1938-06-22

QUESTIONS

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

Mr. HYNDMAN:: 1.	(a) Do stationary engineers and firemen, in charge of boilers in the Public Works department, have to "sign the time clock" and remain on duty for the lunch hour? (b) if

not, is there a relief substitute provided, as by law required for safety and to prevent accidents? (c) If remaining on duty, is there a monetary compensation for this time; or is time allowed in liew therefor?
2.	(a) How many of these plants are over 200 horse-power? (b) How many are under 200 horse-power?
3.	Is it proposed to add to the amount in the estimates to provide for additional stationary engineers and firemen?


Mr. CARDIN:: 1.	(a), (b), (c) Engineers and firemen sign the time clock and the staff, who work 8-hour shifts from 7.30 a.m. to 3.30 p.m., or from 8 a.m. to 4 p.m., remain on duty for the lunch hour, except in the larger buildings where engineers take one hour off for lunch and work up to 5 p.m. They are not replaced by other engineers for the lunch hour, and therefore no time is allowed. This does not include the central heating plant where there are a number of engineers and firemen continuously on duty.
2.	(a) six, (b) eight.
3.	No.



LOANS UNDER HOME IMPROVEMENT PLAN AND DOMINION HOUSING ACT

Mr. FONTAINE:: 1.	What amount was loaned up to March 31, 1938, under the federal home improvement plan: (a) in Canada; (b) in the province of Quebec; (c) in St. Hyacinthe-Bagot county; (d) in the city of St. Hyacinthe?
2.	What amount was loaned up to March
31, 1938, under the Dominion Housing Act: (a) in Canada; (b) in the province of Quebec; (c) in St. Hyacinthe-Bagot county; (d) in the city of St. Hyacinthe?	.


Mr. DUNNING:: 1.	(a) $14,526,455.32.
(b)	2,775,943.98.
(c)	61,653.09.
(d)	56,453.09.
2.	(a)	15,022,659.00.
(b)	4,782,552.00.
(c)	Nil.
(d)	Nil.



MELITA, MAN., POST OFFICE

Mr. PERLEY:: What was the contract price and the total cost for building and equipment of the new post office building at Melita, Manitoba?


Mr. CARDIN:: Contract price, $11,117. Total cost of building, including equipment, $16,653.53.



MAJOR JAMES HAHN

Mr. WOODSWORTH:: 1. Was Major James Hahn appointed by the Canadian government to go to England in 1937 and 1938 to make a survey of munitions production for the purpose of advising the Canadian government ?

Motion for Papers
2.	If so, were his expenses paid by the Canadian government?
3.	What were the terms of Major Hahn's employment ?
4.	At what date did Major Hahn cease to be employed by the Canadian government to advise on munitions and begin negotiating for production by him of Bren machine guns?


Mr. MACKENZIE (Vancouver):: 1.	No.
2,	3 and 4. Answered by 1.



QUESTION PASSED AS ORDER FOR RETURN


Mr. BROOKS:: 1.	(a) How many contracts have been awarded since January 1, 1938, for the supplying of coal to federal public buildings in the province of New Brunswick? (b) What are the names and locations of such buildings?
2.	What tenders were received in each case, what were their amounts, and to whom were the contracts awarded?



MOTION FOR PAPERS


Mr. POOLE:: (a) For a copy of all correspondence, letters, telegrams and other documents, passing between the government of the province of Alberta or any member thereof, and the federal government or any member thereof, regarding the disallowance of any Alberta acts during. the year 1938; (b) for a copy of all correspondence, letters, telegrams, communications and other documents from any persons, corporations, firms or banks, requesting or protesting the disallowance of any Alberta acts.


Mr. MACKENZIE KING:: This is a pretty large order. There is no objection whatever to bringing down any essential documents, but I would point out that this motion asks for a copy of all correspondence, letters, telegrams, communications and other documents from any persons, corporations, firms or banks, requesting or protesting the disallowance of any Alberta acts. There are a great many communications which have come in both to the Prime Minister's office and to the office of the Minister of Justice, and possibly to some other departments as well. Many of them are really in the nature of a repetition of certain form communications.


Mr. BENNETT:: Circular letters.


William Lyon Mackenzie King: Circular communications and letters of that kind. I really believe it would cost quite a sum to have all of these copied and it would also take a very considerable time before they could be 51952-261
copied. The first part of the motion asks for a copy of all correspondence, letters, telegrams and other documents, passing between the government of the province of Alberta or any member thereof, and the federal government or any member thereof, regarding the disallowance of any Alberta acts during the year 1938. That part of the order could be brought down in full; but as to the miscellaneous communications I would suggest to the mover of the resolution that he agree to allowing the departmental officials latitude to pick out what they regard as important and essential.


Richard Bedford Bennett: Might it not be well to do what was done on a previous occasion at the suggestion of the right hon. gentleman when he was in opposition, namely, merely to file a sheet of paper saying that letters somewhat similar to the attached, and many others, have been received, giving a list of the writers? Certainly it is a waste of public money to copy a stereotyped form of petition sent in by many people scattered over many sections of the country. If the Prime Minister would simply give the substance, that is all that would be necessary.


Eric Joseph Poole: I should like to give the suggestion some consideration and bring the matter to the attention of the Prime Minister on another occasion before the end of the session.
Motion stands.



BUSINESS OF THE HOUSE


William Lyon Mackenzie King: That the provision of standing order 28, respecting the committee of ways and means, be suspended for the sitting of June the 23rd, 1938.
He said: Hon. members recognize that this is to permit the present budget debate to continue to-morrow. Otherwise the Speaker would leave the chair without question being put on Thursday, and this is to keep His Honour the Speaker in the chair.


Richard Bedford Bennett: I think the motion might have read, "until the conclusion of the debate." This is only for to-morrow; the debate may continue until the next day.


William Lyon Mackenzie King: There is some objection to having a division come on Friday. I am afraid if we do not conclude the debate to-morrow, it wdll have to go over until next week.


[Stage Direction]
Motion agreed to.
[Stage Direction]
Bren Machine Guns


[Stage Direction]
On the orders of the day:
Mr. C. G. MacNEIL (Vancouver North):: May I ask the Minister of National Defence (Mr. Mackenzie) if it is the intention of the department to make available equipment from the Quebec arsenal, the Valcartier camp, or the old Ross rifle factory for the manufacture of Bren machine guns by a private company; and if so, under what conditions?


Hon. IAN MACKENZIE (Minister of National Defence):: My hon. friend will find that I have already answered the question, during the discussion on my estimates. Very briefly, some machinery which has been stored for the last twenty years is being utilized for the manufacture of Bren guns, and the estimated saving to the department, according to the officers, is $250,000. It is not being transferred to the ownership of a private corporation. The ownership remains in the government, two-thirds of the cost of the material being borne by this government and one-third of the cost being borne by the British war office.


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: According to a dispatch which appeared in the Winnipeg Free Press of June 20, the dominion government have given a contract to a Toronto firm to manufacture 7,000 of these new type machine guns. The British government has contracted with the same company, the John Inglis Company, for 5,000 of these guns, and four cars of machinery are already on the way from Valcartier to Toronto. The statement is made also that:
The contract between the Canadian government and the John Inglis Company for manufacturing the 7,000 Bren guns was signed on behalf of the company by Major J. E. Hahn, an officer with a distinguished military record in the C.E.F. and now president of the Inglis company. According to official information, the cost plus 10 per cent profit basis provides that the 10 per cent is not to be figured on either sales tax or customs duties.
I should like to ask the Minister of National Defence, as it is asked both in the dispatch and in a long editorial in the Free Press of last Monday, how he reconciles this state of affairs with his statement across the floor of the house to me the other day when he said:
_ With reference to any orders to be placed in Canada, we have no more information than is in possession of the hon. member who asked the question.

Apparently there has been a joint arrangement between the British authorities and the Canadian authorities, together with a loan of certain machinery from Quebec. If that statement is correct, how does the minister reconcile this seemingly very careful arrangement, and the signing of the contract, with his statement to me that he knows nothing more about the matter than .1 do?


Ian Alistair Mackenzie: If my hon. friend will look over the discussions which took place in committee of supply when my own estimates were under consideration, he will find that in response to the question of some hon. gentleman opposite, details were very carefully stated at that time. There was no cooperative contract; the contract with the war office was signed by the Toronto firm entirely separately from the contract with the Canadian government; but, as the result of two complementary contracts being signed, there will be a saving to this government of over one and a quarter million dollars.


James Shaver Woodsworth: I ask the minister how he reconciles his statement to me-


Some hon. MEMBERS:: Order.


James Shaver Woodsworth: -across the floor of the house, with the statements in this report?


Some hon. MEMBERS:: Order.


Ian Alistair Mackenzie: I want to assure my hon. friend that there was not the slightest intention to misrepresent the situation. In regard to the contract with the war office, this was declared to the house before he asked his question of me on the floor of the house, and details were given, as they were asked, in committee of supply. There was not the slightest intention to suppress nor was there a suppression of any information, in the slightest degree. I say now in regard to these contracts that there has never been a cooperative effort between the British war office and the government of Canada except in regard to the Bren gun, and the two contracts in that case have been separately negotiated.


Mr. M. J. COLDWELL (Rosetown-Biggar):: What compensation is the Canadian government receiving from the Inglis company for the loan of the machinery, and what is the value of the machinery so loaned?


Ian Alistair Mackenzie: I think that to answer that question it would be better to table the actual agreement with the company in question.

The Budget-Mr. Poole



UNEMPLOYMENT


[Stage Direction]
On the orders of the day:
Mr. ANGUS MacINNIS (Vancouver East):: I would like to ask the government in the absence of the Minister of Labour if their attention has been drawn to press reports of this morning that a number of unemployed are destitute in the city of Vancouver, and that they have announced that they will have to beg on the streets; also that the city officials have announced that if they do so they will be prosecuted; and, under the circumstances, has any arrangement been made to feed these men until work can be provided?


William Lyon Mackenzie King: I may say that officials of the government are watching carefully the press reports which relate to the situation in Vancouver, and are cooperating, I understand, with the authorities there with respect to any situation which may develop. I cannot say what action the Minister of Labour may have taken. I have no doubt that he, like other members of the government, would be anxious to do anything he could toward improving the situation of these men at this time.



THE BUDGET


[Stage Direction]
The house resumed from Tuesday, June 21, 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 proposed amendment thereto of Mr. Lawson, and the amendment to the amendment of Mr. Coldwell.
Eric Joseph Poole: Mr. Speaker, I am not going to attempt to cover all the ground dealt with in the budget speech, which is after all quite voluminous. I have read the budget speech, and I think that the Minister of Finance (Mr. Dunning) is to be complimented on the manner in which he delivered it to this house. I think also that the hon. member for York South (Mr. Lawson), who had the privilege of replying to the government yesterday, made a very fine speech. But as I look over the budget, once again I am struck by the fact that both parties represent the bulwark of traditions. There is nothing new to meet conditions that are new. It is more or less a resume or history of our economic progress during the last 51952-2611
year and the expression of a pious hope that in the future things will change for the better.
During the speech the minister touched on many things which are significant to every hon. member, especially in his references to trade. He said:
In emphasizing as I have clone certain uncontrollable forces which have been influencing our economy, I would not have you think that I neglect or minimize the importance of the domestic factors. The 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.
The question raised in that passage from the minister's speech is significant, because the trend of the world is toward economic nationalism. This is a truth that we must face. The present economy of Canada is based upon the premise that prosperity is dependent upon our external trade. Quite true, in the days of expansion through the years following the industrial revolution which began in 1742. The system which we know as capitalism has derived its strength from the fact that the world was not at that time industrialized. But later, and especially since the great war, we have seen industrialization in every nation of the world speeded up; the very conditions which brought about prosperity in the days that are gone, through the wages received by the great masses of the people, are no more, and the markets of the world are now contracted to such an extent that there is a lesser possibility of selling goods in the world market. The result is unemployment in every nation of the world, and Canada is no exception.
Later on in his address the Minister of Finance dealt with the question of increased production in this country. The greatest contributing factor to our internal prosperity in 1937 was the increase in production in terms of metals. Surely it must be evident by this time to every member of this parliament that this is not and could not be a basis for our future prosperity. We notice that the production of all the ingredients necessary for armaments has increased; the production of nickel, lead, copper and so on has increased. Now let us face facts for a moment. Let us suppose that this mad armament race should cease; that once again peace should prevail between China and Japan; that the warring factions in Spain should go back to the soil and turn their swords into ploughshares. What would be the result in this country? From an economic point of view it would be disastrous, because then there would not
The Budget-Mr. Poole

be the same demand for our production. The group in this corner has persistently emphasized this one important fact, that the only way to prosperity is by recognizing first of all that the best market a nation has is the home market. That is where our prosperity must begin and end. The old belief that prosperity lies in selling our goods to the nations of the world, and that the sale of those goods is the only instrument that can be used to feed our own people, no longer holds good; because as we go on, year after year, the industrial machine will speed up more and more, as a result men will be displaced from industry. But that is not the greatest tragedy. The greatest tragedy lies in the fact that the traditional governments of the world recognize that wages is the only sound and legitimate source of purchasing power. If that is true, and the markets of the world contract through each nation becoming more industrialized, there will be a lesser demand abroad for our goods and incidentally less employment.
What is the inevitable conclusion to which we must come? It is that the system of wages has broken down. I am quite sure if hon. members opposite have followed the trend of events in the country to the south this will be brought home to them more fully than in the case of our own country. Markets are contracting; the wage system has broken down; and our prosperity, such as it was, in the year 1937 was the result of conditions which we hope will not become permanent in world affairs, in other words preparation for war. I often think that if one half the effort which is put into the finding of new markets abroad were put into placing our internal market in order, this would be a prosperous country to-day.
Now I should like to say a few words with regard to the "hoary" fallacy referred to by the Minister of Finance. In his speech the minister said:
The experience of several countries with expansionist policies during the last few years has proven that only a rise in the rate of new investment can provide a durable basis for an upswing in business activity. Attempts to stimulate consumption by government expenditure or by suddenly improving labour conditions have been tried on more than one occasion but in every case they have been found wanting.
That is a very important statement. For the moment we should keep in mind my argument in the first instance with regard to contracting markets. As industry speeds up at home; as labour is displaced by technological improvements, it must follow that the burden in the days ahead will fall more on governments if industry cannot absorb these men, and if we are not prepared to change

our monetary system. I want to say to the Minister of Finance that we of this group do not believe in inflation, at least the kind of inflation to which the Minister of Finance has given expression on so many occasions. Nor do we believe in deflation. They are twin evils; deflation, when money becomes so dear that nobody can get it, or inflation of the type that makes money so cheap that it will buy nothing. It is the middle road we want to follow; in the words of the Prime Minister (Mr. Mackenzie King) himself, to issue credit in terms of public need. A little further on the minister dealt once again with the question of money. He said:
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.
Let me say, Mr. Speaker, that I do not believe the social credit group in this house ever suggested repudiating our obligations. That has no part in our program. What we do need, however, is to place in the hands of the masses of the people of this country the means with which to meet their obligations, which is an entirely different matter.
Once again the Minister of Finance, making reference to the "hoary" policy as expounded by this little group, speaks of debt-free money. Here is the difference between the repudiation of obligations and debt-free money. We do not intend to repudiate any Obligations, but we should bear in mind that in the last few years there has been one class of people who have been benefited through deflation. I am now referring to those who purchased bonds or debentures of the provinces and the dominion some years ago, during an inflationary period, when the price level was high. Contracts were then made between the purchaser and the seller. The result has been that over a period of years through deflation the debts of the provinces have increased. Social services have increased, and the cost has been laid on the provinces and municipalities. In terms of high interest rates we have placed a heavy burden upon small properties until the very homes of the people of Canada have been placed in jeopardy. One has only to review the rising mill rate since 1930 in the municipalities and cities of Canada to find out who is carrying the burden.
I should like to draw a parallel. We will suppose that I purchased bonds in 1928, rvhen the price level was high, and that a friend of mine invested in real wealth, or, in other words, built a home.

The Budget-Mr. Poole


Mr. BOTHWELL:: Were Alberta bonds
ever at a premium?


Eric Joseph Poole: I will deal with you in a
minute. I am trying to draw a contrast. I was saying that we both invested, one in real wealth and the other in bonds. But when the depression deepened, when social services increased and the mill rate rose, the debt was placed upon the man who invested in real wealth. In hundreds of cases in Canada people have lost their equities in their homes. Why? It had to be done to pay fixed charges and to meet sacred contractual obligations. Now the price level is down, and the income derived from bonds during the deflationary period purchases more. There has been a hue and cry across Canada against tampering in any shape or form with these sacred obligations. Surely in view of what I have said, and in view of the burden which has been borne by the small property holders, the bondholders should have come forward and accepted at least some adjustment to relieve financial conditions in Canada. But that has not been done.
I now turn to the hon. member who asked the question about the province of Alberta. Let me say to him that we inherited a bankrupt province. The only terms upon which we could get relief from this government was to go into a loan council. At that time we did not think it was advisable to centralize authority with regard to future borrowings.


Charles Edward Bothwell: On that point, how can the hon. member say that Alberta is bankrupt when a board reports that the assets of the province are 230 billions as against a few millions of debt?


Eric Joseph Poole: I am referring to financial
bankruptcy. A nation is never bankrupt unless it is desolate, unless its fertility vanishes or its natural resources disappear. That is the .only time a nation can go bankrupt in the sense my hon. friend means. But we were financially bankrupt. There was no money in the treasury. So we were compelled to take this action, much against the inclination or the desire of the provincial government. In regard to the issuing of debt money, what exactly do we do when we borrow in Canada? Do we not borrow on the basis of the ability of the people of Canada some day to pay back? Do we not borrow on the basis of our natural and intellectual resources? Is that or is it not true? To-day we are borrowing through the banking system. And what do we borrow? We borrow the permission to produce more of that which we already have-real wealth. In
my opinion the Minister of Finance has taken a step in the right direction. During the life of this parliament he has made a successful attempt to reduce the interest on our national debt. That is a credit to the present government, and a procedure I should like to see continued. But we will never have prosperity until we face the facts. The chief fact confronting us is that our financial system is totally inadequate to meet the present situation. It is true that we have reduced the interest rate, but it is equally true that we have increased our capital debt. How long can a nation continue, generation after generation, to place a chattel mortgage upon the distant future which generations yet unborn will have to carry?
I see no real or logical reason why we could not issue credit in terms of public need.
I do not see why we cannot issue credit on the basis of our real wealth, in exactly the same manner as it is done by the banks. In that way we could place every ablebodied man to work in the creation of national assets. Highways must be built. Surely there is nothing to interfere with a real program of national development. I would hope that during the life of this parliament such development might take place. Unless, however, we take control of our monetary system, I can see no relief. The nationalization of the Bank of Canada is not taking control of the financial system. The most important question in connection with the bank would be this: What is the policy of the bank going to be?
When we say we are going to issue credit in terms of public need, to what need do we refer? Are we referring to loans which would be made available to industry? Do we not yet realize that we can pour money into industry and only aggravate the present depression? We know what has 'been tried in the United States of America. No; we must begin with the consumer. I am convinced any hon. member opposite who will study the questions of costs and prices will realize that the cost of production is one thing and that the retail price of goods is an entirely different thing. The difference between the total cost of production and the ultimate price of retail goods is widening, as the industrial machine speeds up, because it displaces certain payments which to-day go into costs in terms of wages and helped partially to liquidate prices.
The recent unfortunate defeat of our party in Saskatchewan does not cause me any discouragement, and I am sure in saying this I can speak for all members of my group. We feel, as have other men who have gone
The Budget-Mr. Poole

before and who have contributed to the progress of the human family, that we are on the right track. In my short life I have followed governments closely. Since the great war I have watched the governments in Great Britain struggling with national problems. I have followed closely the pump-priming policy of the president of the United States. I watched in Canada attempts during 1931 and 1932 to eliminate unemployment by a program of public works. But none of these things is sufficient in itself. They are only palliatives; they are patches on an already outworn garment. The fundamental thing to do-*


Mr. DONNELLY:: Aberhart!


Eric Joseph Poole: Never mind Aberhart.


James J. Donnelly: Follow his policy and put them all to work.


