1938-05-05

Right Hon. ERNEST LAPOINTE (Minister of Justice-for Mr. Mackenzie King) moved:: That the name of Mr. Gauthier be substituted for that of Mr. Parent (Quebec West and South) on the special committee on electoral matters.


[Stage Direction]
Motion agreed to.


[Stage Direction]
The house resumed from Friday, April 29, consideration of the motion of Mr. Johnston (Lake Centre) for concurrence in the second report of the special committee appointed to investigate farm implement prices, presented to the house on the 8th of April, 1937.
Mr. M. C. SENN (Haldimand):: The motion which is now before the house has already been discussed on three separate occasions. It is to be hoped, in the interest of all those interested in this report, that the debate may now be allowed to continue until the matter is finally disposed of.
If the Canadian farmer is to produce economically and to compete successfully in the home market and the markets of the world he must have his farm adequately equipped with modem machinery. The price he has to pay for such machinery is of very

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great importance to him. It constitutes part of his capital investment, and it has a direct bearing as well upon his cost of production. It will not be denied, that the price which the farmer has to pay for his implements is out of proportion to that which he receives for his own product. Unfortunately, however, the same may be said with equal truth about what the farmer has to pay for nearly everything he has to buy. The remedy for such a condition lies not in asking or requiring industry to sell at unprofitable prices, as the farmer very often has to do, nor in opening our markets wide to goods manufactured by the cheap labour or mass production of other countries, but rather in taking steps to place the farmer on an equality with other industries as fair as bis own price structure is concerned.
The Prime Minister (Mr. Mackenzie King) was perfectly justified in implementing the pledge, which he made during the dying days of the last session, to revive this report, and I hasten to commend the hon. member for Lake Centre (Mr. Johnston) upon the moderation of his address in moving concurrence in the report. I cannot, however, agree with many of his arguments, and certainly not with a number of the recommendations which he added to those which appeared in the report. But I am in hearty accord with the closing paragraph of his speech, wherein he described the plight of agriculture and pleaded that the government should take steps for the rehabilitation of the farming industry.
In my judgment it was unwise and regrettable that concurrence should have been asked in this report at this late date. It was tabled over a year ago. The evidence upon which it was based is some of it over a year old, some over two years old; and in the meantime conditions have very largely changed. The price of implements has again advanced, the cost of raw material and labour entering into the manufacture of farm implements has also risen very materially, and I fully agree with the hon. member for Weyburn (Mr. Douglas) who stated to the house the other night that this report is out of date and of little practical value under present circumstances.
This was not at all a unanimous report. The hon. member for Selkirk (Mr. Thorson), speaking on this motion the other day, read the recommendation in regard to cream separators and stated that it was passed unanimously. I am sorry that I have to deny that statement absolutely. I certainly protested,
not only against that recommendation, but a number of others. The hon. member for Brantford City (Mr. Macdonald) was not in accord with many of these recommendations. I might also say the hon. member for Northumberland, Ont. (Mr. Fraser) protested against many of them, and q(her hon. members of the committee whom I might name, felt in the same way. But my chief reason for saying it was unwise to ask concurrence in the report at the present time is this:	I
do not believe that the committee as it was constituted was in a position to bring down a disinterested and unbiased report. I felt that I was in that position myself. Like many other members of the committee, I am a farmer, and the price of implements i3 of vital importance to me financially and otherwise. Several members of the committee, while it was in session, stated very frankly that they were interested in the price of farm implements, that they were in the market for farm implements, but were unwilling to buy as long as prices remained at their present level. As I listened to those statements I could not help but wonder just how long one of those members would have been allowed to remain on a jury if he made such a statement in a court of law.
In addition to that I believe this whole investigation originated in the Liberal propaganda during the last federal election campaign. Candidates all over Canada said the prices of implements were too high and laid the blame on the Bennett administration for raising tariffs upon farm implements in 1930. They told the electors frankly that if a Liberal government Were elected the duty would be removed of at least reduced and that the prices of farm implements would be lowered accordingly. Some of them even went so far as to carry along lists of farm implements, and they told the farmers that they would be able to buy a mower for ten or twenty dollars less, a binder for forty dollars less, and so on all down the line. So it was not to be wondered at that after the duty was lowered and the prices of implements advanced Liberal members of this house and gentlemen who had been candidates throughout the country were very much embarrassed and even resentful in regard to what had happened. That resentment showed itself from time to time in the committee, and I am sure it was very apparent the other night while the Minister of Agriculture (Mr. Gardiner) was speaking. So I think I am well justified in saying that this was not a disinterested report, from either a personal or a political standpoint.
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I stated previously, Mr. Speaker, that I am anxious, in my own interests and in the interests of agriculture generally, that implements should be made available at the lowest possible price compatible with the prosperity of this great country. However, I believe that one of the greatest assets of the farmers is the home market. I live in close proximity to two centres of population where farm implements are manufactured on a large scale. The workers in the factories thus engaged consume large quantities of all kinds of farm products which are produced in that area as well as everywhere else in Canada. The advantages to the farmers in having such industries employing large numbers of men, thus providing a market for their products, far exceed any advantages which might come about through any reduced duties on farm implements. Less than $2,000 will purchase sufficient implements and up to date horse-drawn machinery adequately to equip the average farm in Canada. The life of this machinery is at' least twelve or fifteen years. If the duty of 74 per cent, which still exists, should be entirely removed and agriculture should get the full benefit of that reduction the average farmer in Ontario would not benefit to the extent of S10 a year, an amount which seems to me absolutely negligible when compared with the value of the home market.
Now, Mr. Speaker, I want to come to the first finding of the committee, which states that the prosperity of the farm implement industry is dependent upon the prosperity of agriculture. I think everyone will agree with that; it is a self-evident fact. Beyond question the farmer is the only customer of the implement company. On the other hand, the farmer must have a source of supply, and the implement manufacturers constitute that source of supply. So these industries are mutually dependent upon each other. The history of the implement industry in Canada is very interesting indeed. At the time of confederation, and in the years following, the farmer's implements were very crude and inefficient. He used a plow that was hammered out in the local blacksmith shop; he cut his grain with a cradle and threshed it with a flail. However, as time went on better implements began to make their appearance. Men of initiative and foresight, such as the Masseys, the Harrises and the Cockshutts saw a fertile field for invention and enterprise, and the period from the eighties up to about 1910 or 1912 saw horse-drawn implements reach a very high state of efficiency. At

