1938-06-21

Hon. IAN MACKENZIE (Minister of National Defence):: As I promised the other evening during the discussion on the estimates of the Department of Labour, I desire to table copy of report under date May 26, 1937, of Major H. Stetihem, Royal Canadian
The Budget-Mr. Lauison

Dragoons, to the staff adjutant, Royal Military College, in regard to the removal of stone; also, dealing with the same subject, copy of night letter, dated June 15, 1938, from commandant, Royal Military College, to Major R. C. V. Bessonette; copy of night letter, dated June 16, 1938, from Major R. C. V. Bessonette to the commandant, Royal Military College, showing that permission was given to remove the stone in question.



PRIVATE BILLS


[Stage Direction]
Bill No. 161, for the relief of Marjorie Ruth Nicholson Lowe.-Mr. Walsh.
Bill No. 162, for the relief of Anna Vereszczak Finchulc.-(Mr. Jacobs.


[Stage Direction]
On the orders of the day:
Right Hon. R. B. BENNETT (Leader of the Opposition):: A few days ago the hon. member for Regina City (Mr. McNiven)
questioned the accuracy of some reports to which reference had been made during the course of debates which took place in his absence. I was not in the chamber when he began his explanation, but I promised that I would produce the documents. I find that under the rules I have no right to produce the papers in view of the fact that the hon. member has denied the accuracy of the report a part of which I referred to. I shall therefore have much pleasure in showing the press reports privately to the hon. member. But I desire to make this statement in view of what took place before I came into the chamber.



THE BUDGET


[Stage Direction]
The house resumed from Thursday, June 16, consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Hon. J. EARL LAWSON (York South):: Mr. Speaker, one would indeed be insensible of feeling were he not moved by the applause which has just greeted him from all sides of the house as he rises in his first attempt in the role of so-called financial critic of the

government. I do most sincerely appreciate the generosity and the expression of goodwill of hon. members of this house.
It was with mixed feelings of gratitude and disappointment that I listened to the hon. Minister of Finance (Mr. Dunning) deliver his budget the other day: gratitude to find that the minister had become converted to so many Conservative doctrines and policies, with which I will deal later, and disappointment to find no provision in that budget to give relief to the hard-pressed taxpayer of this country. The minister's diction was perfect, his articulation modulated, and I admired the agility of mind with which he could take a given set of facts and weave them into an argument to explain the prevailing conditions in this country, when in fact those very facts demonstrated clearly the shortcomings of this government to meet the needs of the people.
I do, however, congratulate the Minister of Finance on bringing down a budget at all. Most of us read in our school books the story of the Spartan boy who stood with stoical face while a wolf concealed beneath his clothes gnawed at his vitals. So long has the delivery of the budget been delayed this year that the business community has become very fearful that the wolf of the laissez-faire policy of this government had consumed the vitals of the government and that we would not have a budget at all. Every year preceding the delivery of the budget there is, for a few weeks, a slackening in business and industry because of the uncertainty of business men and industrialists as to the conditions under which they will have to carry on their business for the ensuing year by reason of tariff or taxation changes. This year that uncertainty has been emphasized and continued until it has grown into a major factor in the si owing-up processes of recovery which were going on in this country while the government was pursuing the mirage of a consummated trade agreement. Later on I shall have something to say with respect to the government's trade agreements.
The minister's explanation of the business decline in Canada during the past eight months or a year, with its consequent result of declining income, must have seemed naive to some of the Liberal members of this house. In order to convey to the country the idea that the policies of this government had saved the dominion from a recession to the same extent as that experienced by other countries, the Minister of Finance made this statement as reported at page 3893 of Hansard:
In the last four months of 1937, our nearest neighbour experienced a decline in business activity more drastic than that which followed

The Budget-Mr. Lawson
the collapse of 1929. World production, trade and prices have also declined but less rapidly than in the United States.
Then further on:
In December a moderate decline set in and by April-
That is, of 1938.
-the index of the physical volume of business in Canada was about 9 per cent below that for April, 1937.
I advanced that argument in this house in 1934 when the Conservative party was the government and the Liberal party was the opposition. It was in the budget debate. I compared the drop in the trade of the world and of the United States with Canada, having regard to the peak year 1929, and the year for which we then had statistics, 1933, and comparing the year 1929 with the year 1933 I pointed out to the house that whereas world trade had dropped 68 per cent, and whereas the trade of the United States had dropped 65 per cent, the trade of Canada under the then Conservative government had dropped only 62 per cent. That argument was derisively received by the members of the then Liberal opposition, and one need only read the pages of Hansard to ascertain their criticism of it. Well, what is sauce for the goose is sauce for the gander. If the fact that Canada's business activities have maintained a higher level than those of the United States or the world during 1938 is attributable to the policies of the government in power in this country, then a similar condition which prevailed at the depth of the depression must be credited to the former Conservative government.
It was indeed a consolation to have the Minister of Finance at least converted to the views expressed by the Conservatives some years ago, but I should like to point out that if the policy of a government with respect to internal and domestic problems can make the country more resistant to world forces and conditions, then obviously trade agreements such as that made by Canada with the United States are not helpful in maintaining business activity and employment at a maximum level in Canada. The Liberal policy as advocated in the election of 1935 and as advocated by the Liberals when they were in opposition in this house from 1930 to 1935 was trade agreements and more trade agreements. According to the Liberals, our problems of unemployment and excessive taxation could all be solved if we but went out and made trade agreements, throwing open our domestic market to the different countries of the world. How well I remember the present Prime Minister (Mr. Mackenzie King) 51952-258
standing in his place in this house and condemning the then Conservative government for its alleged policy of economic nationalism. He told us not once but time and time again that our policy of economic nationalism would never solve the problems of Canada and that they would only be solved by trade agreements with the different countries of the world and with the United States in particular. Apparently the Minister of Finance has learned that in times of depression trade agreements are but as aspen reeds. I again quote his words from the budget speech which he delivered last Thursday, as reported at page 3894 of Hansard:
Export trade is the chief medium through which changes in economic conditions in other countries affect the Canadian economy. Up to August last business conditions throughout most of the world had been improving and the world price level had been rising.
Therefore I say that Canada's progress upward from the depths of the depression is attributable to the general advance in business conditions throughout the world and to the raising of the world price level. If further evidence be required, I quote again from the budget speech of the Minister of Finance at page 3897 of this year's Hansard:
All who have listened to this recital of the facts in connection with recent developments in our foreign trade will, I am sure, be impressed with how vulnerable our economy is to the impact of external influences, and there may also be some who will question the wisdom of any substantial reliance upon foreign trade. There is no doubt about the high degree of vulnerability in our position.
So we have the Minister of Finance admitting that if we are to seek primarily to trade our products with foreign countries rather than fabricate and consume them at home we shall be dependent upon conditions in those foreign countries for the maintenance of our internal economy and of our own standard of living. Surely that is heresy to the doctrines of Liberalism.
The Conservative party has never advocated that we in this land should be economic nationalists, but we have advocated that to the extent that it is possible to consume in our own domestic market the things which we can produce economically, that domestic market should be protected, and every producer and every manufacturer in Canada should have an equal opportunity to sell his products in his own home market. To the extent that we produce more than we can consume, Conservatives have advocated the negotiation of trade agreements whereby we might accept products of other countries which we cannot produce economically in exchange for the surplus of our own products. Thus

The Budget-Mr. Lawson

it will be seen that the Conservative policy lessens to the greatest extent the degree of vulnerability resulting from economic conditions in foreign lands, and provides, having regard to world conditions, a maximum of employment for Canadian workers in Canadian factories fabricating Canadian products, and a maximum price in our own markets for our own natural products.
The minister stated that the Canadian economy was not showing any weakness which required corrective processes during 1937. He based the statement on the fact that the rate of decrease in employment was not as rapid as the rate of decrease in the physical volume of business.- He said, as recorded at page 3898 of Hansard:
In each of the last two years I have had to refer to the failure of employment to keep pace with the striking gains in business activity and to point out that this was a condition usually met with in the early stages of recovery from business depression. I am therefore pleased to be able to report that during 1937 the increase in the volume of employment was for the first time since 1929 more rapid than the rise in industrial production, and also that since tire downward trend in business began last December employment has declined less rapidly than other business indices.
That condition does not reflect strength in the Canadian economy. Increase in employment always trails increase in business activity, and likewise decrease in employment always trails decrease in business activity. If the Canadian domestic market has a given consumption, the moment the goods of the Canadian manufacturer begin to be displaced in that market he does not immediately discharge his employees or some of them. He first endeavours to compete by increased production without increased cost of production, or alternatively he still hangs on producing goods for a while in the hope that the recession is only temporary. That is the reason why we did not feel the impact of the trade agreement made by this government with the United States in 1936. It was not until it got into full swing in 1937 that it began to affect our employment and our Canadian economy.


Some hon. MEMBERS:: Oh, oh.


James Earl Lawson: My friends may laugh, but I will give some figures in a moment. When United States manufactured goods were first given greater opportunities in our domestic market our industrialists endeavoured to meet that competition. The lapse of some months having proven that they could not meet the competition, you have had for the last eight months or a year a constant slowing up of employment in industry, and that slowing up will continue and be accelerated

as the operation of the Canada-United States trade agreement becomes more effective. Already you have had a slowing up, as the minister pointed out the other day, the index of employment in this country on October 1, 1937, being 119-6 and on May 1, 1938, 111-5.
The foregoing leads me to a discussion of the trade agreements made by this government. The Minister of Finance has endeavoured to establish the paternity of this government for the empire trade agreements. Again I quote his words, as found on page 3925 of Hansard:
Since the present administration came into office, Canada has been a contracting party to the two most comprehensive trade agreements that have been concluded since the great war. Our agreement with the United States in 1935 and our agreement with the United Kingdom in 1937 resulted in the reduction of effective duties on a wide range of Canadian imports. They also secured the enlargement and consolidation of marketing opportunities for Canadian exports in the two biggest import markets of the world, which in the last calendar year took between them about eighty per cent of Canada's total exports.


Mr. DUNNING:: It sounds pretty good.


James Earl Lawson: It does sound good. But I propose for a few minutes to consider these two trade agreements, not as to their collective results, but as to the results which have flowed from each.
I have previously stated that the trade agreement made by this government with the United States is contributing to unemployment in this country. Now let me consider the figures in connection with the United States trade agreement. My recollection is that the trade agreement came into effect on January 1, 1936, and was adopted in this house in May of that year. Well, I take the exports from Canada to the United States, excluding gold, for the year ended March 31, 1937, and I find that they aggregate $364,354,990. Our exports to the United States for the next succeeding year, ended March 31, 1938, amounted to $343,250,669, a decrease of $21,104,321. Now let us look at our imports from the United States. For the year ended March 31, 1937, these imports amounted to $393,720,662. For the next succeeding year, ended March 31, 1938, they amounted to $487,328,980, or an increase of $93,608,318. In other words, while our exports to the United States decreased by $21,000,000 odd, our imports during the same period from the same country increased by $93,000,000 odd. If hon. members care to examine the book from which I obtained my figures, namely "The Trade of Canada, April, 1938." as issued by our own bureau of statistics, they will find an almost unbroken record for the last year, of our



193S

[Stage Direction]
The Budget-Mr. Lawson
imports from the United States increasing month after month. No wonder this government is struggling to make a new trade agreement with the United States to avoid the complete destruction of the Canadian market as a result of the last agreement they made with that country.
Now for a few moments let us turn to the empire trade agreements. I was unable to obtain from the bureau of statistics a compilation of figures for exactly the same period of time as those relating to the United States, but I got them to within a month of it. So the figures I am about to give end with the month of April in each year instead of the month of March. Our imports from the British Empire during the twelve months ended April, 1937, amounted to $201,539,570. and our imports for the next succeeding twelve months, ended April, 1938, amounted to $231,208,159. In other words during that year our imports increased by $29,668,589. Now let us look at our domestic exports to the British Empire. For the twelve months ended April, 1937, our domestic exports amounted to $502,290,701. For the twelve months ended April, 1938, they were $519,659,942, showing an increase in our domestic exports to the British Empire of $13,369,241. In other words, while our exports to the United States under the Canada-United States trade agreement decreased by $21,000,000 odd, our exports to the British empire increased by $13,000,000 odd. When one contrasts the benefit of the empire trade agreements to Canada with the detriment of the United States trade agreement, is it any wonder the Minister of Finance on behalf of the government refers to the empire trade agreement as "our agreement with the United Kingdom in 1937"?
The empire trade agreements were made originally by a Conservative government under the leadership of the present leader of the official opposition (Mr. Bennett), in 1932, for a period of five years. They were renewed by this Liberal government in 1937, without any substantial or material change in a single principle.
Richard Bedford Bennett: Having voted against
them in 1932.


James Earl Lawson: The minister says "our
agreement with the United Kingdom in 1937." Shall I ever forget the attitude of the Liberal party in this house and this countiy at the time of the negotiation of the empire trade agreements? Do you remember how the Liberals derisively upbraided the present leader of the official opposition and referred to "blasting a way into the markets of the 51952-258J
world"? Do you recall how the leader of the official opposition was accused then of-driving a hard bargain, of lacking in patriot* ism because he asked from empire countries a quid pro quo for concessions in our tariff?; Shall I ever forget that in the final analysis every member of the Liberal party but one rose to his feet in this house and voted against the empire trade agreements? And now the: Minister of Finance boasts of "our trade agreement with the United Kingdom in 1937.",
A few moments ago I mentioned the; criticism levelled against the leader of the official opposition because he had bargained with the United Kingdom and British commonwealth countries in connection with the trade agreements. As I sat in my seat last. Thursday and listened to the words of the Minister of Finance I could hardly believe my ears, for this is what he said, at page 3925 of Hansard:	,
-"Canada cannot give to-day and bargain to-, morrow." It is even more true, Mr. Speaker, in tlie world as it is to-day that unilateral tariff reductions will not get the wider export markets which our products need and which the government is securing for them.
Surely this is complete conversion to Conservative doctrines and Conservative policies. The pages of Hansard are replete with declarations by the late Sir Wilfrid Laurier that the policy of the Liberal party so far as empire countries are concerned is to make unilateral reductions in tariff and trust to the other commonwealth nations granting us corresponding benefits in their markets. How often have I sat in this house and listened to the present Prime Minister rail against the bargaining policy of the leader of the official opposition and the Conservative party; yet in this budget the official spokesman for the Liberal party says, "Canada cannot give to-day and bargain to-morrow." What? Desertion of unilateral tariff reductions? This is more heresy to Liberal doctrines and Liberal policies. It seems to me I have a recollection of a budget brought down by the same Minister of Finance in this house in 1930. My recollection is that Canada gave unilateral reductions in her tariff in favour of the United States, and this very same minister valiantly defended that action.


Charles Avery Dunning: The hon. member is mistaken; it was the United Kingdom.


James Earl Lawson: The Minister of Finance says "no."


Charles Avery Dunning: It was the United Kingdom, not the United States.


James Earl Lawson: I think I understated it a little bit, because in addition to giving them
The Budget-Mr. Lawson

to the United Kingdom this country did give unilateral tariff reductions which applied not merely to the United States but to all countries. Can I for a moment forget cast-iron pipe and cut flowers? I heard that so often in the house I know it was a unilateral tariff reduction.
Long before I had personally met the Minister of Finance or had come under the influence of his urbane personality I had heard of him by reputation. I had heard of him as the great free trade Lochinvar who was coming out of the west to teach us of the east the economic doctrine of free trade, which was to sever all our chains of bondage to tariffs and bargaining trade agreements. Oh well, I suppose we of the Conservative party should be happy that the virtue of the Conservative policy has at last converted the Minister of Finance to a declaration that "Canada cannot give to-day and bargain tomorrow."
The minister told us when he came to the question of interest rates that the burden of interest upon the Canadian people had been reduced gradually by voluntary conversion operations resulting last year in a decrease of $5,592,000 in the amount of interest payable by the Canadian people. And he pointed out that by this method, as contrasted with an arbitrary cut in interest rates of 22^ per cent in Australia, Canada had benefited. The minister pointed out that the average rate of interest on Australian outstanding debt was decreased, by the arbitrary method adopted by them, to the extent of 25-1 per cent, while Canada's average interest rate, by reason of the voluntary method adopted by us, had been decreased by 29-1 per cent. In other words, the method of voluntary conversion and refunding was much more beneficial than the arbitrary method in relieving the taxpayer.
Again may I point out that this government is merely carrying out the policy inaugurated by the Conservative party, when we were in office prior to 1935. It was no easy task in those days for the former Conservative government to resist pressure from opposition members in the house, because we were in dark days of depression. The pressure brought to adopt the policy of arbitrarily cutting interest rates was very heavy. But let us not forget that it was a Conservative government which steadfastly refused to subscribe to a policy of repudiation, and to-day the people of Canada are reaping the benefit of that stand.
Let me for a moment or two turn to the tariff changes. The budget contains none.

At page 3925 of Hansard the minister is reported as follows:
For reasons which I believe will commend themselves to the house, I am not proposing any amendments to the customs tariff in the present budget resolutions.
I do not know whether the reasons for the failure to make tariff changes will commend themselves to the house, but I am pretty confident the reasons will not commend themselves to the people of Saskatchewan. I am confident the people of Saskatchewan will now come to the same conclusion as that to which many hon. members had previously come, that despite the injury which might be done to Canadian business by delay in bringing down the budget, this budget with no tariff changes in it would not be received until after the electors in Saskatchewan had gone to the polls.
I am sure the reasons will commend: themselves to the hon. Liberal member for Brantford City (Mr. Macdonald) and to the hon. Liberal member for Renfrew South (Mr. McCann), in view of the speeches they made in the house in favour of the maintenance of the tariff on agricultural implements and cream separators. But I wonder if the reasons will commend themselves to the hon. Liberal member for Lake Centre (Mr. Johnston) who, in advocating reduction in the tariff on agricultural implements, is reported as follows at page 1243 of this year's Hansard:
Serious consideration should be given to the matter of removing all duties on the general line of farm implements.
I am wondering if the reasons will commend themselves to the hon. member for Portage la Prairie (Mr. Leader) who, speaking with respect to the tariff on agricultural implements, is reported to have said the following at page 2403 of this year's Hansard:
The present tariff of ?*} per cen,t is the lowest on record, if excise taxes and some other imposts put on through the regulations of the revenue department are not taken into account. But in the face of this reduction in the tariff we find the implement companies increasing their prices in 1936, and again in 1938. To me this looks like a challenge to the parliament of Canada. What are we going to do about it?
In his budget speech the Minister of Finance answers, "For reasons which will commend themselves to this house,"-nothing. . And again, the same hon. member for Portage la Prairie is reported in these words at page 2416 of Hansard:
We maintain that there is a great difference between the two old political parties on the tariff. The Conservatives stand for high protection. and the Liberals for low tariff; if there is no difference between a low tariff and a high tariff we should know it, and the way

The Budget-Mr. Lawson
to find out is to strip these companies who have defied parliament of all tariff protection, and let them stand on their own feet.
To the hon. member for Portage la Prairie this budget will be an awakening. Those of us who are on the Conservative side realized years ago that the Liberal party when out of power preached freer trade in western Canada and tariffs in eastern Canada, but that when in power it nibbled at the tariff a little bit here and a little bit there, with respect to certain industries, thus unbalancing the whole protective structure of the country.
I wonder if the reasons will commend themselves to the hon. member for Huron North (Mr. Deachman) and the hon. member for Halton (Mr. Cleaver). The hon. member for Halton is reported at page 2611 of this year's Hansard as follows:
As to the 71 per cent duty on implements-
He was referring to agricultural implements.
-I would be quite content that it should be referred to the tariff board for hearing, but I submit, Mr. Speaker, that the evidence would abundantly justify the entire removal of the duty.
Will the reasons commend themselves to the hon. Liberal member for Macdonald (Mr. Weir) who said, as recorded at page 2571 of this year's Hansard:
And lastly, because of the monopolistic character of the industry, and also because the tariff is being belittled as a price-governing factor, the government should remove the duty and thus allow the freest competition possible so far as prices are concerned.
I wonder if the reasons will commend themselves to the hon. member for Lisgar (Mr. Winkler) or to the hon. member for Dauphin Mr. Ward). The latter member is reported on page 2636 as having said with reference to the Minister of Finance:
I hope he will wipe out the duties on farm implements, and also on cream separators. I hope he will go a long, long way-as far as he has ever gone before-in reduction of tariffs.
What disillusionment there has been for the hon. member for Dauphin, and what a blight
to his hopes!


Mr. FRASER:: They will still vote for the budget.


James Earl Lawson: Those are the truest words that ever were spoken. That interjection by the hon. member for Northumberland (Mr. Fraser) proves completely the point I made a few moments ago as to what they preach in the west and what they preach in the east. The hon. member interjects, "They will vote for the budget." Of course they will.
I cannot leave this subject without asking if the reasons will commend themselves to the
hon. Liberal member for Melville (Mr. Motherwell), the former Minister of Agriculture in the Liberal government. He said, as is reported on page 2667 of Hansard:
I should judge from the speech of the Minister of Agriculture, however, that the interpretation thereof is that the government is considering the matter very carefully-
They were dealing with agricultural implements.
-and is evidently on the point of some important decision with respect to it.
Well, we have the important decision-do nothing. Is it any wonder that the electorate of this country is deceived when the former Liberal Minister of Agriculture cannot interpret clearly the words and policies of the present Liberal Minister of Agriculture?
No record in this matter would be complete without reference to the hon. Liberal member for Rosthern (Mr. Tucker). That pleasing and voluble gentleman has just returned to this house from his crusade in Saskatchewan on behalf of the provincial Liberal party.


An hon. MEMBER:: Successful.