Eric Joseph Poole: If this government were more kindly disposed, and a little more in contact with the issues confronting Canada, it would realize that the best thing for it to do would be to overstep certain constitutional questions and give that eminent gentleman, Mr. Aberhart, an opportunity to carry out his policies in Alberta. When I hear hon. members call across the floor, and when I hear them criticize Alberta, I say to myself, " They are not afraid he will fail; they are afraid he is going to win." And we will.


James J. Donnelly: I saw him four years ago, and I knew very well he would not get anywhere.


Mr. JOHNSTON (Bow River):: I suppose he looked as good as the hon. member does at any rate.


Eric Joseph Poole: I am not going to argue with you, because-


Mr. SPEAKER:: I must ask the hon. member to address the chair, and when referring to other hon. members to indicate their constituencies.


Eric Joseph Poole: I apologize, Mr. Speaker. Out of all argument as a rule comes more heat than light. I think hon. members of this group ought to be complimented on the stand they have taken in spite of all the opposition that has been voiced against them. The Liberal party is supposed to be progressive, but we see the Liberal government aligning themselves, either directly or indirectly, with the financial system and with those organizations which will break up the British Empire before they will give up their privileges. These are men who have no patriotism, men who recognize no national boundaries, men who pro-fMr. Poole.]
duce nothing; they are men who make their money from the free instruments that this government has given to them.
I am seeking cooperation, and I do not think I should be ridiculed. I am seeking understanding, something which every hon. member of this house should seek. I ask the cooperation of hon. gentlemen opposite. We may smile to-day, but let me say to hon. gentlemen opposite that when I hear of riots occurring across this country, when I see evidence of the widespread poverty in this land of abundance, I come to the conclusion that these are birth pangs which will bring forth the revolutionary child which will grow to an aggressive maturity as the evidences of social injustices and economic insecurity become more apparent. We are generating forces which will destroy the last semblance of democracy. Let me say to hon. gentlemen opposite that the conditions which we have to-day in this country


An hon. MEMBER:: The drought.


Eric Joseph Poole: An hon. member says that these are due to the drought, but let me say that the conditions which prevail in this country, while they may be better than those that prevailed in Germany, are speedily reaching a point where democracy will be destroyed. Democracy can live only by the good results which it gives. When governments refuse to listen, when they just sit back and ridicule every proposal made to them, there is very little hope for a greater Canada.
My hon. friend says that this depression is a result of the drought. A few years ago the present leader of the opposition (Mr. Bennett) went over to London to attend an imperial conference. The proposal was made at that conference that since there was overproduction there should be a reduction in our wheat acreage. The hon. member states that our present condition is due to the drought. Let me tell him this: Should we have two crops similar to the one' we had in 1928, and there is no greater demand for Canadian wheat than exists at the present time, we will soon have 400,000,000 bushels of wheat piled up in our elevators, and conditions then will be worse than they are to-day as a result of the drought. No doubt the drought is a contributing factor to our present condition, but we must not forget that the depression is world wide.
I am not blaming anyone in this country for our present condition, but I am critical of the government and of government members who ridicule every progressive thought out of existence. Remember that the truth of these things will prevail. For political

The Budget-Mr. Poole
reasons you may go on the hustings in Saskatchewan, backed with your great resources, and tell the people a story in order to get elected. Merely getting elected is not victory. Victory lies in the achievement. Victory means to achieve something. Victory means doing something that will bring security to your people. That is the business of this House of Commons. We should see that in this land of abundance, not one man, woman or child shall be deprived of the opportunity-


James J. Donnelly: Where do you get that abundance? We have not had a crop for nine years.


Walter Edward Foster: If the hon. member desires to ask a question, he should first obtain the consent of the hon. member who is speaking.


James J. Donnelly: Where does the hon.
member get the idea that there is abundance in this country, since we have had no crop for nine years.	_


Eric Joseph Poole: We have had a balance of trade of some $300,000,000. If we have not enough, why are there so many unemployed? Why do we put these men to work to produce more? There is the argument. What is your reply? We do not live by wheat alone. Have we not forestry and mineral resources, and everything we want?


James J. Donnelly: Not out there.


Eric Joseph Poole: Yes, we have. We have a greater abundance of these things than most nations of the world. I am quite convinced that no nation can prosper in the midst of misery and degradation. I hear hon. members state that there is work for all recipients of relief, but that is not true until you change your policy. The general condition of unemployment is there. So far this government have not been able to obliterate poverty. They will never obliterate poverty until they change the monetary system, until they issue credit in the terms of public need, as the Prime Minister put it. This will not be done until we understand the true nature of price. Rising prices are no criterion of future prosperity.
On every occasion when the Minister of Finance has been dealing with the monetary policy of this country he has turned to our group, as though replying to us, and has seemed to be a prophet of fear. He has told the house that there cannot be monetary reform without inflation. Of course that is not true. The monetary reform that we propose will bring down the price level as production goes
up. not increase prices in order to make our dollar valueless. We would increase the value of our dollar in order to make more goods available to the people. We are convinced, and I believe the Liberal party will be in ten years or so, that man will never go to work in industry as he has in the past. Only a few short years ago in 1928 a total of 44,000 harvest workers went to western Canada to work in the harvest fields. Since that time thousands of combines and other pieces of farm machinery have been purchased to do away with the need of these workers, and incidentally to do away with their wages, the only instrument they have with which to purchase goods.
From time to time in this house we have heard expressed a fear of communism and fascism. We have been told of the high virtues of democracy. But let me say this, that the move will be either to the right or to the left. This country of only 11,000,000 people has been blessed by the Almighty. If we cannot put men to work building useful public projects, if we cannot give our people a hope for a better future so that they in turn can build homes, then I say that we are indeed bankrupt.
I said when I rose that I was not going to deal with the whole budget, because that is an impossibility in forty minutes; but I do want to emphasize the question of money, which was touched on by the Minister of Finance in the budget. The task of the minister will become more and more difficult as the years go by if he does not take control of the monetary system of this country in all its phases, not only the Bank of Canada but the chartered banks. It must be recognized that the consumer is the greatest factor in our whole economic structure; that monetary reform does not mean a rise in prices, but rather that increased production means a reduction in prices, and that in any equitable economic system in this or any other country you must in an age of abundance begin with the consumer to make up the difference between the cost of production and the ultimate price of goods on the retailers' shelves.
Mr. ARTHUR-J. LAPOINTE (Matapedia-Matane) (Translation): Mr. Speaker, in order not to delay the passing of the budget, I shall not make a long speech. I desire however to take this opportunity to offer a few observations which I conceive to be in the interest of the country.
It is the duty of public men to call the government's attention to abuses which may creep into its organizations without its knowllb	COMMONS
The Budget-Mr. Lapointe (Matapedia)
edge. While refraining from destructive criticism. I believe that the time has come to olfer certain observations concerning the administration of the Canadian National Railways, more particularly as regards the French-Canadian representation on their staff, many members of which, highly paid and arrogant, seem to be constantly defying public opinion.
Far be it from me, Mr. Speaker, to raise the racial cry. In these troublous times, a peaceful solution of our problems is essential. However, I am not one of those who believe that, for the sake of harmony, we should maintain a passive attitude in the face of injustice.
Under cover of a politically-independent commission, it is sought to surround with mystery the administration of our national railways. High officials receive salaries so exorbitant that it is considered undesirable to reveal them to the public, for fear of creating a scandal. A certain, number of them have at their disposal luxurious private cars which are being repaired this year at a cost of many thousands of dollars, while, under the pretext of economy, poor subordinate employees are being laid off and deprived of the wage that allowed them to maintain their families.
I notice with regret that whenever economy has to be practised it is always at the expense^ of the small man. Why not begin by reducing the salaries of officials who are paid ten, twelve or fifteen thousand dollars a year, often for doing nothing? With the exception of a very few higher officials, no member of the Canadian National Railways' staff should receive more than $5,000 a year. These officials have got to the point of thinking that they own the railways. They say: We are managing the national railways; you, members of parliament, mind your own affairs. But when the time comes to vote, 30, 40 and even 50 millions of dollars to cover the deficit, it is we who vote the money and the people who pay it.
I do not wish to be unpleasant to the Minister of Transport (Mr. Howe), for whom I ^ have the greatest esteem. I am aware of his devotion to duty and I know that he is doing his best. Moreover, he is simply applying rules that have been in force for many years. But, since the present system lends itself to numerous abuses, it should be changed and the people's representatives who, after all, are responsible for the. administration of the country's affairs, should know what is going on in that field.
The possible amalgamation of our two great railway systems is being spoken of more than ever. I am absolutely opposed to such a (Mr. A. J. Lapointe.]
plan, for it would lead to the creation of a powerful monopoly which would be disastrous to the Canadian people. I take this opportunity to call the attention of the house to the manner in which the people of the province of Quebec are being treated by the Canadian National Railways. It is a rather extraordinary thing that the stations situated between La Reine and Fitzpatrick and between Noranda and Taschereau, covering a distance of 411 miles, all in Quebec province, are under the jurisdiction of an Ontario superintendent. The same situation exists on the Gaspe coast and from Matapedia to Riviere du Loup, a stretch of 366 miles, where a New Brunswick superintendent is in charge.
Until a few years ago Matapedia was a divisional point for the Gaspe trains. Under the Conservative administration, again for alleged purposes of economy, but most unjustly for the province of Quebec, Matapedia was replaced as a divisional point by Campbellton, New Brunswick. Those who have heard the story know how interesting it is. As for me, I would call it revolting.
But that is not all. When in Quebec territory freight cars are in need of repairs, they are sent from as far as Lake St. John to Lea-side, Ontario, or to Transcona, near Winnipeg, to undergo repair work which could be done just as well in the shops of the province of Quebec. The moving of these cars over such great distances involves an enormous expenditure and deprives the workers of Quebec of employment to which they are entitled.
_ I shall now say a word about the manner in which the French Canadians are treated by our national railway system. I hold in my hand a Canadian National Railways telephone directory for the Montreal region. It bears the title. Private Branch Automatic Exchange Telephone Directory. Canadian National Railways, Montreal, and the form number 6466. Looking over it, I understood more than ever the causes of the unrest and discontent that exist in the province of Quebec. I advise hon. members, for their edification, to read this directory which I hold at their disposal. They will then realize the standing of the French Canadians in the Canadian National Railways organization and will better understand our grievances. It is practically impossible for a French Canadian to obtain a copy of this directory; the officials seem to hide it well, for fear that, here again, the public might find out what is going on. It is clear, Mr. Speaker, that there exists within the Canadian National Railways an organization which is seeking to eliminate French Canadians from the posts to which they are entitled. I therefore consider it necessary to investigate this situation, which should not

The Budget-Mr. Woodsworth
be allowed to continue. Our English speaking friends may be tired of hearing our often repeated complaints, but I wish to tell them that, if we were used a little more fairly, if we were not always kept in the background, we would not so often deem it our painful duty to discuss with such frequency a problem very disagreeable to us.
In order to show them the actual situation, I invite them to visit with me the province of Quebec where we will effect a little investigation. Let us first go to Montreal, and visit the shops, or the large offices of the Canadian National Railways on McGill street.
If my hon. friends pay a visit to the different branches,-Traffic, Finance, Accounting, Purchasing, Industry, Natural Resources, etc., 

they will not find more than two French Canadians out of every twenty employees. They will also find that French Canadians have been almost ostracised from important positions and that high salaries never go to them. They will look in vain for bilingual signs, either on the walls or on the office doors. If they ask the elevator operator for information in French, they probably will receive the same answer as I got, a few weeks ago: "I do not understand." All that is going on in the greatest French centre of America.
I will then ask my hon. friends to travel to the eastern part of the province of Quebec. But, before we leave Bonaventure station, we will pay a short visit to the offices of the sleeping-car department. My hon. friends will no doubt be received as I was a few days ago when I spoke French to one of the employees: " Do you speak English "? said he. " If so, all right, because nobody here understands French."
We will then board the Ocean Limited, the night express, where further surprises await my hon. friends. In the sleeping-cars, they will try in vain to make themselves understood in the French language. After a night's rest, we will go to the dining-car. In any of the places between Rimouski and Matapedia, the stretch covered from 6 to 9 a.m., when the train passes through one of the most beautiful districts of the province of Quebec, which is also one of the most exclusively French, I defy them to find, among the eight employees on the staff of that car, a single one who can speak French. The end of our trip will be in Campbellton, New Brunswick. Over SO per cent of the lines administered from that divisional point are in the province of Quebec. Of the 14 employees there, four only are French Canadians. The staff in the divisional office numbers 21, of whom only four are French
Canadians. Forty-five men are employed in the roundhouse and seven only are French Canadians.
Mr. Speaker, it is all very well to speak of union and harmony between races. But, when one of the races which forms a third of the total population of this country must put up with the rebuffs and the humiliations which I have just described I am bound to confess that union and harmony are impossible. I will frankly ask the hon. members who represent Toronto constituencies in this chamber if the people of that city would submit for long to such a treatment. Although the situation has substantially improved since 1935 in many aspects, it is evident that French Canadians do not receive that measure of justice to which they are entitled.
It takes some courage to voice these truths, but I did it with the best intentions possible. I felt that it was my duty to call the attention of this house on the subject, because that situation is bound to have serious consequences, if no remedy is applied in the near future.
Mr. Speaker, the descendants of those who discovered our country, who opened it to civilization and kept it for the empire on certain occasions; the descendants of those who contributed to such a degree to make of Canada the beautiful and great country it is to-day, are entitled to fairer treatment. When they receive it, good will and harmony will exist between the two great races, which are essential factors of our social and economic progress.


James Shaver Woodsworth: I rise to support the subamendment of the hon. member for Rosetown-Biggar (Mr. Coldwell). I should like to call the attention of the house to certain facts brought to light by the royal commission on the textile industry which was appointed in January, 1936, and reported in January of this year. The commissioner, Mr. W. F. A. Turgeon said:
. . . the advantage of protection is granted to these companies subject to certain conditions, which parliament should recognize and government should enforce.
And further:
. . . the great value of the inquiry lies, not in this report . . . but in this material itself ... in the factums prepared with great care and handed in by counsel for the commission. . . .
I propose to-day to follow quite closely the brief presented by Mr. J. C. McRuer, commission counsel, consisting of some 426 mimeographed pages. As far as possible I shall um the language of the brief.
The Budget-Mr. Woodsworth

In my speech on Monday on the Vancouver situation I referred to this record as a shameful. sickening story of heartless exploitation, of wholesale robbery by men prominent in the public life of Canada. Inordinate greed, barefaced lying and criminal fraud characterize the careers of this gang of high-class .crooks. I suggested that these exploiters were sheltering within our tariff structure and compared the leniency with which they were treated with the harsh methods used in evicting the unemployed from the post office in Vancouver. The member for Parry Sound (Mr. Slaght) accused me of using immoderate language, of being bitter, vitriolic and vituperative. I should like to place before the house some of the facts and leave the facts to speak for themselves. These facts have been known to the government for over a year, but so far as I can learn, there has been no change in the situation. We have now another budget and we are told that we are to have no tariff changes.
Let me give some illustrations of how the situation affects this country and the people of the country. Mr. A. 0. Dawson, president of Canadian Cottons, seems to be very tenderhearted as he refers to the widows and orphans. In fact, he bases his scheme for further protection against competition from Japan on the following grounds:
. . . Because my own company is becoming hoary with age. A great many of the shares are now owned by widows and orphans. Some three or four years ago when we had to discontinue paying dividends it was simply heartbreaking to me to receive personal calls and letters from people who informed me that the withdrawal of our dividends brought them on the verge of starvation.
Now, what are the facts? Canadian Cottons has earned for the shareholders since 1892 a total of $24,560,804.50. Although the original investment cannot be determined with accuracy it was shown to have been not more than $3,930,130. Again, Mr. Dawson showed very great solicitude for the workers. He said-and I quote:
Because of Japanese competition, our workers will be drawing starvation wages and the industry itself will be in extreme danger of annihilation.
These statements are absolutely unfounded. The company has an undistributed surplus available for shareholders of $5,782,067, of which $2,277,208.81 is a secret reserve, not even disclosed to the shareholders, and there is an additional $9,000,000 accumulated undisclosed surplus represented in fixed assets. In addition the company, having been given the legal opportunity of accumulating these reserves, has taken a secret and unfair advan-

tage of the government by concealing its profits and failing to pay the required income tax.
It is hardly necessary for me to point out, as the brief does, that it is from the taxpayers and consumers of the country that a protected corporation receives its right to make special profits that it otherwise could not make. It is the right of those conferring these benefits to be furnished with accurate and honest information in regard to the benefits accruing to the recipients of the special privilege.
Let me turn to another well known person, Mr. B. Gordon, managing director of the Dominion Textile Company. He also shows a very great concern for what he calls "the true interests" of the employees. The secretary of the Syndicat Catbolique du Textile de St. Gregoire wrote him asking for an opportunity to discuss with him the matter of wages paid at the mill. How did Mr. Gordon reply?
We do not propose to discuss the affairs of this company with people like yourself. . . .
He went on:
. . . fomenting discord. . . . As in the past, the management of this company will be conducted with their true interests at heart.
What are the "true interests" as revealed by wages paid?
The share that the worker has had in the advantages of the protective tariff during this period is indicated by the average annual wage paid per individual. From the records available, the highest average was $277 per annum in 1888, and the lowest $224 in 1905.
Contrast those low wages with the dividends paid.
The total of the dividends paid in the stock issued on the original investment of $500,000 from 1929 to 1936 amounted to $5,812,500. The total of the dividends paid on the stock issued on the original investment by members of the syndicate in 1905, between the years 1906 and 1936, inclusive, amounted to $14,837,500, or an average annual rate of 98-4 per cent per annum.
I do not think I need comment.
In addition to the earnings that have been paid out in dividends, the common stock shareholders have a very large equity in the company. . . . The original investment of $500,000 made in 1905 has yielded a return of $14,837,500 in dividends and to-day has, according to the company's records, an additional present value of $14,671,105. This is after charging off to profits $22,943,471 for depreciation, and $12,492,186.92 to equipment and repairs. . . .
There appears to be a secret reserve of profit amounting to $17,265,72817.
Is there any reason why the consumers of this country should continue to pay exorbitant rates for their goods; any reason why the

The Budget-Mr. Woodsworth
wage earners in these industries should continue to be paid pitiably low wages, while the financiers make the enormous profits indicated by these figures? The brief says:
The evidence shows that in its relations with the public and its employees the leaders of this industry have maintained little regard for human relations. The laws of power appear to have dominated and directed the policy of the industry, rather than regard for justice.
The strife between capital and labour will continue with unremitting bitterness as long as employers seek legal advantages and special privileges from various governments of the dominion and arrogantly deny to their employees, on whose behalf these advantages are obtained, any share in or control over the direction of the policies under which the fruits of those advantages and privileges are distributed.
The employers are part of the Canadian Manufacturers' Association, incorporated by act of parliament. The employers demand that competition be eliminated from abroad and assert the right to organize, to regulate and eliminate competition among themselves. At the same time they arbitrarily deny to their employees the right to organize in their own interest. And the government appears to quite acquiesce in that policy. When the government imposes a customs duty on an article imported into Canada it does more than tax the consumer of imported goods by indirect taxation. It gives to the Canadian manufacturer of similar goods a right to impose on the consumers of goods subject to customs duties a private tax for his own benefit. Viewed in this light, Canadian customs tariff laws are a governmental subsidy to Canadian industry.
Where a protected industry does no substantial export business, all capital created through the operation of the business, over and above a reasonable return to the investor on capital invested by him, has been contributed by the consumer and not by the investor. Protection of the industry cannot be justified for the purpose of providing a return to the investor on the ground that he is entitled to a return on capital employed in operations that has been created out of profits earned in excess of a reasonable return on the capital invested by him. It must always be remembered that a portion of that capital, and in many cases the greatest proportion of that capital, has been provided by the consumers of Canada and not by the investors.
I have been referring to one or two particular companies. Many other companies have followed the same course in regard to their capitalization. According to the brief:
The effect is that promoters of mergers and amalgamations have succeeded, by a process of recapitalization and refinancing, in getting into their hands a large amount of capital stock for which they have paid nothing, and the management of the companies is expected to produce a dividend on this stock. The government of the country is called upon to furnish tariff protection to enable the management to do so. The consumers and the employees have to bear the burden of the dividends.
I spoke the other day of the defrauding of the government, and I am going to quote now directly from the brief.
Canadian Cottons . . . was not only setting aside large concealed reserves, but was not disclosing to the proper authorities its true profits and was depriving the government of the taxes justly and legally due. It has in fact been shown that the officers of the company falsified the returns to the government in order to conceal the existence of the secret reserve, which between 1916 and 1936 reached a maximum of $2,506,128.18, and is admitted to be in 1936, $2,277,208.81.
I should like to ask the government if these taxes have been collected. The other day the Minister of Finance (Mr. Dunning) said something about these companies being in the courts. He dad not explain just what he meant, but I suppose there has been some reference to the exchequer court. I should like to ask very definitely that before we are through with this debate we be told what portion of these back taxes has been collected.. And one further thing I should like to ask; whether or not the criminals have been punished.


