wheat and other food products to Great Britain, China, Japan, France, Germany, Roumania and other countries, if all these other countries are too poor to buy the products which we have in superabundance, is that any escuse for our people going hungry and barefooted? If our elevators are crammed with foodstuffs, and the people of China, Japan and the other countries I have mentioned are unable to purchase them, is it logical for us to assume or to say that we should deny those commodities to our own people in Canada who are producing them with the sweat of their own labour? These are facts to which hon. members might give their attention, and if a committee of the house had been set u-p to.deal with them I think both the house and the country would have received more advantage than they have from the efforts of the committees I have just enumerated.
We are told again and again that conditions are bad in the United States. I am quite ready to admit they are bad, but poverty and chaos in the United States are no excuse for a similar condition in this country. Even though world conditions may to some extent be responsible for internal conditions in Canada, the government responsible for the affairs of the nation must accept responsibility for conditions in our midst. I resent very much being told constantly about what is happening in the United States. While I may have a great deal of respect for some activities south of the boundary line I am not one who is always anxious to go to the United States -for illustrations of what we should do.
I am reminded of a statement made a few days ago by a well known English economist who told of the impressions he had received upon a trip to the United States. He said that in that country people were losing faith in institutions and in public men. I hope this government will not ask us to follow the example of a country in which conditions of that kind prevail. This afternoon at the close of the speech by the hon. member for Shel-[DOT]burne-Yarmouth and the peroration of the

Minister of Trade and Commerce, fine language was used and great heights of oratory attained. They were most eloquent as to what conditions should obtain, but not as to ho-w those conditions were to be brought about. I remember some of the expressions used by each hon. member. From the Liberal side of the house we heard the statement that they desired a removal of the restrictions on commerce and a freer interchange of commodities. Mr. Speaker, anything that removes artificial barriers between nation and nation so as to allow a freer flow of commerce has, gen&r-ally speaking, my approval. But we must have something more than that. Free interchange of commodities is one thing, but the great masses of the people should have freer access to the commodities which are produced. Free exchange of commerce is one thing, but it is another thing to have a fairer distribution of products. Unless we have a more equitable distribution of wealth, in my humible opinion there is no hope of solving our economic problems. Again, in my opinion the solution of our difficulties is not to be found exclusively in either raising or lowering tariff barriers. May I here interpose this remark: If those who attend the Imperial economic conference in July next believe that by a process of tariff barriers or tariff adjustments they will bring about a state of prosperity, we must expect a certain amount of disappointment. So far any efforts to bring about a state of prosperity by tariff adjustments within the empire have proved more or less disastrous to the Dominion of Canada. I refer to trade treaties made by the previous and present governments between this country and Australia and New Zealand. An illustration of what may happen is to be found in the despatches appearing in this morning's papers. One of the Australian delegates has stated that the empire will be disrupted if some satisfactory tariff adjustments are not made between its various component parts. It is my firm belief that closer relationships within the empire cannot be brought about by a .process of tariffs. Trade flowed more freely in the years 1928 and 1929 than it flows to-day. In those years we had unemployment; vast numbers of men and women were seeking -work. Restrictions in those years were not as high as they are to-day, and yet at that time we had exactly the same fundamental principles to deal with as we have now. We had wealth on the one hand and poverty on the other. In spite of the fact that we have somewhat changed our fiscal policy, prosperity has not returned to us.

The Budget-Mr. MacNicol
While hon. members in this corner of the house welcomed some of the statements made by the Minister of Trade and Commerce, we must say that up to the present time the actions of the government have not given us very much encouragement; they have not held out any hope of dealing effectively with the problem of unemployment. So far their efforts to adjust the tariff have been more or less a failure, and I sincerely hope the statement made this afternoon by the minister to the effect that we should study these social questions is not addressed to hon. members in this comer of the house but to his colleagues in the cabinet. I trust he is asking them to deal with these fundamental problems.
The minister referred to the crushing burden of our national debt. May I point out that in 1914 the interest charges on that debt amounted to 8-5 per cent of the national revenue? In 1932, according to the figures submitted by the Minister of Finance, the interest on our national debt has increased to 8135.000,000 per year-in other words, from 8-5 per cent to 35-6 per cent of the national revenue. It is this crushing burden which is preventing our return to more normal times. One way to bring about the conditions the minister desires is to tackle that problem and see that our interest charges are restored to the position of 1914.