James Earl Lawson: Yes, it was successful. L am ready to give him credit for that if you will just bide your time. The hon. gentleman returned with a fresh laurel wreath upon his brow. He made a plea to this Liberal government in connection with the tariff on agricuL tural implements. Let me read what is reported on page 2674 of Hansard of this year. He said:
I beseech the house to pass this report. I suggest that the government go further and take the duty off agricultural implements. They should then watch things very closely, and if prices do not come down at least to a figure comparable to prices in 1932,-
Mark you, that was when a Conservative government was in power.
-when costs were lower, other decisive action should be taken to see that justice is done to that fundamental industry which is now so depressed in this country, the farming industry.
I am afraid my hon. friend will have to doff his new laurel wreath, hie him back to the province of Saskatchewan and use all his eloquence and persuasion this summer to convince the electors of that province of the soundness of the commendable reasons of the Minister of Finance for not reducing the tariff on agricultural implements.
This budget is outstanding, not for what it contains, but for what it does not contain. No provision of any kind is made therein for the domestic policy, discussed by the Minister of Finance, which will create for Canada an internal economy capable of resisting in a
.4076
The Budget-Mr. Lawson

large measure the shook and impact of financial [DOT] ftnd economic conditions in other countries. It was at least gratifying to learn from the budget that the Minister of Finance realized that it was necessary to have a policy in respect to internal problems. I quote him again, as reported on page 3897 of Hansard:
A fundamental fact that in this modern world no nation can live unto itself alone does not lessen, indeed it reinforces, the necessity for Canada to devote its maximum energies to the solution of its own internal problems. Concentration upon its domestic problems is the primary duty of any nation.
Fine sounding words and a pious declaration ! What has this government done about it? The government has been in office three years. It has brought down three budgets. We are now at the end of the third session of this parliament, and what, I ask, has this government done to meet its primary duty of solving our domestic problems? The answer is-nothing, except a belated housing scheme brought down within the last three weeks, ; combined with an exemption from sales tax, provided in the budget, on the major commodities used in the building industry and even this scheme with respect to housing cannot become effective until the legislatures in the different provinces have met.
If I were to ask the women of this country, particularly the married women who have the responsibilities of a family, what they most desired in this life, I am confident that after mature consideration they would answer -security. They want security for the home; security for the job of the husband; security for a continuation of income into the home when the husband is out of employment; security for their children as to the possibility of profitable employment on attaining a working age. Surely that is a domestic problem which should be the primary duty of any government. What has this government done about ,it? Nothing.
If I were to ask the youth of this land what was their primary desire in life, I am confident that, after mature deliberation, they would answer-a chance, or an opportunity. They want a chance at a job; a chance to earn a living; a chance to marry; a chance to have a home; a chance for advancement in the social strata as a reward for merit. Surely the solution of that domestic problem is the primary duty of any government. What has this government done about solving that problem? Absolutely nothing, except a very limited yotith training project.
If I were to ask the farmers of this country what they most desire, I am confident they would answer-a steady market with a reason' /Mr. Lawson.]
able price level. Obviously you cannot give them a steady market with a reasonable price level by trade agreements, because then you are affected always by the conditions in foreign lands. The present operation and effect of the trade agreement made by this government with the United States conclusively proves the instability of a foreign market so far as maintaining prices in Canada is concerned. Foreign markets are all very well for our surplus products, but let the farmers of this country never forget that the finest market they will ever have, with the steadiest level of prices, is the hungry mouths of the city workers and factory toilers in this country, provided they have the pay envelopes from which to purchase farm products. What has the present government done to obtain for the farmer a steady market and a reasonable price level? Just nothing.
Supporters of the government will say to me-I am surprised that they have not already done so-"Well, what do you propose should be done to fulfil the primary duty of the government to the nation to solve its domestic problems?" I frankly admit that at this time and on this occasion, with a great Conservative convention to be held within two weeks which is to determine the policy of the Conservative party, I am not at liberty to enunciate a policy on behalf of the people of the Conservative party. But this I do say: if you are to give security to the women and the workers in this land, if you are to give an opportunity to youth, if you are to give a reasonably stable market with reasonably consistent prices to farmers, you must wipe out the growing spirit of provincialism and sectionalism in this country and you must obtain a maximum of cooperation between the provincial governments and this dominion government and a unity of purpose of the Canadian people.
During the campaign of 1935 I heard a great deal about the cooperation that this government was to obtain between the provincial governments and the dominion government if the Liberal party were returned to power. Need I quote the speeches of the present Prime Minister when he went about this country and said to the people, "You have a Liberal government in power in all the provinces but one, and if you elect a Liberal government to power in the dominion you will then have governments with common ideals and common policies; you will get a maximum of cooperation; we shall be able to sit around a table in conference and agree and find a solution of your problems." Well, were they able to obtain cooperation? Were

The Budget-Mr. Lawson
they able to obtain an agreement for the necessar, amendment to the British North America Act, which amendment could have preserved every minority right in this country and yet have allowed a national law for unemployment insurance, for minimum wages and for maximum hours of labour? They were not. Have they have been able to get cooperation from the Liberal government of Nova Scotia to facilitate the marketing of coal mined in that province, in the thickly populated centres of Ontario and Quebec? They have not.


An hon. MEMBER:: They have.


James Earl Lawson: No, they have not, if t'he hon. member will permit me. You have not *changed the statutes one whit since you came into office. Has this government been able to get cooperation with the Liberal government of the great industrial and agricultural province from which I come, the province of Ontario? So estranged is the government of that province from the government of the dominion that the Liberal premier of Ontario publicly declares that he is no longer a Mackenzie King Liberal. No, if cooperation is essential to the performance of the primary duty of any government to solve the country's domestic problems, it will never be accomplished by this government.
Now, in concluding, let us consider for a few minutes the financial aspect of this budget. Canada is labouring under a terrific burden of debt and taxation. If we add together the taxation imposed upon our people by the dominion, 'by provinces, by municipalities, by school boards and other taxing bodies, the figures which result are astronomical. I saw recently in some publication-I cannot vouch for the accuracy of the figures, but I believe they are correct-that out of a national per capita income of $347 a year in Canada the taxation by governmental bodies was $97 per capita. That means that 28 per cent of the per capita earnings of the Canadian people are paid in taxes each year. True it is that this dominion government cannot control the taxation of other taxing bodies, but surely this government can set an example and give encouragement to other taxing 'bodies by some effort at making tax reductions of its own.
One of the fourteen pledges of the present Prime Minister to the electorate in his campaign speeches of 1935 was that there would be retrenchment in public expenditure, a reduction of the principal of the public debt, and a reduction in taxation. What has the government done about it? Let us look at the record as shown by this budget.
According to the figures given us by the Minister of Finance, the total revenue
collected by this government in the last fiscal year is the largest ever collected by any government in this country in the same period of time. I want to compare the figures at the end of the fiscal year, March 31, 1938, with those at the end of the fiscal year, March 31, 1936. I pick 1936, Mr. Speaker, because this government was elected to power in October, 1935, and took office in November.


Ian Alistair Mackenzie: October.


James Earl Lawson: Was it October or November, 1935?


Ian Alistair Mackenzie: October 23, 1935.


James Earl Lawson: I do not think that they can be held accountable for any collection of taxes for the remainder of that fiscal year.
The total revenue collected by this government for the fiscal year ended March 31, 1938, was $516,692,000. Now let me take the corresponding figure for the last year in which the Conservative government was in office. The total revenue collected for the year ended March 31, 1936, was $372,596,000. The government collected last year in taxes-I should not have said, in taxes, 'but in revenue-


Charles Avery Dunning: That is better. .


James Earl Lawson: -$144,096,000 more than the Conservative government in its last fiscal year of office, ended March 31, 1936. And the government tell us, according to this budget, that this year they will spend the vast sum of $530,000,000.
I gave the revenue from all sources. Let me now give the revenue from taxes collected by this government, and I take the same period of time. The revenue received by this government from taxes upon the people for the fiscal year ended March 31, 1938, was $448,652,000; the revenue collected from taxes for the fiscal year ended March 31, 1936, was $317,312,000. If you subtract one from the other you obtain the result that this government collected in taxes from the people for the fiscal year ended March 31, 1938, the sum of $131,340,000 more than was collected for the fiscal year ended March 31, 1936.


An hon. MEMBER:: It means an increase in business.


James Earl Lawson: I do not want to interfere with the continuity of my speech or I would answer the hon. member right now.
Not only has the government collected more taxes but it has spent more money. I wish to read a few figures, and to be fair I will omit from them all capital expenditures, all expenditures upon unemployment and agricultural relief. I find that the government spent in controllable expenditure for the fiscal
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year ended March 31, 1938, $410,954,000 and that the ordinary expenditure, controllable, for the year ended March 31, 1936, was $372,-
539,000.	If you subtract one from the other you obtain the result that this government has increased controllable expenditure during the last fiscal year by $38,415,000; and yet in 1935 one of the fourteen points in the platform of the present Prime Minister was retrenchment in expenditures, reduction of the public debt, and reduction in taxation. Under this government, therefore, the people must struggle along with an ever-increasing burden of taxation.
And now I will answer my hon. friend who said that these increased taxes came from increasing business. Another promise in the Prime Minister's fourteen point program was reduction in the sales tax. In his campaign speeches the Prime Minister decried the fact that the sales tax had once been one per cent and that in 1935 it was six per cent, and he pledged his party, if it were returned to power, to decrease the sales tax. His exact words were that he would cut or drastically reduce the sales tax. Well, he fulfilled that pledge by increasing the sales tax the very first session his government was in power, increasing it from six per cent to eight per cent; and at eight per cent it still remains.
With a view to giving impetus to the building industry this budget exempts from the sales tax some of the principal products used in the construction of houses. That should prove a benefit to a part of the construction industry and I sincerely hope it will. But I will put this question to the Minister of Finance: If the abolition of the sales tax in respect of materials going into the building industry will give an impetus to the building industry, is it not obvious that a reduction in the sales tax would be a boon to industry in general? But it would be more than that. It would be a boon to every citizen in this land, because it would increase his purchasing power. Every time a man buys a dollar's worth of boots or clothing, or any other articles, food or necessities, more than eight cents of that dollar goes to this government in taxes because of the pyramiding of the sales tax.
I well recall how the Conservative government was condemned for imposing a sugar tax upon the people because it was said that it was a burden upon the poor. What has this government done about it? After three years of Liberal government, three budgets and three sessions, we still have the burden of the sugar tax upon the poor. I cannot refrain from reminding the house that during the campaign of 1935 the Conservative government

was upbraided from every platform for having put on an excise tax of three per cent. But after three years of this Liberal government, three sessions and three budgets, we still have the excise tax of three per cent. I can, however, hold out a hope to the Canadian people; I can hold out to the Canadian taxpayer the hope that this government, being compelled in the ordinary course of events to account to the electorate in 1939 and again to seek their votes, will reduce many of these burdens in the expectation of being able once more to delude the electorate with promises of a happy future.
As I pointed out a few moments ago, this government collected from the people of Canada in the last fiscal year $131,340,000 more in taxes than the Conservative government collected in its last year of office. This government has the doubtful honour of being the greatest tax collector in all the history of Canada since confederation. They are distinguished for the combination of a laissez-faire, do-nothing policy and the extraction from the people of Canada of the largest amount of taxes ever collected. Therefore, Mr. Speaker, I move:
That all the words after "that" in the said motion be struck out and the following substituted therefor:
"This house regrets that the financial proposals submitted by the Minister of Finance for the fiscal year ending March 31, 1939, fail to make adequate provision for reduction of the excessive burden of taxation now borne by the Canadian people.


Mr. R. J. DEACHMAN (Huron North):: I desire to extend to my hon. friend the member for York South (Mr. Lawson) my congratulations on the speech which he has just delivered. He has followed the admirable tradition of the Conservative party which ever since confederation has presented its views with ability and steadfastness to the people of Canada. I am not quite certain whether a Conservative party needs a Liberal party, but I am absolutely positive that a Liberal party needs a Conservative party. I have always held to that point of view. And now I congratulate them again upon their having another convention in order to reorganize their party and do something better than they have done in the past. Years ago, as the date of a Conservative convention approached, I wrote an article in which I expressed my hopes for the prosperity of the Conservative party. I want to give the house to-day the first paragraph of that article, because history has a tendency to repeat itself, and the words I then wrote need only one change, the substitution of Ottawa for Winnipeg as the place of the convention:

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Not for worlds would I attempt to call the dead to life for vain purposes. A Conservative party has a place in Canada. Breeching is needed in a set of harness as well as tugs-a fish line has a sinker as well as a cork. Lloyd George remarked not long ago that every man has a little House of Lords in his own mind. So long as Conservative instincts survive there will be need for a Conservative party. We cannot have joy without sorrow, the lilt of laughter without a background of tears, or pleasure without pain. When Conservatism dies Liberalism may prepare its own epitaph. All good Liberals should pray for the success of the Winnipeg convention. Liberalism in Canada needs a Conservative party. It needs something on which it may sharpen its weapons -better far that Liberals should be temporarily submerged in an open fight, with sword in hand and visor down, than that it should pass out in the inglorious occupation of twiddling its thumbs.
Having listened to our distinguished friend this afternoon, I would say there can be no possibility of death by that route. We have in the Conservative party one leader at least who stands by the old traditions. His attitude to-day was perfect. It was the same remedy as was offered in 1878; it was 1930 repeated over again; it was emphasis piled on emphasis to suggest that what this country needs is more conservatism, more high tariffs, reliance upon our home market, development of our home industry, and nothing else.
The hon. member spoke of our vulnerability, from the trade standpoint, our danger from outside nations. He thought invulnerability would be secured if we piled our tariffs high enough. I wonder if he happens to recall the existence of a nation called the United States of America. It is a near neighbour of ours, and is sometimes quoted in Conservative literature. Does he recall the fact, which I think I have mentioned once before in this house, that in the campaign of 1930 the right hon. leader of the opposition (Mr. Bennett) in one of his great efforts referred to the progress of the United States, and said: We see her now marching forward to the tune of America first; and then a few short months later the only tune heard across the line was: Brother, can you spare a dime? I wonder if he recalls that when the depression came, the United States of America was the first to face the crash. We passed through a period of depression, moved upward in the scale towards a greater measure of prosperity, and then there came another recession or depression. Who led in that downward march? Again the United States of America. It had placed its reliance upon tariffs; it had built for invulnerability and made itself the most vulnerable nation in the world. I wonder whether, looking over the map of Europe to-day, he will recall that the peoples with the highest tariffs are the peoples who are now under
despotisms-a natural and obvious route, inescapable, because the removal of tariffs raises the standard of living, and when the standard of living sinks below a certain level there is a tendency to revolt and to try something else. So some of the greatest protectionist nations, frequently pointed to in the past as among those which had made the most progress under protection, now stand,-as Germany and Italy, unable to carry on a democratic government, facing difficulty and creating a strong disturbing influence in the world.
The hon. member referred to the development of home industry, his main argument for protection, I propose to cite the income of the Dominion of Canada at the present time; and no matter what has happened, the income seems to be doing fairly well. In 1930 the total income of the Dominion of Canada was 5,173 millions of dollars. In that year the Liberals of Canada went out of office because the income was not large enough. The Conservative party came in, and the income dropped to a low level of 3,193 millions of dollars in 1933. When I hear a speech such as that delivered by my hon. friend this afternoon I wonder why in those solemn years he did not call upon his gods to arrest the decline of two billion dollars in income in those three years. If a high tariff means something, why did the tariff not work? I wonder what, was the reason. Yet I got a suggestion of a possible answer from my hon. friend this afternoon. He told us that it took some time for the reduction in tariffs against the United States to work an injury to the people of Canada. At the same time he thought it took three or four or five years before the new gospel of high and higher protection, the Conservative doctrine, would relieve the situation which then existed. Well, in 1935 there was a change of government. The income that year was 4,094 millions of dollars. I have these figures from the bureau of statistics to-day. It went up in 1937 to 4,870 millions, an increase in the national income between 1935 and 1937 of 776 million dollars. I am not anxious to claim the credit for the Liberal government for all of that increase. I believe in making the statement as fair as possible. I have a suspicion that in this house, on rare occasions, both parties claim credit for things for which they were not wholly responsible. But when I have shown the decline of income under the Conservative policy of high protection, and the increase under a Liberal administration, at least you cannot logically decide that it would be the part of wisdom to have a higher tariff than we have. We have done better since reductions have been made, relatively small as, in my humble judgment,
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these reduction have been; I am also going to suggest later that they ought to have been greater.
Now my hon. friend says that we need a steady market, and that that market can be built up at home. What you need, he says, is the hungry mouths of the workers in the factories to provide the market. But the trouble is that under Conservative administration the mouths were too hungry and the difficulty was to satisfy the hungry by giving employment. We have changed and improved that since we have adopted a different policy, and have once more started on the upgrade.
My hon. friend referred to the position of the farmer. I am particularly interested in this subject, and I want to point out precisely what has happened. I should like my Conservative friends, if they are in the house now, to listen to these facts, which record the actual transposition which has taken place between 1930 and 1937. In 1930 it took 106 units of farm products to buy a dollar's worth of manufactured goods. Then the Conservative party came into power. The following year it took 132 units. They were not doing too badly for the manufacturers, were they? In 1933 it took 144 units, the next year 137 units and in 1935 it took 124 units. When the Liberals came into office it took 114 units; in 1936 it took 106 units; and in 1937 farm products and manufactured products were back upon a basis of parity of exchange. You could take 100 units of farm products and exchange them for 100 units of manufactured products. Yet my hon. friend from York South suggests that the sober, thoughtful farmers of the Dominion of Canada, looking at these facts and considering not only their own interests but the interests of the nation, should crawl back under the banner of Conservatism under which they lost their income and were reduced to lower levels than at any previous time in the history of Canada.
Then my hon. friend suggested that there had been an increase in expenditure during the last year and that we had taxed the people of Canada more than we did previously. Well, Mr. Speaker, it is the old story; with business expanding more revenue was collected. I suggest that you look back once more at the position of the farmer; when he was paying 144 units of farm products for 100 units of manufactured products he was not in a position to buy a very large volume of goods in the open markets of this country. But without any change whatever in taxation a point of equality was reached as between manufactured and farm products, and what followed? The farmer was able to buy more manufactured goods; there was more employment in the cities. The farmers, having a larger avail-

able sum with which to buy products in the markets of the world, purchased them, so that revenues from the tariff, from the sales tax and from all other impositions steadily moved upward. More revenue was collected because of the greater capacity of the people to buy goods, yet you have the challenge thrown out by the Conservative financial critic to-day that we increased the taxes on the Canadian people. In point of fact the prosperity of the Canadian people increased under a more Liberal policy than had existed previously, and with that increase in wealth came greater capacity to pay and therefore larger revenues. Well, I see no hope for anything so far as my hon. friend is concerned. He has nothing to suggest. In his opinion it is simply the old, old story of higher and higher peaks of taxation, more and more tariffs and relatively less revenue.
Now, passing from my hon. friend from York South, I want to congratulate the Minister of Finance (Mr. Dunning) upon at least one thing in his budget, a feature which under his administration has been greatly developed. In this connection I do not desire to withhold credit from some of the Conservative financial leaders as well; but this year, as last year, my hon. friend presented a budget that was very simple, very clear and very direct. It is quite possible for any ordinary man to understand it, and I only wish every province in Canada and, indeed, every financial institution would adopt a similarly clear method of presenting their stories so that the man on the street, the man in parliament, the leader of thought and opinion, would be able to get a clear understanding of the financial situation. Then there would be less lax thinking. Not many years ago I heard three cabinet ministers state the amount of the debt of the Dominion of Canada, and each gave a different figure. If it is possible for men trained as they were to give different figures in regard to a simple matter of that kind, what about the ordinary man who has only an occasional opportunity to read these things and who therefore lacks the training that would enable him to understand them?
I want also to congratulate the Dominion of Canada, because I think the budget speech revealed the amazing capacity of the dominion to come back after such disasters as those through which we have passed. I wonder what any man standing here in 1914, when we had an export trade of $455,000,000, would have thought if it had been suggested that within four years our export trade would rise to over $1,500,000,000? I wonder what he would have thought if someone had said that within that time we would send five hundred thousand