Miss MACPHAIL:: They do not punish
criminals of that kind.


James Shaver Woodsworth: The other day we had poor young fellows gassed and clubbed for trespassing on public property, but here are men high in the public life of this country who are able to deceive and defraud the government; and apparently though the facts have been in the hands of the government for over a year now, little action has been taken. In the brief there is the phrase "apparently they deliberately falsified"; again there are the words "misled and deceived the government" ; and that the statement of Mr. Dawson, "is utterly without foundation." Let me read section 413 of the criminal code:
Every one is guilty of an indictable offence and liable to seven years' imprisonment who, being a director, manager, officer or member of any body corporate or any company with intent to defraud,
(b) makes, or concurs in making, any false entry, or omits or concurs in omitting to enter any material particular, in any book or account or other document-
The Budget-Mr. Woodsworth

It is all very well to send to the penitentiary men who may be guilty of some petty theft, but what about these men who are guilty of defrauding the government and violating the criminal code? Was I not right in saying the other day that in this country justice is not impartial; that we have one law for the rich and. another for the poor? I want to quote a sentence from the brief in this connection :
It is submitted . . . that the law as defined by our statutes and interpreted in the English court of appeal has been transgressed.
I think the government is under an obligation to explain before this house rises what it proposes to do with regard to the very serious state of affairs that has been brought to light by the textile commission report, which has been placed in the hands of all hon. members. Let me quote again:
-Sir Charles Gordon, the president of the Dominion Textile Company, makes the statement to the shareholders: "While the company has an issue of preferred stock it is evident that the governments of one kind and another are the real preferred shareholders as their takings this year represent earnings of $42 per share on the company's preferred issue."
In making this statement to the public, indicating that the company is especially burdened with taxation, it, however, is not disclosed to the public that these taxes are all paid by the consumers. While, in fact, it is ordinary business practice for any corporation to pass on to the consumer its municipal taxes, this company passes on its income tax to the consumer.
I believe that statement is very much along the line of the statement made in this house the other day by the right hon. leader of the opposition (Mr. Bennett).
Several years ago we had considerable publicity with regard to the danger in which our industries were being placed because of Japanese competition. This is what Mr. G. B. Gordon said:
-that the Japanese situation had resulted in an entire lack of orders for the mills at Sherbrooke and Valleyfield, and that it would be necessary to stop 600 looms at Sherbrooke and 500 at Valleyfield.
What does the brief state with regard to that? I quote:
It is submitted that the evidence is conclusive that there was no Japanese competition existing on the 15th of January, 1936, which would justify any reasonable business man in Mr. Gordon's position assuming that he would no longer be able to manufacture goods at Sherbrooke that could be sold, and that it was therefore necessary to close the mill indefinitely and throw approximately 500 employees out of employment, either to starve or to become objects of public charity.

If this is a proper conclusion, then the real object in closing the mill is apparent. Owing to the condition of the stocks at Sherbrooke and the shortage of machinery at the print works, it was convenient for the company to close this particular mill at that time; in fact it had been convenient to curtail production for some days prior to the closing.
What are we to make of business men who call upon the government for special privileges on grounds that are absolutely without foundation? And what are we to say with regard to a government that continues to give special privileges to firms of this character? Let me quote again from the brief:
The evidence seems to be conclusive that the statements made in the letters written to members of the government by officers of Canadian Cottons Limited were unfounded, and, instead of the business of the mills being strangled, the evidence shows that while they were making threats of closing the mills, they vvere increasing the purchases of their raw materials.
Now I want to come to consider this matter of protection, which ever since most of us were children has been the main subject of our budget debates. Instead of quoting from some of our classical economists I want to quote from this brief, which deals with actual facts, with concrete situations. Here is something concerning Canada and the United States:
It will, therefore, be apparent that no customs duties were necessary to protect the Canadian manufacturer as between Canada and the United States of America in respect to cotton yarns at this time. It is, however, interesting to note from a study of exhibit 820 that while prices moved up in the United States of America, due to the adoption of higher rates of wages and shorter hours of labour, the prices in Canada moved up at the same time, the increase in 1933 being from $24 in April to $30 in July, with no corresponding increase in rates of wages or decrease in hours of labour; in fact the reverse occurred, that is, without any increase in hours of labour, the rates of wages were reduced by ten per cent in April, 1933.
And later:
In this instance the Canadian manufacturer received more than three times as much for manufacturing the yarn as did the American manufacturer.
We become so deadened by the incessant propaganda that has been carried on that we may fail to realize the import of statements of this kind. Anyone who goes across the boundary line to the United States and buys goods in that country and, upon his return, attempts to purchase the same goods in Canada, knows that we pay much more in this country. But we are told that we have to do that on patriotic grounds. We

The Budget-Mr. Woodsworth
are told that we cannot compete, and that our manufacturers are under special handicaps. Yet, let me read this sentence again:
In this instance the Canadian manufacturer received more than three times as much for manufacturing the yarn as did the American manufacturer.
As it is stated later on, this gives the. benefit to the investors, and not to the worker.
Let us now look at the wages the workers have received:
The protection given in 1930 amounted to 25 per cent more than the whole of the mill wages paid for the fabrication of the yarn.
Let us turn out the hundreds of thousands of employees in those factories. Let us pension them for life, at a good pension, and the country would be far better off than it is under existing arrangements. I should like to read that paragraph again:
The protection given in 1930 amounted to 25 per cent more than the whole of the mill wages paid for the fabrication of the yarn.
And a little later:
The Canadian manufacturer was taking advantage of the customs tariff duties to increase the profit to the manufacturer at the expense of the consumer, while giving no benefit of the increased protection to the workmen.
I know some workers do not understand that. Some hon. members will recall that one of these textile companies some years ago brought a whole trainload of workers here to protest against the effects of government policy. The men who came were no doubt real workers. I looked at their hands, and I talked to them. They were genuine employees. They had been told by those who controlled them that certain government policies were the cause of their troubles. They had been told that by their employers, but those employers were deceiving the workers. Again, and again, and again in election campaigns workers have been deceived by false statements of this kind. The brief gives evidence of this.
Look at the profits which have been made. Let us, for an example, consider the artificial silk division. I refer particularly to Canadian Celanese Limited, as an indication of depression prosperity:
The company during these seven years, which embraced the period of Canada's greatest depression, earned in net profits more than the total amount of the cash invested in the company.
If our farmers on the prairies who have worked for years and years, who to-day have lost their all, whose farms are hopelessly mortgaged and their capital swept away, consider these facts, they will realize the great injustice
they disclose. We hear many people in the east begrudging some little relief given to those people in western Canada. Yet we find that this company in seven years earned in net profits more than the total amount of the cash invested in the company.
Of course there are a few people outside the shareholders who do fairly well. In 1935, twenty-eight executives drew $294,458.79, the lowest of which was $5,050 and the highest $35,023.54. In the year 1935, seven persons drew $148,063.59 in salaries. In that year $72,280 was paid in salaries to directors of the company resident outside of Canada. The brief goes on to say:
It will, therefore, be observed that out of the money paid by the consumer over the period of seven years, for every $33 that went to the wage earners, $28.20 went to the higher salaried employees or the investors.
I could take similar figures for the Dominion Textile Company and for other companies.
Let me now come to the question of the financing of these companies. The brief states:
It cannot be contended that if an investment bears interest at an average rate of 20 per cent per annum continuously for thirty years that such a return is inadequate.
Surely that is putting it very mildly indeed! To continue from the brief:
The result has been that on the above basis the consumers of Canada have paid in profits sufficient to pay back to all investors, i.e. bondholders, preferred and common stock holders the whole of their investment-pay all. the interest on the bonds, the dividends on the preferred stock and dividends on the common stock at the rate of 20 per cent per annum on the money actually invested, to pay for the entire buildings, plant and machinery, and to give the company a fund available for outside investment amounting to $24,000,000, all in a period of thirty years.
This government is continuing the same policy, notwithstanding the fact that it went to the country on a policy of lower tariffs, as is indicated in our subamendment now before the house.
Let me now turn to one or two particular branches of these industries. I shall deal first with the woollen divisions, as wool is very important in Canada. I quote:
It is not many industries that can show during the five years of the depression, over as large a cross section as dealt with on page 8, consistently higher earnings on capital invested in the business than for the five years immediately prior to the depression.
Or consider the knit grades division, in connection with which the following statement is made:
For no capital investment in the company at all, the promoters of the syndicate that organized the company in 1906 have realized
The Budget-Mr. Woodsworth

$10,205,304. . . . The consumers, in effect, have purchased the entire plant, and presented it to the owners for nothing, and in addition have provided them with $3,000,000 net profit, and $1,904,949.14 for depreciation.
May I interrupt my remarks at this point to point out that apparently this is the kind of thing the government is proposing to do in connection with the matter which was brought before us at the beginning of to-day's sitting. In that instance we have a company organized with apparently little or no capital, one which is securing equipment from the government and to which, according to reports, the government proposes to give the necessary additional equipment. Then it would appear that on the orders the government give to that company it will guarantee that the company will receive cost plus ten per cent-the same old game all over again in connection with another department of our public life.
But I must return to textiles and give another illustration of the salaries paid by representative companies.


Mr. ISNOR:: Would the hon. member give the name of the knit goods company to which he referred?


James Shaver Woodsworth: Penmans.


Gordon Benjamin Isnor: The hon. member made the statement that they paid $10,000,000 in so many years.


James Shaver Woodsworth: I can give my hon. friend the complete statement.


Gordon Benjamin Isnor: Just the net profits.


James Shaver Woodsworth: For no capital
investment in the company at all, the promoters of the syndicate that organized the company in 1906 have realized $10,205,304. That is given at page 230 of the McRuer brief.


Gordon Benjamin Isnor: Have you the net profits for the last four or five years?


James Shaver Woodsworth: I should like to finish this general argument. The hon. member will find all the information he seeks in the brief, which is available to everyone.
I was about to give examples of the salaries paid by some of the representative companies. Joseph Simpson and Sons Limited paid to one man, who appears to be only remotely connected with the management of the business, an annual salary of $31,000. That is at page 236. The executive salaries of this company for the last three years amount to over $90,000 per annum.

Let me deal for a moment with certain reprehensible practices. In connection with tax concessions I read this:
In addition to the tariff protection that the textile industry is receiving from the government of Canada, the individual companies engaged in the industry have with few if any exceptions received advantages over the ordinary taxpayers, from the municipal authorities where their respective mills are situated.
Then in connection with our own customs arrangements we find a little joker in the form of the clause "not made in Canada." The following statement appears on page 404 of the brief:
That either Mr. Hallam or Brack Silk Mills deliberately attempted to deceive the department is quite apparent.
That is the way the department is fooled. Here is one other statement which takes us into the international aspect of this matter:
It appears that Mr. Watson considered that he was entitled to use a hearing before the tariff board held pursuant to a treaty obligation to suit his own purposes, rather than considering that he and the industry were obliged in all cases to make full and complete disclosure to this tribunal.
I could go on and deal with the effect of specific duties, but I shall give this short quotation only:
The net result is that in addition to the regular ad valorem duty of 25 per cent, a specific duty of four cents per pound, and the excise duty of three per cent, leviable in April, 1932, the Canadian manufacturer had an additional protection on the above items-
In connection with special appraisals, we find the following:
-by the simple process of the publication of this appraisers' bulletin, the customs duty, taken on an ad valorem basis, was increased from 38 per cent to 67 per cent on the articles affected by the bulletin without consulting parliament.


Mr. ILSLEY:: When was the bulletin
issued?


James Shaver Woodsworth: I have not the
complete brief before me, but that statement is to be found on page 108 of the brief. In connection with costs of production I find the following:
It is submitted that the evidence shows that very few of the companies reporting to the commission keep such records as will enable them to state with reasonable accuracy what their cost of production is for any particular fabric.
There are other illustrations I could give showing the enormous amounts charged to operation for depreciation, repairs and betterments. It is stated that the Dominion Textile Company has had profits of about $1,000,000 per year since 1920, other than

The Budget-Mr. llsley
those disclosed in its public statements. I ask the government to explain why no action has been taken. This report has been in existence and available to the government for over a year.


James Lorimer Ilsley: What does the hon. member mean by "no action"?


James Shaver Woodsworth: Criminal action.


James Lorimer Ilsley: Civil action has been taken.


James Shaver Woodsworth: I am talking about criminal action. The criminal code covers this matter, and I should like to know why its provisions have not been invoked.


Walter Edward Foster: I am sorry to interrupt
the hon. member, but he has exhausted his time limit.


James Lorimer Ilsley: Mr. Speaker, the hon. member
has made some reference to the fact that the government has failed to take action against certain textile companies. I should like to take a few minutes of the time of the house to explain this matter.
The evidence given before the Turgeon commission revealed the fact that there were probably short payments under the Business Profits War Tax Act and the Income War Tax Act. The auditors of the income tax division went into the matter very carefully and spent several months investigating the situation. They came to the conclusion that eight textile companies had made short payments of business war profits and income taxes. The position taken by the income tax division was contested strenuously by the. companies, who contended that they had paid all the taxes due to the crown. Under these conditions I think the hon. gentleman will realize that criminal proceedings were entirely inappropriate.


James Shaver Woodsworth: I do not realize
that at all.


Major James William Coldwell: Is not the point that
they issued false balance sheets? That is similar to the Lord Kylsant case in England.


James Shaver Woodsworth: Would the minister permit me to quote just one sentence?


Walter Edward Foster: The Minister of National Revenue (Mr. Usey) has the floor.


James Lorimer Ilsley: Let the hon. member go
ahead.


James Shaver Woodsworth: Here is the quotation:
-the law, as defined by our statutes and interpreted in the English court of appeal, has been transgressed.
It is section 413 of the criminal code that is applicable, which reads:
Every one is guilty of an indictable offence and liable to seven years' imprisonment who, being a director, manager, officer or member of any body corporate or company with intent to defraud,
(b) makes, or concurs in making, any false entry, or omits or concurs in omitting to enter any material particular, in any book or account or other document.


James Lorimer Ilsley: If the hon. gentleman had brought this matter up during the discussion of my estimates, as a Liberal member did, I would have been in a position to go into the matter more fully. The respect in which the income tax division felt that the textile companies were short in the payment of their taxes was in connection with the undervaluation of inventory. Inventories are taken at the beginning and the end of each year, and the difference between the two inventories is material in deciding the profits made by the company during the year. If the inventory at the end of the year does not represent the true value of goods on hand, that is, if it is too low, then the profits of the company for that year would be less than they otherwise would be. The companies took the position that it was within the discretion of the directors to value their inventories at such prices as they thought fit, having regard to the conditions in the business world. They pointed out that there is no provision in either of these acts laying down the basis on which inventories are to be taken, nor is there any regulation for laying down the basis on which inventories should be taken. On the other hand, the income tax division took the position that in the accounting world at least the practice is that inventory be taken at cost or market, whichever is the lower, but that is not a statutory rule or a rule laid down by the regulations. However, we took the position that that is the practice that should have been followed all through the years beginning with 1916 or 1917, and down to the present time. When this dispute arose between the income tax division and the textile companies we thought that we were right, and apparently they thought they were right.
I said a moment ago that under conditions such as that, criminal action was inappropriate. That is, when there appears to be a difference of opinion as to the basis on which profits are made up, it is pretty difficult to expect a conviction if you lay an information and seek to establish your position in the criminal courts. Certainly you should take your proceedings first in the civil courts and find out whether your rule is right, and that
The Budget-Mr. Ilsley

is exactly what we did. We brought actions against eight of the textile companies for amounts totalling a little more than one million dollars, and those actions are now pending in the Exchequer Court of Canada. We are attempting to recover that amount. All these actions are being contested. The textile companies have interposed defences, but we are going to do the best we can to win the actions, and we hope to do so.
So when the hon. gentleman says, as I believe he did, that the government has taken no action, he is not representing the facts as they are. I was asked on my estimates what action had been taken with respect to these alleged underpayments of income tax by the textile companies-it was the hon. member for Halton (Mr. Cleaver) who asked the question-and I gave on the estimates the information I am now giving to the hon. gentleman. If, as my colleagues tell me-for I was not in the chamber myself-the hon. gentleman has accused the government of having taken no action against these companies, he is making a statement that is not warranted by the facts.


James Shaver Woodsworth: No criminal action with regard to the deliberate falsification of accounts and misstatements, not only to the government but to the company shareholders.


Walter Edward Foster: Order. The hon. member cannot make a speech.


James Lorimer Ilsley: The hon. gentleman, if he will forgive my saying so, is getting a little bit out of his depth when he talks of an English case. There is no doubt that if there is a deliberate falsification of accounts it is criminal, but that is a thing that has to be established, and that will be determined in the civil actions we have taken. It would have 'been, I am convinced, absolutely useless and fruitless and futile to lay information against these companies under the conditions I have mentioned, and every lawyer in the house will agree with me.


Mr. A. B. HYNDMAN (Carleton):: Mr. Speaker, before continuing the debate on the budget I should like to express my regret at the temporary illness of the Minister of Einance (Mr. Dunning), and I am sure I voice the feeling not only of my own party but of each and every group in the house when I say that we all hope it will be of a fleeting nature. I say that not because the hon. Minister of Finance is a resident in my constituency, but because I feel that the hon. gentleman is one of the best finance ministers that Canada has had in her whole history as a dominion. I put him in the same 
category with the late Right Hon. Mr. Fielding, the Right Hon. Sir Thomas White, and the present right hon. leader of the opposition (Mr. Bennett). I was pleased yesterday when the hon. member for York South (Mr. Lawson) told us that the Minister of Finance was becoming more Conservative. Perhaps the reason for that is that he has been a resident of Carleton county for the last two years, and if he lives there long enough I think he will go the whole way.
Coming now to conditions in this country
I.	Mr. Speaker, with the other doctors in this house, well know that we are at times called upon to treat infected wounds. We can treat them in two ways. Either we can scrape them out and clean up the infection, or we can apply soothing and healing ointments which will cover up the wounds but leave the infection buried in the tissues of the body. I feel that the proper course to take is to clean out the wound and remove the infection, and I believe the same treatment should have been applied during the past two or three years by this government to conditions in this country.
We have heard criticism of the budget from all sides; one hon. member has blamed high tariffs for present conditions; another hon. member has said they were due to low tariffs, and another member has placed the blame on high taxation. But in my humble opinion the reason for the distressing times we have in this dominion to-day is that there has been a lack of cooperation and a lack of action on the part of the government-a lack of the very thing which they so urgently advocated in the last election campaign. H we have a lack of mutual understanding or a lack of cooperation in Canada I believe it will deal a death blow to democracy, and in that connection I should like to quote from a speech delivered by Anthony Eden at the beginning of this year, when he said:
We cannot expect to approach the organized production and national equipment of the autocratic states unless we can, by voluntary effort and close cooperation between all sections of the community, realize a measure of national unity comparable with that which they have reached by other methods.
This is a time when every endeavour should be made to promote national unity, for it is only as a united nation that we can give of our best.
I should also like to give this quotation from a speech delivered this year by one of the outstanding clergymen in this dominion!
If we do not stop the drift away from that unity which was born of confederation we are facing national disaster.