the same time there was a development and consolidation of the agricultural implement industry.
The other evening the hon. member for Lake Centre emphasized very strongly the profits made by the implement industry as a whole between 1890 and 1912, but I do not think it is reasonable to base an argument in favour of lower prices of farm implements at the present time upon profits which these companies enjoyed during a period which ended a quarter of a century ago. If the hon. member had so wished he could have told the house the profits that were made over the whole period, from 1890 to date; the figures are among those furnished to the committee by the auditor, and they are very interesting indeed. They indicate that from 1890 to 1935-and those were the years under review-the implement companies of Canada made an actual profit of 34 per cent on the average stock issued during that period. That was paid by way of cash and stock dividends. Eliminating the stock dividends entirely it will be found that during this period the implement companies made a profit of 8-8 per cent on the actual cash originally invested in the industry. I do not think anyone will say that these were unreasonable profits over that long period of time ; it seems to me they might be called very reasonable.
Immediately following the hon. member for Lake Centre the hon. member for Brantford City gave to the house figures showing the losses incurred by the implement companies, with one exception, in both the last ten year period and the last fifteen year period. I do not intend to repeat those figures, but I tried to check up on them, and I believe they are approximately correct. However, if any confirmation of the hon. gentleman's statement is needed I should like to refer hon. members to the price spreads report. It is well known that the price spreads commission also investigated the agricultural implement industry, and on page 64 of the report of that committee there is a paragraph dealing particularly with this very question which, it seems to me, confirms the figures stated by the hon. member for Brantford City. The paragraph is very short, and I should like to read it:
Evidence shows that of the four large companies, two obtained a small return on investment over the ten year period 1924-33 inclusive, the figures being 2-6 per cent and 1-0 per cent. The other two companies failed to earn a return and made losses of 2-6 per cent and 1 [DOT] 1 per cent.
In considering these results-
And I want particularly to direct attention to this phase of the matter.