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men to the field of battle. Yet after the war, after a peace that was worse than war and after fiscal policies which were worse than the peace, we have survived and in 1938 have an [DOT]export trade of over a billion dollars. Sometimes we are too much in the habit of speaking of our export trade in terms of dollars. If we consider the physical volume we find that between the depths of the depression in 1933 and 1937, which is the last year for which I have the physical volume of business, there has been an increase of 47 per cent in the export trade of the dominion. And this was accomplished in a period during which drought interfered with the development of [DOT]our export markets. From the standpoint of bushels our wheat exports declined approximately 58 per cent. From the standpoint of dollars the difference between the average for the periods 1926-29 and 1935-38, in our exports of grain and flour, amounts to almost $300,000,000 a year. A country which can face losses and disasters such as these, at least part of which arose from no fault of its own, and can do it after it has suffered restrictive tariffs such as were imposed in the five years which followed 1930, must be a nation of striking force, a nation of which we may well be proud. It has shown the ability to suffer those setbacks and come back in a way that probably no other nation in the world could come back. Confucius, the great Chinese philosopher, once remarked that man's greatness is shown not in never falling but in rising every time he falls. I think the same might be said of a country. A nation shows its capacity by its ability to come back, by its resiliency, by its power to recover, and in that regard Canada stands out as a leader among the nations of the world.
These things are matters of encouragement, but there is always a serpent or two in the garden of Eden. The return to normal production has not given us the volume of employment which might be desired. There is no question whatever but that there is maldistribution of income in Canada. In part that is due to the destruction of our agricultural production by drought and also to the wide spread which I quoted a few moments ago as between agricultural and manufactured products. I want to give the figures, because I think this is something the house ought to consider; and I do not give them in any partisan sense. I deplore the tendency to place party above everything, and to try to create the impression that Conservatives or Liberals alone are perfect. There is a problem here which is too big for that, and I ask hon. members if possible to separate the political from the economic aspect, and to
listen for a moment to what has happened in Canada, to	that	which representsthe problem of the	people	of Canada. And whether it be Tory, Grit, C.C.F. or Social Credit, unless you reach the bottom of this problem you still leave the future of Canada in a position which to say the least is insecure indeed.
The year 1926 is generally considered the base year in Canadian statistics. I should like to place on record the money income in that year in different sections of Canadian industry, and then to place opposite it the real income. Because the money income expresses only the amount of dollars received, whereas the real income represents the amount of actual purchasing power which the people in different forms of employment receive for their work.
In the period 1931-35 the total wages in manufacturing industries was 16-8 per cent less than in the year 1926. But because of the difference in the cost of living the real wage, or the purchasing power of wages paid in Canadian industry, in the average year of 1931-35 period, was 2-3 per cent more than it was in 1926. Per capita money wages fell 9-7 per cent, whereas in real wages they were up 8-9 per cent. The share of capital-and by that I mean the amount left after deductions for salaries, wages and raw material- the sum out of which it had to pay interest, overhead and profit was 11-2 per cent below the 1926 level, in terms of money income, but was 9-5 per cent more in terms of real income.
I should like to point out that in those three, namely total wages paid, per capita wages and the share which went to capital in Canadian industry, there was a decline in money income, but an increase in real income during the period of the depression, as compared with the year 1926.
Now let me give the other side of the story. While those people were prospering there were some others who were not doing so well. I submit this fact, that you cannot have one-half of the people slaves and the other half free. I mean you cannot have one-half of the Canadian people cared for in a period of depression, while leaving the other half to chance. Raw materials declined in money value. This item represents raw materials used in Canadian industry, and therefore includes a certain percentage of imported products. Those who were selling raw materials got 32 per cent less money for them, and in real value received 17 per cent less than in 1926.
The share received by agriculture was 49 per cent below the amount received in 1926,
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but the real income in agriculture fell by 36 per cent. Railway earnings, expressed in terms of money income, dropped 38 per cent, and in real income 23-6 per cent. Railway wages and salaries were 30'5 per cent lower, but expressed in terms of real income were 14-8 per cent lower. The per capita income received by the railway workers declined 6-3 per cent in money income, but was increased 15'4 per cent in purchasing power.
The problem I place before the house is a simple one. What are we going to do with the problem embodied in this small statement of facts? Is the House of Commons going to say, "All is for the best in the best of all possible worlds," when we find that during the five years of depression the burden fell upon the basic producer, and the farmer? So far as industry was concerned, the burden fell upon the railways, and that is the reason for our railway problem to-day.
That was the condition, while certain other classes in the community received fair recompense for the services they rendered. I have no panacea for these problems, but I do say that the House of Commons ought to consider them. I venture the further suggestion that if we are going to maintain the tariffs of to-day, which are lower than the tariffs of 1935, we will have to face the problem in an intensified form in the years which are to come, and the challenge made then will be keener than the challenge made to-day. We still have hopes. We who hold the view that the Liberal party will go forward with the expansion of markets, the reduction of tariffs, the idea of equality of opportunity for the different classes in the dominion and an enlarged opportunity for youth-as my distinguished friend would put it-we still have hopes!
It is sometimes said that in connection with these matters I am somewhat extreme- that is the word. I like to hear that. Well, I will venture to prove that I am not extreme. I want to show to the house not only that I am not extreme but that there are a few hon. members, on both sides perhaps, who in these matters are extreme, if there is any possibility of defining that term. For years, as many hon. members know, I appeared before the tariff board representing the Consumers' League. I asked for reductions in tariff, but never once in that period did I ever ask for a reduction in tariff below the wage content of the product produced.
Taking the census of industry for 1936 we find that total wages paid out in Canadian manufacturing industry represented 14-6 per cent of the value of the products produced. Salaries constituted 5-7 per cent. The average

rate on dutiable imports into this country in. 1936 was 26-7 per cent. If imports come from foreign countries outside the British Empire-they are subject to a 3 per cent excise tax, and that 3 per cent is applied to the duty paid value. Therefore one has to add 3-8 per cent to the 26-7 per cent. Then we have the sales tax, and the sales tax must be applied on the-duty, because the tax upon a duty is an added duty. Adding these we find a total of 32-8 per cent representing the average tariff in Canada on dutiable goods. In those goods we have a wage content of 14-6 per cent. Am I extreme when I say a tariff rate of more than twice the value of the wage content in the product, and one which represents more than 50 per cent in excess of the entire wages and salaries, is too high a tariff for Canada, and something which calls for a sharp reduction?
Let me put this before you in another way. You have a factory in which you are manufacturing goods. You produce one million dollars' worth of goods in a year. Your wage bill is . less than $150,000. If you import the products which are manufactured in that factory, under a Liberal government you would pay 32-8 per cent or $328,000. Is it enough? Well, I venture to suggest that it is substantially lower than it was under the Conservative government, but to me that is scant consolation. It is substantially higher than it was under the former Liberal government. I believe as Liberals that we should do something to get back to the days when we had a measure of freedom and when trade was not restricted as it is to-day.
Let us apply this to textiles. In 1930 the average rate on dutiable textiles from the United Kingdom was 20-3 per cent, leaving out the sales tax. excise tax and all those other things. In 1935 it was 29-3 per cent and in 1937, the average rate was 26-1 per cent. That is a reduction of a little over three per cent from the top level of 1935. The average rate on dutiable goods from foreign countries was 28-9 per cent in 1930, 36-6 per cent in 1935 and 34-8 per cent in 1937. I submit that those rates are too high and that something ought to be done about them. I am not an extremist when I point out these things to the house. I am a Liberal and I am simply calling attention to rates which are too high. Unless these rates are remedied they will not only destroy the industry of the dominion but will bring about a tragedy almost as great, the destruction of liberalism itself.
Here are some other rates which I am sure will be interesting to some of my hon. friends. I have taken the average rates on art silk from four countries, and it will delight

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the hearts of Conservatives to know that these are countries with which we have favourable balances of trade. Here is the way we have used them in the last few years. The average rate on art silk imported from Belgium, [DOT]China, Italy and Japan is 103 per cent, not including excise tax, sales tax and other taxes. Am I an extremist when I point out these things? I contend that I am only a rationalist trying to argue what is sound and reasonable in a world which has gone tariff mad. But I have substantial support for my argument. I should like to quote one or two distinguished gentlemen. Sir Arthur Salter, in his book entitled World Trade and its Future, makes the following statement which has particular reference to the difficulty which we face in Canada to-day:
Always, as the negotiations proceeded, one felt that the dominant consideration in the mind of each national representative was not a conception of his nation's interests as a whole, mistaken or not, but a calculation of pressures to which the national government would be subjected by organized interests in the respective parliaments.
In other words, we are not suffering to-day from these extreme tariffs because the leaders *of thought and opinion want them. We are not suffering because the people of the Dominion of Canada or the people of the world want them

they do not. We are suffering because of the pressure brought to bear by definite groups upon the parliaments of almost [DOT]every country in the world. These groups, pressing their will persistently and steadfastly, deny to the people of the world the opportunity to come into the inheritance which is theirs. Sir Arthur goes on to say:
Consequently the net result of the Genoa resolutions was rather to endorse and consolidate a system of trade barriers which *everyone, looking at it as a whole, recognized to be injurious to world recovery, and those passages in them which recommended reductions remained as merely pious hopes without practical effect. And in general this was the *experience of other conferences of this period, though a few organized at Geneva for more modest and specialized purposes secured the removal of some of the least defensible forms [DOT]of trade obstruction.
I come now to the argument made by another distinguished gentleman. I quote from the report of the imperial economic conference of 1932. At that conference the present right hon. leader of the opposition had this to say:
When we reach an agreement-
He was referring to the empire agreements.
-by which our products pass more freely from one empire country to another, we drive clear channels through the stagnant pools dammed up by the world upheaval, and naturally we wil] carry past the boundaries of the empire
and to its benefit, establish once more again throughout the world that commerce which is its very life blood.
I heard the hon. member for York South tell us that what we needed was a more or less self-contained economy, one in which we could be free from contact with the outside world. We were to be made invulnerable, but we' have the leader of the Conservative party, the Prime Minister of that time, telling the assembled delegates that the way of escape was not by restriction, but by breaking down these barriers and restoring a larger measure of freedom of trade within the countries.


Mr. SPEAKER:: I regret to state that the hon. member's time has elapsed.


Some hon. MEMBERS:: Go on.


Walter Edward Foster: It must be with the unanimous consent of the house.


Robert John Deachman: I come now to another point. I only want to show the unity of thought that exists among men of different political beliefs and diversified thought. First I quoted the words of Sir Arthur Salter. Then I quoted my right hon. friend the leader of the opposition. I should like now to quote the right hon. Prime Minister of Canada (Mr. Mackenzie King). At the special session of 1930 he moved the following resolution:
This house regrets that the government has seen fit at a special session called to deal only with unemployment to propose great increases in customs taxation on a wide range of commodities under circumstances which prevent this house and the country from securing adequate information regarding the proposals and prevent proper parliamentary discussion of them.
In the opinion of this house the tremendous increases in taxation proposed will not end unemployment,

They did not.
-but will inevitably increase the cost of living-
They did not increase the cost of living very materially, but they increased it above what it would have been if greater freedom of trade had been given to us. I continue:
-and will also increase the cost of production in the primary industries, agriculture, fishing, mining and lumbering, thus making it more difficult for Canadian producers in these industries to meet world competition in marketing their products.
I have quoted the attitude of certain leaders of thought in the Dominion of Canada and elsewhere. I find myself in exact agreement with their views. Why should I be regarded as an extremist when I say that we should do these things? Why should anyone say that I am. an extremist when I accept the policy
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which these men accept? Why should I be called an extremist for thinking as does every leader of thought, not only in the dominion but throughout the world? These are important things and things which should be considered very carefully in the present disturbed condition of the world.
I want to turn to one other matter. At the present time the members of the government are faced with a difficulty. They are trying to do something which beyond question ought to be done. They are trying to break down the barriers of trade. I confess that I do not hold with the convictions which the Minister of Finance has expressed in regard to unilateral tariff reductions. I hold to another view. I believe that tariff reductions aside from treaties should be made. It depends, of course, on the way that they are carried out. We are confronted with great difficulties in that regard. But if it can be successfully done, and if this proposed agreement becomes a broad measure, leading to a wide reduction among these nations and carrying through to, others by means of the most favoured nation treaties-if that is accomplished, beyond doubt it will be the greatest economic event of the present century. I do not think there is a doubt that it can be done, and if this government will bring it about, then indeed the Minister of Finance will have accomplished something which is an important Canadian event and an important world event.
We have reached a stage in world history when, I venture to suggest, no longer can any country in the world have a high standard of living and at the same time maintain a high tariff. I will give one example. Take a country like Baffin Land, whose population consists entirely of Eskimos, producing nothing but sealskins and blubber. They can have a comfortable standard of living, within their own conception of a standard of living, consisting of sealskins and blubber. They may have a national policy and vote for blubber and protection. But if they want to enlarge their standard of living they must market the products which they produce-exchange them for the products of other countries. I move from Baffin Land to Saskatchewan. The main products of that province are cattle and wheat. The people cannot live upon a high standard on cattle and wheat alone, so if they are to increase their standard of living they must provide a measure of freedom of exchange; they must have an opportunity to exchange the products they produce for the products which other people produce. Exactly the same state of

things, in varied measure, exists so far as the people of Ontario or the maritimes or British Columbia or any other province are concerned. If you would increase your standard of living you must have greater freedom of trade.
What does an increase in the standard of living mean? It means only one thing-the maintenance of high wages or a greater purchasing power; and when you restrict your trade by tariffs you are in fact voting for nothing else than a reduction in your real wages.


Mr. ROWE (Dufferin-Simcoe):: Mr. Speaker, on a point of order, I am reluctant to interfere with an interesting speech, but I think it is a very early stage in the debate to establish the principle of unduly extending, beyond the conclusion of the point being made by your honour, the time allotted to the hon. member speaking.


Walter Edward Foster: I myself raised the point a few minutes ago, but all hon. members seemed anxious to hear the hon. member for Huron North speak somewhat longer, and that is why I allowed him to proceed. As a rule, hon. members should speak no longer than forty minutes.


Some hon. MEMBERS:: Question.


Mr. M. J. COLDWELL (Rosetown-Biggar):: I must say I regret that the hon. member did not conclude his speech in this debate. It was the latter part of his speech in which, I think, many of us were particularly interested.
I would join with those who have congratulated the Minister of Finance (Mr. Dunning) upon the manner of his presentation of the budget, the comprehensive survey which he has made. Congratulations should also be extended to the hon. member for York South (Mr. Lawson), who made an excellent criticism of the minister's speech. And of course we always listen with a great deal of interest when the hon. member for Huron North (Mr. Beachman) explains his views on tariff and financial matters.
In the budget speech and in the budget there was one particular thing which stood out very clearly, namely, that a vast proportion of our revenue is raised by taxes which bear heavily on the great masses of the people. We find, for example, that by way of customs import duties we collected $93,456,000; from the sales tax, $138,054,000, and from excise duties, $52,037,000, a total of $283,547,000. If, in addition, taxes on manufacturers' importations are added-and they ought to be because they are passed on to the consumers-we must add another $42,765,000,

The Budget-Mr. Coldwell
making a grand total of $326,312,000. Now, break this down, as the minister did in his budget speech, on a percentage basis, and we find that customs duties account for 17'62 per cent of the revenue; sales tax, for 26-03 per cent; excise tax, for 9-81 per cent, making a total of 53-46 per cent for those items. If, as I contend we should, we add the manufacturers' importations, another 8-06 per cent, we have a total of 61-52 per cent of the entire revenue from import duties, sales tax and excise, an enormous percentage taken directly from the consuming masses of this country. It should be pointed out that these items together account for nearly $30 a head for every man, woman and child in Canada. When we remember that members of the Liberal party in this house from time to time have criticized and taunted our social credit friends because they have not carried out their promises, let us also remember that the Liberal party has not carried out its promises by reducing these important items which bear so heavily upon the masses of the people. Calculated on the basis of a family of five persons, it means that approximately $150 a year or $12.50 a month per family is collected in these hidden taxes, to say nothing of the exactions which are permitted by the operations of a tariff. That in itself would account for more than $25 per month per family, an amount of which we have heard so much . in the house during this session.
All we get in the budget besides the exemption from sales tax of building materials is an exemption from sales tax of food for fur-bearing animals, repairs for fishermen's boats, harness and harness parts, and gopher poison. The fox farmer gets his feed, the fisherman get his tar, and the prairie gopher gets his poison free of all sales tax. That is about all we have in the budget for these particular classes. What a commentary, I may add, on the budget of 1938!
The minister said that almost half of our total imports come into Canada free of duty. But when we examine that statement we find that these are mainly raw materials or partly manufactured articles for manufacturing industries. Then, of course, we find included the $100 exemption for tourists returning to this country. May I say here, because I wanted to say it earlier in the session, that when the department interprets the word "included" as "contained" in relation to that exemption, in my opinion they are misinterpreting the will of parliament.
After the Minister of National Revenue (Mr. Usley) had argued, in a discussion which occurred quite early in the session, that articles brought into this country must be "contained" in the baggage of the tourist, I looked into
the matter and found that the resolution of parliament used the words, "included in the baggage", which, it will readily be seen, is a very different matter.
As I listened to the first half of -the minister's speech I realized that it was an apology for the announcement which was to follow, the announcement of a policy of doing nothing; this conclusion was irresistible. My mind went back to those days when I listened to the Minister of Finance as a crusader for something approaching universal free trade.


Charles Avery Dunning: He still is.


Major James William Coldwell: Then it is very carefully concealed in this budget.


Charles Avery Dunning: Universal free trade
would be an admirable thing.


Major James William Coldwell: But in those days, I would point out, it was not only universal free trade, because in common w-ith many of us in western Canada, the hon. gentleman was preaching free trade as an economic and social philosophy.


Charles Avery Dunning: Not for Canada alone, never.


Major James William Coldwell: Then I greatly misunderstood the minister, as many thousands did.


Charles Avery Dunning: The hon. gentleman certainly did. He cannot quote a single speech of that kind emanating from me.


Major James William Coldwell: That was the interpretation we placed upon the minister's speeches in those days. If not the Minister of Finance, then to the left of him sits the Minister of Mines and Resources (Mr. Crerar). I remember repeating many of the arguments he used in the elections in the old days in the province of Saskatchewan from the platforms of the Progressive party of which he was at that time the leader.


Mr. CRERAR:: Is that an argument for free trade?


Major James William Coldwell: No; but I remember the arguments which were used by the minister at that time in favour of free trade.


Thomas Alexander Crerar: As a matter of fact my hon. friend, in many admirable speeches he made then, never argued for free trade.


Major James William Coldwell: I repeated many of the arguments of the minister, and I thought at that time I was arguing for free trade, but I find that I was probably in error. And of course I can remember the hon. member for Melville (Mr. Motherwell), who was regarded as a convinced free trader in those days. Yet
The Budget-Mr. Coldwell

to-day we have the Minister of Finance repeating with even greater emphasis what he said last year.


Charles Avery Dunning: Two years ago.


Major James William Coldwell: I quote:
It is even more true, in the world to-day, that unilateral tariff reductions will not get the wider export markets which our products need and which the government is securing for them.
How, then, does this policy differ from that of the right hon. the leader of the opposition (Mr. Bennett)* who declared in 1930 that he would make the tariff work for Canada? He merely put the same thought more dramatically when he said, "I will blast my way into the markets of the world." The Minister of Finance went on to say:
The United States is not prepared to reduce its tariffs except by way of trade agreements, and the United Kingdom is now pursuing a similar policy.
Then he concludes that unilateral action by Canada is out of the question and that bilateral trade agreements form the policy of the government.


Charles Avery Dunning: What would my hon.
friend suggest should be done when two customers who take eighty per cent of all we have still definitely have that policy?


Major James William Coldwell: That was also true in 1930.


Charles Avery Dunning: Oh, no.


Major James William Coldwell: Oh, yes.


Charles Avery Dunning: Britain was free trade in 1930.


Major James William Coldwell: Britain was free trade in 1930 only to a certain extent.


Charles Avery Dunning: Entirely.


Major James William Coldwell: And she was rapidly going in the direction of a very low tariff, because the British tariff to-day is not comparable with the high tariff which we have in Canada at the present time.


Mr. STEWART:: And she was taking our products.


Major James William Coldwell: Yes. I am reminded that she was taking our products. But the point I make is this: How does this policy differ from the brick-for-brick policy which I am sure I heard the Minister of Finance denounce in western Canada some years ago.


Charles Avery Dunning: Hear, hear.


Major James William Coldwell: Well, to-day we are told that we cannot take off a brick unless the
[Mr. Coldwell.)
United States takes off a brick; and if on the other hand the United States puts a brick on we, too, by the same argument, should put a brick on. That would be a bilateral agreement to the fullest extent.


Charles Avery Dunning: You are saying that, not I.


William Earl Rowe: That would be a countervailing duty.


Major James William Coldwell: Yes. I think, however, the hon. member for York South (Mr. Lawson) covered that point very well to-day. But where are all the Liberals who told the Canadian people of the wicked exactions that were taken through the tariff by the textile industry, the agricultural implement industry and other industries throughout Canada? Where, now, are the threats that were made a few weeks ago in this house by the Minister of Agriculture (Mr. Gardiner) and by others to the farm implement industry? That was before the Saskatchewan election, and those speeches, may I say, were widely circulated during that election. I have on my desk before me the manifesto of the premier of Saskatchewan in which he makes this statement regarding farm implements:
With the object of reducing the retail price, the government will continue to press upon the federal government the necessity of removing all tariff duties on farm implements. Should such action fail to bring about reasonable reduction the government will further press the federal government to take the necessary action to control the prices of such implements.
There we have a Liberal government in the prairie provinces within the last two weeks promising to use its influence, not for bilateral trade agreements, but for unilateral action, the removal of all tariffs from the farm implement industry. An hon. member suggests that he did not have enough influence. Well, statements of this description at any rate secured for the Liberal party in that province a goodly number of votes, and that, I think, is one factor which is undermining our democratic institutions at the present time. Political parties seek office on specific promises, and then, when they have achieved office, forget all about the definite pledges they have made.
The minister says that unilateral action cannot be taken. Such a statement is as old as the tariff controversy itself. As a matter of fact, the assertion that free trade depends upon its mutuality has always been the favourite argument of high protectionists. Give us universal free trade, they have always said, and we shall always be in complete accord with it. Protectionists have always argued that mutuality must be the key-note of free trade. Every book that I have read on the philosophy of free trade makes that particular point quite

The Budget-Mr. Caldwell
clear. I have heard hon. gentlemen opposite assert that countries which tax our exports to them not only injure us but injure world trade generally. I have heard them further say that every tariff wall is a wall not only against income but against outgo. That has been the argument used by our free traders throughout Canada, and indeed throughout the world-I was going to say, from time immemorial, but that would not be correct- for a century, ever since Cobden and Bright went on the war-path in favour of free trade in Great Britain.
Now a Liberal Minister of Finance says that tariff reductions will not get the wider export markets which our products need.


Charles Avery Dunning: No. The hon. member has left out a word, the word "unilateral."


Major James William Coldwell: I am sorry; it was not intentional. Unilateral tariff reductions will not get the wider export markets which our products need. There we have a statement which has been made by every protectionist philosopher who has written a book on tariffs and protection. That is the reason why I said at the very outset that there seemed to be a considerable change in the outlook of the Minister of Finance from the days when I used to vote for him, incidentally, in Saskatchewan.


Charles Avery Dunning: Only very incidentally.


Major James William Coldwell: Oh, I have done it.


An hon. MEMBER:: And you do not
regret it.


Major James William Coldwell: No, I do not regret it. How many Liberals in this house actually believe in the Liberal platform and are prepared to practise what that platform preaches? I should like to find out, and I think the country generally would like to find out. I therefore propose to move an amendment to the amendment, in which I have incorporated the Liberal tariff platform. I move, seconded toy Mr. Douglas (Weyburn):
That the amendment be further amended by adding the following thereto:
That this house further regrets that the proposals submitted by the Minister of Finance on June 16 disregard the pledges of the Liberal party to the Canadian people contained in its platform of 1919 and subsequent years, which declared, among other things, that the best interests of Canada demand that substantial reductions of the burdens of customs taxation be made with a view to the accomplishing of two purposes of the highest importance: first, diminishing the very high cost of living which presses so severely on the masses of the people; second, reducing the costs of the instruments 51952-259
of production in the industries based on the natural resources of the dominion, the vigorous development of which is essential to the progress of our country.
That to these ends, wheat, wheat flour and all the products of wheat, the principal articles of food, farm implements and machinery and repair parts thereof, rough and dressed lumber, gasoline, illuminating, lubricating and fuel oils, etc., nets, net twines and fishermen's equipment, cements and fertilizers, should be free from customs duties as well as the raw material entering into the same.
These are not my words; they are the words of the Liberal party which has been in office for fourteen years since those promises were placed in their platform and program. I want to see whether I can find out, and the country, I believe, wants to know and ought to be able to know, just how many persons in this house agree with that platform. I say quite frankly that I agree with the proposals contained in that platform. If it is not the policy of the Liberal party, whose government this is, then let the Liberal party cease to divide the people upon an issue which they themselves have largely made an unreal issue in Canada; because wherever you go on the prairies even to-day the speeches of the times to which I have referred still carry weight, still have an effect, and you will find that instead of discussing other economic issues many of our farmers and people on the prairies discuss the merits of the tariff proposals of the Liberal party and consistently vote for that party because they believe that those proposals are a part of the tariff policy of that party.


Mr. MARTIN:: The hon. gentleman did the same thing to-day.