The Budget-Mr. Hyndman
Let me give another quotation from an address in Toronto by one whom I consider the outstanding Canadian citizen in this country:
Not since I have lived can I recall such a spirit of disunity and disharmony as we have now between the provinces and the dominion. To-day we find our federation is threatened with disunity. It is openly asserted one section is paying too much and another is getting too much. There is everything to make disharmony, disunion and jealousy.
I should also like to quote from an address delivered by the hon. Minister of Trade and Commerce (Mr. Euler). Speaking at Hamilton he had this to say:
People entertain fear as to what might happen, and as a result enterprise is at a standstill. There is no reason why Canada should not be prosperous.
There was a meeting in this city not long ago of the advisory council of the National Liberal Federation of Canada, which passed a resolution declaring that we must defend national unity in our country. But I feel that we have anything but national unity in this country of ours at the present time. One need only refer to the premiers of two of the larger provinces to bear that out. The premier of Ontario, for example, referring to the relief program of the Minister of Labour (Mr. Rogers) described it as a head-line and a headache. He said: "I must confess I am not in the confidence of the government at Ottawa." And when the royal commission on dominion-provincial relations met in Quebec, what did the premier of that province say? The report was: "Quebec heads fail to reply to commission request."
In my opinion the government has not carried out one of its promises made in the last election. The promise was made that there would be action, but there has been no action in the last three years. In fact, going back to the years 1926, 1927 and 1928, I do not hesitate to say that if ever a government in this country had everything in its favour, it was the Liberal government that was in power in those years. And what did they do? They sat on the soft, cushioned seats of this house and allowed the dominion to drift into the greatest depression that has ever struck us; and although at that time they were warned of the lurking danger by the present leader of the opposition, it made no difference. They simply said that everything was all right. Again, at the beginning of this session this same outstanding Canadian citizen, the leader of the official opposition, warned the government of the danger signals, but still we got no action. But it may be said that these criticisms are from Conservative sources. Well, let me quote some statements made by 51952-202
members of the Liberal party itself. The hon. member for Huron North (Mr. Deachman) said, as reported at page 2439 of Hansard:
I want something done to-day. I want some consideration of these problems in order that something may he accomplished in our own time. This is what I ask the house. This is what I know the country asks of us.
And then the Liberal member for Winnipeg South (Mr. Mutch) made this statement, as reported at page 2224 of Hansard:
I had hoped that for the rest of the session we would be through with fiddling and would perhaps devote more time to the fire protection of our Canadian Rome which many of us think is burning. When responsible members of this or other legislative bodies waste their time in this sort of thing, irreparable damage is done to the institutions of democracy.
Another Liberal member, the hon. member for Springfield (Mr. Turner) said, as reported at page 2068 of Hansard:
There is at present right across the dominion a general feeling of unrest and insecurity, which seems to be growing . . .
And last but not least, we have this statement from the hon. member for Vancouver-Burrard (Mr. McGeer) as reported at page 3109 of Hansard. He hopes that we will-
-do all we can to guide the Department of Finance out of that swamp of financial ignorance in which it seems to be lost.
This proves conclusively that the slogan, "Vote Liberal and get action" meant nothing, because we have had no action since this government has been in power in the last three years. We have had nothing more than a commission form of government. Let me put on Hansard again-it was given yesterday-a list of the commissions appointed by this government since they came into power. We have now a national employment commission; a wheat marketing commission; a textile commission; a commission on lobsters and smelts; a dominion-provincial relations commission; a penitentiaries commission; a war veterans' assistance commission; a radio commission; a transport or railway commission; a tariff commission; a civil service commission; a board of grain commissioners; a national battlefields commission; a federal district commission; an international boundaries commission; an international joint waterways commission; an international fisheries commission and a national harbours commission; and by this evening's press I see that we are to have another commission to administer penitentiaries.
What about the cost of these commissions? First of all, there was the textile commission, which cost the country $180,000. That commission was headed by Mr. Justice Turgeon,



The Budget-Mr. Hyndman
who also conducted another inquiry. Apparently the government ran out of Liberal judges because Mr. Justice Turgeon was placed at the head of two commissions. He was appointed two years ago to investigate the textile industry and only the other day did we receive the report. Then there was the grain marketing commission. That cost the country $114,000, and all they did was to go over to the old country, for the purpose of obtaining a market for grain, and when they came back they found there was no wheat to sell. Then there was the penitentiaries commission, which cost 890,000. They have brought in a report based on the evidence of convicts in the different penitentiaries, and they suggest that we should appoint another commission. The war veterans' assistance commission cost $326,000; the commission on coal, $23,000; the commission on lobster fishing, $4,000; and the national employment commission, $295,000. The dominion-provincial relations commission, from August 14 of last year to February 10 of this year had cost $68,000.
Looking at the answers put on Hansard to certain questions asked, I cannot understand how these commissioners spend the money and why there has not been some control by the government over some of these commissions. I find one commissioner with a living allowance of $233 a month, or $7.50 a day. He must have been starving himself according to some of the payments made to others. I find a lawyer with travelling expenses of $107.60. I suggest that, from the fees the lawyers received, their travelling expenses and living allowances, $107.60 is not very high compared with some of the other figures. I have investigated living expenses at the Chateau Laurier, and I find that I can get a really good room there with private bath for $6 a day. A good breakfast costs $1; a good lunch a la carte, $2; a good dinner, $3; and one can possibly get along, in the way of tips, on $2 a day. That means $14, and yet some of the commissioners are allowed $35 a day for living expenses. In other words, as far as I can see, they are putting $21 into their pockets. Yes; we find a commissioner getting $35 a day, and yet the Minister of Labour can allow these workmen in Vancouver who are on relief only 75 cents a day. We find that one lawyer who is a K.C. is paid at the rate of $200 a day, while his assistant who is not a K.C. gets $50. But what strikes me as very peculiar is the living expenses. One lawyer gets $200 a day, and it costs him just twice as much as his assistant to live, because he gets $20 a day for living expenses
(Mr. Hyndman.]
and his assistant receives $10. Why the difference? Is it on account of the "K.C.?" What does the "K" stand for? Does it stand for "Mackenzie King"?
The next commission is an interesting one. It has a chairman and two commissioners. I cannot understand why, if the chairman can live on $25 a day, and one of the commissioners can live on $15 a day, the other commissioner needs $35. Then we come to the two lawyers, two assistants. As I have remarked, the "K.C." must mean a tremendous lot, because each of the lawyers is paid at the rate of $150 a day, with travelling expenses.
I cannot understand these travelling expenses at all. Consider the case of another commission. The commissioner has a bill for travelling expenses of $17 a day: one lawyer receives in fees $27,000 odd; the other lawyer gets S32,000; but the living allowances to the lawyer in receipt of the lesser fee are $30 more than those to the other lawyer, and his travelling expenses are $476.19 more. Can anyone figure that out?
Here is another one. Travelling expenses are getting higher. For the life of me I cannot understand how these men travelled. Here is a commissioner who, according to this report, was travelling for thirty-nine days. For those thirty-nine days he received $2,825.69. That figures out at $72 a day for travelling expenses. If anyone can tell how he has been travelling, I should like to know. I have inquired at the railway station, and I understand that for about $72 to $75 I could go from here to British Columbia. It takes more than one day to go that far. Yet this commissioner is getting $72 a day for travelling expenses. One of the lawyers, a K.C., who got $200 a day, has travelling expenses of $983.69. His assistant was getting only $50 a day. Presumably he said to himself, "I must make it up in travelling expenses." because his travelling expenses amount to $1,231.72. These are things I cannot understand and should like to have explained.
The last commission I want to mention is the national employment commission. Its cost ran very high. In 1937 it cost this country $147,569.72, and in 1938 practically the same amount, namely, $147,925.94.
I wonder what the farmers in western and eastern Canada, the men and women who are out of employment, and the school teachers getting only $700 a year, think of all this.


An hon. MEMBER:: Seven hundred dollars, where?


Alonzo Bowen Hyndman: Out in the west, I
believe. I wonder what the hundreds of college graduates who have graduated this

The Budget-Mr. Hyndman
year, the thousands of people on relief in Saskatchewan, and average honest Canadian citizens, think of all this. And then we talk of democracy and of trying to preserve it. It is this sort of thing which is driving people in this country into communism, socialism or fascism. I would not say I cannot blame them, but I do say we have to prove that democracy is better than communism and fascism, and we as a government are not doing it.
I want to refer to the votes in Saskatchewan in 1934 and in 1938. In 1934 the people of Saskatchewan voted for the Conservative and the Liberal parties to the extent of 75 per cent as against 25 per cent who voted for other parties. What was the vote in this last election? It was 58 per cent for the Liberal and Conservative parties and 42 per cent for the other parties. I leave that fact with the government.
In my opinion the government should be doing something more for agriculture, the basic industry of this country. On other occasions I have spoken in this chamber about the western farmer and I have been criticised. I want to make it absolutely clear that I am speaking as a private member and my observations are my own. Although this government has spent a tremendous amount of money on the provinces of the west-Saskatchewan, Manitoba and Alberta-I do not criticise them for that. I criticise them for not helping the farmers in the rest of Canada. When I pick up the supplementary estimates and look at the amount of money this government is voting and expecting to spend on agriculture within this year, I find that, of the total sum of $6,742,059.71, $6,093,511 go to Manitoba, Saskatchewan and Alberta and only $648,548.71 to the rest of Canada. I am not saying that the grant to the western provinces is not fair, but I contend that this government is not doing enough for farmers in other parts of the dominion. I suggest to the government that if there is a reshuffle in cabinet portfolios, let eastern Canada have a minister of agriculture, for -a change. For the last three or four parliaments the ministers of agriculture have come from western Canada. Give us one for a change. Let western Canada have the Minister of National Defence instead.


An hon. MEMBER:: The west has him.


Alonzo Bowen Hyndman: Remember also that this amount of $648,000 includes marketing service, production service, experimental farms, and science services.
I advocate, on behalf of the farmers in eastern Canada, a minimum price for all farm products. Why should we not have a 61952-2621
minimum price for our farm products just as the western farmers are guaranteed a minimum price for wheat? Give our farmers something to work on. I agree with the hon. member for Kootenay East (Mr. Stevens) in his attack upon the packers of this country. In my opinion they have the farmers of eastern Canada right by the throat and they are controlling the price of farm products in the east. All one has to do is to stop and think for one moment of what happened to the prices of beef cattle and pork between last August and last November. Why was there a drop of $3 per 100 pounds in the price of beef? It was that the packers knew that the farmers had to sell their products because they required money to pay their taxes. The price of pork went down last fall, when the farmers had pork to sell; they could get only 7i cents a pound. What is the price of pork to-day? It is nearly lOf cents, now that the farmers have no pork to sell. The packers are controlling prices, and unless the government does something in this regard I am afraid the country is not going to get very far.
As I said before, Mr. Speaker, I do not want to criticise the help that has been given the west, but there is one point I think I should mention in which I feel the Minister of Agriculture (Mr. Gardiner) and the government are to blame. We all know that for the last two years the western provinces have been going through terrible times, and we in the east gathered together carload after carload of vegetables which we shipped for the relief of the west. But what happened to those vegetables when they reached there? The Liberal government and the Minister of Agriculture appointed a man to distribute them, and what did they pay him? He was paid at the rate of $6,000 a year, or $500 a month, to distribute those vegetables. He was not satisfied to do the work himself; he said he wanted some assistance, and the government turned around and appointed forty-five men to help him, at $125 a month and expenses.


An hon. MEMBER:: Terrible.


Alonzo Bowen Hyndman: Terrible is right, and if their expenses are anything like the expenses of the commissions I mentioned a moment ago, I guarantee that they are getting more than $125 a month.


Mr. EVANS:: If I might ask the hon. member a question, was that all the work which was done by the gentlemen referred to by my hon. friend, the distribution of the fruit and vegetables?


Mr. McGREGOR:: And even that was not done right.
413S
The Budget-Mr. Hyndman


Alonzo Bowen Hyndman: Another burning question in Canada is the burden of taxation. I believe I am voicing the sentiment of every taxpayer of this country when I say that the cost of government is entirely too high. I should like to place on Hansard a record of the increase in the cost of government during a ten year period:
Agriculture		Percentage of increase for year 1936-37 over year 1926-27 (10 years) 28-61
Debt service		46-15
Development of natural resources		31-20
Education		2-34
General government. ..	12-08
Protection of persons and property		36-00
Public welfare		365-25
Recreation		18-31
Soldiers' pensions and care		22-17
Miscellaneous		119-08
Immigration and colonization 		Percentage of decrease 45-33
Post office		1-50
Transportation		4-28
Of course it must be remembered that the cost of public welfare includes the cost of direct relief. In the post office there is a decrease of 1-50 per cent, due, I maintain, to the poor salaries paid to the rural mail carriers. They could very well be paid a little more, in order to make up that difference of 1-50 per cent In 1926-27 the cost of government was $745,528,086. In 1936-37 the cost of government rose to $1,104,434,576, or an increase of 46-37 per cent, and a per capita increase of 27-24 per cent. During the same period, however, our increase in population was only 16-68 per cent. In 1927 we paid $137,410,345 in interest on our dominion debt, which took 30-30 per cent of our total revenue, whereas in 1912 the interest on our debt amounted to only $12,605,882, or 7-47 per cent of our revenue. I submit to this house, Mr. Speaker, that this cannot go on.
In discussing this matter of debt I am reminded very much of the battle of Waterloo, which was fought nearly a hundred years ago, I think in 1870-


Some hon. MEMBERS:: Oh, oh.


Mr. COLD WELL:: 1815.


Alonzo Bowen Hyndman: Very well, 1715.


Some hon. MEMBERS:: Oh, oh.


Alonzo Bowen Hyndman: Well, it was fought, anyway. What I want to point out is that Great Britain, which won that war, is still paying interest on the cost of it; and I want to point out also that France, the loser, is
[Mr. McGregor J
still paying interest on the money she borrowed to conduct that war. Is that not wonderful finance, so sound and so sacred?
This year we are given a little relief in regard to the sales tax, and I commend the government for the action it has taken in that regard. I think the removal of the sales tax on building materials in particular will be of some help, but the government must see to it that there is not an increase in the prices of those materials from which the sales tax has been removed. They should see that what occurred when the housing scheme was brought in by this government two or three years ago does not occur again. What happened at that time? When that housing scheme was inaugurated, the price of materials went up 50 per cent. That is no good. Control must be exercised.
And, O my! Mr. Speaker, how the farmers of this country must appreciate the removal of this eight per cent sales tax from harness and gopher poison. I looked up the price of a set of heavy duty team harness complete, and find that it costs $59.38. Therefore the farmer is going to save eight per cent of $59.38, which amounts to $4.74. Since a set of harness usually lasts about seven years, he is going to be in pocket eighty cents a year. Is that not a wonderful thing that the Liberal government has done for the farmers of this country? But the sales tax is taken off gopher poison! Just think of it! The average farmer in western Canada, I understand, buys about $3 worth of gopher poison a year. Eight per cent of $3 is twenty-four cents, so under this wonderful budget he is going to save twenty-four cents a year. What wisdom the farmer showed a short time ago when he voted for the Liberal party!
Why did the government not take off the tax on medical supplies? , For a number of years we have been paying the sales tax on those supplies, and the removal of it would have been more to the point. There is plenty of revenue from taxation, and yet the government talks about deficits. There should be no deficit. The federal deficit, so far as I can make out, is something like the surplus of the Hepburn government. When I look into the matter I find that in the past five years the revenues to this government have aggregated the stupendous sum of $1,748,811,000.
When we compare the revenues in the last two years of Conservative administration, at a time when conditions in this country were very bad, and when relief expenditures were high, with the revenues in the last two years of the Liberal administration, in a time when we are told conditions are so much improved, we have to stop and think. In the last two

The Budget-Mr. Kennedy
years the Liberal government have taken $835,203,000 in taxation from the people of Canada, while in the last two years of the Conservative administration that government received only $576,296,000 in revenues. In other words, the difference in revenues amounted to $258,907,000, and still the Liberal government have a deficit of $13,000,000. Can you, Mr. Speaker, figure that out? Why should they have a deficit? They should have no deficit at all. Why has there not been a greater reduction in the sales tax? I maintain the sales tax should be repealed at once, and .though it is possible the government might not be able to balance its budget, there is no need for a substitute; for the rebound in business would be much greater and more permanent than any effect resulting from the proposed expenditure of millions on relief work, or any other form of government aid.
The important point is that this invasion of the fundamental right and duty of the people to make and exchange products and services with one another should be removed at once. To penalize people by taxation is to fine them for doing their duty. When the sales tax is removed, trade will recover sharply; and then, with the increased revenue from other and more legitimate sources, the sales tax can be relegated to the limbo of discarded expedients, where it belongs.
Let us consider the tax sales of farms in Carleton county; and when I refer to Carle-ton county I am not referring to any mean county. I indicated earlier in the session the financial position of Carleton county. They are running their finances and looking after their affairs very well. I have before me a notification of the latest tax sale. We find that farms in Carleton county are being sold for taxes.
I shall speak only briefly about Canadian trade. Trade is of course a subject of great importance. I would particularly draw the attention of the government to the importance of the Ottawa trade agreements. I would point out to the government the importance of our trade agreement with the United Kingdom and the commonwealth of nations. Our exports to the United Kingdom and the commonwealth in 1937 amounted to $924,318,073, while to the United States they amounted to only $343,250,669.


Mr. DEPUTY SPEAKER:: The hon.
member's time has expired.


Alonzo Bowen Hyndman: I should like to have
about five minutes more.


Frederick George Sanderson: With the
unanimous consent of the house.


Some hon. MEMBERS:: Go ahead.


Alonzo Bowen Hyndman: May I thank you, sir,
for the courtesy you have extended to me. I was pointing out that We sell a great deal more to the United Kingdom and the commonwealth of nations than we buy from them, while the reverse is the case with the United States. The United Kingdom and commonwealth markets are our lifeblood; let us protect them.
But there is another market to which I should like to draw attention, namely the home market. In my opinion the home market is the most important of all. Ninety per cent of our farm products are sold in our home market. Let us protect it so that our farmers may have a market in which they nlay sell their goods. Let us have a home market so that our people may have jobs.
Briefly I would suggest, as I said at the first, that we should have a work and wages program for our people, rather than one of relief. When I look at the large sums of money expended by the government in connection with different projects, I am amazed. I find that we have a decrease of $14,000 in the amount of money to be spent in the Department of Labour. In the Department of Public Works there is a decrease of $2,134,000; and in the Department of Pensions and National Health, a decrease of $573,000. In technical education the expenditures have been decreased by $27,000, and expenditures for mines are decreased by $477,000. I notice, however, that there have been increases in some of the departments. I claim the position should be reversed. For instance, there is an increase of $3,000 for the privy council.


Frederick George Sanderson: Order. I am afraid I cannot permit the hon. member to go farther.
Mr. ORVIS A. KENNEDY (Edmonton East): Mr. Speaker, first on behalf of my party may I express regret at the sudden illness of the Minister of Finance (Mr. Dunning) which has caused him to leave the chamber at this time. It is our earnest hope that he will soon be able to return to his seat in the chamber.
It is with a feeling of regret and heavy responsibility that I rise on this occasion to deliver my first address in the house. I am reminded at what cost I take my seat in the house, the cost of the loss of a personal friend and gentleman in the constituency of Edmonton East. I refer to the passing last January of Doctor W. S. Hall.
In this address I propose to direct the attention of the house to some of the questions which were of vital importance to the
The Budget-Mr. Kennedy

Liberal-money reform. Even at this late date, three years later, it is again noticeable that money reform was not referred to in the speech from the throne and the budget. Surely it was not an idle boast; surely the Liberals were sincere when they made this promise to the people of Canada in 1935.
There is one other remarkable feature to which I should like to direct attention. The hon. Minister of National Defence claimed in Edmonton that the government had complete authority over the central bank; yet since that time it has been found necessary to purchase all the stock of this bank. Why is this necessary if they had complete control before? Let me quote again from the speech of the Minister of National Defence in Edmonton. After reading the preamble of the Bank of Canada Act, he said:
That is the finest charter of financial liberty you ever had. The government has complete authority and complete responsibility under the terms of that set-up. I suggest that all we need is a few more reformers from western Canada like Jim MacKinnon and Bob Marshall, and we will get action under that authority.
Tips is a plain admission, Mr. Speaker, that we were not getting action under the authority we had before. Now that the government has complete ownership of the Bank of Canada, all it needs is to control completely its policy and to institute a measure of monetary reform. This is advocated not only by all progressive parties in Canada but by some of the strongest supporters in the government's own party, and to emphasize this point I wish to quote from an editorial in the Edmonton Bulletin of June 1, 1938. This paper was one of the strongest supporters of the Liberal candidate in the by-election last March. The editorial says in part:
The Prime Minister has stated he will introduce legislation to completely nationalize the bank; a proceeding which would have no merit or purpose unless the bank is to be used as an instrument for the active administration of monetary policy for the purpose of creating and maintaining wholesome business and economic conditions.
The bank purchase decision implies repudiation of the idea that monetary conditions are shaped by the " times," and acceptance of the principle that money and credit can be so managed as to shape the " times." It is to be assumed the purchase legislation will be followed promptly by measures to employ the bank in this way; which measures parliament will have to either approve or upset the government and force an appeal to the country.
Parliament is therefore to be " put on the spot " on the subject of monetary reform. It is to be hoped the members will prove they were misjudged by Mr. Dunning and Mr. McGeer- and by a good many others-in assuming they had fallen into a stand-pat attitude on this issue-the one issue that offers them a chance to start the forces of rejuvenation and get the country out of the slump.