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-we inquired as to whether any of the capital had been placed upon their books without the receipt of adequate and proper consideration. No evidence of this was found, at least in the years under review. That there was no undue expansion of manufacturing facilities in the years of prosperity has already been shown and we therefore do not believe that the investment upon which the returns have been calculated is greater than was justified.
The first two sentences of this statement I suggest corroborate to the full the statement made by the hon. member for Brantford City that most of the companies had incurred losses during the last ten or fifteen year period. But in addition to that, and of equal importance-perhaps of more importance-it also shows that there was no over-capitalization in the companies, that there was no watered stock, and that there was no distribution of stock melons in any reorganization of the companies which took place. That is the sense of the findings of the price spreads commission. It seems to me that this adequately proves that certain of the recommendations and findings of the farm implements committee, and statements which have been made by several hon. members regarding undue profits, are hardly in accordance with the evidence.
In view of the relationship existing between the farming and agricultural implement industries, and in view of the fact that there were no undue profits made during this period, it is very difficult for me to understand the charges made the other evening by the Minister of Agriculture against the implement companies when he spoke of soulless corporations not satisfied with reasonable earnings. Because of the minister's position he is peculiarly situated to speak with authority for agriculture. One cannot condemn too strongly language the effect of which is to arouse bitterness and enmity between these two great industries whose interests should be mutual and who are so dependent upon each other. It would have been much better if he had attempted to encourage harmony and cooperation between them, rather than stir up discord and ill-feeling. I agree with the hon. member for Rosetown-Biggar (Mr. Coldwell) when he states that the minister should have announced the government's program the other evening, when he spoke as a member of the administration, rather than make vague and indefinite threats against the industry. By not doing so he has left himself open to the suggestion, more than once repeated, that the speech was made for use in the impending election in Saskatchewan.


Mr. McLEAN (Melfort):: Who made the suggestion?


Mark Cecil Senn: I would refer the hon.
member, since he has asked me, to an editorial which appeared in the Globe and Mail, the great Liberal organ of the province of Ontario. If he cares to hear it I shall read it to him.


Mr. STEWART:: Read it all.


Malcolm McLean: I do not think it is a very Liberal organ since the marriage of the Globe and the Mail, is it?


Mark Cecil Senn: I think it is. I do not 'think I shall take the time to read it; I have insufficient time as it is to say all I wish to say. However, if the hon. member wishes to hear it, I shall certainly place it on Hansard.
During the period to which we are referring the price of implements has advanced greatly in the United States and I believe that at the present time in that country an investigation is taking place into the question. One cannot help wondering if the government is waiting to see if any action is going to be taken over there before taking action themselves in the matter. Under the circumstances I do not believe the government will take any action. In fact, standing in my place this afternoon I feel I can assure the implement companies that at the present time no action detrimental to their interests will be taken by the government.
I should like to refer to a recommendation made by the mover of the motion. He appealed to the government to remove entirely the duty on agricultural implements, on the ground that Canada's market for wheat has been lost through increased tariff protection, exchange control, quotas and price-fixing by European countries, and that therefore the cost of production in Canada should be lowered by removing the duty on agricultural implements. I wonder if the hon. member realizes how small an effect such action would have.
The average sales of agricultural implements in Canada in the ten year period between 1926 and 1935 were approximately $39,000,000. During that time the average wheat production was $377,000,000. If the 7\ per cent duty were removed, and if the farmer received the full benefit of it, it would amount to only about four-fifths of a cent per bushel. That would have 'been the amount if the implements had been used only in the production of wheat. But when you consider that they were also used to produce oats, barley, rye, flax, hay, fruit and vegetables, and even dairy products, I am sure the committee must agree with me that the effect on the cost of production of farm products would be absolutely negligible.
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Mr. JOHNSTON (Lake Centre):: The
period to which the hon. member has referred was one when the purchase of farm machinery in the country was not normal.