Major James William Coldwell: Well, I do not know that I did. But the hon. member for Essex East (Mr. Martin) will have an opportunity of pointing that out a little later.
In other words, if there is a Liberal in this house who believes in his party's official tariff program, I contend he should vote for the subamendment which I have just moved.
Just over two years ago I made the statement in this house that in my judgment the tariff controversy in Canada was largely out of date owing to the fact that such promises as this had not been implemented. And I listened with a good deal of interest to the hon. member for Melville (Mr. Motherwell) this session stating that in his opinion all we had succeeded in doing in the years that have gone by is to create a great deal of hard feeling and to divide the people. The purpose of my amendment is to test the opinion of the house regarding that policy.

The Budget-Mr. Caldwell

If the Liberal party and the Liberal government of this country will not give an opportunity to the constituents whom I represent in this house to go into the open markets of the world to buy as well as to sell there, then again, using the words of the hon. member for Melville, we must expect some compensating adjustments. If the farmers of the west and other parts of Canada are forced to buy in what is after all a highly protected market, then they have the right to expect that the product which they produce shall be protected, so that they may receive an adequate return for their labour, or in other words, that their products, as in New Zealand, shall receive a proper minimum price which will enable the producers to buy within this protected market in which they have to operate. One or other of these two things it seems to me is a matter of simple justice: either that our producers should be permitted to buy in the open market, if they have to sell there, or that they should be guaranteed their price level, as the manufacturers and other groups are guaranteed a price level by the tariff to-day.
There are many other aspects of the budget which one might discuss. I was of course interested in what the minister had to say regarding the financial outlook of the government. That, however, can be discussed under the Bank of Canada bill which is now before the house, and if I may do so I would here express a great deal of pleasure that the government have seen fit to bring in a bill to nationalize the Bank of Canada.


An hon. MEMBER:: At last.


Major James William Coldwell: At last. The group
with which I am associated has consistently urged this in the house ever since 1921. I should like to see the government go beyond that and exercise greater control over the chartered banks; indeed I should like to see the chartered banks also made public institutions.
The hon. member for Huron North (Mr. Deachman) made a very interesting comparison in the opening part of his speech. He stated that the average real wage of those employed in 1935 was higher than the average real wage of those employed in 1926. He then went on to show that the earnings of' capital also increased during the same period, but that the returns to the farmers greatly decreased. That statement regarding our farmers of course is quite correct. On the other hand let us bear this in mind, that the hon. member for Huron North was taking all the farmers collectively, but he was in reality, as I understand, taking only

that portion of labour which was employed. Those of us who remember the evidence given before the implements committee, for example, will recollect that the farm implement companies stated that they first dismissed their lower paid and casual employees and endeavoured to retain their permanent employees and officials. Naturally these men received higher wages and salaries, while a number of the other casual employees were forced to go on relief and had no wages. So if you take labour in the mass, I think you will find that it suffered tremendously during the depression. The farmer, of course, and particularly the western farmer, suffered more than anyone else during that period of depression. Capital, however, was represented by substantially the same people who controlled it prior to the depression. There may have been changes here and there; but in the main it was the same group, and it seems to me that in reality that group alone received an increased return during those years of depression. So, if we want to get the picture presented by the hon. member for Huron North clearly in our minds, we must take these factors into consideration.
I do not want to make my speech more lengthy, but I should like to close with the thought with which 1 began. It is this, that the picture presented by the Minister of Finance in the budget clearly indicates that the revenue of this country is largely derived from the great masses of the people. The hon. member for York South spoke of the sales tax and the increase in the revenues from that source since this government took office. There was the enormous sum of $138,000,000 largely taken out of the pockets of the common people of this country by means of that tax. Then there is the sugar tax, which bears heavily on every home in this country. According to these figures, as I have said, the revenue of the country to a very large degree has been derived from the masses of the people.
I should like to see the government consider other ways and means of obtaining necessary revenues. For example, out of our natural resources are extracted huge volumes of wealth by corporations some of which are largely owned by people who do not reside in Canada. At the moment I am thinking of International Nickel, with profits last year in excess of $53,000,000. I am thinking of Consolidated Smelters which last year, out of the resources of this country, made a profit of some $16,000,000 and placed in reserve $3,000,000 to meet profits this year. Then it paid a dividend of $2.50 on the original $5 share. Someone will say that these shares are

The Budget-Mr. Blackmore
worth more than $5 to-day. They are not really worth more than S5. That was their original value; but in the open market, by speculation, such shares may be boosted up to $20, $30, $40, $50 or $100.


Charles Avery Dunning: Oh, no.


Mr. COLD WELL:: The minister does not agree; nevertheless that is a statement of fact.


Charles Avery Dunning: Not in relation to the companies of which my hon. friend is speaking.


Major James William Coldwell: My point is that apart from those considerations enormous profits are being made out of the resources of this country, and the time has come when we ought to look to these resources to provide revenue not for private corporations but for the Dominion of Canada. The present budget is brought down following a year of comparative prosperity; I say "comparative prosperity" for certain groups. There is every evidence of a recession. As the minister intimated, or at least implied, if war industries ceased and the demand for certain Canadian products disappeared, we would find ourselves in a very difficult position.


Charles Avery Dunning: No.


Major James William Coldwell: The minister says he did not imply that. In the course of his speech he stated that our position was not good in every respect.


Charles Avery Dunning: If my hon. friend will permit me, I emphasized that the danger of war, which produced a demand for certain commodities, also reduced the demand for other commodities which depended upon peace and prosperity in the countries which bought our goods. The inference is that if the demand for war materials ceased, then conditions of peace and prosperity would bring about a demand for much more of our other commodities. I am sorry if I did not convey that clearly, because that is what was in my mind in what I had to say.


Major James William Coldwell: That was not the impression that I got, and moreover I do not think the minister ought to be so optimistic. I am of the opinion that even if to-morrow the world should reach an agreement regarding disarmament, the tremendous burden of debt created by rearmament would largely nullify the gain that we would make, at least for a considerable time to come. Therefore I say we should be looking to the future and trying to find ways and means of increasing the revenue of the country without adding to the burdens of the common people.
51952-259J


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, anyone listening to the minister's superb delivery of his budget speech and to the contents of that speech, remembering at the same time that the cry of the suffering is going up throughout the land from coast to coast, could not possibly escape the thought that the minister is a confirmed optimist. He can dress up a gloomy situation to make it look attractive and beautiful better than anyone to whom I have ever listened.


Charles Avery Dunning: You can do pretty well yourself.


John Horne Blackmore: I appreciate the minister's compliment. After having said that I congratulate the minister upon having thus performed, I must say there are some things about the budget which are not quite so attractive. In the first place I believe everyone must grant that this is a rich man's budget. It depends upon taxation and borrowing. Taxation and borrowing -both tend to work in the interests of the rich man and to the disadvantage of the poor. There is, moreover, no new source of money. This both permits and obliges the banking system of Canada to go on creating all of the nation's money. This budget, therefore, is a betrayal of the Canadian people. It betrays the aged, the middle-aged, the youth and the infant in arms. The budget speech either repudiates or qualifies the Liberal party's promises of monetary reform made in 1935 and in previous years.
I turn to page 3902 of this year's Hansard, and I read these words:
There are some, of course, who appear to believe that the government should not pay interest at all or, indeed, should issue debt free money to finance its expenditures or to retire its interest bearing debt or to do both of these things. It is incredible that this hoary fallacy should persist after so many historical demonstrations of its devastating possibilities.
I shall stop for a moment to talk about hoary fallacies. To certain types of mentality everything that has not yet been done is an impossibility. How the minister, with his natural optimism, can.be of that mentality surpasses my understanding to comprehend. Iron was never successfully used for ships and was consequently an impossibility until iron was used for ships. A perusal of the debates in the British House of Commons while they were considering the advisability of introducing iron for the building of ships reminds one strangely of some of the things we hear in this House of Commons when we suggest a change of monetary policy. For example, in the British house one man is reported to have
The Budget-Mr. Blackmore

said: "Iron for ships, forsooth! Why not stone for ships, then?"-a question which manifested a great deal of intelligence in that man.
Vaccination for the prevention of disease was apparently an impossibility until it was done. Alchemy, by which one substance was to be changed into another, was for centuries laughed at. It was considered impossible. Ben Jonsen even wrote a play called The Alchemist, in which the credulity of his fellows was laughed off the stage. But, behold! Today we have learned how to change one substance into another. We now have synthetic rayon, rubber, dyes and nitrates. Who knows how much farther we shall go before the wonderful possibilities of this world are exploited? The dream of horseless carriages was a favourite source of amusement to some people, until all of a sudden an age developed in which horseless carriages became a reality.
Merely to look upon our proposals as a hoary fallacy does not reflect altogether to the advantage of the author of those words. We hear quite frequently urged against our contention the question: Has it been tried out? It has never been tried out. National money has never yet been tried out-not even by that king to whom the hon. member referred-in accompaniment with the dividend and the just price. Consequently social credit has never been tried out. And consequently, to certain types of mentality in the house, it is foredoomed to failure, and not worthy of a trial.
May I ask whether or not mine sweepers were a success before they were tried out? Were gas masks a success before they were tried out? If in the defence of London against air attacks they had waited until someone had tried out the devices to be used, I assume London would have been in as bad a position of utterly impotent helplessness as we are to-day in our financial affairs, a position the weakness of which future years will abundantly show.
To proceed with the minister's words:
Perhaps I underestimated the insidious appeal of a program which promises to make something out of nothing, although I must say that for no one more than for a Minister of Finance should such a program have seductive charm.
Perhaps the word " seductive " was wisely chosen, but I doubt it.
Those who are arguing against social credit persist in saying you cannot have something for nothing. Social credit does not propose something for nothing. It never did, and it does not to-day. Not long ago the leader of the opposition (Mr. Bennett) made a remark about something for nothing. In a few

moments I shall comment on the matter; but before going into detail I feel moved to ask hon. members this question: Did any of you ever do anything to repay Shakespeare for writing his plays, or did you get them for nothing? Did you ever do anything in payment for Titian's and Raphael's works? Did you ever do anything in payment for Beethoven's and Mozart's works? People may laugh about this; but after they have thought the matter over long enough they will realize that passed down to this generation have been remarkable inventions, to the enjoyment of which the people of this generation are entitled just as much as we recognize they are entitled to the full enjoyment of the works of Shakespeare, Milton, Raphael and Beethoven. The less any one says in opposition to what I have said, before he has taken time to think, the better off he will be. We will ask anyone if he can devise a means whereby the inventions which have gone into the manufacture of the great machines we have to-day, and which unquestionably, to the extent to which we draw upon our inheritance, belong in some measure to everybody in the community, shall be paid for by those who use and enjoy them in the future. Let us ask anyone and everyone if he can say how we can enable the people to draw dividends from this part of their heritage of the past. I have never mentioned this before, but it is an exceedingly important matter. It is not saying that we want something for nothing; all we are asking for is a right. The minister goes on to say:
How much easier my task would be if I could draw on the accumulated savings of the Canadian people without paying interest thereon

May I point out to the minister that this is a completely erroneous notion of social credit. There is no desire to draw upon the accumulated savings of the people of Canada. It may look impossible to the person who has not studied the theory, but I say now that no one will be worse off. Everyone will be better off. That may seem impossible; nevertheless it is so. Many of these other things which I have mentioned seemed impossible, but they were carried out. The minister continued:
-if indirectly I could do the same thing by issuing credit against our natural wealth, that is, against the resources of farm and forest and mine and factory now owned by the Canadian people as individuals and not by the dominion government.
Here the minister has a right idea of social credit. He says that he cannot draw credit against the resources which are not owned by the dominion government, but let me tell

The Budget-Mr. Blackmore
him that for many generations our banking institutions have been doing that very thing to their own profit and to the disadvantage of the people who own those resources.


Charles Avery Dunning: Oh, no.


John Horne Blackmore: That may be questioned now, but I do not think it will be questioned when I have finished. The minister continues:
I am sometimes criticized because I do not accept the so-called "new economics" which is in fact centuries old.
I do not question that it is centuries old, but many of the finest things in this world are centuries old. The minister continues:
It dates back to that monarch-
I shall not read further from the minister's eloquent speech, but I should like to say a word or two about that monarch whom he does not name. He must be left as an uncertainty, an abstraction.
I should like to refer now to the admirable speech made last night by the hon. member for Vancouver-Burrard (Mr. McGeer). In my opinion it was one of the most courageous and effective speeches ever delivered in this house. As the days go on I believe the honour which is due to the hon. member for having delivered that speech under these circumstances will increase. I should like to quote briefly from page 4063 of Hansard:
As a matter of fact, under section 59, subsection 4 of our Bank Act, our chartered banks are now privileged to take a five dollar Bank of Canada bill and to exchange on the security of that five dollars, $100 of bank deposits written into the bank's books by a mere stroke of the pen, for either a one hundred dollar treasury bill or a one hundred dollar interestbearing bond.
While we are talking about getting something for nothing, I should like to direct attention to that achievement of the banks as being a most astonishing example of getting something for nothing. What was it that enabled the country to use those $95 of deposits as money? It was the resoures of the Dominion of Canada which the minister has said you could not draw upon in issuing credit. There may be two notions about the matter, but I believe I could make out an extremely strong case from my standpoint if I had the time, which I have not. The hon. member continues:
That was. the concession which was made to the chartered banks of the government of 1934, and they are not missing the opportunity; for to-day they hold $1,155,000,000 of such securities, an increase of $471,000,000 since that great concession was made when the Bank Act was amended to reduce gold reserves to twenty-five per cent and to reduce cash reserves to five per cent.
And again:
I say the chartered banks hold legal tender currency, which they own outright, for which they pay nothing, which they have secured freer than they used to secure the right to print their own currency, because the cost of printing them is now borne by the Bank of Canada, to a total, according to the May report of the Bank of Canada, of $247,000,000. $199,000,000 of which is on deposit with the bank and the balance is held in the bankers' tills.
The right hon. leader of the opposition was a party to the creation of the agreement under which the banks gained that power, and yet he rose in his place in this house and stated that it is impossible to get something for nothing. If the banks could do that without bringing about that inflation which the minister fears so intensely; if the money which they created was good, why could not the government have created that money just as well? If the government gave to the bank in return for $100, $95 of which was made up of figures in a book, an interest bearing bond, is there any reason why the government could not have kept that money or bond in the government treasury and issued credit against the bond? Would that credit not have been just as sound as that created by the banker? Under those circumstances it could have been debt free, and I can safely challenge any attempt to prove the contrary.


Charles Avery Dunning: It is nearing six o'clock. I did not want to interrupt the hon. member while he was speaking, but I should like to direct attention to the peculiar position in which we find ourselves. Constant reference is being made to a previous debate of this session as well as to a matter which is before the house in the form of a bill to amend the Bank of Canada Act. I would refer you, Mr. Speaker, to standing order 41, citation 293 (a), which states in part:
-that a member, while speaking, must not:
(a) refer to any debate of the same session on any question not then under discussion.
We are now in the midst of the budget debate. If it is right to debate Bank of Canada matters on this occasion, then, when the bill comes before the house in its subsequent stages, we shall be liable to be debarred from discussing that matter. I suggest, Mr. Speaker, that you be good enough to consider that point. I do not want to stop my hon. friend from discussing these matters because there will be ample opportunity during the debate on a specific bill, but I thought it better to raise this point now rather than to allow a number of speeches to go on.


John Horne Blackmore: May I have time to complete one more sentence before six o'clock.
Militia Act Amendment


Walter Edward Foster: With the consent of the house.


John Horne Blackmore: This money which was used to buy Canadian bonds or other Canadian securities could have been used just as well to buy Canadian gold. In that case the gold would have been obtained by the banks for nothing, except the risk. The risk which they would take would be backed up by the resources of the people of the Dominion of Canada, which resources the banks do not own. Now I ask:	Who is getting
something for nothing? '
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



MILITIA ACT AMENDMENT


[Stage Direction]
Mr. C. G. MacNEIL (Vancouver North) moved the second reading of Bill No. 84, to amend the Militia Act.
He said: This bill has been standing on the order paper for some time. I had hoped that its appearance on the order paper would in itself have been sufficient to direct attention to the necessity of revising an act the language of which is not only antiquated but obsolete in the light of present day circumstances. I would not have proceeded with this bill had I secured any indication that the government contemplated appropriate action in this matter.
In entering upon a discussion of the subject, I am not unmindful of the warning note sounded by the Prime Minister (Mr. Mackenzie King), during the debate on foreign policy, that members of this house should exercise reasonable caution in discussing issues of this kind. Nevertheless, I cannot overlook the fact, to which our attention was directed by the Prime Minister himself, that the trend of international affairs may at any time involve Canada in a very grave crisis. I cannot overlook the fact that in this act we have what are virtually the articles of war for Canada. We have in it the authority under which Canada may mobilize its man power; we have herein the authority under which Canada may participate in an external war. I say I cannot overlook these facts; but I submit that it would be folly verging upon the criminal to face the risks of the impending

crisis without clearly defining and frankly discussing, in relation to our present constitutional status, the authority under which we engage in war.
I wish to make it quite clear at the outset that I am not attempting to discuss or propose changes in commonwealth relations. I am not attempting to discuss or suggest any alteration or change in the status of the crown with regard to dominion affairs. I had before me, in drafting the proposed bill, the Balfour formula of 1926, wherein it is declared that: .	.	. Great Britain and the dominions.	.	. are autonomous communities within
the British empire, equal in status, in no way subordinate one to another in any aspect of their domestic or external affairs, though united by a common allegiance to the crown, and freely associated as members of the British commonwealth of nations.
I suggest nothing more than that which has already been proposed by the Prime Minister in the assurances he has given to this house and in the speeches he has made at successive imperial conferences, wherein he has said repeatedly that we have no commitments either to maintain neutrality or to engage in a war in the event that the British Empire should be involved in conflict, and that parliament will in the light of the then existing circumstances determine these issues. I have that clearly in mind, and if the bill is examined it will be found that it goes not a step beyond the policy already enunciated by the Prime Minister. I ask simply this, in discussing a matter of purely domestic policy, that there be now written into the statute those assurances which have been given the people of Canada by the Prime Minister; that the language should be clear and explicit with regard to our position in respect of fateful decisions. I ask that we give reality to his statement; that at least we take one step, a step which may easily be taken at this time, to give actual content to some of the assurances made by the Prime Minister.
I may also point out that what I propose is entirely consistent with British practice, and I hope that my friends who adhere to the British-front policy will not suspect me of any attempt to undermine that policy at this time or to suggest separation or secession from the empire. I propose nothing beyond the now recognized status of the dominion within the British Commonwealth of Nations. That which I propose in these bills is entirely consistent with British practice.
May I remind hon. members that the British Army Act, which in 1937 was entitled, "An act to provide, during twelve months for the discipline and regulation of the army and the

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air force", is an act which is re-enacted each year. The parliament at Westminster must meet and must re-enact each year an act providing not only for the establishment of the armed forces of the United Kingdom but also for the discipline of those forces within the United Kingdom and His Majesty's dominions beyond the seas, and it deals in every particular with the control of those forces. Each year that step is taken in addition to the voting of supply for the maintenance of the military, naval and air establishments in Great Britain. I have here excerpts from the Army (Annual) Act of 1937. In the first paragraph of the preamble this is what is found:
Whereas the raising or keeping of a standing army within the United Kingdom in time of peace, unless it be with the consent of parliament, is against law . . .
There is, of course, a definite reason for the British practice in this regard, dating back to the days of the Restoration. In 1803 the statutory articles of war were incorporated in the army act. Those who are students of military law will easily trace back the development of this practice. I am quoting now from the authoritative Manual of Military Law, which states:
The Ai-my Act has of itself no force, but requires to be brought into operation annually by another act of parliament, (generally known as the Army (Annual) Act), thus securing the constitutional principle of the control of parliament over the discipline requisite for the government of the army. These annual acts afford opportunities of amending the Army Act, of which considerable use has been made.
Dealing with this matter, the British people have made it clear for definite reasons that the prerogatives of the crown in this respect shall be limited and shall be subject to the control of parliament. All I ask in this bill and in the companion bill is that we be definitely assured now, by statutory enactment of the control of parliament over three matters: the command of our armed forces, the imposition upon the Canadian people of compulsory military service, and the participation of Canadian forces in external war. You will notice that I recognize the necessity of the executive being completely unhampered and free to make prompt decisions and to act decisively and instantly with regard to emergencies requiring us to repel invasion. I ask that parliament have definite authority to deal with the command of the forces in the first instance, with the imposition of compulsory military service on the Canadian people, and as regards the participation of our forces in overseas war. That is all I ask- definite statutory authority providing for parliamentary control in a manner consonant with the parliamentary control exercized in the United Kingdom over the military forces of that kingdom.
Three questions arise in this regard. The first is, who shall exercise command over the armed forces of the dominion? The act at present reads:
The command in chief of the militia is declared to continue and be vested in the king, and shall be exercised and administered by His Majesty or by the governor general as his representative.
I ask that this be amended in dealing with the exercise of command to include the words "administered by the governor general acting ,by and with the advice of the king's privy council for Canada." I know many will immediately argue that under the Interpretation Act the term "governor general" is held to mean the governor in council. I am well aware that section 23 of the Interpretation Act provides:
When the governor general is authorized to do any act by proclamation, such proclamation is understood to be a proclamation issued under an order of the governor in council; but it shall not be necessary that it be mentioned in the proclamation that it is issued under such order.
But in the definition section of the Interpretation Act we have:
" Governor," " governor of Canada," or "governor general" means the governor general for the time being of Canada, or other chief executive officer or administrator for the time being carrying on the government of Canada on behalf and in the name of the sovereign, by whatever title he is designated.
Section 7 reads:
" Governor in council," or " governor general in council" means the governor general in Canada, or person administering the government of Canada for the time being, acting by and with the advice of, or by and with the advice and consent of, or in conjunction with the king's privy council for Canada.
There would appear to be two distinctly separate functions performed by His Excellency the Governor General. That may seem to be of minor consequence, but I think I should direct to this problem the attention of those who are more familiar with constitutional law than I am. I am at a complete loss to understand our position with regard to this matter, particularly as there is written into the Militia Act a section that makes the Army Act of Great Britain applicable to Canada. In section 69 of the Militia Act it is provided:
The Army Act for the time being in force in Great Britain, the king's regulations, and all other laws applicable to His Majesty's
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troops in Canada and not inconsistent with this act or the regulations made hereunder, shall have force and effect as if they had been enacted by the parliament of Canada for the government of the militia.
I cannot reconcile this section, as drafted in 1904, with our position under the Statute of Westminster wherein it is provided:
No act of parliament of the United Kingdom passed after the commencement of this act shall extend or be deemed to extend to a dominion as part of the law of that dominion unless it is expressly declared in that act that that dominion has requested, and consented to, the enactment thereof.
I cannot find in the Army Act of Great Britain as it stands at the present time any express declaration that the Dominion of Canada has requested or consented to the application of that act to Canada. It is an interesting point that the fact that section 69 still appeara and is in force in Canada is tantamount to a request and consent of the dominion that, in certain respects at least, the Army Act of Great Britain shall now be applicable to the armed forces of this dominion.
In dealing with these three questions which I bring to the attention of the house, it is perhaps well to consider the history of the Militia Act. No one is more familiar with that history than the right hon. gentleman who now holds the portfolio of Justice (Mr. Lapointe). On more than one occasion he has expounded and dealt in detail with the history of the act. At no time did he do so more thoroughly than in June, 1917, when he took issue with the leader of the house at that time in regard to the interpretation of the sections to which I am now directing the attention of the house. The act, as was pointed out by the leader of the opposition (Mr. Bennett) a few weeks ago, was introduced in 1868, shortly after confederation, by Sir George Cartier, under circumstances vastly different from those which obtain to-day. At that time, dealing with the command or exercise of authority with respect to the armed forces of the dominion, he drafted the section to read:
As provided by the fifteenth section of the British North America Act, 1867, the command-in-chief of the land and naval militia, and of all the naval and military forces of and in Canada, is vested in the queen, and shall be exercised and administered by Her Majesty, personally, or by the governor as her representative.
The act reads:
The militia shall consist of all the male inhabitants of Canada of the age of eighteen years and upward, and under sixty-not exempted or disqualified by law, and being British
[Mr. MacNeil.J
subjects by birth or naturalization; but Her Majesty may require all the male inhabitants of the dominion, capable of bearing arms, to serve in ease of a levee en masse.
Section 5 divides all the male inhabitants of Canada into four distinct classes for the purposes of service. That was compulsory military service. The criticism of the bill, as I read the debates of 1868, was on the ground that the bill destroyed the volunteer system. The Minister of Justice will agree with me, I believe, that Sir George Cartier at that time felt it necessary under the circumstances then existing to impose some form of compulsory military service. As a matter of fact that form was modeled upon the French system then in vogue. The chief opposition to the bill, as one would gather from the debates of that day, was that it destroyed the volunteer system, and I submit that authority of compulsory military service still exists in the present Militia Act, as I shall endeavour to show in the course of my remarks.
Let us consider the circumstances. The war of 1812 was still within the memory of many then living. The government of Canada had suffered and had to deal with disturbances on the border, the St. Alban's raid and the Fenian disturbances, and the Canadian people were, as it was expressed in the debates, fearful of an invasion of combined Russian and American forces. They therefore felt it necessary at that time to have compulsory military service. Sir George Cartier said he hoped to provide forty thousand trained men per annum until ultimately Canada would have an army of trained men numbering seven hundred thousand capable of defending the shores of Canada. It was also stipulated in the act of 1868 that:
Her Majesty may call out the militia or any part thereof for actual service, either within or without the dominion, at any time, whenever it appears advisable so to do by reason of war, invasion or insurrection, or danger of any of them; and the militiamen, when so called out for active service, shall continue to serve for at least one year from the date of their being called out for actual service, if required so to do, or for any longer period which Her Majesty may appoint.
It goes on to provide that, when faced with sudden emergency, her majesty may appoint in command of the Canadian forces an officer of the regular British army. That may have been admirable legislation at the time, and I am merely drawing attention to the reasons which existed for it. In 1883 several acts dealing with the armed forces of the dominion were consolidated. The next important change occurred in 1904, in the