The Edmonton Bulletin has consistently stood for money reform, and I agree with it that money and credit can shape the times. The system must be made for man, not man for the system.
Therefore, Mr. Speaker, it is the urge of many people in all parties that the government take immediate steps to introduce a ' definite policy of raising the standard of living of every Canadian citizen in keeping with the development of our natural resources. The people have consistently asked for security and freedom. They want taxation reduced; they want debts to be dealt with equitably so that they will be relieved from this crushing burden; they want poverty abolished. These are results that can be accomplished with an aggressive policy of money reform.
May I say just a brief word on unemployment. I do not wish to go into detail, so I shall simply state that since the government claim that it: is their right to control the purse-strings of this nation, they are the only ones who can introduce measures to alleviate the unemployment situation. Therefore the federal government should assume full and complete responsibility for the care of the unemployed.
In passing, may I say that as a young man myself I appreciate the efforts of the government in its youth training projects. I want however, to point out that you can train me or any other young man in Canada to be an expert in any line you choose, but if that young man has not a job he will not have the power to keep his home and family together round about him. Therefore the government must go one step further, and that is to occupationally establish our young people. I would also point out, while on the subject of youth training, that we have from Halifax to Vancouver one of the finest educational systems that could possibly be devised. We have efficient public schools, high schools, technical schools, colleges and universities- the best anywhere. The people of Canada -the fathers and mothers of our young people -by taxation are paying for these institutions, and yet we find that the only thing that is keeping their sons and daughters from attending these institutions, the only thing that is depriving them of the opportunity of an education in these institutions, for which their fathers and mothers are paying, is lack of purchasing power. Once again I suggest that this is an appropriate subject to be dealt with in the budget debate. I believe that we must change our obsolete economic system and modernize it to bring about the results for which the people of Canada are asking.
At six o'clock the house took recess.

The Budget-Mr. Kennedy
After Recess
The house resumed at eight o'clock.


Mr. KENNEDY:: I should like to give, in some detail, figures in regard to the freight rate problem as it affects western Canada and particularly Alberta. It is a serious question with us, and you will find, Mr. Speaker, as I give the figures, that Alberta particularly has had a great handicap because of the freight rate situation.
It is a well-recognized principle in rate making that rates should not rise as rapidly as distance; this is the tapering principle. The average length of haul of commodities is much longer west of Port Arthur than east of Port Arthur. For example, in the case of grain the eastern haul is, on the average, 466 miles, while the western haul is 645 miles. Terminal and many other overhead charges are the same whether a ton moves 10 miles or
1,000	miles. Thus the longer the haul, the lower should the ton-mile rate be. That is, the overhead costs may be spread over a greater distance. Yet frequently we find that the western ton-mile rate is almost as high as or higher than in the east. For example, eastern grain moves an average of 466 miles and pays a rate of 60 cents per ton-mile, while western grain moves an average of 645 miles, or about 40 per cent more, and yet pays almost the same ton-mile rate. If the usual tapering principle were applied, the western rate would be 13-2 per cent lower than it is at present. Similarly, if the normal tapering principle were applied, lumber rates would be 31 per cent lower, and the rate on anthracite coal would be 52 per cent lower, and so on.
Commodity
Ammonia in iron drums	
Calcium phosphate	
Carpets	
Drugs, medicines and chemicals	
Dry goods, cotton	
Insulators	
Glass and glassware	
Glass, window	
Hardware and tools	
Angles, band, bar	
Lead, white or red, dry	
Lye, concentrated	
Oil, cottonseed	
Roofing and roofing material	
Boots and shoes	
Bolts, clips, nuts, rivets, rods, nails, iron or steel Pipe cast-iron, pipe wrought iron, 12" and under
Sugar and syrup	
Twine, cordage under	
Wire fencing	
Barbed wire	
Railroad companies, to facilitate rate making, assign every one of the thousands of commodities offered for shipment to one of several classes, or a special commodity rate is assigned to a commodity. The latter is especially true for commodities of a bulky nature which cannot bear the higher class rates. However, in this connection a serious abuse has developed which affects adversely the Alberta consumer and distributor. For example, canned goods, when moving from Montreal to Alberta, are assigned to fifth class, and the rate is SI.98 per 100 pounds, while if the goods move to Vancouver, a special commodity rate of $1.50 per 100 pounds is assigned. This makes the Alberta rate 2-09 cents per ton-mile and the Vancouver rate 1-04 cents per ton-mile. Thus the Alberta rate is 100 per cent above the Vancouver rate. In the case of bafbed wire, an important item in farm costs, shipments to Alberta go in fifth class and carry the rate of $1.98, while shipments to Vancouver carry a commodity rate of 75 cents. This means that the ton-mile rate to Edmonton or Calgary is 240 per cent higher than the Vancouver rate. This higher freight on wire costs the Alberta farmer $26.40 more to put a three-strand fence around a quarter section of land. Similarly baking powder, confectionery, dry goods, hardware and tools, boots and shoes, and paints and varnishes carry relatively low commodity rates to Vancouver but must be shipped on class rates to Alberta points.
I wish to present a few figures to show to what extent the people of Alberta are handicapped by freight rates. This is a comparison of Montreal to Edmonton rates with Montreal to Vancouver rates:
Rate	Rate	Excess rate	Montreal to	Montreal	Calgary and	ExcessCalgary and	to Edmonton over	per-Edmonton	V ancouver	V ancouver	centage$2,334	$1.25	$1,084	86-82.344	.75	1.594	212-64.534	3.00	1.534	51-54.531	3.50	1,034	29-54.53i	3.27	1.264	38-71.98	1.35	.63	46-61.98	1.35	.63	46-61.98	1.00	.98	9801.98	1.25	.73	58-4(1.98	1.00	.98	98-01.98	.75	1.23	164-01.98	1.00	.98	98-01.98	1.00	.98	98-01.98	1.25	.73	58-43.034	2.00	1.034	51-81.98	1.00	.98	98-01.98	.70	1.28	182-81.98	1.00	.98	98-02.334	1.30	1.034	79-61.98	1.25	.73	58-41.98	.75	1.23	164-0
The Budget-Mr. Kennedy

Wholesalers and jobbers, as well as the people of Alberta, suffer under this rate structure. Paints and varnishes can be shipped from Montreal to Vancouver and reshipped in less than carload lots, l.c.l., to Vernon, B.C., a distance of 3,200 miles, for $254 per 100 pounds, while to ship in carloads to Calgary and l.c.1 to Vernon, a distance of only 2,589 miles, costs $2.97}. This is a difference in favour of Vancouver of $0.73} per 100 pounds.
Flannelette blankets move to Vancouver in a cotton goods car at $1.75 per 100 pounds. The Edmonton rate is $4.53} per 100 pounds. This tremendous difference is principally due to the fact that the railways will not include cotton blankets in a cotton goods car to Edmonton. If these blankets could be included in a fourth class cotton goods car, the rate would be $2.33} and the discrimination would not be so great. The railways will accept these blankets in a fourth class car if the edges are not whipped. Unfortunately it is not practical to ship them in this shape, as the edges will fray. They cannot be shipped to Edmonton since no equipment is available. A rate structure that will allow a Vancouver wholesaler to bring blankets to Vancouver and reship local freight to Holden, a town sixty miles east of Edmonton, for 21} cents per 100 pounds less than is charged for shipment direct to Edmonton does not seem reasonable. The rates are $1.75 Montreal to Vancouver, plus $2.57 local freight Vancouver to Holden in Alberta, and the Montreal to Edmonton rate is $4.53}. The same discrimination in favour of Vancouver applies in the case of other dry goods, hardware, tools, and barbed wire.
At the other end of the prairie region Winnipeg is in a favoured position. In some cases Winnipeg distributors can ship l.c.l beyond Edmonton at a lower rate than the combination of the carload rate from Montreal to Edmonton plus the local rate. Many commodities can be shipped in car lots to Winnipeg and reshipped local freight into Edmonton territory at a lower total freight charge than would be the case if they were shipped direct in cars to Edmonton and distributed from there.
It is suggested that a substantial reduction in the rates on grain and grain products from Alberta producing points to British Columbia would do much to facilitate the interchange of commodities between the two provinces, giving each an increased purchasing power for the products of the other. These two provinces geographically are ideally situated side by side, each producing entirely different products which are required by the

other, but handicapped by a transportation cost between them which is relatively unfair to a federation of provinces.
To summarize briefly: Alberta, along with other western provinces, carries relatively a very large proportion of Canadian transportation cost, and in addition Alberta gets the shock both from the east and from the west. The old reasons of higher cost of construction and operation advanced by the board of railway commissioners for perpetuating this condition have been challenged from time to time. However, if Canada is to succeed as a nation, restraints of trade between the different portions must be removed, so that the products of the various parts may be freely interchanged, and if in the process the situation of the railways is too adversely affected, then the situation should be dealt with so that the burden shall be carried nationally and not disproportionately by various sections.
Another problem of vital interest to my constituency of Edmonton East is the coal situation. In or adjacent to the constituency of Edmonton East there are twenty-three mining companies in active operation, also the headquarters of many of the mines operating in the coal branches are in the city of Edmonton. One can readily realize how important a question this is to the people there.
However, rather than deal with any particular constituency I prefer to deal with the problem as it concerns Alberta as a whole. We all realize that the coal distribution is certainly far from satisfactory, and we would urge the government to look into the matter with a view to finding some means of making the distribution more equitable. Alberta alone has 14 per cent of the coal reserves of the world, 21 per cent of the coal reserves of the North American continent, 72 per cent of those of the British Empire, and 87 per cent of those of the Dominion of Canada. Yet we find the startling fact that, with all this coal in one province alone of Canada, Canada supplies only one per cent of the world's needs. Another startling fact we find is that, with all this coal, in 1936 exports decreased two per cent while imports increased 5-6 per cent. Upon a close examination of coal statistics in an effort to find where the difficulty lies, other startling facts are disclosed. Out of 28,000,000 tons of coal used last year in Canada, Canadian coal mines supplied only, in round figures, approximately 15,000,000 tons. Ontario brings in over 10,000,000 tons of coal from the United States of America. Surely a policy of Canadian goods in

The Budget-Mr. Veniot
Canadian homes, or Canadian coal in Canadian engines and stoves, would be the proper policy for this country.
The question is not one of production. We could produce far more coal in Alberta at very little greater cost than is the case to-day. When we examine the figures as to the unemployed -and I should have liked the Minister of Labour (Mr. Rogers) if he were present, to take particular notice of this fact -we find that last year we used a little over
5,000	miners underground in the mines of Alberta, but we have over 13,000 men holding miners' certificates. This means that approximately 8,000 miners were used in other industries, forcing other tradesmen on to unemployment, or that these miners were themselves being kept on relief. Another startling illustration is this, that the unemployed in Alberta in May totalled 8,771, approximately the same number that were kept out of work 'because we were not using coal from Alberta in Canadian homes.
Another clear illustration would be this. Ontario is sending about $100,000,000 into the United States each year to buy United States coal and bring it into this country. If we again compare figures, this is surprisingly close to the amount which the government at this time is trying to divert into a housing scheme in order to create employment. It is one case where money is going out which the government does not need to borrow in order to get; it is here, and it is being sent to the United States. If the government in some way or another could divert this flow of money amounting to about $100,000,000 from the United States into Canadian industry, this would do a great deal to stimulate employment in Canada. It is not that our coal is not as good as theirs. Alberta coal is every bit as good coal as one can buy anywhere in the world. The trouble is that we are not able to bring it to eastern Canada. I ask that the government check up on the question of subventions. We appreciate very much that the government are spending $2,-
250.000	in subventions in the Dominion of Canada, but we find that Alberta is getting only about $345,000. If we can get a larger subvention so that we can move Alberta coal to Ontario homes, this will stimulate business, I believe, all along the line.
Another suggestion which might be placed before the government is this. The order in council regarding subventions states that the subventions shall be provided by parliament year by year. If this grant could be stabilized in such a way that' it could be applied continuously, so that we could have it for a period of seven or even five years; or, in
other words, if the government could introduce a bill which would stabilize subventions to the coal industry for that period of time, we could interest coal miners in bringing the coal to the markets in Ontario. This would make it possible for the coal industry to establish warehouses at strategic points from which they could supply the Ontario market. This would have two advantages. It would make for greater employment, employment for men in these warehouses. It would also create the possibility of all-the-year-round work in Alberta mines and even in Canadian mines generally, to use a broader term. It would permit miners to mine in the slack season in the summer time and fill the warehouses, so that they would be prepared for the winter rush in the Ontario market, and would not crowd the domestic market in Alberta.
I am submitting these thoughts briefly to the government. I had hoped to take them up on the estimates of the Minister of Mines and Resources (Mr. Crerar), but I am placing them on record in the budget debate so that he may look into them at this time.
Just to summarize what I have been saying in this speech: As a young man, I plead with the government to spare no effort in the interests of building a bigger and greater Canada. They have the means; we have the goods. I plead with them to spare no effort to build a bigger, better and saner Canada for the young people of future generations to live in.


Mr. C. J. VENIOT (Gloucester):: At this stage of the session I would hardly venture to take part in the debate were it not for the fact during the last five months little or no mention has been made of an industry which is of vital importance to some 200,000 citizens of the maritime provinces whose very existence depends in one way or another on the fisheries. I do not intend my remarks as a criticism either of the present government or of any preceding government. I propose to point out facts as they exist, and hope to present a constructive suggestion.
Last year the hon. member for Shelburne-Yarmouth-Clare (Mr. Pottier) gave this house a vivid picture of the distress of fishermen in the maritime provinces, showing how this industry, the fishing industry, had reached the brink of bankruptcy, and begged that something be done as rapidly as possible to relieve the distress and suffering of the fishermen. Year after year for the last fifteen years or so the same picture has been presented with but little variation in the colouring.
The Budget-Mr. Veniot


Mr. BROOKS:: If I may ask the hon.
member a question, with the condition of the
fishermen and fisheries in the maritime provinces such as the hon. gentleman has described, would he explain why advantage was not taken of the $500,000 voted last year for rehabilitation?


Clarence Joseph Veniot: I think it would be easier for the head of the department to give that explanation. The submission of the fishermen is that the present set-up of the Department of Fisheries is not in tune with the trend of the times when compared with the Department of Agriculture. It is not abreast of the developments which have taken place in the fishing industry in other countries.
During the past few years it has been my privilege to discuss with men who are deeply interested in the fate of the fishermen the various problems which confront them. Invariably the conclusion of these discussions has been practically the same, namely that the first and foremost step to bring the fisheries back to their former condition would be the uplifting of the fisherman and a complete revamping of the Department of Fisheries, so as to give it a set-up comparable with that of the Department of Agriculture. From a department of regulation, patrol and conservation there is an urgent need as rapidly and as completely as possible to transform it into a department of leadership, education, initiative, expansion and development in its relation to the several fields already mentioned, namely production, collection and storage; preparation and processing; distribution and marketing of fish. Let us briefly consider these few items.
First, let us consider the production and catch of fish. There is something radically wrong with fish-catch when people who live in the neighbourhood of the baie des Chaleurs and the gulf of St. Lawrence must both summer and winter send to Halifax wholesale fish dealers for their supply of fresh fish. There is something wrong when the fur raisers in the northern section of New Brunswick must every week import from neighbouring provinces tons upon tons of fish to be employed as food for fur-raising animals. Too many of our fishermen are still using the antiquated hand-line method of catching cod, and too great a number are without means of procuring modern fishing gear to increase their catch of other kinds of fish. The economics of this unnatural situation deserves study and consideration.
Second, let us consider the collection and storage of fish. This item needs greater attention. Here also the entire picture needs transformation under experienced leadership, just as has been the case in the Department of
The Budget-Mr. Veniot

Agriculture. Fish is one of the most perishable of protein foods. In order properly to preserve it in its fresh and edible state it is necessary, as soon as it is caught, that it be either processed immediately or subjected to some form of cold storage or freezing. Unfortunately a great number of our deep sea fishermen are not aware of this important fact and have not their boats equipped properly to store or to freeze their fish immediately, before it reaches shore. Only the large fish operators have boats equipped with these freezers or ice-boxes to take care of the fish in such a way as to render it suitable for further processing. The rest of our fishing fleet is obliged to subject its catch to some form of pickling, which renders it unfit for further delicate processing. In this condition steps should be taken either to provide some better system of collecting fish from the deep sea fishermen, or to give the fishermen the knowledge or facilities so that they may equip their boats to take care of their rapidly spoiling catch.
Third, let us consider the preparing and processing of fish. Leadership and education in cooperation with provincial governments, along lines similar to those adopted by the Department of Agriculture, are essential in the field of preparing and processing in new and attractive ways to make the product marketable and appetizing. Last year in my county a complete investigation of the fisheries situation was made, under the instruction of the Minister of Fisheries (Mr. Michaud), and the one outstanding fact derived from the investigation was the lack of knowledge of the great number of fishermen as to methods of processing fish. Tons and tons of fresh fish could be filleted, smoked, canned or otherwise prepared if our fishermen only had the knowledge how to do so. The same applies no doubt to the majority of fishermen in many other sections of the maritime provinces. In this connection it might be fitting to point out that since 1934 the government of Quebec realizing the necessity of educating its fishermen along the lower end of the gulf of St. Lawrence and on the Gaspe coast as to modern methods of processing and handling fish, has officially established in that district a school to be devoted exclusively to fishermen so that they may be taught all a fisherman need to know about the preparation of fish and the methods of handling it when caught, and before it is brought to shore, so that it may reach its destination in as fresh condition as possible.
Fourth, I should like to discuss the distribution of fish. Valuable experiments have been

made by rail companies to discover the best methods of transmitting fish long distances for marketing purposes. But I suggest that one further step is important, namely the' establishment, at strategic points from coast to coast, of a chain of cold storage plants to' take care of adequate distribution. I do not imply that the government must construct and operate these cold storage plants, or go into the cold storage business. But we have here a need for leadership and initiative by a wide-awake and active Department of Fisheries which will create these distribution facilities.
The fifth point is that of marketing. It is hardly necessary to add that with a greater variety of fish products and with the creation of greater facilities for distribution and storage,, a much wider field of markets can be attained.. With proper leadership and direction there is-no reason why Canadian markets for fish could not be doubled or trebled. How many hon. members from the central provinces ever have on their tables fresh fillets of cod or haddock, fresh mackerel or herring, smelts, or lobsters, oysters or clams? In spite of the-present system of distribution one cannery in New Brunswick, which began operations on a small scale a few years ago, has succeeded in obtaining markets in over eighty countries. The individual small fisherman is not able-to enter such fields, unless some leadership is given by governing bodies.
Mr. Speaker, these are but a few considerations of facts as they exist in the fisheries industry. I leave them for the reflection of hon. members on all sides of the house, regardless of political affiliation. I feel sure they will conclude that there is plenty of room for improvement in the fishing industry. This appeal for leadership and for constructive action and development in connection with the fisheries is made in the interests of 200,000 Canadian citizens from the maritime provinces, coupled with several hundreds of thousands of citizens in other parts of Canada who depend for their livelihood upon this very leadership which they themselves have not the power or the means to develop.
They do not want charity. They are asking for light and guidance in their own field of endeavour, for an opportunity to develop their natural talents and to follow their blood tendencies to live off the sea. My submission is that in next year's budget the government should begin to make provision for the gradual but complete transformation of the Department of Fisheries from a department of regulation, control and conservation to one of leadership, initiative, education, action, expansion and development of the fisheries, patterned

The Budget-Mr. Taylor (Nanaimo)
on the development of the Department of Agriculture, as a first step towards rehabilitating what formerly was one of the richest industries in the maritime provinces, and in Canada as a whole.