@Acting Speaker: (Mr. Cowan,
Port Arthur):	The hon. member's time has
elapsed.


Mr. J. R. MacNICOL (Toronto Northwest) :: Mr. Speaker, in this debate I propose
to base my remarks on the fact that in its budget for 1932 the government has maintained intact the tariff enactments of the budgets of the short session of 1930 and the regular session of 1931. During the recess, to ascertain the extent of stimulation in industry brought about as a result of tariff enactments, I made a survey of employment in industry in many Canadian centres and in several of the neighbouring states, in the latter to derive firsthand information concerning the effects if any, of the Bennett tariff on American industry. It is my purpose to submit data showing that in spite of worldwide economic dislocation, employment in Canada, although below normal, is better than it would have been had it not been for the tariff enactments of this government. Four of the major objectives sought to be attained by budget legislation with respect to the stimulation of employment in industry are, first, more jobs for Canadian workers; second, greater purchasing power; third, contentment; fourth, increasing
to the greatest possible extent towards 100 per cent the Canadian content, both material and labour, in goods manufactured in Canadian factories by Canadians for Canadians.
In spite of the present worldwide economic dislocation the government has achieved something worth while towards the realization of each of these objectives. The Toronto Industrial Commission has issued a circular stating that since August, 1930, some sixty-seven new industries, mostly small, have been started in the Toronto district, and Industrial Canada and the Bureau of Statistics give the names of fifty-two other companies, mostly small but a few are large, that have been started throughout the country. I know most of these industries are small, and consequently the pay-roll is not heavy; on the other hand the increased employment in the aggregate is considerable. The large majority of these new industries have come from the United States; a few of the largest are of British origin. But, large or small, the figures pertaining to these new organizations are in my humble opinion worth consideration, and I have carefully tabulated them. These new industries occupy a floor space of 4,095,000 square feet; the capital invested in them amounts to $34,125,000; the Canadian content of material and labour-mostly labour- is sixty-seven per cent; the number of employees, 8,950. Anyone acquainted with industry knows that for every man or woman engaged in any manufacturing plant another employee is engaged outside providing the raw material and the one thousand and one articles that enter that industry through the receiving office. So in addition to the 8,950 men engaged in these 119 new factory branches, it may be taken for granted that another 8,950 workers are engaged outside. But as many of these new plants are branches of United States concerns, I will place the additional number engaged outside at 50 per cent or 4,475, so as to foe well within the mark. I submit that that is something to be proud of.
In addition to that a further considerable amount of employment has been provided existing Canadian factories producing goods for the Canadian customers of United States companies, goods that now cannot be shipped in here owing to the tariff regulations made by this government. Thereby employment is provided in Canada for Canadian workmen that otherwise would be provided for the workmen of the United States. Let me give a number of instances of individual plants. The John T. Hepburn Company, Toronto, has invested many thousands of dollars in