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Militia Act introduced by Sir Frederick Borden. The sections with which the amending bills deal were introduced in their present form-
Richard Bedford Bennett: The act of 1868 was
repealed.


Mr. MacNEIL:: Yes. As the leader of the opposition points out, they repealed the acts of 1868 and 1883, and introduced an entirely new bill, and the present sections 64 and 69, as they now stand, were then incorporated in the statute as drafted by Sir Frederick Borden. I think it is important to note the intentions of Sir Frederick Borden with regard to these matters, and on this point I wish to quote the words of the present Minister of Justice speaking on Bill No. 75 in the House of Commons in June, 1917, as reported at page 2520 of Hansard. He said:
Until a few clays ago, I do not think that anybody who has studied the constitutional history of Canada ever expressed the opinion that her militia could be sent overseas by virtue of that act. The debates that took place in 1868 showed that there was no intention to change the principle or the meaning of the section I am discussing. In considering the words "either within or without the dominion" in a subsection we must not forget that Canada at that time included only the four provinces, Ontario, Quebec, New Brunswick and Nova Scotia, and it was important that the authorities should be empowered to send the militia outside of the area of those four provinces to protect and defend the British territory which forms to-day the other provinces of the dominion.
I come now to the Militia Act of 1904.
That is the act to which I am now referring, which is in force to-day.
Surely this act did not change or modify the principles which I have enunciated. The language of the section was made clearer by the insertion of the words "for the defence thereof."
The minister is referring to the section dealing with active service, which now reads:
The governor in council may place the militia, or any part thereof, on active service anywhere in Canada and also beyond Canada for the defence thereof at any time when it appears advisable so to do by reason of emergency.
The present Minister of Justice continued:
The right hon. Prime Minister quoted a few words from a speech by Sir Charles Fitzpatrick, then Minister of Justice. He took good care, it seems to me, not to cite the language of the father of the act, the man responsible for the legislation, and who knows best wrhat was the intention and aim of the bill. Here is the language used by Sir Frederick Borden, then Minister of Militia:
"Mr. Maclean:	I would ask the minister if
it is not the case that under the old section of the law as it now stands the militia of
Canada could be used for the defence of the empire and sent out of this country for that purpose? But under the proposed law that is strictly prohibited.
"Sir Frederick Borden: No. I am advised, and was advised at the time of the South African trouble, for instance, that under the law we could not do that.
"Sir Sam Hughes: Could not do what?
"Sir Frederick Borden:	That we could not
send the militia to South Africa for service; under the law we were not able to do so. The present law has changed, as I say, in conformity with that view, and in sympathy with the idea which, as I said, controls the militia of mother countries and the militia of every one of the colonies of the empire, where you will find precisely the same clause."
On August 1, 1904, in committee, he said:
"Sir Frederick Borden:	. . . The troops we
sent to South Africa were not sent under the militia law at all. They were sent under a special arrangement; they went as volunteers. The same thing could be done at any time. It certainly would not be done under the militia act, either as it was or as we propose to make it, because there is no essential difference. Notwithstanding the fact that my hon. friend from Colchester questions my possession of common sense, I still believe that the act as we propose it is essentially the same in that respect as it was before, the object being to make clear the actual intention."
He said further:
"The very fundamental idea of a militia force always has been, and is now, home defence."
I am sure my hon. friend would not pretend to say that under the law as it is to-day the government could send a corps of the militia upon foreign service.
The Minister of Justice clearly indicated that to be the intention of the men who drafted the present Militia Act.
I wish now to turn for a moment to what actually occurred in 1914. I have the various sessional papers, including the orders in council passed prior to the assembling of parliament on August 18, 1914, and the various dispatches exchanged between His Royal Highness the then Governor General and the British government.
On August 1 this dispatch was sent from the Governor General to the Secretary of State for the Colonies:
My advisers while expressing their most earnest hope that peaceful solution of existing international difficulties may be achieved and their strong desire to cooperate in every possible way for that purpose wish me to convey to His Majesty's government the firm assurance that if unhappily war should ensue the Canadian people will be united in a common resolve to put forth every effort and to make every sacrifice necessary to ensure the integrity and maintain the honour of our empire.
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On August 1 this message was sent from the governor general to the Secretary of State for the Colonies:
In view of the impending danger of war involving the empire my advisers are anxiously considering the most effective means of rendering every possible aid and they will welcome any suggestions and advice which imperial naval and military authorities may deem it expedient to offer. They are Confident that a considerable force would be available for service abroad. A question has been mooted respecting the status of any Canadian force serving abroad as under section 69 of Canadian Militia Act the active militia can only be placed on active service beyond Canada for the defence thereof. It has been suggested that regiments might enlist as imperial troops for stated period, Canadian government undertaking to make all necessary financial provision for their equipment. pay and maintenance. This proposal has not yet been maturely considered here and my advisers would be glad to have views of imperial government thereon.
The Secretary of State for the Colonies to the governor general, August 4, 1914:
Though there seems to be no immediate necessity for any request on our part for an expeditionary force from Canada, I think in view of their generous offer your ministers would be wise to take all legislative and other steps by which they would be enabled without delay to provide such a force in case it should be required later.
From the governor general to the Secretary of State for the Colonies on August 5, 1914:
My government beim; desirous of putting beyond doubt status of Canadian volunteers, request that His Majesty may be pleased to issue an order bringing these volunteers under sections 175 and 176 of the army act.
From the Secretary of State for the Colonies to the governor general, dated August 6, 1914:
With reference to my telegram of August 4. His Majesty's government gratefully accept offer of your ministers to send expeditionary force to this country and would be glad if it could be despatched as soon as possible. Suggested composition follows.
Again on August 8 from the Secretary of State for the Colonies to the governor general:
Referring to my telegram sixth August army council state that a certain proportion of army troops will be required in addition to force mentioned. You will be furnished later on with suggested numbers.
I might go on and read numerous other messages. I refer to order in council P.C. 2067 dated August 6, 1914, which I think is important for the purpose of this discussion:
The committee of the privy council have had before them a report, dated August 6, 1914, from the Minister of Militia and Defence, representing, in view of the state of war now existing between the United Kingdom, and the dominions, colonies and dependencies of the British Empire on the one side, and Germany

on the other side, creating a menace to the wellbeing and integrity of the empire, and having regard to the duty of the Dominion of Canada as one of those dominions to provide for its own defence and to assist in maintaining the integrity and honour of the empire, that it is desirable to mobilize militia units of the various arms of the service of such effective strength as may from time to time be determined by Your Royal Highness in Council, such units to be composed of officers and men who are willing to volunteer for overseas service under the British crown; to organize and equip them for war and to make and perfect all arrangements necessary to enable them to enlist and be enrolled for service under His Majesty's Government, should that government so desire.
The minister recommends, in order that this purpose may be carried out, that Your Royal Highness authorize the raising and equipment of such units of such effective strength as aforesaid, the concentrating of them at some point to be selected by the Minister of Militia, with Your Royal Highness's approval, and to make and perfect all arrangements necessary to enable them to enlist and be enrolled for service under His Majesty's government should that government so desire, upon such terms of engagement and for such service as may be deemed advisable.
I could go on and read the various documents on record, but I think I have read enough to show that on every essential point Canada was committed, prior to the assembling of parliament, to participation in external war. I could read the War Measures Act introduced in the house on August 19, 1914, which merely gave blanket ratification to those steps which committed Canada irrevocably at that time to participation in overseas war without the consent of parliament. That was determined under the authority of the statute which I now desire to amend. That statute is still in force. The historic precedent exists. Canada was committed to war without the consent of parliament, and that authority may again be invoked without the consent of parliament. I wish to make it clear that I am not criticising the action of those men who faced terrific responsibility under the most trying circumstances in 1914; I merely point to the facts as they exist. Surely we may profit to some degree from that experience, and if the assurance of the Prime Minister that parliament will now decide, under the constitutional status which we have attained, by reason very largely of Canada's sacrifices in the great war, means anything at this time, surely there can be no objection to the amendments which I propose to the Militia Act. If there is any failure to amend that act, the suspicion must lie in the minds of many that it is the intention again to invoke its authority in the same manner as in 1914.

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Mr. LAPOINTE (Quebec East):: If my friend would permit me, for the purpose of information, is there anything in any of the orders in council he is mentioning indicating that those orders were adopted under the authority of the Militia Act?


Charles Grant MacNeil: That is just the point. There are included in the sessional papers numerous orders in council referring to specific sections in the Militia Act, and the Naval Service Act. I shall show that the order in council was passed under the authority of the Naval Service Act ratifying the purchase of submarines and placing them at the disposal of his majesty's government.


Ernest Lapointe: The Militia Act was mentioned in the orders in council, was it?


Charles Grant MacNeil: Yes, in dealing with the formation of an expeditionary force, order in council P.C. 280, and particularly P.C. 2068 dated August 6, 1914, the concluding paragraph of which reads:
Whereas in view of the state of war existing between the United Kingdom and the dominions, colonies and dependencies of the empire on the one side, and Germany on the other side; and in view of the fact that thereby the Dominion of Canada is liable to invasion and other assaults of a hostile nature, such an emergency has arisen as calls for the placing of the militia on "active service."
Therefore His Royal Highness the governor general in council, under the authority of section sixty-nine of the Militia Act, is hereby pleased to order that such corps or parts of the militia as may from time to time, with the approval of the governor general in council, be named or designated in general orders published in the Canada Gazette, be placed on active service in Canada.
A subsequent order in council provided for the dispatch of the Canadian overseas expeditionary force.


Ian Alistair Mackenzie: May I ask my hon. friend to quote again the order in council with reference to the overseas expeditionary force?


Charles Grant MacNeil: It is dated August 10, 1914:
The committee of the privy council, on the recommendation of the Minister of Militia and Defence, advise that authority be granted for the Canadian overseas expeditionary force to be composed in accordance with the accompanying table.


Ian Alistair Mackenzie: In that order in council there is no reference to the Militia Act.


Mr. MACKENZIE KING:: That last reference applies simply to the composition of the expeditionary force, does it not? Is it not
still obligatory for parliament to give its approval before any forces can be sent
overseas?


Charles Grant MacNeil: My reading of these various orders in council is that this authority was granted prior to the assembling of parliament.


Ian Alistair Mackenzie: Only for mobilizing them in Canada. There is no provision in the Militia Act for sending them out of Canada before parliament is summoned.


Charles Grant MacNeil: Is it not clear from the order in council I read a moment ago and the dispatches that were exchanged, that an offer was made to send an overseas force and the offer was accepted? Then comes order in council P.C. 2067, which provides:
-such units to be composed of officers and men who are willing to volunteer for overseas service under the British crown; to organize and equip them for war and to make and perfect all arrangements necessary to enable them to enlist and be enrolled for service under His Majesty's government-
The first message on August 1 stated that they intended to send an expeditionary force, and I think the inference may be drawn that at that time they were doubtful as to the interpretation of section 69 and suggested a device by which the Army Act might be made applicable to Canada. I have further sessional papers which indicate very clearly that these sections of the Army Act were invoked in order that there might be ample authority for the dispatch of an overseas expeditionary force.


William Lyon Mackenzie King: Does not the
act provide that parliament must come together within fifteen days after an attempt to mobilize, and under the law as it stands would not parliament still have to give its consent before any forces could be sent out of the country?


Charles Grant MacNeil: That is the law as it
stands. There is an order in council here providing that parliament shall be summoned within fifteen days, and it was so summoned on August 18, 1914. But, as I pointed out, the War Measures Act introduced by the Minister of Justice of that time gave blanket ratification to those steps already taken by the executive, committing Canada irrevocably to the dispatch of an overseas expeditionary force, and I can find nothing in the debates of the special session of August, 1914, that does more than is set out in the War Measures Act, which states:
2. All acts and things done or omitted to be done prior to the passing of this act and on or after the 1st day of August, A.D. 1914, by or under the authority of or ratified by,-
(a ) His Majesty the king in council;
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. (b) any minister or officer of His Majesty's imperial government;
(e) the governor in council;
(d)	any minister or officer of the government of Canada;
(e)	any other authority or person;
which, had they been done or omitted after the passing of this act, would have been authorized by this act or by orders or regulations hereunder, shall be deemed to have been done or omitted under the authority of this act, and are hereby declared to have been lawfully done or omitted.
4.	The issue of a proclamation by His Majesty, or under the authority of the governor in council shall be conclusive evidence that war, invasion, or insurrection, real or apprehended, exists and has existed for any period of time therein stated, and of its continuance, until by the issue of a further proclamation it is declared that the war, invasion or insurrection no longer exists.
5.	It is hereby declared that war has continuously existed since the fourth day of August, 1914, and shall be deemed to exist until the governor in council by proclamation published in The Gazette declares that it no longer exists-
Now I wish to turn to the situation which arose in respect to the Military Service Act of 1917. In the preamble of that act the sections to which I referred are definitely quoted as indicating the necessity for the Military Service Act. Section 41 and section 69 of the Militia Act are quoted, and the justification for the Military Service Act, as the Minister of Justice will remember quite clearly, was that such authority had existed previously in the Militia Act. It was argued by the late Sir Robert Borden, by his Minister of Justice and by various supporters of the government at that time that from 1914 to 1917 authority had existed and could have been invoked under the Militia Act not only for the dispatch of an overseas expeditionary force but, if they had so desired, for the imposition of compulsory military service on the people of Canada; and, as I say, the justification for the Military Service Act of 1917 was that it was more desirable to have the method of selective draft rather than the system of balloting which is now in the act; for I contend that the compulsory military service feature is still contained in this act. As I stated a moment ago, all male inhabitants of Canada are still liable for military service and may be summoned to the colours by order of the governor general in case of a levee en masse; and for the purpose of enrolment even in peace time the male inhabitants of Canada at present are divided into four classes and may be required to serve for a stated period. Of course that is obsolete in practice; but it is still in the act and that authority may be invoked if it should be so desired. I am not suggesting for a moment

that the right hon. Prime Minister has the faintest desire to do so; but the language of the statute is obsolete in the light of the assurance of the Prime Minister and the present constitutional status of the dominion.
May I also point out that in the debate to which I refer it was quite apparent that there was a wide divergence of opinion, and I commend the debates of 1914 as well as those of June, 1917, to all members of this house for careful study at this time. As I say, the Prime Minister of the day, Sir Robert Borden; his Minister of Justice, and many other eloquent and able gentlemen argued that the authority existed in the Militia Act. They quoted the opinion of Sir Charles Fitzpatrick who, in dealing with the interpretation of these sections, particularly section 69, said:
The governor in council may send the militia of Canada out of Canada at any time when deemed necessary for the defence of Canada. If, in the opinion of the governor general in council it should be necessary, because of a war going on in India, to send militia out there for the defence of Canada, they may, in the exercise of their discretion, do it, because they are the sole judges of what is necessary to be done in the defence of Canada.
Then he went on to say:
But we do not think it advisable that that power should be absolutely and unrestrictedly in the hands of the governor in council. We think it advisable that the period during which they may exercise that powder should be restricted and that parliament should be called together and be consulted at the earliest opportunity. Parliament must be summoned in fifteen days and then the whole matter will be in the hands of the people's representatives.


Ernest Lapointe: But the
opinion of Sir Charles Fitzpatrick was contrary to that of Sir Frederick Borden, who was the father of the act in 1904, was it not?
Mr, MacNEIL: That is true.


Ernest Lapointe: What is my hon. friend's own opinion about it?


Charles Grant MacNeil: I merely point to the
ambiguity and remind the Minister of Justice that at that time he argued passionately and eloquently for the interpretation which might follow the intention of Sir Frederick Borden when he drafted the statute of 1904. But may I point out to the right hon. gentleman that his opinion, in which he was supported by his leader, the late Sir Wilfrid Laurier, by the Hon. Mr. Oliver, the Hon. Mr. Lemieux and others, all of whom argued very emphatically for that interpretation, was overruled; and the interpretation prevailed at that time that under these

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sections of the Militia Act the executive, without reference to parliament except within the fifteen day period-


Ernest Lapointe: I could
not say that the other opinion prevailed, because the act was replaced by a special new act for the purposes of the then war.


Charles Grant MacNeil: The Militia Act was not
repealed; the Military Service Act of 1917 substituted the selective draft for the balloting procedure necessary now to bring militia units up to the required establishment.


Ernest Lapointe: Yes; but compulsory service during the war was carried on under the Military Service Act of 1917, entirely without regard to the old act.


Charles Grant MacNeil: I am pointing out that the leaders of the political parties at that time-and I am not saying whether they were right or wrong, nor am I trying to revive discussion of the conscription issue-were divided in their opinions on this question. There were differences between able constitutional lawyers at that time, who were faced with tremendous responsibilities. Sir Wilfrid Laurier took direct issue, as he said, with the opinion of Sir (Robert Borden on this very matter. The government of the day acted on the interpretation given by Sir Charles Fitzpatrick, a former Minister of Justice and later Chief Justice of Canada. The sections of the Militia Act now under discussion are quoted in the preamble of the Military Service Act. I mention this incident to show that serious ambiguity exists, and I fail to understand why the Minister of Justice, having found himself in that position in 1917, has failed to amend the act as it stands to-day, so as to make the position clear that parliament has definite control over decisions as to compulsory military service and as to dispatch of troops beyond the frontiers of Canada.
Let me refer to one other point. Speaking of the advisability of frankness in discussion prior to the event, in May, 1918, there was serious disaffection in Canada, and that disaffection was brought to a head by the descent upon Ottawa of a delegation of four thousand farmers. They submitted through the present hon. member for Outre-mont (Mr. Vien), who was in the house at that time, a most remarkable document, from which I wish to quote briefly. It indicates the results which follow arbitrary executive action without reference to parliament, and the results which follow a failure to bring these matters under frank discussion. At page 2551 a remarkable document was read into
Hansard as submitted by representatives of the agricultural community. I quote in part:
Will the house permit us to speak more plainly what is in our minds? We have never believed that the conditions produced by the war demanded flagrant departures from the honoured processes of law enjoined by the constitution while parliament is in session or is near assembling. We believe that reliance upon parliament, instead of upon arbitrary authority, most effectively honours the guarantees of freedom which are embedded in the constitution. One considerable departure from sound practice may be accepted, but repetitions of it may be exceedingly dangerous, especially under such circumstances as now beset the state.
Twelve days before the meeting of parliament in January, 1916, the authorized Canadian army was doubled from 250,000 to 500,000 men. No British army had ever been doubled without recourse to parliament. That it was done in Canada caused students of British history to inquire whether anything had occurred to warrant such a disregard of parliament. Though this House of Commons has inherited some of the consequences of such an innovation, we desire to confine our respectful remonstrances to more recent events.
It goes on to speak of riots in Quebec, unhappy circumstances through the agricultural communities, and the effect of the order in council endorsed by parliament which virtually swept aside the provisions of the Military Service Act of 1917. In view of the history of the Militia Act, the setting in which it was originally drafted, and in view of its inadequacy between 1914 and 1918, and the doubt which existed as to its exact interpretation, and as to the authority of the executive with regard to decisions of vital consequence, surely I am within my rights in urging the government to accept the amendments I have proposed.
It is intelligent and wise to act prior to the event. I say it is better far to face these decisions to-night, even though there may be sharp disagreement on some matters, than in face of grave emergency to have strife and dissension and disputes, such as I have referred to to-night in the quotations I have brought to the attention of the house. I say the Prime Minister might very well accept the amendment and keep faith with the youth of Canada whose lives are at stake, and who may be commandeered by the executive without reference to parliament under the terms of the Militia Act as it stands on the statute books of Canada to-day.