Mr. J. S. TAYLOR (Nanaimo):: Mr. Speaker, as I rise to my feet my good wishes go out to the hon. Minister of Finance (Mr. Dunning) with the hope that he will speedily completely recover from the sudden indisposition which took him from the house this afternoon.
For a very few years, too few I regret, we have enjoyed the benefits of a general upward trend in business, but we have not yet been able to seal to ourselves the practice of balancing the budget of the country. We cannot be absolutely certain that business conditions will continue their desirable upward trend in the near future. Therefore, we must admit that there is no secure progress in our national affairs.
We face an utterly staggering situation. Our purely federal obligations stand to-day in excess of $3,500,000,000 gross, or $3,100,000,000 net. Before we can address ourselves to the necessary work of our country we must spend every year not less than an approximate sum of $117,000,000. Last year this amount stood at $134,500,000. This amount is needed purely for interest on money borrowed for work and services already done, sometimes overdone and sometimes demanding to be done again. Hon. members will not disagree with me when I venture to assert that to-day we are paying interest on capital debt the original reason for which has been lost to the country and its economy by the natural wastage of the years. Had I any inclination to pass out of the field of discussion of our national finances, I could bring to argument the story of many railways, many canals, many power plants and many industries and undertakings, the capital structures of which are staggering under items for the purchase of buildings and equipment destroyed or cast off many years ago, while the interest goes on year after year satisfying no one but the receiver, and in essence not even him.
Bear in mind that there has been no reduction in our national debt, nor can there be under the most promising of present-day conditions. There has been no reduction during the past eight years, and the continuing increase has brought us as a nation to an intolerable position. We have added a total of approximately $900,000,000 to our burden of public debt. In 1867, in the days of confederation. the public debt of the new Canada then being formed stood at approximately
$93,000,000. Seventy-two years have passed since that time, and during that period we have increased our debt fifty-seven times to a grand total of about $3,600,000,000. In that period we have only fifteen recorded years in which there was any reduction of debt. These reductions totalled slightly in excess of $319,000,000, leaving us with an addition to our confederation debt of about $3,300,000,000 gross, or $3,000,000,000 net. Do hon. members realize that there have been only fifteen profit making years in the seventy-two years since confederation? This means that in almost four years out of every five since that time we have complacently or compulsorily added to the debt structure of our country.
We do nothing at all about it. Reductions take place only when the budgeted accounts of the country disclose a satisfactory surplus. With that surplus the debts of the country are purchased and pro tanto reduced. But nothing is done to discover how we might whittle down our obligations and restore sanity to the economy of our people. It is not only in connection with the public debt of Canada that this has taken place. In every province and in every municipality the same obtains. We find the same condition existing in every country of the world where debts are privileged to accrete. Our debt is always increased by the surplus of our necessities, and the lean years eat up the depreciated revenue resources of our country. When the fat years come along they awake in us the urge to make up the leeway of our course, and we are quite satisfied to equate the growing needs of our growing country with the new financial resources of successful government. There can be little advantage in making of this speech a calamity howl, and I assure hon. members that such is not my intention. Still, I should complete the picture.
So far I have not considered the debts of the provincial governments which at the end of their 1936 fiscal years totalled over $1,700,000,000 for direct liabilities, less sinking funds. Neither have I considered the bonded indebtedness of the municipalities of all classes, which at the end of their 1934 fiscal years had reached the amazing total of $1,450,000,000, and these figures have since been climbing. What does it matter that these total exceed $6,250,000,000 net? Even then the tale is not told of the guarantees of interest, the guarantees of principal and such like. The thing which essentially matters is that we do nothing about it. The thing which eternally matters is that the wealthy men in our country know that they, more than wars
4150	COMMONS
The Budget-Mr. Taylor (Nanaimo)
and more than depressions, have produced this condition, but they are utterly helpless to bring sanity to its continuation.
It seems to be the accepted idea that a growing country can support a growing debt. While taxpayers protest and politicians grumble, never a voice is raised to declare that though everything else seems wrong there must be, there should be, there shall be a way out. Why should our public debt be considered as a snowball rolling down hill? Why should we complacently or in any other manner accept its growing size and assume that only when it reaches the valley of desolation will it melt? We have no justification for blaming the war or the war years for all our troubles? The war years numbered seven as far as this country's debts were concerned, but I have indicated a long series of fifty-seven years of unrelenting debits which were not all attributable to hard times. We are bound to admit that depression increases our public debt, while prosperity tends to give us confidence and encourages us in the enlargement of our public debt to meet our public needs. There is something very wrong with our economy and especially with our understanding of it. The facts I have marshalled are an advertisement of weakness which pleads for.immediate action.
The world has learned to accumulate and to develop wealth in the functioning of the capitalist economy, or, I should say, the neo-capitalist economy. The world very early and very quickly learned to demand interest on money lent. This is a highly important corollary of our neo-capitalist economy, and in spite of its generally blighting, parasitic nature, it is invariably protected and sustained by the full strength of our law structure.
We must therefore deal with it as we find it. We must also deal with the general economic situation as we find it; for these are the products of our brains, and in justice to ourselves and to those who will follow us. we must eliminate from both and from all our social machinery excesses and abuses which are constantly attaching to their functioning, human nature being just what it is. None the less it is no platitude to say that no effort of any kind, industrial, commercial or social, escapes the frustration which interest slowly but without surcease fastens upon it. Debts tend everywhere to increase. Interest tends everywhere to become more throttling, and I want to draw the earnest attention of the house, indeed of all the world about us, to this amazing fact, that there exists no machinery anywhere by which in our economy we can arrest their juggernaut
progress. The small cancellations afforded to successful citizens do not in historical survey provide any important solution of the situation, while the whole machinery of finance piles the interest of Pelion upon the debt of Ossa. There does not exist anywhere in the world to-day machinery to remove the pyramiding weight of both. Thus I assert that we move slowly and irresistibly to the collapse of our civilization without any intelligent effort being made to avert the catastrophe, and all this when we cry aloud for social security for our people and yearn for cultural opportunities for our spiritual development. In the present age we pay year by yeaT for the debts of the past, not in reduction of them, but in order that we may keep them alive for the honour and glory of, our good name and the dishonourable burdening of all those who may follow after us.
If I were asked, to tell hon. members what I think of interest, I would unhesitatingly classify it as a cancer upon the body politic. Long nights have I spent in concentrating on a way by which it could be painlessly extracted from our modern system. As I thought long and earnestly, I came to realize that in the end it might prove to be the goad to drive us out of the economic complacency in which we find ourselves, a complacency which permits us with unctuous pride to point to the unheard-of achievements of our modern civilization, while at our feet the drool of the cretin and the pathetic gaze of the helpless starveling scarcely move us to flick the crumbs from the tables of our gluttonous feasts.
For a very few moments, and before I move forward to any suggestion I desire to make, there is before me a problem corollary to my whole subject, to which I must refer. I refer to the present position of gold in the polity of any country. I have no illusions about the folly of building up huge reserves of gold. For many years I have predicted its ultimate elimination from the business of the world. It has been withdrawn from the pockets of the world, and it would be crazy folly for anyone to attempt to put it back. Its economic use to-day is to function as a make-weight in balancing international accounting, and I am quite prepared to admit that it will function in this way for many years to come, if happily the world does not completely fall to pieces in the meantime. At any rate I think we can agree together that its function internationally will be the last present power of which it will be deprived. It will be recalled that in the early

The Budget-Mr. Taylor (Nanaimo)
days of the great war the demand of Britain and her allies for food, equipment, and ammunition in unprecedented quantities created an alarming situation. Then it was that Sir George Paish took from the old country to Washington documents of security to a very considerable amount. These securities belonged to and had been collected from patriotic citizens, patriotic industries, and patriotic undertakings by the British government, and they represented investments of every possible kind which might prove acceptable to the government of the United States. They were lodged, shall I say, or deposited, or better still, hypothecated with that government, in order that a vast purchasing credit might be established in favour of Britain. It was to be a credit outside Britain, outside her normal commercial functionings-note that fact. This was done in the shortest possible space of time by British patriots. It was the first great historic effort of entrenched modern finance, by surrendering its forts, its guns, its immense stores of ammunition, to support in extremis the country of its patriotic owners and directors.
The release of these securities was not brought about until long after the war had ended, when Stanley Baldwin journeyed from London to Washington to acknowledge and commute the immense debt which had accumulated in the meantime.
Now our country, our Canada, is in extremis, tottering under a staggering load of debts, debts of capital, debts of interest, all borne by our little villages, our larger towns, our bigger cities, our provinces, and our Canadian selves. We must face these facts as they are to-day, and keen our brains, not our hearts, to discover a way out. Such a way out must not be lit by the flaming torches of revolution. It must not lead us into the cul-de-sac of renunciation, and surely as true Canadians it should not lead us into the wilderness of despair and frustration.
And facing the facts, Mr. Speaker, I say there is a way out, a way which passes by the very halls of finance, the very magazines of commerce, the very arenas of throbbing industry, and by the peaceful homes of our people. No unusual festival need mark our progress, and no unusual activity need herald our accomplishment.
If the wealthy patriots of Britain heard their country's call in 1914, then the wealthy patriots of Canada should hear their country's call to-day. They know how precarious is their hold on their so-called wealth. They know this more clearly than the millions of our people who have no such nether millstone
around their necks. They know that the last twenty years have witnessed no new avenues of great wealth open up. They have felt the pace during the past thirty years as it constantly quickened. They have felt the point of saturation slowly approach. They know that sooner or later, and better sooner than later, they must accept the call to face their responsibility and do their part, or be wiped off the slate forever in withering fatuity. Let them and their companies and their associations collect such gilt-edged securities as our scrutinizing government will accept. Have all the documents of title discharged in blank. Let them offer them to Canada absolutely free of incidental or other charges, under letters of deposit or hypothecation for a fixed period of not less than ten years.
At the expiry of that time they shall be absolutely freed by Canada and returned. Let Canada accept the condition that all accruing and developing interests and dividends proper to the securities shall flow to the patriot owners as usual during the term of the hypothecation. Let this be done to a first total of not less than $200,000,000 of acceptable and accepted securities, and I assert that the first great creative step will have been taken by Canada to lift herself out of the slough of despond.
This amount of $200,000,000 is well within the compass of the patriotic citizens of our country, and while large enough to make a distinct impression in the new plan is small enough not to disturb the safe and fluidic operation of the economic forces of our country. But there must be no strings to the hypothecation. The results of the working of the plan will be to the advantage of the wealth of the country and its holders to-day as to those who unequally bear its yoke.
Of course, it may be argued that this plan will involve inflation, and I therefore anticipate such an argument now before the plan is advanced. Managed inflation cannot be questioned. The country's first requirements in currency or otherwise were not scientifically arrived at; they were discovered accidentally and estimated arbitrarily and every variation since must necessarily fall into the class of inflation or deflation, theoretically at least. When we fail to balance our budget it is by a theoretically inflationary process that we cover, and when we develop a surplus we theoretically deflate to balance. This means that during the fifty-seven years since confederation when we failed to balance the budget the amount of the deficits were covered by the theoretically inflationary process.


Walter Edward Foster: Order; I would draw the hon. member's attention to the fact that he has exhausted his time.


James Samuel Taylor: Thank you, Mr. Speaker; I very much appreciate this. I thought I could finish in forty minutes.


Walter Edward Foster: I regret to inform the hon. member that he has exhausted his time to speak.
TMr. J. S. Taylor.]


Mr. LIONEL CHEVRIER (Stormont):: Mr. Speaker, I desire to congratulate the Minister of Finance (Mr. Dunning) upon his excellent expose of the country's financial affairs. It is indeed gratifying to see that a deficit of $77,000,000 has been reduced this year to approximately $13,000,000, and notwithstanding the predictions of the minister I hope next year will see the balancing of this country's budget.
The year 1937, Mr. Speaker, will go down in the history of this country as Canada's year. It was a year of substantial and definite progress in every field of productive activity; and notwithstanding difficulties both internal and external, the country made rapid strides along the road to prosperity. Agriculture, in spite of the drought which reduced the harvest in the west, on the whole was more profitable, and the buying power of those engaged in agriculture was increased. Mining development and production reached a new high level during the year. The wood industries were active, and it is gratifying to note that the value of the tourist traffic to this country rose to the figure of $200,000,000, very nearly equalling the 1929 record. The external trade of the dominion reached heights which had not been heard of for many years, and which compared favourably with the peak year in this country, 1929. Much of our industrial and trade activity was due in part to rearmament in Great Britain and also to the reciprocal arrangement made with the United States which, until the last months of 1937, operated strongly in our favour.
These rapid strides along the road to prosperity and recovery were rather suddenly arrested, and the picture to which I have referred was changed overnight, as it were. Suddenly we found ourselves in the midst of a recession. Gradually our trade with the United States began to fall off. Our neighbours, who had been buying from us in large quantities, ceased to purchase' the commodities which we were anxious to sell. The causes of this sudden cessation of purchasing are manifold. The fear of war; the accumulation of foreign capital in Canada and the United States; the disputes between capital and labour, and the concentration of wealth and power in the hands of a few, all contributed to the present situation. The recession in the United States began some time during the summer of 1937, and because of our intimate relations with our neighbour to the south, soon afterwards we began to feel the effects of that change. But let me say, sir, that this government took what I believe to be adequate and immediate steps to meet that oncoming recession. It at

The Budget-Mr. Chewier
once brought down legislation providing for a works program. It caused to be passed the Municipal Improvements Assistance Act, by which $30,000,000 was made available to municipalities in this country for self-liquidating projects. It then brought forward for the consideration of this house the National Housing Act, which I believe will go a great distance in aiding this country towards recovery. This, sir, is truly a Liberal measure, and I believe it is by far the most important statute that has been brought down in this house by this or any other government looking to the solution of the problem of unemployment. By this measure municipalities, housing corporations and individuals will be able to borrow money in order to build low-cost homes. Then, in the budget resolutions, the minister removed the sales tax from building materials.
It is unfortunate that the proposed tripartite agreement between Canada, the United Kingdom and the United States should not have been completed in time to be included in the budget resolutions. It can be readily seen, however, that an agreement so far-reaching and so wide in effect could not be negotiated without a great deal of time and consideration. It is to be hoped, however, that the government will be able to conclude, these negotiations before the year is out.
If I may, Mr. Speaker, I want to refer to another proposed agreement between Canada and the United States, having to do with the deepening of the St. Lawrence waterway. The draft treaty, prepared at the instance of the United States government, was tabled in this house a short time ago. At this juncture, since the international commission has not been set up, I do not wish to declare myself either in favour of or against the proposal, but I should like to make a few brief observations in connection therewith.
The scheme of developing the St. Lawrence waterway is by no means a new one. As far back as I can remember it has been a topic of great interest in the community whence I come. Twenty-five years ago this question was debated and talked about a very great deal in and about the community of Corn-wrall. It was then said that some day the Long Sault rapids, which lie in the international rapids section, would be developed, and that they would generate electricity to such an extent that Cornwall and the surrounding country would, in time to come, be one of the greatest manufacturing centres in Canada. The hope was then expressed that we might have an entirely Canadian scheme, a scheme entirely within Canadian territory; and while that aspect is still possible so far
as the navigation end of the problem is concerned, it is quite impossible as far as the power aspect is concerned, because the power lies in the international rapids section, and that power cannot be developed without the consent of our United States neighbours. Engineers now affirm that it would be impracticable and unsound to canalize the St. Lawrence for navigation purposes only, and of course as I said a moment ago the power could not be developed unless we obtained the permission or consent of the United States of America.
The project, which at one time seemed to be a far-away dream, to-day is closer to realization than ever before. In my humble opinion, it is only a question of time before this scheme will be an accomplished fact, and when it is completed it will have the effect of making the area which lies around the lower end of the international rapids section one of the greatest industrial centres of this country.
The proposed new treaty would provide a two thousand mile channel linking the heart of the continent of North America at the head of the great lakes, to the Atlantic ocean. It would further provide a twenty-seven foot waterway from lake Superior to the sea. At present the channel is approximately twenty-two feet deep from the head of the lakes to Kingston, fourteen feet deep from Kingston to Montreal and thirty-five feet deep from Montreal to the sea. The international section, which extends from Cornwall to Kingston, is 115 miles long, and the whole of the scheme has practically been completed, save that part which lies in the international section.
The canals in the vicinity of Cornwall are only fourteen feet in depth, and those in the vicinity of Montreal are somewhat deeper. Towards the deepening of the St. Lawrence waterway system this country has already spent $220,000,000, and of this amount over half, namely $131,000,000, has been spent in the development of the Welland ship canal at the Niagara peninsula. That canal is from twenty-two to twenty-five feet in depth. We have spent $23,000,000 in deepening the canals from Cornwall to Kingston, and $27,000,000 in deepening those from Cornwall to Montreal.
The other aspect of the project, which is by far the more important, namely the power development, is one which deserves consideration. The estimated potential power capacity of the whole scheme is 6,500,000 horse power, and of this amount 2,200,000 horse power lies in the international section. The United States is very anxious to develop its share of
The Budget-Mr. Chevrier

that power, namely 1,100,000 horse power, at Cornwall, and proposes that both countries enter into an agreement to canalize the St. Lawrence river and at the same time develop the power. The scheme of course offers many advantages, but one has to admit some disadvantages as well.
As I said at the outset, it would be folly for me or for any other member of the house to give an opinion upon the scheme before the international joint commission referred to in the treaty has been set up, and before that commission has given us details, first, with respect to the cost of the scheme so far as Canada is concerned and, second, with respect to the territorial and legal rights of this country in the project, and third with respect to the apportionment of work in the international section.
The draft treaty is far from clear as to the amount of money which will be spent for Canadian materials and as to the amount of work which would be given to Canadian workmen. It strikes me that great care will have to be taken that in the international section, where the works are to be carried on, even though they may be carried on in United States territory, Canadians should be given an equal chance with Americans to sell their products and to offer their labour. Otherwise there might be very great opposition to the scheme, from a Canadian standpoint.
So far as the treaty of 1932 is concerned, there is another point I would like to bring to the attention of the house, namely, that this treaty-and the plans so indicate-changes the location of the present canal and places it entirely within United States territory. That from an engineering standpoint is, I understand, to be the proper place in which it should be. However, I warn the international joint commission, when it is set up, that great care will have to be taken with reference to the location of this canal, because the canal has always been in Canadian territory. It has been used by Americans, and Canadians as well, in Canadian territory, and in my humble opinion it would be a serious matter to displace it unless some very sound reason existed therefor.
With the deepening of the St. Lawrence waterway there is intimately connected the agricultural life of this country, because if the scheme is completed, unquestionably agriculture stands to benefit. There is, too, another element which enters into the picture, namely, the fact that the development of power will again bring into the urban centres large numbers of people from the farms. This country will have to decide whether it has not gone too far industrially, and whether 
it would not be better to assist municipalities to get their citizens or their ratepayers back on the farm, rather than to develop large blocks of power which will create new industries and bring large numbers of people from the country to urban centres. I leave this subject without saying more. I was anxious to make these observations which, I feel, are well taken, and which are perhaps premature. I was anxious to make them because this is a project of vast importance, and one which, were it to be completed, would affect the whole economic structure of Canada.
Mr. Speaker, we are living in very difficult times. In the last quarter of a century many events have come to pass, and many phenomena have occurred. The turmoil of war, the fall of governments through revolutions, the advent of totalitarian states and dictatorships-all of these things have contributed towards the fall of the old order. These phenomena, unexpected as they were, have taken place in a very short period of time. Old boundaiy lines have been wiped out. Powerful dynasties have fallen, and empires have been divided up among nations. New governments have arisen, and new states have been set up. We in this country have not escaped the influence of these new ideas and new tendencies. And while we are many miles away from dictatorships and totalitarianism, we have within our country elements which would set up these forms of government.
The ability of democratic and parliamentary institutions to survive depends primarily upon whether or not economic depressions can be overcome within the limits of these institutions. Under dictatorships people will endure conditions which, if they existed under parliamentary or democratic institutions, would ensure the overthrow of such institutions in a very short time.
The year 1937 marked just twenty years since the advent of the first totalitarian state in Russia, through the October revolution. The most distinctive feature developed by that totalitarian state unquestionably has been the terror. This of course applies in part to the other totalitarian states, such as Germany and Italy. Terror is the only instrument sufficiently powerful to enable the attainment of the goal of totality. The best known feature of terrorism in Russia has been the periodic hearing of mass trials. Inevitably the crime with which the accused is charged is treason, and very often the form varies, from blowing up bridges to plotting military intervention. The evidence offered consists almost exclusively of the incriminating confessions of the accused.