Mark Cecil Senn: That is undoubtedly true. At the same time I do not believe it was a normal period so far as the production of wheat was concerned.
I should like to refer to a statement made by the hon. member for The Battlefords (Mr. Needham). I do not believe he intended to convey a wrong impression to the house, but at page 1.341' of Hansard, he stated that between the years 1920 and 1935 the value of farm implements at the factory was $492,250,017, and that during that .same period they were sold for $660,737,871, leaving an amount of $168,487,854, which I am afraid conveyed to some people the idea that implement companies had benefited in profits to that extent. He did not tell the house, however, that from this $168,487,854, the difference between the two figures, there should have been deducted $52,000,000 for freight; nor did he tell the house that from that amount there should be deducted approximately $100,000,000 as agents' commissions, and cost of distribution. That leaves an amount of about $16,000,000 to take care of profits and other expenses incidental to the business, which were not included in the factory cost. That makes an entirely different picture.
Some fault has been found with the cost of distribution of farm implements. Beyond any question it is inordinately high-much higher in some years than in others. In some years only a small number of implements are sold, but the same organization for distribution has to be maintained, whether the bulk of sales be great or (small. I do not believe anyone will suggest that agricultural implement agents throughout Canada are reaping excessive profits. As a matter of fact many of them find it very hard to make a living, and from time to time some have to go out of business. But I do wish to say that the service given farmers by the agricultural implement companies is something the farmer absolutely must have, and something which is given every day at I believe a reasonable cost. Depots for repair parts are maintained throughout Canada at points where implements are sold, and at those depots a full stock of repair parts is kept. On many occasions they are kept at considerable expense to the companies. In addition to that, other services are given the farmers, and I do not think we can overestimate the value of services which from time to time are rendered.

I should like to refer to one or two more of the findings of the committee. Finding No. 2 refers to the backlog of unpurchased requirements which the farmers had been unable to buy during the years of the depression. It states that the normal requirements of agriculture amount to over $51,000,000, but that in addition there is a backlog of some
8200,000,000 which the companies should enjoy in the next few years. A perusal of the evidence will show that not one of the representatives of the companies would agree with such an estimate; they all made the statement that it would be unwise for them to base their production program or their price structure upon any such estimate. The experience of the past year has proven this to be correct. Not only was the $51,000,000 of normal requirements not taken up in full, but none of the $200,000,000 was purchased. I agree fully with the hon. member for The Battle-fords, who stated that there is little hope that the normal estimated requirement of $51,000,000 would be purchased in 1938. The average purchases of farm implements in the last sixteen years have amounted to about $41,000,000, as will be found on page 1215 of the evidence.
Findings No. 9 and No. 10 are in the same category and to a certain extent refer to the same subject. Finding No. 9 reads:
That the unfavourable factors affecting the financial returns of the farm implement companies in the period 1930 to 1935 have been largely eliminated and therefore the companies can look forward to a period of relative prosperity in the industry.
I do not think anyone who is at all acquainted with the position of agriculture to-day will say that the buying power of the farmer has returned to normal. The experience of the past year has shown that it has not. It would be a very optimistic man who would say that this buying power will return to normal in 1938.
Finding No. 10, which refers to bad debt losses, states:
That, particularly, the abnormal bad debt losses resulting from the depression have been largely absorbed by the implement companies and that this item of cost should not appear in the next few years.
What has happened during the past year?
The reserves which the companies had set aside for bad debt losses were absorbed early in the year. Many of the accounts that had been considered collectable had to be written off during 1937, particularly accounts in the drought areas. This state of affairs was brought about by conditions over which no one could have any control.