The Budget-Mr. MacNicol

equipment for the manufacture of goods hitherto made by American firms. The president told me that twenty-five per cent of their men are now engaged in making goods for Canadians that were formerly made in foreign plants by foreign workmen. The Gray Forgings and Tool Company is another concern that has invested many thousands of dollars in machinery to turn out a complete line of tools for motor cars, and to-day they are making a set of forged wrenches that hitherto were not made in this country, but were imported from Massachusetts and Connecticut. Those two plants are located in the riding which I have the honour to represent. Then I might cite the Canadian General Electric Company-a very large concern-the Gold Medal Furniture Company, the Easy Washing Machine Company, the Canadian National Carbon Company, the Patons & Baldwin Textile Company, the Hamilton Gear and Machine Company; all these companies are manufacturing goods not hitherto made in Canada, and which would still continue to be made in foreign plants were it not for the tariff regulations enacted by the government in 1930 and 1931. The Corman Engineering Company, Toronto, one of several small companies, make a long line of repair parts for foreign machines, parts that formerly we had to import. This company during the last nine months have had twenty-two machinists working full time, and on three days of the week they run two shifts. In addition to repair parts they make a variety of new equipment not hitherto manufactured in Canada, and which but for the present tariff regulations would now be imported to the disadvantage of Canadian labour. The management of the company told me that fifty per cent of their employees are now engaged in making equipment that otherwise would be made across the line. In addition there are twenty-two men outside the company engaged in making the brass and iron castings and the long line of equipment used by the company.
In south Toronto there is a large boiler and engine works, and in east Toronto there is a large link belt factory; I refer to only these two of the many in Toronto which I could mention. Both these companies are making asphalt plants. I will not discuss that item further at the moment because I will come back to it later in connection with another firm. The manager of the boiler and engine factory told me recently that sixty per cent of the men engaged in that industry are making equipment which, but for the tariff enacted by this government, would be made by foreign
EMr. MacNicol.]
workmen in foreign plants and shipped to this country.	.
Now let us go outside Toronto, to one or two other industrial centres. In the city of Brantford there is another large boiler and engine works, which also makes large asphalt plants for a company in Milwaukee. These plants are very large and are worth approximately $30,000 each, while the labour content built into each one is the equivalent of three thousand man-days. I am told that five of.these machines have been made in Canada already. In other words, as a result of the tariff enacted by this government, in those five machines alone fifteen thousand man-days have been gained to labour in Canada.
In Dundas I visited a very large plant of which every Canadian might well be proud, and just here I might say that in discussing these matters with the heads of these different companies the talk was about employment and entirely non-,poliitical; I did not want politics to be dragged into my discussions with those gentlemen. The plant to which I refer is one of the largest, if not the largest, of its kind on the north half of this continent, and there I found Canadian workmen making four lines of large machinery for mines, oil wells and so on. To give hon. members some conception of the size of one of those machines, the day I visited the plant the machinists of the company were lathing a forging made in Welland, Ontario, the largest ever made in Canada. It was a shaft for a hoist, and the finished article weighed seventeen tons. Fancy the size of the completed hoist for which the shaft was made; I may tell the house that it weighs 135 tons and will lift 12,000 pounds from the bottom of a mine 4,000 feet deep. That equipment is a credit to Canadian management, Canadian workmen and Canadian industry, and it demonstrates what Canadian industry can do when it is given a chance. Those four lines of equipment are giving employment to many men who otherwise would not be employed; thousands of man-days enter into the construction of each machine.
Now for a short time I will pass from individual factories to groups of factories, and I will commence with the washing machine industry. The tariff enacted in the spring of 1930 by the previous government reduced the duty on washing machine parts to 10 per cent, and made the whole industry in Canada merely an assembling proposition. The present government raised the duty to 35 per cent and the result has been romantic, if one may use that word in speaking of business. What has been the result? Thirty thousand tubs, the clothes part of the washing machine, either of nickel