The Budget-Mr. McKenzie
There has never been a case on record of a man failing to admit the crime with which he was accused. It is clear that the trials were never held for the purpose of deciding the guilt or innocence of prisoners. Clearly they were public demonstrations intended to create definite impressions upon the minds of the people. If there had been failure to increase coal production; if there had been severe food shortages; or, again, if peasant insurrections were about to take place, then a mass trial was likely to be staged. The first object of the mass trial was to strike fear into the hearts of all those who might be harbouring disloyal intentions; the second was to divert public opinion from public misfortune, and the third was to create the opinion that effective action had been taken to prevent the recurrence of the undesirable event or development.
The form of totalitarianism in Germany is very similar to that which exists in Russia. There is not a great deal of difference between bolshevism on the one hand and national socialism on the other. The tendency in Germany is to eradicate from the minds and hearts of the people the very essence of religion. Conditions in Italy are perhaps not as bad, but the dictator there possesses the same powers and he can make use of the terror if he wills.
I point to these conditions simply to show that while conditions in Canada may be difficult, they do not begin to compare with those that exist under totalitarian governments. The only way in which we can keep these new and false and untried ideas from our own country will be by a more equitable distribution of wealth, by bettering the conditions of the masses, of those who suffer and those who toil, and by bringing down legislation similar to that which was brought down in this house in the last month or so. By doing this, we shall prove to the Canadian people that peace, order and happiness can still be found within parliamentary and democratic institutions.


Mr. H. A. McKENZIE (Lambton-Kent):: Mr. Speaker, I rise to take part in this debate with a good deal of temerity, knowing as I do that I am speaking in the presence of many old parliamentarians who have been in this house for many years and who have served their constituents faithfully and well and have contributed much to the progress of the country. However, I shall try to be brief in my remarks. I have taken up very little of the time of the house, keeping in mind what the Prime Minister (Mr. Mackenzie King)
said during the first session of this parliament, that if members of the House of Commons studied their problems more and talked less we would make much better progress.
If each of the 245 members talked as often and as long as some do, this session would last not for four or five months but for four or five years.
There is nothing that has a greater effect on the life, prosperity and progress of Canada than the budget, and the present budget is no exception to the rule. I am sorry the Minister of Finance (Mr. Dunning) is not in his seat to-night, and I am sure it is the wish of every hon. member that he have a speedy recovery and be soon restored to health. I wish to congratulate him upon the clear and comprehensive manner in which he presented the budget. It has inspired us with new confidence and hope, and it showed us the great grasp he has of the economic problems that confront our country. However, one of the great hindrances to recovery is our immense public debt with its resulting tax burden that rests particularly heavily on our farmers and other primary producers.
My constituency of Lambton-Kent, formerly Lambton East, has the distinction of being one of the few counties or municipalities in this dominion with no debenture debt. Long ago we adopted the policy of balancing our budget and living within our income. If other municipalities had done the same, they would not be in the financial difficulties in which they find themselves to-day. As Canada is largely an agricultural country, the problems of the farmer are to our minds the most important questions before the Canadian people to-day. Their problems are important in more ways than one, considering the fact that nearly fifty per cent of the population of Canada reside either in rural parts or in small incorporated villages directly dependent upon the prosperity of the farmer. Thirty per cent of Canadian production is agricultural. It forms the basis of our export trade and is the lifeblood of our railways. In brief, the commercial and industrial existence of our country depends upon the primary producers. Unless the prosperity of the nation is reflected on the man who tills the soil, we cannot consider we have solved the problem of making Canada a land of prosperous, happy and contented people.
As long as the capitalistic system holds out; as long as the motive for doing business is the profit motive, we shall never be economically sound unless the profits of the primary producers are much greater than they are to-day. But I do not believe that we shall

The Budget-Mr. McKenzie
ever see a full measure of happiness in this or any other country until the great masses of the people receive a greater share of the wealth. I know the terror of the workingman's life. It is not so much the hourly wage; it is not so much the number of hours in a day that must be worked, the discouraging feature is the fact that a man has to live in constant uncertainty as to continuous employment. If the workingman were assured of fifty-two weeks of employment in every year, we would have a much more contented labour. Steady employment would give labour a greater buying power and thus provide a better home market.
That is all very good, but I am afraid we have the cart before the horse. Once a farmer is able to step into the buying market, much of our unemployment will take care of itself. We all know that the farmer is the greatest buyer we have of a large variety of goods. He needs manufactured goods in enormous quantities; he requires the services of hundreds of hired men and women, but he must have the necessary money or purchasing power. The removal of the sales tax on building materials will be of special significance to the farmer and will bring fresh hope to him. Any one who drives through our rural districts must be impressed with the need of farm building repairs. If there is any one in Canada who deserves a better home and modern improvements, it is the farmer.
I believe he will take advantage of this budget to the extent that his resources will permit. The removal of the tax on harness and harness parts will also help.
Unemployment insurance has little to offer to the producers in Canada's great natural industries, such as fisheries and agriculture, for they will be taxed along with the wage earners to provide the state's contribution to the unemployment fund. Minimum hours of labour are unlikely to be adopted by the farmers. With the high cost of manufactured goods and the comparatively low price he receives for his products, the farmer must work even longer hours. In 1920 a total of 110 bushels of wheat would buy a binder; at the present time it would take almost 400 bushels to purchase a similar machine. In order to produce this amount of wheat he would have to work, not eight hours a day, but eight hours in the forenoon and eight hours in the afternoon. Agriculture must be elevated to a place where the farmer will have faith and confidence in his calling as a means of livelihood. It seems to me that the people of this country are altogether too ready to forget the basic importance of this industry,

and the result is that the farmer is underpaid for his time and labour. We must remedy this by raising the scale of wages of those who work the land to a point in keeping with other classes, so that the rewards of capital invested in agriculture will compare favourably with the returns from other forms of investment.
I should like to say a word here for the sugar-beet farmers in my riding. These farmers have been growing sugar beets successfully since 1902, when the first factory was built at Wallaceburg. This industry produces around fifteen or twenty per cent of the total sugar consumed in Canada. The total acreage planted last year was around
50.000	acres with a total production of over
120,000,000 pounds of sugar valued at over $5,000,000. Almost thirty per cent of this acreage was taken care of by individual farmers and their families, and the rest was handled by contract labour. In the troublesome times during the last few years the farmer has been among the first to adjust himself to changed conditions, but the beet farmer has found it difficult to make things pay with sugar selling at $4.30 retail without the sales tax. The wholesale list price at Montreal is $3.90, and the refiners pay a field price of $5.50 per ton for beets. With normal prices and conditions this industry has possibilities. If Canada produced fifty per cent of her own consumption of sugar, we would require 20,000 workers, apart from office employees, and there would be distributed annually about $20,000,000. This would take care of many of our unemployed. I urge the government to help this industry by removing all or at least half the sales tax on beet sugar. The government tax of one cent per pound on sugar means a tax of approximately $30 per acre, which is much more than the farmer makes.
In this connection I might say that the economic life of this country is comparatively simple. Our primary industries produce, and the rest of us live by exchanging our goods and services for the products of the primary producer. I am not overlooking the importance of the home market, but we must not forget that in order to consume the wheat which we can produce in a normal year we would require a population of 30,000,000 or more people. The same might be said in regard to beef and hogs.
We have great natural resources, and I wonder if our immigration laws are not too strict. For the fiscal year ending last March our total immigration was 15,645. Of that number only 2,264 came from the British isles, 5,113 from the United States of America,

The Budget-Mr. McKenzie
and 4,464 from other parts of the world. Included in that number were 1,300 farmers and 339 of the labouring class.
In the southern part of my riding, where they specialize in certain types of farming such as the growing of sugar beets, tobacco, corn, onions and tomatoes, there is usually a distinct shortage of the right type of farm labour, and I would suggest that a selective ' and less restrictive immigration policy be adopted. This class of immigrant not only enhances farm values but actually creates more work, and they are consumers as well.
Walter C. Cain, deputy minister of lands and forests for Ontario, in answer to a query recently by the Rowell commission, reported that in northern Ontario there were approximately 6,000,000 acres of accessible land capable of agricultural development, but he did not see the likelihood of any rapid development taking place unless immigration bars were lowered. Consequently, if we doubled our population, our market problem would be easier.
I am not going to take up the time of the house regarding the great burden of debt, but it is interesting to note that in 1878, when Sir John A. Macdonald succeeded the Hon. Alexander Mackenzie as premier, the total expenditure of the federal government for all purposes was a little over $30,000,000 a year. Likewise, when Sir Wilfrid Laurier was in office in 1896, the total expenditure was $44,000,000. Now we are budgeting for an expenditure of over $500,000,000 a year.
In connection with government expenditures, I am informed that seventy-five per cent or the dominion's share of the old age pensions is $28,653,000, and the total cost under the Department of Pensions and National Health for the last fiscal year, including the cost of administration and hospitalization, is $55,570,945, or $11,000,000 more than the total expenditure for all purposes forty-three years ago. Mr. Speaker, these are stupendous figures, and the money must all come out of the taxpayers of this dominion. I am not finding fault with this expenditure but just wish to show some of our added costs.
My plea is that the government in all trade treaties and legislation should do everything possible to find markets, and profitable markets, for the primary products of Canada.
Next to that, cattle raising is probably the most important section of the agricultural industry in this country, and our system of marketing beef cattle is definitely bad. In the packing plants at Toronto and elsewhere there is little or no competition among the buyers, with the result that with a fairly large
supply of cattle the buyers set their own price and the farmers can take it or leave it. In this way the farmers are annually deprived of thousands of dollars to which they are justly entitled. I am advocating that parliament establish a select standing committee of this house to inquire into the cattle marketing problem, and to study ways and means of providing the British market with a steady supply of beef so that the producers will receive a square deal and the best prices obtainable.
We should not forget that the whole structure of our economic system rests upon the shoulders of those who till -the soil or otherwise begin the process of using the natural wealth of our primary industries for the benefit of humanity. Let us beware lest we place on the shoulders of those who support our economic life a burden beyond their ability to bear.
However, our recovery in Canada since 1929 far outruns -that of the United States. A chart recently published by the national industrial conference board of the United States, a non-political organization, and considered most reliable, shows that the downward trend from 1929 to 1933 almost paralleled the industrial decline in both countries, and the per capita debt of both countries was reduced by about five per cent; but since that period and to the end of 1937 industrial production has increased in Canada 4-8 per cent and declined in the United States 24-4 per cent. Employment in Canada, exclusive of agriculture, has increased 5'2 per cent but in the United States is down 6 per cent. While Canada's per capita debt has increased 22 per cent, that of the United States has increased 102 per cent, so that we are in much better shape than our neighbours to the south.
The government's decision to -take over the Bank of Canada is meeting with general approval throughout the dominion. This step will undoubtedly strengthen parliament's control of national credit. The need of some reform of our present monetary system is apparent to many, and though many theories as to how this can best be brought about are in evidence to-day, it is certain that we cannot continue borrowing money to pay our debts and that a halt must be called in that direction.
Trade negotiations between the British Commonwealth of Nations and the United States are meeting with many difficulties, but we are in hopes that they will be successfully completed at an early date. The general feeling is that trade treaties of this type are greatly to be desired at this time, so that
The Budget-Mr. Leclerc

we may develop a united front against the inroads of economic nationalism; and, of course, reciprocal trade pacts are fair to all parties and are conducive to prosperity and increased foreign trade alike. However, the success of such agreements is dependent upon the closest cooperation of government, producers, and business organizations in general.
Surrounded as we are by dictatorships, our only hope is in cherishing democratic ideals; and now these principles seem to be confined to the English-speaking peoples. Our first duty is to the bulwark of democracy, the British Empire. In Canada, the forces for disintegration are stronger than they have been for fifty years, with a possibility of the country breaking up into a number of sovereign states. Until this tendency is arrested and until Canada can achieve the solidarity at which confederation aimed, we cannot hope for national prosperity and progress.
Let me conclude by saying that if Canada is to continue to make progress, it must be as a united nation.	We Canadians have the
greatest heritage in the world, and we must think in terms, not of what is in the best interests of this section or that section, but of what is in the best interests of Canada as a whole-and not only nationally, but internationally. So I call on my fellow members to forget party politics and work together in order that this most desired goal may be attained.
Mr. JOSEPH H. LECLERC (Shefford) (Translation): Mr. Speaker, as I am rising to address this house for the first time since I was elected, permit me to offer the remark that I now better understand the meaning of the word parliament as applied to this legislative assembly. No other term could so well convey to the people of this country that an enormous quantity of idle words are spoken in this chamber, contrary to the custom of commercial, financial and industrial establishments, which are none the worse for that, seeing that they provide the government with its major sources of revenue.
Mr. Speaker, permit me to say further that, had I the parliamentary experience essential to preside over the deliberations of this house, I would not accept that honour without securing reforms which would enable me to apply closure to the saviours of the country who would make each session last more than twelve months a year, if every hon. member were to abuse his privileges as much as they do. I dare say, Mr. Speaker, that the government bills would not be less effective were they passed more rapidly, so that sessions could be shortened by half, thus saving several hundred thousands of dollars of the public funds.

My remarks are not in the nature of criticisms against those representatives of the people who, without abusing their privileges, state the legitimate claims of their constituents. I am now in a better position to appreciate the heavy burden resting on the shoulders of statesmen, and I cannot entertain any doubt regarding the devotion to duty and the sincerity of purpose of the majority of the distinguished public men who, in turn, assume power in our country.
Owing to its geographical situation, and to the diversity of interests of the different provinces from one ocean to the other, Canada is perhaps one of the most difficult countries to govern. We have not only the fishermen's problems on the Atlantic coast and the miners' problems in the Yukon territory, but also the intermediate problems of the different provinces. Some of them are industrialized and they want a legitimate protection for their industries so that they may be in a position to pay reasonable wages to workers whose health is rapidly declining in plants so extremely mechanized. The agricultural provinces of western Canada, having but few industries, advocate the lowering or the abolition of protective tariffs.
I realize, sir, what tact, what judgment and what experience are necessary to conciliate those divergent interests and consolidate national unity.
I have not the least idea of criticizing those hon. members who put all their talent to the service of the people whom they represent in this house. We see, for instance, members from the Atlantic coast emulating members from the Pacific coast in order to call the attention of the government to the miserable condition of the fishermen. Every session, from beginning to end, members from western Canada spend their energy defending the cause of the wheat producers who, having known a great prosperity, now find themselves in a difficult situation, although they get the lion's share in the distribution of the favours granted by this house.
A foreigner, having read our Hansard for a number of years, would be under the impression that wheat producing is our only major agricultural industry, and the only one having suffered in recent years.
As the number of hon. members who are interested in dairying is limited, we are apt to forget how that industry has developed in every province of Canada.
I wish to devote this, my first speech in this house, to the dairy industry which is the most important in my constituency and in my province, and which is seldom discussed in this house, but which is nevertheless

The Budget-Mr. Leclerc
the greatest and most important agricultural industry in Canada. In order to show its importance, sir, let me quote a few figures. Although prices have been abnormally low for a long time, the annual value of its products during the last six or seven years still averaged the imposing figure of 200 million odd dollars.
The progress of the dairy industry has been going on steadily in every province of Canada. The number of farmers interested in that industry is 318,000, and 50,000 persons are employed in allied industries. If we add together the heads of families and their dependents working in all branches of that industry, we find that they represent nearly 17 per cent of the total population of the country. This is a very large proportion, possibly the largest, employed in a single industry in Canada.
There has 'been no decrease in the number of workers in the dairy industry during the last few years of economic depression. This is conclusive proof that this industry is the most stable in Canada, even though it does not receive the full consideration it deserves.
Notwithstanding the increase in prices for farm products during the last two years, for butter and cheese particularly, bringing new hope to the farmers, one cannot overlook the serious trouble the latter experienced from 1931 to 1935, when butter dropped as low as 15 and 16 cents a pound, the lowest level reached in more than fifty years, so much so that in certain sections of the country it was used as a lubricant.
The government of the time did not even think of fixing a minimum price for this product, though they were doing it for wheat and other grain. It was no doubt because no representations were being made on behalf of the dairy industry that such discrimination took place where one class benefited at the expense of another.
Mr. Speaker, in spite of the improved prices for dairy products, the total income of an able farmer is no higher than the annual wage of any factory worker.
Here is a summary of the income that may be derived from a good farm in the eastern townships, a farm where 20 cows can be kept. On the basis of the prevailing prices for the. last two years, the average annual income from a cow is approximately $30, which means that the total income derived from the herd is only $600 a year. If we add to that another amount of $600 which a farmer can obtain from the sale of other farm products such as pork, beef, eggs, maple syrup, and so on, we have his gross income. Let us consider what the farmer has to pay for feed, fertilizer
and so on, and what he has to pay for municipal and school taxes, insurance, maintenance of farm buildings, interest, and for the purchase of new farm machinery, the cost of all this being entirely out of proportion with the price he obtains for his farm products. It can thus be seen, Mr. Speaker, that he cannot make both ends meet, and that his farm cannot be successfully operated.
Besides, we must not forget that, in order to earn such a small income, the farmer, as well as his wife and children, must toil from sunrise to sunset every day of the week, including Sunday, for the forty-hour week and minimum salaries are unknown on the farm.
In farming communities, needy farmers are dealt with by municipal authorities with less consideration than is given to city indigents. In this connection, I may mention the fact that a farmer was forced to sell his herd of ten milk cows in order to pay for the hospital care of a member of his family.
Mr. Speaker, the plight of farmers is one of the most serious social problems of our times. Therein lies the true reason why people give up farming, considering that all members of the community have a right to entertain common aspirations. Can country people be prevented from yearning after simple comforts, and from being dazzled by their friends from the city who display an artificial luxury which is often bought on instalments. Some of them can see no future for themselves or for their children in farming. Many young country people look for work in the cities, where they replace old men who will eventually have to be cared for by the State.
Mr. Speaker, I do not think I overstated the plight of a great number of our farmers. In my opinion, it is useless to try to improve through ai'tificial means, the diets which prevail in towns, if we fail to create normal life conditions for the tillers of the soil. We would even be doing a service to city workmen in putting a stop to that unceasing migration of families and young people from rural districts, through which the number of those who compete with city workmen is constantly growing.
Mr. Speaker, I fully grasp the difficulties which governments must face. They cannot subsidize all industries without falling into the excesses of socialism. However, I have never heard any good reason for fixing a minimum price for wheat, or for subsidizing production of that cereal in preference to any other branch of agriculture. We have had a commission to regulate the price of wheat, we have a permanent tariff board to protect the legitimate interests of industry. All those
The Budget-Mr. Leclerc