Mr. R. A. PELLETIER (Peace River):: Mr. Speaker, I rise to support the measure with some hesitation, because it does indeed involve a highly technical constitutional question and one which perhaps might better be left to the consideration of legal authorities.
Militia Act Amendment

Nevertheless I have long felt that our position concerning this particular matter has never been clear and explicit enough, and it is my view that the measure now before the house would make the act clear and explicit beyond the shadow of a doubt.
I also keep in mind the words of the Prime Minister (Mr. Mackenzie King) when he told us to be very careful about what we had to say concerning foreign policies. Nevertheless I believe that because of the existing situation certain principles should always be kept in mind, and in that connection I am reminded of the expressions of Sir Edward Grey, otherwise known as Viscount Grey of Fallodon, a former Secretary of the Foreign office during at least part of the great war. Referring to the situation at that time he said:
Every country had been piling up armaments and perfecting preparations for war. The object in each case had been security. The effect had been precisely the contrary of what was intended and desired. Instead of a sense of security there had been produced a sense of fear, which was yearly increasing. Europe was afraid of the German army. Germans encouraged in themselves and in others the belief that the German army was invincible.
I pause to point out that he was referring to conditions then existing. Perhaps the situation to-day is not similar. But the conclusion which he drew from his thoughts at that time are just as true to-day as they were then.
Such was the general condition of Europe; preparations for war had produced fear, and fear predisposes to violence and catastrophe.
So, keeping that principle in mind, I feel it is simply supporting the stand taken by the Prime Minister that our position should be made clear in respect to our attitude concerning this particular question. For example, it was for that reason that on March 16, 1938, I tried to introduce a bill which would have had the effect of repealing the Military Service Act of 1917. Hon. members will recall the discussion which took place at that time when the Minister of Justice (Mr. Lapointe) assured us that the act was dead. As a matter of fact he said it was a "dead horse", and other similar references were made to the act at that time.


Ernest Lapointe: And that was true.


René-Antoine Pelletier: The purpose I had in trying to introduce the bill was to attempt to make our position in Canada as clear and explicit as we possibly could. No one can deny that since we are a part of the British Empire we must face our responsibilities in that connection. It is true the Prime Minister has assured us on many occasions that the people of Canada would be consulted, through 
parliament, if any action of that kind were taken. Yet when we notice the events taking place around us to-day we cannot help pointing with wonder at the words of Sir Thomas Inskip, Coordination of Defence Minister, who spoke in the British parliament just before midnight on May 31 of this year. The press report is as follows:
James Ede, Labour, said last night that from Sir Thomas' statement it was clear the government had "legislative machinery" for conscription ready to be used as soon as war should break out.
"I have said so as plainly as I could," the minister replied.
He went on to say:
With the experience of 1914, the government departments concerned have given a great deal of consideration over a number of years to the best use of man power in an emergency.
There is certain to be, in the event of war, a competent authority who will allocate, according to the age and capacity of each individual person, a suitable position for that person to occupy.
But nobody would escape from the obligation which would be placed upon him in those circumstances by choosing a position, possibly one which he might think more attractive for himself, in peace time.
If anybody elects to join one or the other of the many services asking for recruits at the present time, he will do so with full realization that he will not thereby be exempt from any obligation which parliament may impose upon him in time of war.
That is the declaration of Sir Thomas Inskip in the British parliament. I feel it was said simply because the present world situation, although it has quieted somewhat within recent weeks, is felt to be serious in Great Britain, and certain measures are being taken so that all things might be in readiness in the event of an outbreak of war.
Because of what the right hon. Prime Minister (Mr. Mackenzie King) has said, I feel that every member of this house should support this measure, particularly the hon. members from the province of Quebec and elsewhere who have always felt they should be consulted before any such action was taken by the parliament of Canada. I should like to quote from the speech of the Prime Minister as follows:
"What I have said and quoted-"
I am still quoting what I said at Geneva two years ago.
"-does not mean that in no circumstances would the Canadian people be prepared to share in an action against an aggressor; there have been no absolute commitments either for or against participation in war or other forms of force. It does mean that any decision on the part of Canada to participate in war will have to be taken by the parliament or people of Canada in the light of all existing circumstances; circumstances of the day as they exist in Canada, as well as in the areas involved."

Militia Act Amendment
In order to bring about that happy condition, I consider that the present Militia Act should be amended. Section 4 of the Militia Act reads:
The command in chief of the militia is declared to continue and be vested in the king, and shall be exercised and administered by His Majesty or by the governor general as his representative.
It does not say the governor general in council, nor does it refer in any other way to the parliament of Canada. There may be other limitations, but that is the language of that particular statute. In order to determine our exact position, we should know what are the powers of the governor general and who is the governor general of Canada. I hold in my hand the statutes of Canada, 1930, second session, and I should like to read from the prefix thereof relating to the letters patent constituting the office of the governor general of Canada. This reads:
Letters patent under the great seal of the realm, constituting the office of Governor General and Commander in Chief of the Dominion of Canada. Dated 23rd, March, 1931.


Ian Alistair Mackenzie: Would my hon. friend read section 15 of the British North America Act in conjunction with that?


René-Antoine Pelletier: I am coming to that. I just wanted to make it clear how the governor general was appointed, and in a few minutes I shall refer to the powers of the governor general as set out in the British North America Act. I quote:
Office of Governor General and Commander in Chief constituted.
We do hereby constitute, order, and declare that there shall be a Governor General and Commander in Chief in and over our Dominion of Canada (hereinafter called our said dominion), and appointments to the said office shall be made by commission under our sign manual and signet.
I wanted this to be placed upon the record during the course of my remarks to show definitely how the appointment of the governor general is made. Section 15 of the British North America Act reads:
The command in chief of the land and naval militia, and of all naval and military forces, of and in Canada, is hereby declared to continue and be vested in the queen.
It does not state that it is vested in the governor general in council. Executive power is outlined under sections 9 and 10 of the British North America Act, which read:
9.	The executive government and authority of and over Canada is hereby declared to continue and be vested in the queen.
10.	The provisions of this act referring to the governor general extend and apply to the governor general for the time being of Canada,
or other the chief executive officer or administrator for the time being carrying on the government of Canada on behalf and in the name of the queen, by whatever title he is designated.
There is some reason for those of us who are not well versed in legal matters to believe that there may be room for disagreement in connection with the status of Canadians at the present time. In my opinion the present bill will serve to a large degree to clear up the situation. It will also serve to bring into effect the declarations made by the right hon. Prime Minister, that the people of Canada should be consulted in case of war. I could go on and refer to the fear which is in the hearts of so many people at the present time as to the outbreak of war. We realize the serious situation which exists in Europe, and we fear that our ties with other countries may involve us in war. I am not at the moment discussing our relationship to the British Empire or to Great Britain, but I do believe that as a part of the British Empire we must of necessity assume the responsibilities which exist at the present time and which must be faced. The words to be added by this bill to section 4 of the act are:
-acting by and with the advice of the king's privy council for Canada.
The other amendments proposed by the bill are along the same lines.
I intend to support this bill, and I want to make my position quite clear. I well remember during the election campaign of 1935 when I was asked many times to state my position in connection with war. In every instance I always replied I believed that in ease Canada was invaded, every Canadian should be willing to give to the very last of anything that he possessed, even his life, in order to defend the country that he loved and the family that he had raised, but before he was sent overseas to take part in any war beyond the borders of Canada he should be entitled to express his opinion as to whether or not the reasons for that war were such that he could support. I do not wish to discuss the propaganda which is usually carried on at such time and which has such an influence upon public opinion. The fundamental principle of democracy which is involved is not altered in any degree. The individual who may be called upon to give up his life elsewhere should have the right to say whether he is willing to do so. I believe everyone in Canada desires to have that great privilege.
The Budget-Mr. Blackmore



THE BUDGET


[Stage Direction]
The house resumed consideration, of the motion of Hon. Charles A. Dunning, Minister of Finance, that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Lawson.
John Horne Blackmore: Mr. Speaker, before proceeding with the remainder of the contribution which I am endeavouring to make to the budget debate, I should like to say, in criticism of the budget, that as a westerner and a representative of an agricultural constituency I protest against the fact that no effort has been made to reduce the duties on and the prices of, farm machinery to the farmers, and that no provision has been made for the reduction of the sales tax. Both of these matters bear heavily upon the people in my constituency and throughout the west.
When the house took recess at six o'clock I was referring to the remarks of the hon. member for Vancouver-Burrard (Mr. Mc-Geer) as reported on page 4067 of Hansard, to the effect that he did not approve social credit principles. From what the hon. member said with reference to the issuing of purchasing power, one is forced to the conclusion that there is not much difference between his idea as to where the money could come from and the idea of those who believe in the social credit movement. Inasmuch as the origin of new money is the first all-important matter rather than what you shall do with the money after you get it, I contend that he was hardly justified in making so sweeping a statement as is to be found in column two of the page to which I referred. However, his opinions are his; ours are ours; and he has a perfect right to say what he likes. There is apparently this difference between his idea concerning money and ours. He did not, so far as I was able to understand, lay down in his speech the principle that the new money should not cause debt. Our stand is that when new money is created there should not be any debt of the government for that money; if anyone owes anybody for that money, he should owe the government of the country for the money. To us it is an absurdity that the government of a country should owe anybody in the country for the money that government has with which to carry on, or for the money which is created

within the country. It is the unchallengeable, sacred, sovereign right of the government of the country to create such money as it is necessary to create within the country.
The hon. member for Vancouver-Burrard did not say anything about the just price. I think he would be in a difficult position in maintaining an objection to the just price. It has not been discussed to any great extent, but certainly a just price commends itself to any fair-minded person.
As to what shall be done with respect to the dividend, may I raise just one or two questions for the benefit of the hon. member and other hon. members in this chamber? He mentioned last night the great amount of money which the British government was expending to increase purchasing power by an impressive rearmament program. He mentioned rehousing and a great many other projects which are being carried on to distribute purchasing power among the people. Let me ask this question first: When the rearmament program ceases, how will the government proceed to get the money into circulation? That question must be answered. And when rehousing has gone forward to as great a degree as is considered advisable under the conditions, how will an amount of money similar to that which has been expended through rehousing be distributed among the people? The same question might be asked with respect to each of the projects proposed. Again, it must be borne in mind that when any project is set forth and effected within a country, there are but a limited number of the people of that country who are enabled to get employment in connection with that project. The result is that a great many people to whom the purchasing power should come are unable by any ordinary means to get that purchasing power into their hands. The all-important matter is to get the purchasing power into the hands of the consumers. The hon. member will be faced with the difficulty of getting around that objection unless he accepts the principle of the dividend.
Let me turn for a brief time to the question of money. The Minister of Finance, whether he intended to or not, gave the impression that attempts in the past to use money by a government have been failures.


Charles Avery Dunning: Oh, no.


John Horne Blackmore: In this connection let me refer hon. members to an extremely fine book, published in 1930, called The Theory and Principles of Central Banking, by Doctor William A. Shaw, editor of the calendar of treasury records of His Majesty's public

The Budget-Mr. Blackmore
records office. He is the author of seven successful books on monetary topics. There can 'be very little doubt that this man is one of the world's most eminent authorities. On page 50 of that book, which is to be found in the library, appear these words:
And thereupon the treasury offered to sell them currency notes at full face price without limit, and at the same time opened a currency note redemption fund for the purpose of retiring the issue as soon as the need for it was over.
What is being discussed here is the means which the British government used to overcome the financial crisis with the banks,, which crisis arose when the war broke out and they had a panic. I go on with the quotation:
To the treasury's surprise, the currency note quickly struck root, and proved itself completely acceptable, and gradually the treasury realized that the whole circulation of the country could be changed over to paper and the gold withdrawn. The changeover was accomplished with astonishing ease and speed by 1916. By the restrictions which were later placed on the movement of gold this currency note circulation became virtually inconvertible, though it was not declared so by law until 1925.
Thus far there seems to have been little difficulty in making this national currency work. I turn again to page 51 and read the following words:
To this currency note circulation there was at first no limit fixed. It could fall or rise unhampered, according to the community's demand or need of it, and in the remaining years of the war and of the armistice period it bore the strain of increased prices and enormously increased production without friction or effort. For the first time in history the world had a sample of a truly automatic currency, issued only by the state, sold only at full face value, supplied or retired in complete accordance and response to the community's unfettered demand or need.
May I stop just for a minute to comment. It is one of the fundamental ideas of the social credit proposals that the money in circulation shall depend upon the needs of the people; in other words, that we should have economic democracy to the fullest degree. Consequently this monetary experience has a most important bearing upon the social credit contention. To continue the quotation:
After ten years of illuminating experience this perfect, uncontrolled, and uncontrollable automatic currency system was thrown over, the automatic principle was surrendered, and our currency, although declared by law to be inconvertible paper, was placed (or was supposed to be placed) under the control of the Bank of England, and became once again sensitive (or was supposed to be made sensitive) to the vagaries of a fluctuating gold cover fund.
The indications from the words used there are that if that change had not been made, this inconvertible paper currency, issued by the state and by the state only, would have been a most outstanding success. On page 57 we read further:
The historical survey agrees with pure theory in declaring that currency control is not and cannot be a function of a central bank, and that paper currency must be entirely automatic alike in its issue and its retirement, just as the previous metallic gold circulation had been, and therefore that the control of it lies in the community, not in the central bank.
May I point out, pausing for a moment, that the idea is economic democracy; that the community itself shall decide (the amount of money which shall be in circulation. To continue the quotation:
In this perfect form such paper is incapable of overissue and debasement, and is therefore proof against manipulation at the hands of a needy government. Therefore the guarantee which Europe is seeking against inflationism resides not in a central bank (which is no guarantee at all), but in an automatic currency.
Such is the verdict which I deduce from this rapid survey of European banking and currency history of the last hundred years.
In the light of such expressions as that, in a book written by so eminent an authority, any man inside this house or out who undertakes to point the finger of scorn at the economic reformer, the advocate of money reform, is being reckless in an extremely high degree.
May I now deal for a few minutes with what has actually happened with respect to the growth of money in another country; I refer to the United States. The information which I am now going to put on Hansard is drawn from pages 66 to 68 of a book called Inflation, by Woodward and Rose, published in 1933. In those two pages will be found the following illuminating figures:
		Bank	Total
Coin and	deposits	circulatingcurrency	per	mediumYear	per capita	capita	per capita1834..	.. $ 5 24	$ 7 11	$ 12 351860..	.. 9 76	9 85	19 611880..	.. 13 93	44 30	58 231900..	.. 17 10	111 57	128 671915..	.. 18 56	218 48	237 041930..	.. 29 76	485 57	515 33
Until 1860 there was very little difference between the amounts of coin and currency and bank deposits, but notice the tremendous jump in the use of bank deposits-figures in a book -iin these later years. In 1930 the coin and currency was $29.76 per capita; bank deposits, $485.57 per capita, and the total circulation medium $515.33 per

The Budget-Mr. Blackmore

capita. The figures which are given on these two pages show the way in which bank deposits, created by the banks out of nothing, constituting nothing but figures in a book, came rapidly to be the money which was used by the country. The figures are extremely striking. The last figures I gave indicate that in the United States in 1930 there was only $29.76 of coin and bills, what we ordinarily call money, while there was 1485.57 of bank deposits. There is a common fallacious notion among people that bank deposits are in some way coin and currency, but these figures show clearly that such is not the case; for as I have just said, and I repeat, in 1930 there was only $29.76 of coin and currency per capita in the United States, while bank deposits amounted to $485.57 per capita-[DOT] figures in a book.
The question is, who created these deposits? The banks of the United States, working through a hundred years of time; and our contention is simply that the government should have created that money. The government and not the banks should have owned it.
Let me turn now to another quotation. These quotations may be rather uninteresting, but they are the best means I can find of convincing anyone who is open-minded and willing to .be convinced. So far as the others are concerned, there is no use in bothering with them.
On page 181 of a book called Controlling Depressions, by Paul Douglas, professor of economics of Chicago university in 1935, we find these words:
Finally, it may be asked why private interests should be allowed to obtain the wealth which comes from the creation of monetary purchasing power in the form of bank credit. As Carl Snyder has shown, production, if we take long periods of time, has increased at a rate of approximately three per cent a year compounded. Now if the private bankers only increase the quantity of credit in the same proportion they would gather to themselves a very large gain in wealth and power.
There, may I point out, is something for nothing, something that has been acquired by the bankers of the United States through all the history of banking in that country.
This has most certainly been the ease in the ast. The volume of bank credit which has een built up from very small beginnings is now the property of the banking fraternity. By creating credit they have acquired a title to wealth and a claim upon the national income as real as if they had themselves built gigantic factories, railroads, utility plants, etc. Some idea of how much these sums amount to can be gained from the fact that if we were to take a credit total of thirty-three billion as our base, an increase of three per cent in this figure to match the secular increase in production would mean that in the very first year the

private bankers would create one billion dollars in new credit. They would own this and would in fact increase their wealth by that much. Ab the total volume of credit rose, the absolute yearly additions would of course rise also. Thus, three per cent of fifty billion would amount to 1-5 billion a year. A large part of the fruits of progress, therefore, tend to be transferred to the private bankers because their ability to create the monetary counters enables them to claim title to the goods. It is, of course, true that this purchasing power is then loaned out. But interest is charged for the loans and these go not only to independent business men but also frequently, as the revelations of the last ten years have shown, to persons and syndicates closely identified with or controlled by the bankers themselves.
There are other quotations from this book which I shall read. Although they are not interesting to listen to, they make interesting reading. On page 182 the author says:
The bankers as individuals are not, of course, to be blamed for this creation of purchasing power. Under the prevailing rules of the game they have been given this power and they have acted both within their legal and their moral rights. But the question remains whether the rules themselves are best for society.
Social credit says that the rules are not best for society; that they should be changed, and that it is the responsibility of this government at this time to change the rules:
Society has long since taken away from individuals the right to profit individually by privately coining money. Why should it surrender to private individuals and corporations the similar right to levy toll upon the public by permitting them to create purchasing power in the form of credit? Should not the profits of this essentially public function accrue to society as a whole rather than to those who have placed themselves at the vantage points of industry?
These are the words of Professor Paul H. Douglas, professor of economics of the university of Chicago. They sound like social credit, but here is an orthodox economist of the United States writing in this vein. In the light of the fact that so eminent a man makes such a contention, reckless indeed is he who has offensive things to say about monetary reformers. On the same page he writes:
There has always been a considerable volume of opinion in favour of the complete nationalization of banking. In the past, its advocates have been regarded as money cranks hovering on the lunatic fringe of social reform. The sentiment in favour of such a policy has, however, been swelling rapidly in both Great Britain and the United States during this depression. In Great Britain, the Labour party has been putting such a proposal near the head of its program, and while no such strong political forces have as yet advanced similar demands in this country such developments do not seem as impossible in the future as they once did. The most cogent argument in favour of such complete nationalization

The Budget-Mr. Harris
which has been advanced in this country is that of Doctor John Bauer and Nathaniel Gold in their recent book, Permanent Prosperity and How to Obtain It.
There are other passages that follow immediately which any hon. member would find interesting. The finding of this outstanding author is that the government and the people should have the profit that comes from the creation of money.


Mr. DEPUTY SPEAKER:: I must remind the hon. member that he has exhausted his time.


John Horne Blackmore: It may be interesting to know that I have half a minute left.


Mr. J. H. HARRIS (Danforth):: We all
fully realize the task of the Minister of Finance (Mr. Dunning) in preparing the national budget; but he and other hon. members will understand, I am sure, that with all the good will and with the best wishes, we might be excused for leaving out the usual complimentary remarks, and take full advantage of the forty minutes allotted to us to discuss a subject matter which it took three hours to present to the house.


Charles Avery Dunning: Not as bad as that-two and a quarter.