The Budget-Mr. MacNicol
plated capper or enamelled steel, which formerly came from Warren, Ohio, are now made in London, Ontario; twenty thousand clothes wringers formerly made in Erie, Pennsylvania, and Woonsocket, Rhode Island, are now made by Canadians at St. Mary's, at Hamilton, at Toronto, at Farnham and other Canadian centres. Thirty thousand gear sets and twenty or thirty odd lines that enter into the construction of washing machines are now made in Canadian plants by Canadians, providing 250 new jobs, where formerly they were made in foreign lands by foreign workmen. I say, Mr. Speaker, that is something of which any government can be proud.
Take the printing industry. I have here a list of forty-seven United States magazines now being printed in Canada, and what has been the result? The printing plants of Canada to-day use from 175 to 200 tons of Canadian paper monthly to print these magazines, and that paper is worth from 812,000 to $15,000 a month. The postage and express in connection with the -mailing of these magazines is estimated at another $5,000 a month. The ink used is worth $1,700 a month, and better still 175 new jobs were provided for Canadians in the printing industry, and those 175 Canadians receive $25,000 a month. The publishers belli me that the whole new business adds to the national wealth of Canada about $1,000,000 a year. I say that is something worth while, and something of which we should be proud.
Now take ithe electrical line, covering a great number of plants. During the last two years electrical plants in Canada have invested $2,000,000 in order to equip themselves for -the manufacture of a long line of material formerly imported. In Canada we now make motors ranging in size from one as bag as a ten cent piece, such as operates yonder clock, to one of 54,000 kilowatts or 75,000 horse power. Large sums of money have been invested in equipment necessary to manufacture several new series of motors such as used in house appliances, washing machines, vacuum cleaners and so on, hitherto made in Ithe United states. A complete line of switches is now made here, ranging in size from the small wall push button to the great circuit breakers that automatically cut out a current of 75,000 horse power, or any one of half a dozen generators of 75,000 horse power. Canadian emplayers and Canadian workmen have demonstrated that given the chance they can turn out finished articles to equal anything made anywhere in the world. To-day the electrical business in Montreal, in Toronto, in Peterborough, in Hamilton, in Brantford, in 41761-1211
St. Catharines and in other places is employing 750 men who, if it were not for the tariff regulations enacted by this government since coming into office, would be unemployed.
Now I pass to the steel industry, the steel manufacturers and the steel workers, because you cannot separate one from the other. What is good for the industry is good for the employee, and what is good for the employee is good for ithe industry. The steel industry has benefited very materially by the tariff enactments of this government. In Hamilton a new school of commerce building is l^eing erected. When I saw it, it was half up, and in the framework of that building 970 tons of steel are -being used. Thanks to the patriotic fervour-for in my humble opinion it is nothing less-of the Hamilton board of education, the architects, the engineers, the steel manufacturers and steel fabricators, every ton of -that 970 tons being used in the High School of Commerce is being made in Canada by Canadians, and had it not been for the tariff enactments of this government, perhaps not a ton of Canadian steel would have been used therein. A -new hydro electric building is being erected in Toronto, and 1,000 tons of steel to be used in that building are to be made in Canada by Canadians. A viaduct is being erected in the city of Sarnia, and in that construction there will be 300 tons of steel made in Canada by Canadians. These three jobs have given the Canadian steelworkers 25,000 extra man days which they might not have had had it not been for the tariff enactments of 'this government.
The making of steel is one line which adds to the national wealth and which benefits labour to a very marked degree, because about eighty per cent of a ton of steel represents labour. We are now making steel ingots in Canada, from which steel plate is made, representing from eighty to ninety-five per cent Canadian content. Plates, from a quarter of an inch thick and up to 78 inches wide, are made from ingots of ninety-five per cent Canadian content. In other words, for every hundred dollars' worth of these steel ingots used in the making of plates ninety-five dollars are added to the national wealth, because the money which is paid out is circulated in and remains in Canada. On the other hand, when we send fifty dollars out of Canada to bring in steel plate, nothing is added to the national wealth. I am quite aware, of course, that in addition to that fifty dollars sent out of Canada to bring steel in, there is an additional fifty dollars spent in Canada to finish the product; but that fifty dollars spent on
The Budget-Mr. MacNicol