commissions have undoubtedly been useful but. in the economic machinery of this country, there are other branches of the farming industry which need assistance, especially the dairy industry. Whenever minimum prices are again set for wheat, we must demand the same consideration for the dairy industry.
Mr. Speaker, I wish to bring to the attention of this house a new problem which faces the dairy industry. I refer to the vegetable oils imported into Canada for the last few years, coconut, cottonseed, palm, and peanut oils. These oils are refined and made comestible; a large quantity is employed in the production of shortening, salad oils, etc. The inedible oils are used in the manufacture of soap, paint, varnish, lubricants, etc. It is obvious that shortening is displacing to a certain extent the natural lard of Canada even among the farming people. Statistics show that the production of lard is on the decrease ir. Canada on account of the fact that bacon pork does not give as much lard as the fat pork produced in the past. In the last few years we have heard a good deal of recrimination on account of the importation of vegetable oils. It is rather difficult to estimate exactly the harm done to the dairy industry by those importations because the statistics show that the consumption of butter for 1937 increased by 10,000,000 pounds over that of 1936, and by 100.000,000 pounds over that of 1925. This new problem must not be overlooked if we want to prevent the refined product of foreign countries, highly advertised by the large packing companies, to jeopardize the future of our dairy industry.
Mr. Speaker, one of the farmer's most serious problems is undoubtedly the disequilibrium between the prices of agricultural products and those of manufactured goods. Certainly, I am in favour of social laws ensuring reasonable wages and a reasonable standard of living to the factory worker. But, unfortunately, the farmer now feels the incidence of such laws, having no reasonable wage assured to him, nor a minimum price fixed for his products. Born on a farm, I am acquainted with the work and drudgery of a farmer's life. Having carried on dairy farming all my life, I am perhaps in a better position than others to know the difficulties and sacrifices which the farmers have had to undergo for several years past.
I pay respectful homage to the organizations of courageous farm women of my constituency and my province. They are to be admired for their helpful cooperation and the moral encouragement they are giving to agricultural undertakings. I should be sorry if I failed to mention the clubs of

young farmers of my constituency, for which I entertain great hopes. By their practical studies they are becoming, I am convinced, model farmers who will, in their respective centres, contribute to the spreading of the best methods of farming which will ensure the prosperity of our rural districts.
As to the advantages of cooperation, I take pleasure in quoting a few paragraphs of the collective pastoral letter of the bishops of the province of Quebec on the rural problem in relation to the social doctrine of the church and on the dangers which threaten our rural population.
Shall we first venture to state that rural life remains the normal condition of the masses? In a century when all kinds of attractions and needs have, in most countries, uprooted the rural populations to concentrate them in the cities, we should not, it would seem, seek to return to their fields so many improvised townsmen, nor even retain on the land those who are still there. Doubtless, and we readily admit it, rural life can no longer be conceived with the same remoteness and hardships which it formerly offered to the peasants who are entitled as much as anybody else to the benefits of modern science and invention. The fact nevertheless remains that, in spite of the development of manufacturing processes, the fundamental industry will always consist in draw-ing from the land the daily bread of mankind.
We could at this point paint a happy picture of rural life and describe all its advantages for the individual, the family and society. But, it must be admitted, this happpiness is not common; unless we succeed in placing rural economy on a more stable basis, it will probably vanish altogether. The products which the farmer offers for sale do not bring prices equal to those of the products of industry. And the economic recovery which is gradually manifesting itself in the wages paid to industrial workers is not so apparent in the domain of farming.
The years of depression, from the effects of which the rural districts are recovering more slowly than the cities, have brought about a general distaste for farm work-more particularly among the youth of the country who are more and more attracted by other occupations, seemingly more remunerative, in factories, mines and lumber camps. Tired of the daily complaints of their parents who have difficulty in making ends meet, these young men from the country seek elsewhere employment which they consider more remunerative.
Other causes, however, have accentuated this distaste. A more or less conscious opinion exists among most people that farming is an occupation to which one should resign oneself only as a last resort; that with a modicum of schooling, one should hasten to leave the plough, and that, in order to progress in life, one should settle in the village at least, if not in the city, however lowly the work to be found there. On the other hand, many city people, especially among those whose prosperity is of recent date, are fond of displaying in the village of their birth a sham and superficial luxury and using patronizing airs towards the intimidated countryman.

The Budget-Mr. Tremblay
Cooperative societies protect their members against their own temptations and against the unfair competition of others. Therefore, one of the most pressing things to teach to the farmer is the pecuniary profit he will derive, in addition to peace of conscience, from cooperating with his fellow-farmers instead of working in an underhand way. In fact, the isolated family is exposed to routine methods of farming and is unable to defend itself easily against costly middlemen in the purchase of farm implements and other requirements.
Mr. Speaker, I am glad to bring my full support to these wise teachings.
It was established during the inquiry on the prices of farm implements that the marketing and distribution of farm implements increase the selling price to the farmers by 25 to 40 per cent. Then why not buy and sell through cooperative organizations? Such organizations would have not hundreds, but thousands of members. I am convinced that they would tend greatly to eliminate the middleman in the selling of farm products and the buying of farm implements.
Mr. Speaker, I was glad to hear the Minister of Agriculture (Mr. Gardiner) say that he is establishing machinery for better advertising of our farm products in the United Kingdom. I personally, noticed that New Zealand keeps its products well to the fore in the London markets. In fact, what strikes you most in London is the words "New Zealand butter- New Zealand cheese-" in large letters on the busses.
Therefore, I congratulate the Minister of Agriculture for his publicity campaign in regard to our products. I urge the house to give serious consideration to my remarks. To bring prosperity back to agriculture is to give their purchasing power back to the farmers, and it is the safest way to solve Canada's economic and agricultural problem.
Mr. Speaker, before concluding may I quote the following words from Honore Mercier:
Agriculture, specially in the province of Quebec, is at the basis of public prosperity. Rivers and streams could be turned from their course, artificial works could, for a time, give satisfactory results, but it would be foolish to rely for the future on any other basis than that which agriculture offers us.


Mr. L. D. TREMBLAY (Dorchester):: Mr. Speaker, it was not my intention to take part in this debate, but inspiration came to me this afternoon while listening to my hon. friend from Matapedia-Matane (Mr. Lapointe). I congratulate him warmly for having raised certain matters worthy of consideration and for having pointed out certain anomalies, to say the least, in the administration of the Canadian National Railways. These anomalies will no doubt be attended to by the minister of Transport (Mr. Howe). I took note of the
statement of my hon. friend from Matapedia-Matane. I do not know if I have his exact words, but here it is as I took it:
It is a rather extraordinary thing that the stations situated between La Reine and Fitzpatrick and between Noranda and Taschereau, covering a distance of 411 miles, all in Quebec province, are under the jurisdiction of an Ontario superintendent.
The hon. member also pointed out this other anomaly:
The same situation exists on the Gaspd Coast and from Matapedia to Riviere du Loup, a stretch of 366 miles, where a New Brunswick superintendent is in charge.
I do not know if that is evidence of bad faith. Such a situation would at least call for an explanation. As to freight cars going from Lake St. John to the neighbouring province or, worse still, to Western Canada, for repairs, whereas such work could be done in the province of Quebec, it seems to me that we have grounds for complaint, and I say once again that my hon. friend from Matapedia-Matane deserves congratulations for having called the attention of the house to those matters.
My hon. friend also spoke against the amalgamation of our two railways, and he has my complete approval.
He certainly voiced public sentiment in the Province of Quebec when he stated that we opposed amalgamation of the two Canadian systems.
I have carefully read the evidence given in this connection by Mr. Hungerford and I believe that we must inevitably come to the same conclusion after considering the reasons he offers against an amalgamation of the two railways. Prospects of substantial economies through the unification of our two railways were dangled before our eyes, but the evidence given by Mr. Hungerford shows, I believe, that this is but a bait. With your permission, I would like to quote a few extracts from the report. He states, for instance:
To sum up my position with regard to the asserted economies from unification or amalgamation, it is my judgment that they are largely unrealizable. Railway savings purchased at the expense of the development of Canada and of a wide disturbance in the already disturbed labour and material markets of the country would be too dearly obtained. The country instead of being better off would be worse off. Yet it is only to the extent that a program of drastic reduction in expenses could be achieved that the country would be warranted in inviting the perils of monopoly and of the great difficulties which I foresee in the type of management of the joint enterprise which is now proposed.
And a little farther on in the report, Mr. Hungerford states that savings could be realized' through cooperation, willingly given
The Budget-Mr. Tremblay

or enforced, and his suggestions, as I see them, are practical ones. He suggests, among other things:
Most of the economies which are realizable in a practical sense, in that they relate to economies which can really be made effective without unduly impairing the public interest, will be found upon examination to be obtainable under the principle of cooperation and the country need not incur all of the unknown perils of unification in order to obtain these economies.
I am satisfied that he is perfectly correct. Of course, if one takes a different viewpoint, if those who favour a monopoly of railways in this country give consideration only to eventual profits or dividends, I can readily understand their zeal in promoting unification of the two railway systems. But as far as we are concerned, representing as we do the interests of the people and intending to fulfill our duty, we are overwhelmingly opposed to unification.
A distinguished newspaperman from Quebec city, who does not always share our views, but who holds good ones often enough, Mr. Eugene L'Heureux, of L'Action Catho-lique, made the following statement in an editorial dated June 17:
The Hungerford plan seems to us sounder, broader and in closer harmony with the real interests of Canada than the other.
The other is the plan put forward by the promoters of unification or, in other words, of monopoly.
We would be mistaken in taking the view that this railway problem is merely a budget matter. The railways are not built for their own benefit, but for that of the nation. Such is the reason why we cannot properly appreciate their financial statement save in the light of their contribution not only to the economic but also to the general progress of the country. If we must shoulder a twenty-five million annual railway deficit, still if they make the development of the country possible as well as that of every section of it, then we may find compensation for it many times over.
In the new settlements, for instance, the railways generally do not earn enough to cover their operating expenses. But shall it be said that just because the railways have a deficit in those settlements, settlers and new settlements must be deprived of the advantages of a railway? Such is not my opinion. That is a viewpoint which the promoters of amalgamation do not take into account at all, but which we must remember nevertheless.
There is another point raised by Mr. Hungerford in his report, and we understand better why the Canadian National Railways have been suffering such large deficits. Let us take the period from 1927 to 1930. Mr. Hungerford has this to say about that period: 
The Canadian National Railways, from the onset of the depression in the fall of 1929 until the middle of 1930, pursued a policy of maintaining at work on the property all its staff for which legitimate employment could be found, rather than taking the drastic step of wholesale dismissals, closing down of shops, etc. This policy, whether well-founded or not, was publicly announced and supported in parliament.
And I say that parliament was perfectly justified in doing so and that it was simply discharging its duty. As regards this railway problem, the possible income or profits of the railway at the end of the year is not the only thing to be considered. Had we considered the question otherwise, what real economies could we have realized? Thousands of men would have been added to those already unemployed, and this house would have been called upon to vote large sums of money to assist those discharged by the Canadian National Railways.
That is the reason why I am definitely opposed to unification or monopoly. I would leave it to Mr. Hungerford whose statement was commented upon by a Quebec newspaper. He says:
I maintain that monopoly is no inducement to good management. I believe it involves a risk of demoralization in the business, a loss of initiative and enthusiasm, a lack of sympathetic understanding between the officers and the staff, between the management and the public.
Moreover, I am not in favour of a railway monopoly in Canada. I sincerely believe that it would be highly detrimental to the public and that it would be contrary to the course we intended to follow when we established the Canadian railways, which aimed at developing new districts impossible of access until those lines were built up.
I will not labour the point but I wanted to say to the house that any scheme of unification or monopolization is one that should be seriously examined.
I come to the conclusion, as Mr. Hungerford states, that if we were to set up a commission composed of a representative of the Canadian National Railways, a representative of the Canadian Pacific Railway and a representative of the government cooperating with a view to improving services in the various parts of the country and to eliminating duplication in some others, we could effect large savings without any prejudice to the people of Canada.
Now, Mr. Speaker, there is another question on which I should like to draw the attention of the Minister of Transport (Mr. Howe). I have here the official report of the Royal Commission on Anthracite Coal and I read it from beginning to end. For some time now I have requested the National Harbours

The Budget-Mr. McKinnon
Board to try to utilize the space called " public wharf " in the Quebec harbour. Last year, a certain space was put at the disposal of the public for coal importations but, as it was a public place to which anyone had access, it was clear that the period of time in which it could be used was limited. The National Harbours Board issued a regulation dealing with the use of this public wharf and it was no surprise to me that they set a time limit of three weeks in case others might claim the same privileges. I brought to the attention of the National Harbours Board the fact that the regulation under which that public wharf could be used during that period would freeze-out all possible competitors of the coal monopoly in Quebec. Thus was removed in Quebec all serious competition against the trust of the Webster group which is described as such by the Tory report. Limiting to three weeks the period of time during which a coal importer could use this public wharf would have the effect of eliminating all competition.
The Minister of Transport had to answer a few questions I asked him about the use of that public wharf. I had anticipated the situation and I hope that action will be taken with a view to remedying it. The National Harbours Board has already received communications wherein the request is made that responsible organizations, financially sound, be permitted to organize for the importation of coal, which they are not allowed to do at the present time. For instance, who would care, with this regulation allowing the wharf to be used for three weeks only, to incur the cost of setting up machinery for unloading and handling coal? They have to use the machinery of their competitors, the powerful Webster concern operating under the name of St. Lawrence Stevedoring Company.
The commissioner appointed by the honourable the Minister of Labour (Mr. Rogers) had this to say about the St. Lawrence Stevedoring Company, as shown on page 79 of his report:
Your commission believes it ie justified in calling special attention to the profits of the St. Lawrence Stevedoring Company. This company has practically no commercial risks; it does not buy or sell coal; it merely unloads, prepares and delivers coal for the companies of the Webster group and, in addition, unloads or tranships coal and small quantities of other commodities for other occasional customers.
And I ask you, Mr. Speaker, to take notice of the following statement made by the Commissioner :
The St. Lawrence Stevedoring Company has outstanding $200,000 of fully paid capital stock; its permanent assets are valued at $146,000; its accounts receivable (due almost entirely from the British Coal Corporation) -
As every one knows, that means again the Webster group.
-are $470,000, its cash on hand $60,000. In the three years 1933, 1934 and 1935, its net profits were $360,000, $391,000 and $250,000; a total of over $1,000,000, or an average of 167 per cent per annum on its paid-up capital stock. In other words, the rates it charges its own associated companies are grossly out of proportion to its cost of operation and the responsibility it assumes.
To that company the Webster group's competitors will have to apply as regards the handling of the coal imported by them. Should they ever dare to compete with that all powerful group, I feel sure that, under such unfavourable conditions, they would not remain long in business.
I wished to bring these matters to the attention of the house. Knowing as I do the ability and patriotism of the Minister of Transport, whom I greatly esteem and trust, I am convinced that he will give to my remarks his most sympathetic consideration. I wish to thank him in advance and I hope that before long we, in Quebec, will be afforded an opportunity of witnessing genuine competition in the importation of fuel.
I could quote another paragraph from Mr. Tory's report,-paragraph 21, on page 117:
Retailers' gross margins have also generally declined since 1930. In the city of Ottawa, however, the retailers' margins are much higher than in Quebec, Montreal or Toronto. In Quebec city, where the Canadian Import Company has a complete monopoly of the wholesale trade, the wholesale price is $1 higher than in Montreal, while the margin for the retail dealer is exceedingly narrow.
The report of this royal commission should be read by every one. It should be circulated, in order that the public may be made aware of the methods used by their exploiters. The word is not too strong. Every page of this report reveals the coal trust's desire constantly to extend its tentacles and to make exorbitant profits. I ask the minister to take the measures required to give Quebec the benefit of competition in the matter of fuel.
I wish to add a word of appreciation of the general policies enunciated in the budget speech. The general situation is extremely encouraging and we have reason not only to feel proud of the present government, but also to view the future with the greatest optimism.


Mr. H. B. McKINNON (Kenora-Rainy River):: Mr. Speaker, I wish to congratulate the Minister of Finance (Mr. Dunning) upon the financial showing for the fiscal year 1937-38, the deficit of $13,775,000 being substantially less than the minister had thought it safe to predict a year ago, and also sub-

The Budget-Mr. McKinnon
stantially less than when we headed into the . deipression eight years ago. The remarkable thing about this financial showing is that it comes at a period when world economic conditions are receding and also at a time when Canada has been hard hit through having a series of droughts in the western wheat fields.
As the member for Kenora-Rainy River, which district is the bottle-neck through which western grain moving to the east must pass, I am much gratified over the present prospect of a western crop this year. With both transcontinental rail lines passing through the riding, the railroad industry is of great importance to the district. The people of the district will rejoice with the farmers of the west over crop prospects for three reasons: First, as a relief to the farmers themselves after a series of heart-breaking experiences; second, 'because of the general improvement that will follow throughout Canada from a more prosperous west and, third, because of the improvement in the railroad industry and what this will mean to the employees.
In his budget speech the Minister of Finance drew a sharp distinction between pump priming and government assistance to the building construction industry, where such assistance is aimed at stimulating private endeavour. This distinction is a most proper one. The steps which the government is proposing to parliament in the form of advancing money for municipal works construction, the broadening of the scheme of loans for private housing construction and greater assistance to low rental housing schemes are all in the proper direction. I would suggest that dominion participation in these schemes be such that in addition to careful administration of the dominion end of these projects the operation of the various acts be thoroughly and constantly watched and studied so that each year the federal government may be advised what further steps should be taken, what additional measures should be applied and what changes should be made in order that parliament may 'be asked to pass such further legislation or amendments to existing legislation as are needed better to stimulate construction.
Though admittedly the volume of employment is better throughout Canada than a year ago, and considerably better than two or three years ago, it so happens that Kenora-Rainy River is one of the few ridings in which conditions are not as good as they were last year. It would seem that this riding is affected by the condition of every one of the industries which have experienced recessions as compared with a year ago. Because of

the western crop situation, railroading and flour milling in the district are depressed. Conditions in the United States have had an adverse effect upon the lumbering and pulp and paper industries. There are no opportunities for alternative employment in northwestern Ontario such as exist in other districts. This district has only a few industries, and in bad times it must rely on governmental assistance, though of course in good times this is not the case.
With reference to the general subject of employment, may I say I feel that such a step as the creation of the national employment commission was a move in the right direction. My only criticism is that there should be such a body, possibly in a different form, more or less permanent in character in order constantly to study Canada's employment needs and problems. The Minister of Labour (Mr. Rogers) promised the appointment of a committee to carry on some of the work begun by the national employment commission. I express the hope that this matter will receive early attention and that the government will set up some competent board of permanent advisers to consider the all-important matter of employment.
I heartily approve the policy of the government in continuing the Canadian National Railways as a separate enterprise. It is quite true that the railway deficit is serious, but that is the price we must pay for the undue optimism of years ago in connection with railways and also because of our great distances. This deficit, which should be reduced when conditions warrant, would have to be paid in some form or another by the people of Canada regardless of what shift there may occur in the management of the railways.
The budget contains an exemption from income tax of lump sum payments into pension schemes by employers. This is a step in the right direction. Employers and employees should receive every encouragement to build up pension funds for the protection of the employees, along similar lines to the civil service pension fund. In this way employees will be taken care of in old age, they will be able to maintain their selfrespect and they will not become- public charges. The government might very well watch this pension scheme business in order to discover whether there is not some other way in which employers and employees can be encouraged to enter into such scheme.
As with pensions, so with the lifting of the sales tax on building materials. This should be quite a help to the workers through giving assistance to the building industry. I

Questions
suggest a constant study of building and construction in order to devise ways and means of aiding that basic industry. This principle of easy taxes to encourage building should receive particular attention.
If the experience of the last several years has taught us anything, it has taught us the need of unemployment insurance. Prolonged unemployment and heavy relief costs without a dollar saved to meet the situation at its beginning should prove the need of some such provision as unemployment insurance if we are going to care properly for our population. I realize that the scope of the dominion is limited in this field, but the scheme should be national in order to be effective. I hope the dominion government will pursue to a conclusion the present policy of seeking provincial agreement to a dominion scheme. In no event should the utmost necessity be lost from sight. Should the negotiations with the provinces not yield a final conclusion within a reasonable time, then the dominion government should canvass the situation thoroughly in order to discover what alternative course might be adopted by the parliament of Canada to ensure a national scheme. As a first step toward unemployment insurance the dominion government might see what could be done about taking over the public employment offices. These would be needed for the insurance scheme, and in any event any scheme to grapple with employment would require a good system of employment exchanges under the sole control of the dominion.
I feel that if a few of these schemes were put into effect, they would go a long way toward taking care of the situation that will no doubt arise in the future. If we build up a sound unemployment scheme, I am sure that when the next depression strikes us we shall not find ourselves in the same difficulty as that in which we have been during the last eight years. I hope the government may see its way clear during this session of parliament to implement some of the recommendations I have made.
On motion of Mr. Marsh the debate was adjourned.
On motion of Mr. Mackenzie King the house adjourned at 10.57 p.m.
Thursday, June 23, 1938