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Finding No. 16 recommends that cream separators should be placed on the free list. Very strong representations were made by the hon. member for Renfrew South (Mr. McCann) against such action being taken, and his argument was well supported by facts and figures. However, I cannot help but think that it would have carried more weight had he stood four-square on a policy of protection instead of stating that he was neither a protectionist nor a free trader, that he believed in tariff for revenue. I was just wondering what action he will take should this report be concurred in. If it is concurred in, it would seem to me that the Minister of Finance (Mr. Dunning) will be obliged to remove the duty from cream separators. I was disappointed that the hon. member did not move an amendment to have the matter of the duty on cream separators referred to the tariff board.
I find the following statement on page 1278 of the evidence:
The information so submitted together with the evidence given by the officers of the De Laval company in connection with the importation by this company of cream separators from Sweden clearly establishes that it is apparently uneconomic to manufacture cream separators in Canada.
I agree entirely with the statements which were made by the hon. member for Brantford City and the hon. member for Renfrew South, that there was not sufficient evidence produced before the committee to warrant any such statement as that. As stated by the hon. member for Renfrew South, the only apparent reason why other countries are able to manufacture cream separators cheaper than Canada is that lower wages are paid in those countries. There can be no doubt that if the manufacture of cream separators were discontinued in Canada, and Canadian dairymen had to rely upon foreign manufacturers for their machines, they would be placed in a most unfavourable position. I shall refer to this matter again before I conclude.
There is another phase of the cream separator question which has not been discussed in this house at any length, if at all, to which I should like to refer for a minute. Because of the preference granted to cream separators under the Ottawa agreements, one or two cream separator companies in Great Britain have been able to establish a fair volume of Canadian business. This fact has not been referred to in any speech to which I have listened, nor was it mentioned in the evidence given before the committee. This volume of business is considerable. I should like to 51952-163
refer particularly to R. A. Lister and Company, Limited, of England, the oldest and largest manufacturer of cream separators in the British Empire. This company did some business in Canada prior to the war, but their factory was taken over by the government during the war and up to the time of the Ottawa agreements they had done little or no business in Canada.
I have here a statement by a representative of this concern, of which I shall read only certain paragraphs which I believe would be of particular interest to hon. members. The first paragraph refers to what I have just stated, that this company had done business in Canada prior to the war but had lost it during the war. The statement goes on to say that despite terrific efforts on their part after the war to rehabilitate their separator business, including the purchase of a plant in Hamilton, Ontario, it was not until the ratification of the Ottawa agreements and the granting of a preference in 1931 on British machines coming into Canada that they were able to make the headway which they firmly felt their previous efforts justified. It is interesting to note that they have secured some fifty per cent of the New Zealand trade. I quote:
Prior to the passing of the preference in Canada, they were asked whether they were prepared to take full advantage of the concession which would be afforded to them as one of the manufacturers affected in the empire. They immediately intimated that for their part they would not only be prepared to do their utmost to take advantage of it, but would do their best to ensure that for every $100 worth of separators which they exported to Canada, they would take at least $100 worth of Canadian produce in payment. As a result, they entered into a contract with the Coekshutt Plow, and Frost and Wood companies for the distribution of their separators in Canada, and undertook to take on the distribution of certain of their products, suitable to the British market, in Great Britain. As a result of this agreement they have purchased approximately twice the value of Canadian products as compared with the value of cream separators which they have exported to Canada-this, despite the fact that the sales of Lister cream, separators in the dominion have been increasing steadily and materially year by year during the past five years-and at the present time, they have similar negotiations in hand with a view to materially increasing the value of this two-way trade in the interests of both Canada and Great Britain but if, having done all the spade work, development work, and just as the business is becoming of material importance, (grown as it has in turnover some eight to ten times), they are to have it undermined by the taking away of the incentive and encouragement afforded them by the preference aforementioned, the insurmountable difficulties with which they will be confronted will be appreciated. It is contended (1) that they are not only making available to the dairy farmers of Canada a high grade machine but that they