labour in Canada merely offsets the fifty dollars sent out, so that in reality nothing is added to the national wealth.
There are a number of steel buildings projected at the' present time, and my sincere hope is that public bodies having control of these projects, whether church boards or school boards or other boards, and architects and engineers, observing the great benefit that accrues to the country from the use of steel made by Canadians, will specify flat that the steel to be used in the structures under their control shall be if at all posable made in Canada. In Canada riveted steel girders and uprights are made out of plate and channel iron and angle iron. I am quite aware that in the United States they use H-beams and I-ibeams, but they did not begin the use of these beams there until they had passed the one hundred million mark in population. We Canadians have to look out for ourselves. There are only ten millions of us, and, in my humble opinion, sound tariff legislation that encourages the manufacture of steel plate, angles and girders in Canada, goes a long way towards increasing the national wealth.
My time is going, and forty minutes is hardly long enough to tell even one-fourth of the achievements of this government towards providing employment since it came into office. I have surveyed the textile and leather industries, both of which are running from 90 to 100 per cent, but I do not propose to discuss either of them except to say this in regard to the textile industry. There are at present engaged in Canada in the textile factories 109,575 operators, and the authorities in the textile industry inform me that were it not for the tariff legislation of this government in connection with textiles, one-third less would be employed therein. In other words, this government, as the result of tariff enactments in favour of Canadian employment, in the textile industry, deserves direct credit in that one industry alone for the present employment of over 36,000 operators. Will anyone say that the emplojunent of 36,000 operators is nothing? I do not for a moment try to argue that business is as good as we should like to have it; it is not. I do not think that conditions are as good as we would like, but they are a lot better than they would have been had it not been for the tariff enactments of this government.
The March issue of Industrial Canada gives a list of some 628 new limes, of material manufactured in this country since this government came into power. I am well aware that a great number of these are very small items, but added together they make an. aggregate 
which is commendable. The government deserves credit for encouraging the manufacture of new lines, and in the total employment in this country, according to our own Bureau of Statistics, there are about 900,000 or more engaged in industry at the present time either wholly or part time. I thought I would make a survey to ascertain the value of part time employment, and I obtained the figures from 125 cross-Canada firms all nationally known. Of the 125, sixty-nine replied to my questionnaire, and of that 69, nineteen had no part time employees. I gave them two dates, asking for part time employment on March 1, 1931, and part time employment on May 15, 1931, because I wanted to make a comparison with a similar survey made in Washington, to which I shall allude in a moment. In Canada on March 1, 1931, the part time employment in the balance of these Canadian industries was 30.18 per cent and on May 15 of the same year it was 30.54-very little change. The part time results in the United States were by no means equal to that. In Washington a circular letter was sent out to 750 crosscountry United States firms of which 250 replied, and the part time employment in the United States on March 1, 1931, was 33.5 and on May 15, 1931, 40 per cent. That clearly shows the superiority of Canada and bears out the statement we so often read and hear that conditions are better in this country.
Someone asked some days ago about the number of plants in Canada that had closed since this government came into power. The July, 1931, issue of Industrial Canada contains the advertisements of 340 cross-Canada concerns, and I am very happy to say that as far as I can ascertain everyone of those firms is to-day doing business in Canada. That speaks volumes for the integrity and business ability of Canadian managers and speaks well for the workmen in the plants.
During the course of this debate someone has suggested that nothing has been offered for the improvement of conditions in Canada.
I suggest to the government that practical and technical cost accountants, men conversant with industry be delegated to survey the imports coming into this country. After they have compiled their statistics and presented them to the government, it could then determine what could be economically manufactured in this country with a view to increasing employment and at the same time preventing the exploitation of the consumer. It is not a difficult matter for any government to prevent the exploitation of the consumer. If industry were treated scientifically

Privilege-Mr. Pouliot
and considered with a view to the natural resources of a district, its topography and geology, its climatic conditions, its proximity to water or other transportation facilities for the handling of raw and finished products, and its proximity to markets, power and labour supply, I am firmly convinced that millions of dollars could be invested in this country in the erection of new plants to provide increased employment.
It is the duty of the government in power to create employment if possible. The investment of capital, the extension of existing industries and the building up of new industries creates more and more jobs. Considering the economic dislocation and the distress which exists in the world to-day, the government of this country has done a great deal to provide employment for Canadians. I know of no better way to provide employment than by the erection and operation of factories. Having been associated so 'long with the business life of this country, I know full well that men working in industiy and receiving fair wages are contented and happy. There is no other way to encourage the erection of factories and the investment of capital than by adequate tariff regulations. I take this opportunity to congratulate the government for maintaining in the budget of 1932 the tariff regulations adopted in the budgets of 1930 and 1931 which resulted in so many additional man-days' employment.
During the years 1926, 1927, 1928 and 1929 this country imported $40,000,000 worth of steel plate and structural steel-I do not refer to rolled steel-and had one-half of this been manufactured in Canada by Canadian steel makers it would have given them an additional 3,600,000 man-days' employment. I suggest to the government: maintain the fiscal policy adopted in 1930-31 and proceed along similar lines with future budgets. The result will be most beneficial to employment in this country.


Hon. W. R. MOTHERWELL (Melville):: Mr. Speaker, if it is agreeable, I ask that it be called eleven o'clock.


[Stage Direction]
At eleven o'clock the house adjourned without question put, pursuant to standing order.
Tuesday, April 12, 1932