Joseph Henry Harris: After listening to social
credit, something about which most of us do not seem to know a great deal, perhaps hon. members will now listen to something about which they know or ought to know a great deal.
Canada is faced to-day with problems of great magnitude. First and foremost among them I place the fact that close to one million of her men, women and children find themselves leaning on the state for daily sustenance. The cost this year will be about
868,000,000. Another problem which is costing us a great deal of money is our railway problem; even as it was last year, the cost will be close to $42,000,000, if not more than that. We have an agricultural problem that is and will be with us for many years to come; young men and young women as they come to maturity find themselves drifting from the farm to the town. Sixty years ago twenty-two people were in the towns to seventy-eight on the farms. To-day in Ontario we find thirty-nine on the farm producing for the wants of sixty-one in the urban centres. Coming to the urban centres, we find one of the greatest problems is that of real estate taxation, which makes it difficult for our people, who are home loving people and like to own their own homes, to do so. These problems are the concern 51952-260J
not only of members of this house but particularly of the ministers, and we should have some action from them. The greatest of all problems is the fact that so many of our people cannot find a vocation. True, the matter of sales tax was dealt with, a nonwork-producing tax, and some degree of relief has been given. Still I say the greatest problem is that of our fellow citizens who cannot find a vocation.
The budget itself quite properly was divided into its five classifications; financial operations, trade, the balance sheet, the estimate of revenue and expenditure, and ways and means to meet that expenditure. But why was not equal weight given to each of these five divisions? Why was one hour spent on trade, one on accounts, information with regard to which we can get each and every month from the blue-books, and only half a page devoted to the forecast for the coming year and half a page on ways and means to meet that cost? Why was nothing of any consequence said- only 217 words-with regard to the railway problem which is exercising the minds of all Canada? To my mind this presentation, to put it as kindly as I can, is one of the greatest examples of inaction that I have seen during my term of sixteen years in this House of Commons. "Vote Liberal and get action." What empty words! Trade and Commerce took one hour. I think the time has come when perhaps the Minister of Trade and Commerce (Mr. Euler) might take charge of that portion, elaborate the picture for us, and sit in this house and answer, relieving the Minister of Finance of that part of the burden. But inasmuch as the Minister of Finance takes it on himself to talk to us for an hour on trade and commerce, perhaps I may be spared a few minutes.
Trade. Your Liberal god seems to be total trade. You think only in terms of total trade. There I draw the line of demarcation between the Liberal party and the Conservative party. You worship at the shrine of total trade; with us, trade, yes, trade wherever we can get it, expanding trade, but trade of a kind that will not take away from our citizens their handicrafts, their vocations. That is the kind of trade for which we stand. The Liberal party look to the south for more trade, and there they find people much the same as our people, their vocations the same as ours, their mode of living the same, their resources very much the same, the same kind of products and much the same geographical position. What is the result when you give concessions to a powerful nation like that? Each concession you give turns out in the
The Budget-Mr. Harris

long run to be detrimental to the best interests of our country. The action taken by them, particularly during the last two or three decades, we all know has resulted in stifling us and barring us from making real progress. The United States to my mind should receive a secondary consideration in regard to our trade. You have the spectacle of us sitting here for five months waiting for that nation to make up its mind whether or not it is going to enter into a trade agreement with us. That is another example of leaning on that country and not going ahead and functioning as a government, and presenting the budget in March, as it ought to have been presented. Let us go ahead and do the business of Canada, instead of sitting back and waiting five months for the powerful nation to the south of us to make up its mind what it is going to do. Let us carry on and show a stiff front to the rest of civilization, not letting ourselves remain in the category of an adjunct to the United States.
Then, following the same line of thought that total trade is the god, we have in the budget address a table, appearing on page 3896 of Hansard, setting out the imports from the United States, $393,000,000 in the fiscal year ended March 31, 1937, and exports to the United States, of $364,000,000 in the same year. They add the two together and say that is the total trade. But the total trade is not the real factor which affects the economy of this country; it is the balance of trade. Those figures should have been deducted, exports from imports, to show our unfavourable balance with the United States. In 1938 we see the total imports rising to $487,000,000 and exports shrinking by some $21,000,000. But they are added together and the total set before the people of Canada
as an increase of $72,000,000. Had our exports to the United States been deducted from our imports from that country, it would have shown an unfavourable balance of $144,000,000. That is the factor which is seriously affecting our economy. That is the factor which should receive the attention of every sound thinking Canadian. That $144,000,000 unfavourable trade balance represents goods half of which could have been produced or made in Canada. Why give away $2,000,000 a week of Canada's home market, the products of our farms, gardens, orchards and factories? Why give away $1,000,000 a week in wages to purchase the products of United States farms and gardens and factories? I almost heard a tremble in the minister's voice when he handed out that little sop to the west by saying that during his term of office the free imports into this country have increased from one-third to one-half. So much was I interested that I looked to see what classes of goods these imports were. I found an increase in agricultural and vegetable products of a kind that we could produce in this country of $8,000,000 from 1936 to 1937. Analysing that figure I found that in the same year fresh vegetable imports of a kind that we can produce here increased from $4,180,000 to $5,140,000, or twenty-five per cent in one short year. Seeing that, I thought to myself again that the time has come when a party will have to be put in power whose goal is not only more trade, but trade of a kind which will not affect the natural production of our dominion.
With the permission of the house I should like to put the following tabulation on the record. The budget shows the trade of Canada with the United States on page 3896 of Hansard:
(Merchandise-all gold excluded.)
Imports from the United States. Exports to the United States..
Fiscal year ended March 31, March 31, 1937	1938
$393,720,662	$487,328,980
364,354,990	343,250,069
Increase
or
decrease + $93,608,318 - 21,104,321
Total trade with the United States
$758,075,652	$830,579,649
+$72,503,997
A clearer view of the position would be shown if we deducted our exports from the imports thus:
Imports from the United States Exports to the United States. .
Fiscal year ended March 31,	March 31,
1937	1938
Increase in unfavourable balance

Unfavourable balance with the United States $ 29,365,672	$144,078,321

[Mr. Harris.l

The Budget-Mr. Harris
In connection with mixed farming in Canada, particularly in Ontario and Quebec, when I noticed from the statistics that twelve million tons of canned beef came into this country last year, knowing that this represents thirty thousand cattle, I thought once more that the time had come when we should call a halt to importations of that kind. Can we not produce beef in Canada?
Turning to the other side of our national life, industry, and looking at the iron and steel industry, we find that imports increased from $114,000,000 in 1936 to $150,000,000 in 1937; yet in the report of the national employment commission it is stated that there were 99,157 men engaged in that trade in
1929, of whom 35,000 were walking the streets in 1936. Why, then, should we import an additional $40,000,000 worth of iron and its products, while so many of our own people found themselves on the streets looking for jobs? Take the schedule of all commodities entering Canada and divide it up, as the bureau of statistics does, into raw materials, semi-manufactured articles and fully manufactured articles, and what do we find has happened in the last four years? Our total imports have increased from $238,000,000 to $487,000,000, an increase of $249,000,000, or more than double.
I put this record on Hansard:
Imports into Canada from United States by Degree of Manufacture
(Fiscal Years, 1934-1938)
Fiscal years	Fully Fully
ended	Total	Raw	Semi-	nianu-	manu-
March 31	imports materials manufactured factured faetured
1934	
$238,187,681	$ 90,360,530	$14,412,383 $133,414,768	56-01935	
303,639,972	112,600,065	18,874.371	172,165,536	56-71936	
319,479,594	109,674,022	20,463,892	189,341,680	59-31937	
393,720,662	124,346,994	22,165,712	247,207,956	62-81938	
487,307,907	144,065,465	25,390,779	317,851,663	65-24 year increase	
$249,120,226	$ 50,704,935	$10,978,396 $184,436,895	9-2
The fully manufactured products, in every $100 of which there is contained $40 of workmanship and wages, showed an increase from $133,414,768 to $317,851,663, or a total increase of $184,436,895. Yet in his budget speech the Minister of Finance says that "Canada cannot give to-day and trade to-morrow." Within the last three or four years Canada has given more than $184,000,000 in this way alone; yet she wants to trade to-morrow. I say we ought to adhere to the policy that Canada cannot give to-day; and I am behind the minister in that policy. I would even follow him if he went one step further and said Canada should protect the opportunity for workmen in this country to fabricate the goods we need, even beyond the point of giving and even to the extent of protecting ourselves. The Conservative policy that brought about "our" great empire trade agreements-and I said "our" empire trade agreements-did that very thing; saw to it first that the products of our own artisans and farmers were protected against the inroads of materials of all kinds from other countries, and then we had something with which to make a deal; we had some opportunity to bargain.
Canada has been in this position on other occasions; we have been brought to this situation many times through the advent of Liberal governments, and each time they come
to power it seems that more and more of the products of other countries come to our land, while we produce less and less of our own requirements. That happened in the seventies, and the situation was remedied by the national policy of the Conservative party. It happened again in 1890 and 1900, and then in 1911 Canada said, in no uncertain voice, "No more of that." It happened again after the depression of 1930. I say to the hon. member for Huron North (Mr. Deachman) who seems to have forgotten that there was a depression, that it was not only the depression which was responsible for the extent to which Canada's economic position was affected in 1930. The tremendous importations into this country of goods of a kind that we could produce was also responsible for the difficulty in which we found ourselves. In spite of the fact that "do nothing to aggravate or provoke the United States" seems to be the attitude of our friends opposite, I say that what happened in days gone by is happening again to-day; and if we continue to slip as we have this year, to the extent of an unfavourable trade balance of $100,000,000, it will not be long before something will have to be done. If it is not done, the people of Canada again will call in the Conservative party to straighten matters out.
The Budget-Mr. Harris

This weak, spineless attitude of not aggravating or provoking a nation so powerful as the United States is not enough for this strong Canadian race. We witnessed what happened when the Fordney-McCumber tariff, the Haw-ley-Smoot tariff and the various revenue bills were passed in the United States. We may wait for an election to make some change and bring in an agreement, but if I understand the temper of the Canadian people they do not feel disposed to wait as long as that.
With regard to the actions of the United States, in 1932, 1934, 1936 and on May 16, 1938, they passed revenue bills. Did we see Washington sitting back and waiting before passing these bills, for fear of provoking or aggravating the people of Canada? No; the fact is that they passed these bills without hesitation. It is quite true that in 1936 we had the United States-Canada agreement, and the president was given power which permitted some of the excise duties which they had imposed against our products to be cut in half. Let us take one example, however; let us look at what happened in regard to rough lumber. Did they hesitate to put $3 a thousand against rough lumber going into that country? They did not. It is quite true that when the agreement came down they cut that duty in half, but the fact is that a tax of $1.50 per thousand still exists in regard to that commodity. That is only one example. Then there is copper. In 1932 they placed a duty of four cents against copper not only in the raw state, but in all forms right down the line, and that was not changed when they came to make their agreement with us; that four cents still remains. I would ask my maritime friends from Nova Scotia and British Columbia, from the north Pacific and the north Atlantic, where fish oil is produced in greater quantities than in any other part of the civilized world:	Was anything
said about a duty of three cents a pound being imposed against Canadian fish oils in the 1934 United States revenue bill? There was not, and that excise duty still remains. They did not stop to wonder whether they were going to aggravate or provoke Canada when they put through that revenue bill.
In June, 1936, they saw fit to impose, not only against Canada but against the world, an excise duty of three cents on animal fats of all kinds. Did we do anything about that? We did not. That excise duty was imposed, and it had a double-barrelled effect. In the first instance it paralyzed that industry as far as Canada was concerned, and it backed up on the world market a billion pounds of vegetable oils which paralyzed the industry

in England, Canada and elsewhere. Was anything done about it? It is true that a reference was made to our tariff board in December, 1936, but was that board asked to bring down its report? The Minister of Finance, the Minister of Agriculture and all hon. members of the house know that between December, 1936, and June, 1938, there was ample opportunity for a report to be brought down and for some action to be taken upon it.
Yet with these revenue bills which have affected the lumbering industry, the mining industry and the agricultural industry, and which also place two and a half cents a gallon against gasoline and half a cent a gallon against crude oil and fuel oil, which is produced in Canada and other countries, what do we find happening within the last two or three weeks in the same United States? We find that they again reaffirm the position they took with regard to the effective period for these import duties and taxes. They did not consult Canada particularly about these particular sections, and by proclamation, by public resolution No. 48 as of June 29, 1937, they were extended to June 30, 1939. They are extended to 1939 on four of our main lines of activity. Did they hold up their session of congress or their activities in Washington in order that they might have an opportunity of making a deal? No. Yet we sit here in a spineless, do nothing sort of way, draw our breath and diraw our pay, while the affairs of Canada to my mind are not given straightforward business administration, regardless of where the chips may fall.
Taxation. We have listened to what you had to say about reduction of taxation during the election campaign and many times since. But the truth of the matter is that you have budgeted to extract more taxation from the Canadian people next year than you have for many years in the past. Where are you going to get this taxation? You still expect to find the sales tax either first or second in the group. The sales tax to my mind, Mr. Speaker, is far too high. It is too heavy on the Canadian people. It taxes from the baby in the cradle to the octogenarian in his casket. It catches them all. I am in accord with a small measure of sales taxation which would catch all the people, but I say that this eight per cent is too high. To my way of thinking it is iniquitously high.
Income tax. This is quite right and quite proper, and I am glad to see it where it is. But I think that it is high enough. Nevertheless, the form of taxation which makes

The Budget-Mr. Harris
work-and it is work that we want in Canada to-day; my friends to the left say we need work and wages

is the taxation which will come into the treasury from the goods of other countries, if the goods of those countries must come here. If the goods do not come in, then give us a chance to produce our own requirements for our home market.
The orientation is all wrong. The sales tax should not be first and the income tax should not be second. Customs and excise revenues should take first place, and particularly in a country such as Canada which has such a strong neighbour to the south. The election budget will probably reduce that tax. Just before you go to an election perhaps you will bring the sales tax down. Yes, and my friends at the summer picnics this year will be saying, "We have brought down the sales tax on building materials." I can imagine them standing on a platform and saying, "This very platform on which I stand has had removed from it the eight per cent sales tax, and that has been done by the Liberal government." And those who exclaim from the housetops will also say, "Every article in this house has been benefited by the removal of the eight per cent sales tax.
Mr. Speaker, they will tell us about the great boon that sales tax removal on construction materials has been to the Canadian people. If that sales tax was a great hardship on the construction industry, then I say it is a great hardship on all other lines of work on which that particular tax takes its full toll. It is a non-work tax. It should foe cut in half forthwith. And my suggestion is that in its place we place excise duties to the same amount against goods coming into Canada. That would tend to relieve the numbers on relief rolls, and give work to many workmen. Tariff by scientific arrangement, business administration and carrying out the fundamentals of tariff protection would make for more production, assist mixed farming, market gardening, the development of our natural products, and would not extract so much money from our people.
What do you do with the money when you get it? You spend a great deal of it right here. The cost of government is too high. Are we, as members of the House of Commons, functioning as we ought? Seriously, are we as members of the house doing the job of work which we undertook, when we were asking the franchise of our people, we were going to do? What have we done in the last five months? Perhaps we have enlarged the field of political patronage and meddled with the railways. Perhaps we have meddled in radio, public works and the civil service.
I am glad the Prime Minister (Mr. Mackenzie King) is in his place in the house. He will remember a time sixteen years ago, when East York had a growing population which reached 100,000 people. He will very well recall that I represented 100,000 people at that time. I said I would represent the
100.000	people in the constituency of East York if you, Mr. Prime Minister would do the same for North York. Of course you could not do it there then, because you had to go outside the province of Ontario to find a seat. But I suggested that you also represent
100.000	people in the House of Commons so that we could cut the membership to one hundred, and so that we might function, go to work and do a proper job.
But no; we still have 245 members. And at the same time the Prime Minister will recall that I said I thought there were too many commissions working at that time. What I said then I repeat to-night. Why has it been necessary to add sixteen commissions in the last two or three years to carry out the work of government? Why cannot we as members of parliament carry on a good deal of that work? Why should it be costing $1,000,000 to $2,000,000 each and every year for commissions to do the job of work for the government, work which you and I and the rest of the members of the house feel that we should do? Commissions are set up politically; why not face that issue? We are as able as they are to do the work. If the commissions cannot be cut out; if the government cannot see its way clear to cut at least half of the commissions, then cut out half the number of members of parliament.
We have had the national employment commission, the wheat marketing commission, the textile commission, the lobster and smelt commission, the veterans' assistance commission, the radio commission, the Dominion-provincial relations commission and the penitentiary reform commission. There has been the suggestion to add another fifty cents to radio fees, and to enlarge the scope of the radio commission. Public opinion does not want an enlargement of the scope of the work they are doing. That is one point which should be given serious consideration. To my mind the fees' system should be cut out entirely. Then, we have the transport or railway commission, the tariff commission, the civil service commission, the board of grain commissioners, the national battlefields commission, the federal district commission, the international joint commission, the international boundaries commission and the national harbours commission.
The Budget-Mr. Harris

No session of parliament seems to be complete unless we have some commissions appointed to do work which your people and my people think they sent us here to do. We must remember how, when the present Prime Minister sat on this opposition side of the house; he talked about government by commission. His favourite topic seemed to be that of government by commission, and on other occasions his favoured topic was government by order in council. On still other occasions he talked about governor general's warrants.
The distribution of work which would be effected and the amount of money which could be saved by taking work from commissions and giving it to the members would be very considerable. I shall not go into details, but it was interesting to note the answers to questions asked by the hon. member for Carleton (Mr. Hyndman) with respect to the cost of commissions. I noted the answers given to the questions of my dear late friend, the late member for Waterloo South (Mr. Edwards), and the answers given to the questions of the hon. member for Grenville-Dundas (Mr. Casselman). The answer to those questions should receive the serious consideration of every hon. member, and particularly the government.
Throughout my remarks I have been trying to enunciate principles which would make for more work for our Canadian people. So, when I voice my views with respect to the railways, I have fixed firmly in my mind the idea that nothing should be done which would take railway men from their vocations. To my idea we do not go far enough when we speak of transportation. We speak only in terms of our nationally owned railways on the one hand the privately owned system on the other. When we go deeper into this problem we realize that we must consider the effect of the present trend to ride and carry freight on rubber. We must consider the cost of transporting freight and passengers over our highways as compared with the cost of maintaining our railways. I know this may be under provincial jurisdiction, but I charge the Minister of Transport (Mr. Howe) to give some consideration to the capital cost of our highway system. We should consider this matter in all the provinces. We must take into account the revenue received from gasoline taxes and motor licences, balance the highway budget and see what deficit we have. When we are considering our railway problem we must not forget these three things.
Our railway system has been refinanced and is still being refinanced. There is unemployed money, yes, but the deficits accumulate and

we require more and more of this unemployed money with which to pay these deficits. The first responsibility of the management of this road should be to get a balanced budget. They should have the fullest cooperation of whatever government is in power in trying to achieve that end. We should not put out a budget containing a hundred or more items of expense, and then have the management imbued with the idea that their job is to spend all of the budget allotted to them. A businesslike administration of the road would bring it into a better position, but at the same time the Canadian government and those charged with responsibility should see that it is not placed in an unfair position as compared with highway transportation by bus and truck.
Maturing obligations have to be met. I know the Minister of Finance would not be guilty of bragging of the great saving the Liberal party has made because of his ability to borrow money at such low rates of interest. However, let me say to those who sit about him that it is easy to raise money when so much money is unemployed. There is plenty of money available at low rates of interest. It is quite easy to make the statement that Canada has been saved millions of dollars by lower interest rates; but I ask hon. members this question: How much was that railway debt which has been refinanced worth before the name "Canada" was placed on the back of the bonds? In May of this year the Minister of Finance received authority to borrow another $200,000,000. There was one issue of $916,000 of the Rail and River Coal Company which previously paid five per cent. This was refinanced, with Canada's name on the bond, at a little over two per cent, and it may be contended that Canada has been saved three per cent in interest. When my Liberal friends feel inclined, on platforms throughout the country, to make this statement about, interest being saved, let me say to them that no credit is due for the fact that this government has been able to borrow money at lower rates of interest. That is only the ordinary common business sense which was first shown in the administration of our affairs by the Conservative government and which has been followed by the present incumbent of the office of Minister of Finance.
The Liberal party is the great party that was going to make for unity in Canada. I can remember when their leaders one after another stood up in the Maple Leaf Gardens at Toronto and asked the people to vote Liberal and get unity. What empty words when considered in the light of what has

The Budget-Mr. Duffus
happened since! Vote Liberal and get action ! What empty words in the light of what has happened since! Who are these men of whom we make mention? They are the stand-patters, the free traders, the protectionists, the crack-pot financiers, the monetary reformers, the sound-money men; they are the men from whom the people of Canada expected to get some action. But we have had no action. All we have had is five months of do nothing.
This budget does not help our particular situation. The people of Canada have been greatly disappointed at what has happened during the last five months.
I agree with the hon. minister when he says that we need toleration in this country. I realize that we need goodwill. I opened my remarks along those lines, and I shall close them in the same way. We need cooperation; but, above all, Canada needs leadership and action from her public men in order to have that progress which is necessary to this most vigorous of units that civilization presently knows.


Mr. J. J. DUFFUS (Peterborough West):: Mr. Speaker, in asking the indulgence of the house at this time, after listening to the speeches delivered to-day in the chamber, I am motivated by a compelling sense of duty to the government, to the people of the constituency which I have the honour to represent and of the Dominion of Canada in general. I realize fully that the budget affects fundamentally the very vitals of the social, industrial and economic life of this nation, and similarly, though perhaps to a lesser degree, that of the other great nations of the world. If I may judge from press reports and from personal observations, it is quite apparent that the budget has been exceptionally well received and likewise well sustained. It is a budget of a Minister of Finance who for two years has been trying to find a way out of an almost insurmountable economic muddle. Having regard to the crop failures of last year and the drought in western Canada with the resultant relief costs, and considering the reduced transportation revenue, he has admirably accomplished his task. As usual, the budget was presented with implicit confidence by a great statesman who has the courage of his convictions and the determination to keep faith with the people to whom he is responsible. At this time I wish to tender to my hon. friend the Minister of Finance (Mr. Dunning) my sincere congratulations upon having done this house and the country, by the presentation to parliament of this his third budget, a service that is destined to be an historic triumph.
The minister always discusses economic questions with all that rare insight, vision, thoroughness and power of expression which have led the world to acclaim him as one of the foremost geniuses of his time on monetary topics. His tireless energy, his deep sincerity and his unflagging zeal on behalf of the people of Canada, whose interest he has faithfully endeavoured to serve, have won for him their confidence and their hearts to a degree hitherto not exceeded in this land. No words that I could use would exaggerate what I conceive to be the importance of this budget in relation to the economic structure of the Dominion of Canada. Beyond doubt, it involves Canada's most important problems, and its adoption will bring happiness and renewed confidence to the people of Canada. On account of the vast area of this dominion, it is extremely difficult to arrive at decisions and policies that will be wholly satisfactory to the people in the east, in the west and in the central portion. With our geographical complications it is impossible to please everyone, and unless we have the firm determination to adopt a policy of conciliation, it will mean the eventual disruption of the country.
I am fully aware that changes cannot be effected without disadvantage to some special interests. Governments cannot move far without incurring disfavour in some quarters. In framing a policy in the interests of our farmers, our industrialists, our workers and the great masses of the consuming public, it is only reasonable to assume that some will be adversely affected in certain respects.
However, I am convinced, in these difficult times, when it is the duty of everyone to make sacrifices on behalf of the Canadian citizens, that, when necessary, our industrialists will loyally cooperate with the Minister of Finance and with the tariff advisory board in adjusting their problems in a manner that will bring about satisfaction to a marked degree, especially since nearly every manufacturing concern in Canada has enjoyed two years of almost unprecedented prosperity, having last year contributed to the national wealth the largest amount since 1929. I am one who believes that due consideration should be given to our manufacturing industries to enable them to obtain reasonable profits, to pay fair wages to their employees and to make possible the establishing of satisfactory prices to the consuming public, and that commodity prices should be based always on a study and appreciation of the purchasing power of the masses in order that they may be able to maintain and enjoy a decent standard of living tc which they are justly entitled.
The Budget-Mr. Duffm