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are helping several hundred industrial workers to find sound employment in Canada; (2) that by distributing their products through an agricultural machinery manufacturers' organization they are helping the manufacturer to reduce his selling price in Canada. They are possibly among his three largest clients in the world to-day.
The arrangements come to were the most practical and sound interpretations of the Ottawa agreement which could be effected, and it is believed that this reciprocal business not only expresses the written word but the spirit of the Ottawa agreement in its highest sense, and that without any question of doubt it is within the best interests of the Dominion of Canada and the United Kingdom.
The import figures of cream separators imported into the United Kingdom speak for themselves. They are as follows:	1932, 2;
1933, 535; 1934, 950; 1935, 1,355; 1936, 1,994; 1937, 3,163.
I contend, Mr. Speaker, that if this duty is removed as the recommendation suggests, it will be a violation of the intent of the Ottawa agreement, and I suggest, as the hon. member for Renfrew South has done, to the Minister of Finance and to the government, that before any action is taken on this question it be referred to the tariff board or to some other independent organization.
I find that my time is pretty well exhausted. I do wish, however, to make one other statement before concluding. It is not my intention to discuss the conclusions and recommendations of the commission at greater length. The experience of the past year has proved that they have had varying degrees of truth and of value. The whole discussion revolves around one question: How can agriculture be furnished with its implements of production at prices which it can afford to pay? Certainly not by driving Canadian manufacturers entirely out of business. With this everyone appears to agree. Even the report itself does not suggest that prices should have been lowered when the duty was lowered. You may search it from beginning to end without finding any such intimation. It was left to the chairman to make the suggestion that the duty on agricultural implements should be removed entirely. Such a conclusion was not reached in the report.
In my judgment the remedy for the inequality in prices is twofold. First, steps must be taken to increase the purchasing power of the farmer. This, however, is not the proper time or place to discuss methods of bringing about such a condition. Second, everything possible should be done to preserve the Canadian market for the Canadian manufacturer of farm implements and to see that as large a proportion as possible of the implements in use on Canadian farms are of Canadian production.

This is not a new doctrine. Properly applied, it has done more in the past to reduce prices than any other action that could have been taken. It has worked well in the past, and I believe it is still efficacious. I repeat, it would be a calamity if our Canadian factories were forced to close because of undue competition with the mass production and cheap labour of other countries, and if the Canadian farmer were forced to rely on other countries for his implements of production. Then, indeed, no Canadian authority would have any control whatever over prices.
I should like to quote to the house what a great Liberal and a great Canadian said about this matter. Speaking in the House of Commons in the year 1904, and referring to foreign manufacturers, this is what he said, in part:
They are not worrying about the good of the people of Canada. They send goods here with the hope and expectation that they will crush out the need of Canadian industry. If Canadian industry is crushed out, what would happen? The end of cheapness would come and the beginning of dearness would be at hand. Artificial cheapness obtained to-day under such conditions at the expense of dearness at a very near day in the future is not a system of which we could approve, or that any of us on either side of the house could encourage.
These are the words of none other than the Right Hon. W. S. Fielding, one of the greatest Liberal ministers of finance that this country has ever had, and the truth of his statement is more than ever apparent under present conditions.
The hon. member for Renfrew South gave a good example in his address when he told the house that Sweden had raised the price of cream separators in New Zealand, where there are no manufacturers of that article; at the same time lowering the price of those sent to the Dominion of Canada because of the competition that was experienced with Canadian manufacturers.
I repeat, it is to be hoped that the Canadian farmer will never be forced to rely on foreign manufacturers for his implements of production. If the Canadian market could be reserved one hundred per cent for the Canadian manufacturer it would result in a lower cost of production because of increased volume, and at the same time would provide increased employment in the factories engaged not only in the manufacture of implements but as well in the manufacture of materials, and in industries which are allied to the farm implement industry. In that way, Mr. Speaker, I believe that we could to a certain extent