Let us not overlook the fact that for years our citizens have been burdened down with an almost intolerable load of taxation. We have administered relief to an extent which almost suggests that the time is fast approaching when we shall have to consider a relief program for the taxpayers of this country if a sit-down strike by them is to be averted. Permit me to say that there is a prudential limit to all spending policies and that the country cannot bear indefinitely an increasing burden. Every million dollars added to the huge debt of Canada overshadows and obscures the wonderful prospect of prosperity and happiness that this land once possessed. We must eliminate extravagance and waste. Municipal insolvency, provincial insolvency and federal insolvency are the triple perilous conditions which have already reached disheartening proportions. Only balanced budgets and a gradual decrease in debt and taxation will save our country from economic disaster. Governing bodies must continue, for years to come, to pare wherever possible and, indeed, even where it seems impossible, with consistent and wise judgment in economic requirements. It is most essential that a policy of pay-as-you-go and if you cannot pay don't go, be maintained. Unrestricted and reckless extravagance and continual balances on the wrong side of the ledger will lead to one thing and one thing only, namely economic disaster.
Present national circumstances demand the greatest concept of loyalty to the state. There should be a total absence of bitter criticism for party purposes. If ever there was a time when the politicians of Canada should forget party rivalry and bend their efforts to serve this country, that time is now. United action, supported by the strength and good will of all classes of people, is most essential to the national progress. Members of parliament and others should not forget but should realize always that governments have no source of income but from the people. There is a general feeling throughout the country that this government recognizes this fact and that it has a sincere desire to lessen the burdens of the taxpayers. Indeed, Mr. Speaker, the very high regard that this government has for its pledges, for the sanctity of its spoken and written word, as evidenced by the implementation of its obligations, and by its loyalty and devotion to all interests in Canada, is something of which this house might well be proud. No government hitherto in this country has so successfully and scientifically grappled with the problems confronting it. I think it can

fairly be said that in the history of Canada no government has enjoyed more fully the confidence of the people.
The Minister of Finance has still a very difficult and trying task ahead of him, one that might well challenge even the biggest statesman. Let us assist him to accomplish it. Bitter criticism at this time cannot help. Il may hinder. Whatever degree of wisdom may mark a minister's judgment can only be lessened by partisan nagging, squabbling and bitter criticism. Creating in the minds of the people loopholes of imperfection will get us nowhere, whereas working in a spirit of confidence and cooperation will greatly assist.
All citizens are shareholders in the business of Canada. The eyes of the nation are on her chosen representatives, who are being depended upon to safeguard her interests. We are Canada's board of directors. Let us hand to the Minister of Finance all the help that reasonable fair play and common sense can suggest in continuing his onerous labours. The feeling of the nation at the present time is against playing politics and putting petty obstacles in his way. There is a nation-wide demand that he be accorded every assistance, encouragement and a clear field in which to accomplish the success the country hopes he will achieve, namely, a gradual reduction in taxation and debt and a happy, prosperous and contented nation. If he succeeds-and I confidently believe he will-he may be well termed a superman.
Judicious economies are imperative during periods of economic storm and distress. Great progressive private corporations in many countries have shown no lack of courage in this regard, and they are seemingly emerging successfully, notwithstanding the great burden of taxation, increased as it has been by almost every unit of government. Cooperation by the various governments in the field of expenditure in order to eliminate overlapping and duplication would effect much needed economies. Adequate control and a gradual reduction of relief expenditure amounting approximately to $100,000,000 annually must be implemented on a satisfactory basis. Canadian relief recipients generally are praying to get off relief.
One of the foremost tasks ahead of us is the lessening of the economic strain existing in the various parts of the dominion. The adjustment of financial and constitutional relations between the provinces and the dominion is an immediate problem. The countries constituting the British Commonwealth of Nations have a definite responsibility to join with other nations in reducing all barriers to international

The Budget-Mr. Duffus
trade. This government has put forth a concerted effort to broaden and to deepen the channels of trade, and in no instance has it caused an increase of duties against any country. This policy has contributed not only to the revival of trade but to the removal of international friction and conflict.
The United Kingdom trade agreement, which was presented to the dominion parliament in 1937, assured Canadian farm products a free entry into the British market. In 1935 the total trade of Canada was $1,-
389,000,000, and in 1936 it was $1,663,000,000. In 1937 it reached a total of $1,934,000,000, or an increase of 39 per cent over 1935. The favourable visible balance of trade for the calendar year 1937 enabled Canada for the first time since 1921 to regain her position as the fourth exporting nation of the world, the figures amounting to $1,125,000,000. I quote the words of the right hon. leader of the opposition (Mr. Bennett) as reported at page 24 of Hansard of this year:
I should like to say how much I rejoice, as do those who are associated with me, in the gratifying progress of this country during the last twelve months.
The year 1937 in every respect was Canada's banner year of hog production. The average quality was better than ever before. The quantity was much larger than in any year except during the war. What is most important is that Canada has at the present time more firmly entrenched herself as the source of supply of bacon for the British market than at any previous time.
The United States provides a market for more than one-third of our exportable products, exclusive of gold an'd the tourist trade. Canada's business with the United States in 1935 amounted to $671,000,000 and in 1936. to $775,000,000; whereas in 1937 it reached the unparalleled sum of $961,000,000. Had the United States-Canada treaty been in effect during the past twenty-seven years, on the basis of the great increase in the trade of the dominion during the past year with that country, Canada might have doubled her population during that period. Anything like trade hostilities between two great neighbouring nations would be, and indeed has been, regrettable and mutually injurious. A policy of good will and of mutual understanding will continue to increase the trade between the two peoples who are both excellent customers, one of the other, and who can each profit by wise and discriminating exchange of business.
According to the statistics of the Bureau of Foreign and Domestic Commerce, 245,000 head of cattle were exported to the United States in 1937, as against 199,000 in 1935, an increase
of 23 T per cent in number and 58-8 per cent in value. The exports of dairy cattle to the United States in 1937, and in 1936 as well, were 7,000 head each year, but the value in 1937 was $425,000 as compared with $352,000 in 1936, or an increase of 7-8 per cent. Incidentally, from January 1 of this year to the end of April, 11,069 head of cattle weighing 700 pounds or over were shipped to the United Kingdom as compared with 688 head in the corresponding period of 1937.
Exports of hay to the United States in 1937 amounted to 144,000 tons valued at $1,069,000, whereas in 1936 shipments were 70,500 tons valued at only $540,000. These items are approximate.
I have here a table showing the comparative increase in exports to the United States in the years 1936 and 1937 which with the consent of the house I wish to place on Hansard.


Walter Edward Foster: With the consent of the house the hon. member may place it on Hansard, but only the Minister of Finance has that privilege.


Joseph James Duffus: The table is as follows:
Animal and animal
products	
Wood products and
paper	
Iron and its products N o n-metallic minerals and their
products	
Non-ferrous metals and their products	
Strawberries (lbs.) Clover seeds (bus.) Certified seed potatoes (bus.) Beef cattle (head) Poultry (head) .. .. Cream (gallon).. ..

The encouragement of tourist trade with the United States by every legitimate means is of national economic benefit. It is of inestimable value in strengthening and increasing the friendship that exists between the two great nations on the north American continent. Uncle Sam's tourist dollar is the thing that Canadians should make a bid for, and we could obtain these tourist dollars in increasing volume by courtesy, fair treatment and judicious advertising, which would mean an icrease in trade and the infusion of new money into the dominion. It therefore behooves us as good Canadians to hold out to them the hand of fellowship, to give them welcome and make them feel at home. Our visitors of today may be our neighbours of to-morrow. It is gratifying to know, according to the dominion bureau of statistics, that Canada's tourist
The Budget-Mr. Duff us

trade last year amounted to $325,000,000 as compared with $255,000,000 in 1936. While I am unalterably opposed to the country going further into debt, money properly expended on the construction of additional highways and feeder roads for the expansion of tourist travel, to increase tourist and other revenues, would be one exception.
Canada is now one of the leading mining countries of the world. Minerals constitute one of the most important resources of the dominion. The progress is amazing, as shown by the 1937 output of $456,000,000, the largest production on record, and an increase of about 26-2 per cent over 1936. In the same year $17,000,000 was paid out in salaries and wages. Another remarkable feature is that in 1936 over $81,113,000 was distributed in dividends. In 1937 the distribution of dividends increased to jver $105,000,000, an increase of 29 per cent, all of which creates buying power for other commodities and thereby adding to employment. The budget provision of 1936 for the assistance of new mines, by which they were given three years to get under way before the corporation tax was collected, has been a substantial inducement to the establishment of new mines and mills. Something like sixty new Canadian gold mines have reached the mill stage under this legislation, and many more are progressing with confidence and increasing success. All this has been a great stimulus to Canadian gold production, which has been the country's mainstay during the depression period. Last year the output of precious metals reached a value of $143,000,000. Prospects are that this year this production will increase to over $160,000,000.
For years the government has taken consistent steps towards reducing the cost of the implements and instruments of production Prices of farm products and manufactured goods were on a par in November, 1937, for the first time in many years. Emphatically we must not retard production, thereby increasing unemployment and affecting income and making progress impossible. Fundamentally industry is our way out. We have to depend in large measure upon the wealth which industry creates and the employment which it provides to bring prosperity to both our workers and employers. Business not only creates wealth and employment but distributes wealth; it is the only sound way in which wealth can be distributed. Industrial expansion causes an increase in the consumption of agricultural products; the greater the increase in industrial areas, the better will be the home market for' these goods.

It is, however, conceivable, even admitting the increasing importance of secondary industry to this country, that we cannot cure the plight of agriculture through the medium of high tariffs. While it is most essential that we do nothing that would detrimentally affect industry, either large or small, it is just as important that we give increased and effective support and encouragement to those engaged in agriculture, for the obvious reason that *farm incomes are inadequate. Agriculture and industry are complementary and interdependent. Each contributes to the other, and what helps or injures one helps or injures the other. But both are indispensable to the solution of our relief problem and that of railway debts and a balanced budget. Agriculture is the lifeblood of our Canadian railways. The public will gladly cooperate with any sound movement on the part of agriculture that is for the good of industry, knowing that prosperous rural communities are essential to the progress and prosperity of towns and cities.
There are two main objects in the work and service of the dominion Department of Agriculture, namely better agriculture and better marketing. Each is linked with the other. It is to this end that the services of the department are directed. It is comforting to know that the government proposes to give the farmers of Canada greater assistance in producing and marketing their products. For example, during the last two or three years the live stock branch has been responsible for the inauguration of some twenty-six organizations throughout Ontario which handle eggs and poultry on a basis of grades. This business is done at minimum cost. The farmer who brings his product to these organizations knows that he is going to be paid for it on a graded basis, and that the grade he gets at the grading station will be accepted in any market. It is estimated that this has resulted in an increase of three cents a dozen to the farmers who deliver eggs to these organizations, and a corresponding increase in other graded products.
In the interest of public welfare, referring specifically to public health, all governments have placed rather formidable obligations on the live stock and dairy farmer. To begin with, we notify him, then exhort him, and finally force him, indirectly at least, to have his herds tuberculin tested, and demand the destruction of diseased animals and subsequent reactors. It is true he receives some compensation, but not commensurate with the loss he sustains. Subsequently he was called upon to follow the same procedure in

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respect of Bang's disease, with the same expensive results; and we are now asking him to have his herds blood tested. While not disputing the necessity for this procedure in the interest of the consuming public, I believe the expense is beyond the farmer's ability to pay, and that he is entitled to greater consideration in this regard.
Furthermore, while admitting that governments are assisting farmers greatly in inspection, grading, etc., I submit that we should put forth a greater effort to provide still better facilities of a scientific kind during these critical and rapidly changing times. Improvements in live stock breeding, better and more economical feeding methods, the dissemination of information on more profitable marketing, are all present-day governmental responsibilities of vital importance to agriculture. Scientific research reveals that climatic and soil conditions make it necessary, in order to farm profitably, that the farmer be informed as to the best varieties of crops suitable for his particular locality and his potential market. Greater attention to and more expert information on soil management should not be overlooked, as well as such factors as rust and plant diseases which possibly can be successfully grappled with. Unless the soil contains the necessary plant food elements to produce profitable crops, agriculture will not continue to be attractive to the young people. All this should convince the government, notwithstanding the additional expense entailed, that the solution of these problems demands continuous and effective attention. Admitting and appreciating to the full all that this government has done towards the expansion of the marketing of agricultural products, as evidenced by the statistics I have submitted, I maintain that still greater expansion of markets is not only necessary but imperative. Improvement in quality, grading, packing and shipping facilities of all agricultural products, and the determination to guide them aright into the hands of the consumer, wherever he may be, is equally imperative, and a measure towards greater profit in Canada's basic industry.
In my concluding remarks on this allimportant subject of agriculture I desire not only to recommend but to urge the Minister of Finance and the government to give consideration to a mesaure by means of which a farmer with ample security could borrow sufficient money at four per cent per annum to refund and consolidate his debts and purchase his immediate requirements. I cannot conceive of anything that would do more to stimulate the building trade, manufacturing,
employment, transportation and national revenue as well as agriculture.
At this time I wish to make a few observations in regard to our new harbours board set-up. Speaking in this house on March 24, 1936, the hon. member for Broadview (Mr. Church) said, as reported at page 1420 of Hansard for that year:
I do not object to the principle of the bill; in fact, I believe if it had been introduced several years ago Canada would have been saved many millions of dollars-
It is interesting to note from the annual report of the national harbours board for the calendar year 1937 that substantial savings have been made, and that likewise there have been noteworthy increases in operating revenue. At page 7 of the report will be found the consolidated income statement for the years 1935, 1936, and 1937, which shows that since 1935 there has been an improvement in operating revenue of approximately $S35,-000, while there has been a decrease in operating and maintenance expenses of approximately $700,000, making a total betterment of $1,535,000 for the benefit of the taxpayers of Canada, which is a substantial saving. Prior to 1936 the annual salaries of the various commissioners aggregated no less than $73,000, and in addition they received automobile allowances amounting to $15,000, making a total of $88,000. The comparative figure under the present board is $30,000 for salaries with no automobile allowance, representing a saving of $58,000.
Further substantial economies are shown in the entertainment expenses of the commissioners and staff, which in 1935 were $18,000, as compared with $1,500 in 1937 a saving of $16,500 in this one item. The travelling expenses of commissioners and staff in 1935 amounted to $24,000, as compared with $7,000 in 1937. Other economies which should not be overlooked include the entire elimination of residence telephones, which formerly cost $2,200; a reduction in the cost of advertising and printing from $52,500 to $14,600; a reduction in donations and contributions from $24,000 in 1935 to nothing in 1937. These items aggregate $185,700. Since the total head office expenses in 1937 amounted to only $130,000, including engineering and central accounting services, it will be seen that the expenses of the board and its headquarters staff can now be met out of the savings I have enumerated, leaving a margin of $55,700 as well. These substantial savings of the new harbours board provide an outstanding example of the business administration of one item of one department of gov-
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eminent, and if time permitted one could cite many similar economies representing the shrewd business methods inaugurated by the government in order to save the money of the taxpayers and at the same time improve administrative efficiency.


Mr. H. E. BRUNELLE (Champlain):: Mr. Speaker, it is my pleasant duty to congratulate the Minister of Finance (Mr. Dunning) upon the exceptionally practical budget speech he recently delivered in this house. In the course of his speech the minister made reference to the unemployment question and showed that there had been some improvement in the general situation. Members of the opposition and of other groups in the house have referred extensively to the same question, but regardless of that fact I intend to confine my remarks to the question of unemployment and relief which for eight years has been, and for some years to come will be, a vital problem.
I need not say that every hon. member is anxious to rid the country of unemployment. It must be admitted, however, that the Canadian people did not know what relief was; that they did not want relief, and that they were above that humiliating position until 1930, when the right hon. leader of the opposition (Mr. Bennett) and his followers, through pessimism and vain promises, simply invited the people to ask for relief. By doing so, the Conservative party officially established relief and unemployment as a more or less permanent institution. If one considers the utter failure of the Conservative party to carry out the promises made in 1930, one is justified in making the statement that this party has forfeited its right to interfere when the question of unemployment is being discussed.
Before going further, I should like to say that when the right hon. leader of the opposition recently stated in the house that another crisis was soon coming he did considerable harm to the country. On account of the high position which he occupies his statement was taken seriously throughout the length and breadth of Canada. Our producers at once became suspicious and in many instances adopted a stand-still policy, to the great detriment of our workmen. I have ascertained personally that the pessimistic and unwise declaration of the right hon. gentleman has done much harm to all classes of our people. Let us take it for granted that unemployment and relief constitute a plague. In this respect each member of the house is justified in saying that something must be or can be done,

providing he can offer some practical suggestion. The problem of unemployment no longer should be used as a political football; there ought to be sincere cooperation between all political parties and all the provinces in a patriotic effort to save our country. Believe me, sir, it is in unemployment that communism, socialism and other such movements find their source and thrive, though I am glad to say that our unemployed are still of sound disposition.
There is no doubt that our conditions have improved since 1935, and the government and the Minister of Labour (Mr. Rogers) deserve our felicitations. The employment commission has done good work. The plan to train young people in various branches of industry is due to the initiative of our Minister of Labour, in spite of the fact that leaders of the Quebec government call it the Bilodeau-Rogers plan, as though that were its source.
The improved housing plan which is about to pass the house, whereby our citizens will be exempt from some municipal taxes and sales tax, is highly advantageous. The other project to advance money to municipalities for electric, gas and waterworks is a magnificent one. These projects will help to rid the large cities of their slums, and will improve business in general. Another practical and productive plan would be that of establishing more people on the land. For several years ive have talked a. great deal about the matter, but in reality the only back-to-the-land movement has been that of taking the normal number of dead people to the graveyard. I speak subject to correction, but it is my impression that about 54 per cent of our present population is urban and only 46 per cent rural. This is an abnormal condition in a country such as Canada, which is considered an agricultural country. Yet we know that many ex-farmers who are now living in the cities cannot find work. We know they will not be able to find work, as the work is not there to be had. We know that modern machinery will to a greater and greater extent take care of the work to be done.
I would say again to the Minister of Labour that one remedy for unemployment, among others, would be to locate good agricultural, unsettled and unimproved lands, and to open them for colonization. Such lands could be easily located. However, to make colonization attractive, I say each homestead should to some extent be improved at the expense of the government. This would be a self-liquidating expenditure, and would bring relief to the cities. To-day many people are sorry they left the farms. They would gladly return,

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but we must admit that such people are no longer fit to do that type of pioneering work which was done by our forefathers.
Let us pay our unemployed men to do the work of clearing and breaking the land, putting up decent houses and barns on each new farm. Those who would take these modestly improved farms would find them attractive and sufficiently remunerative to make them wish to remain on them. Grants and subsidies to homesteaders are not the best form of help, because they resemble relief. We must get rid of relief. Had we used only 50 per cent of the general relief expenditures since 1930 in so improving new lands, and thus creating new parishes and towns, undoubtedly Canada would have acquired a vast additional asset and the cities would have been relieved of a great burden. Let us do it now; better late than never. A colonization plan may be a provincial matter, so I suggest we invite provincial governments to cooperate. Some provincial governments talk so much about cooperation that they have no time left actually to cooperate.
Another measure for the relief of unemployment would be that of taking some steps to reopen those industrial plants which, on account of disastrous Tory policies, closed their doors between 1930 and 1935. There is one such closed plant in Cap de la Madeleine, the city in which I live. In that city is an industrious and thrifty population, the best in the country. They long for the reopening of the St. Maurice Paper company mill, which ceased to operate in 1932, when the then Prime Minister was blasting his way to the world markets. That mill still remains closed, while the premier of Quebec celebrates with great pomp the opening of a new paper mill at Comeau Bay. Again I say the provincial government has a certain control over and connection with such corporation. Let us again ask the provincial government to bend its energies not towards developing political quarrels and idle criticism, but upon finding work for the unemployed, permanent work, and not that which is temporary, unsteady and unproductive.
A further good and practical move would be to reform or to abolish the senate, and thus save money. Let us discard that useless and expensive chamber. Possibly it could be converted into an industrial, practical Canadian chamber of commerce, the functions of which would be to invite and to bring in new industries to our rich country, and to find ways and means of reopening the closed ones. I realize the question of unemployment is a serious and difficult one, but its solution is not beyond our powers. There must be union, harmony, cooperation and
sincerity of purpose between the provinces and the central government.
Moved by a sense of narrow provincialism and by personal ambitions, some bombastic provincial heroes do not hesitate to set province against province and section against section, with the result that the very foundations of our confederation are presently shaken. The personal importance and actual weight of those destructive agents are not extraordinary, but the position they hold makes the condition much more serious. No matter what importance may be attached to the actual causes of discord, their effect upon Canadian unity may be tremendous. It is time that the serious people of all parties should rise against sectionalism. To treat with contempt the anti-national attitude of some provincial premiers is no longer advisable or wise, and I say that a mere passive attitude if prolonged may have serious consequences. Let us remember that there is not always a measure of proportion between cause and effect. Let us remember that the kick of an insignificant cow caused almost the entire destruction of the city of Chicago some years ago.
According to the British North America Act unemployment is a provincial matter. Unemployment insurance is in the same position. Let the provinces settle those questions. However, if they cannot do so, let them step out of the way and permit the federal government to act freely. It is a shame and a crime that the unemployed and the whole of the labouring class should be deprived of the benefits of unemployment insurance on account of the narrow-minded views of a couple of provincial premiers. Provincial autonomy means as much to me as to anyone, but the welfare of the whole country should be the supreme law. Real Canadians and real statesmen do see beyond provincial frontiers. Canadian workmen want unemployment insurance, and it is only fair that they should have it. Had we established such a system of insurance before the last depression, our unemployment difficulties would not be half as great as they are going to be.
It is time that the demands of our labouring classes were met in order that we may avoid labour troubles in the future. Our country will fare better when all classes of the community are organized and united and when their unions are equitably protected by law. Our farmers and our workmen should be united. The right kind of unions protected by the right kind of laws will go a long way to alleviate our unemployment troubles. I believe in labour unions, and I believe in the right of organized labour to declare strikes
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and to protect itself against strike-breakers. In brief, the workman's right to obtain redress by means of strikes should 'be respected and protected by all governments. .
It is futile to pretend to make strikes legal and lawful and at the same time to permit someone to spoil the purposes of a strike. Whenever legitimate means have been taken by workmen to obtain redress, when sufficient time has been given to the employer to redress the wrongs, then and only then should a strike be allowed to proceed peacefully and effectively. I speak subject to correction, but I understand a New York state law makes it compulsory for workmen to submit their grievances to a board made up of representatives of the employees, the employer and the business men in the particular locality. Ample time is provided for in which to arrive at a compromise. This law might be copied in Canada. A strike is such a tremendously grave measure to be taken that all possible means should be used to avoid such action.
I know the Prime Minister (Mr. Mackenzie King) and the Minister of Labour are giving particular attention to the rights of labour. The employers and the large corporations can always protect themselves, and our particular care should be for the workmen in order to help them to obtain their legitimate demands. I thought it fit to make a few remarks and offer some suggestions in connection with capita! and its relations to labour. I feel that few other problems have the magnitude of this one and deserve as much study and attention. I feel proud to declare myself in sympathy with the least fortunate class of our people who need particularly to be organized and united in order to enjoy their natural rights and prerogatives.
On motion of Mr. Poole the debate was adjourned.
On motion of Mr. Dunning the house adjourned at 10.55 p.m.
Wednesday, June 22, 1938