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help to alleviate the unemployment that exists to-day, as well as provide better markets for farm products in the Dominion of Canada.


Mr. W. G. WEIR (Macdonald):: Mr. Speaker, the motion before the house asks for concurrence in the report of the special committee appointed at the last session of parliament to continue an inquiry into the high prices of agricultural implements with particular reference to the increase in prices in 1936. This committee was named to continue an investigation that had been started the previous session before the committee of agriculture and colonization. Looking over the list of members of this house who made up that special committee I find that every group in the house was represented on it. My hon. friend from Haldimand (Mr. Senn) made reference to the fact that the report of the committee was not unanimous.


Mr. HAYHURST:: Were any members of that special committee from the province of Alberta ?


William Gilbert Weir: Yes, I think so.


William Hayhurst: No, not from Alberta.


William Gilbert Weir: Every group was represented; I do not know that every province was represented.


William Hayhurst: Alberta is a vital province so far as agriculture is concerned, and there should have been at least two representatives from that province on the special committee.


William Gilbert Weir: My hon. friend can deal with that when he rises to speak, but I repeat, every group at least in the house was represented on the committee and thus had a voice in its deliberations. As far as I recall there was no dissenting voice in the recommendations that were brought in by the committee.


Mr. THORSON:: May I interject that all the groups were asked to select their own representatives?


William Gilbert Weir: Yes. May I say, by way of explanation as to why this inquiry was continued before a special committee rather than before the agriculture committee to which it was referred the year previously, that the agriculture committee consists of sixty members. It is a very large committee and one which in my own personal judgment, was not as satisfactory a committee as it might have been to which to refer an inquiry of this kind. I think even the right hon. the leader of the opposition (Mr. Bennett) agreed with that observation. Indeed he went further and said 51952-163$
that the inquiry, he thought, should go before the tariff board. It was for this reason, then, that the reference was made to a smaller special committee. Last year it will be recalled that due to the desire to prorogue parliament early on account of the coronation the report of the committee was not dealt with, nor was any motion made for concurrence in it.
May I here say a word as to the general approach made to this inquiry? I do not believe any committee of this house ever approached a problem with greater earnestness and stronger determination to find the essential facts regarding any industry or any matter that was ever inquired into. The approach was made in the spirit of desiring to establish the essential facts; regardless of what those facts might disclose the committee was prepared to base its findings thereon. With an approach of that kind I am sure that both the committee appointed in 1936 and the one which operated last year were able to secure much additional information, through the good-will that was created right from the beginning, than otherwise might have been the case.
May I also in passing extend a word of appreciation to the hon. member for Lake Centre (Mr. Johnston) who as chairman of the committee had more to do with directing its proceedings than any other person. At the same time may I express a word of appreciation of the very valuable services rendered by the auditor and the counsel who acted for both committees. I doubt if any committee of this house was ever served by abler people who were more willing to give of their time and energy than these gentlemen did. at the remuneration which they received.
There is one phase of this matter upon which I should like to make an observation. When this committee was established, or shortly after it got under way, it was found that a similar inquiry was taking place in the United States before their trade and industry commission. I think it is regrettable that we have not the report of that commission before us at this time, when we are dealing with the report of our own committee.
Coming now to the consideration of the report which is before us, I think everyone is agreed that the prosperity of the agricultural implement industry is tied up with the prosperity of the farming industry. One needs only to look at the figures of purchases of farm implements over a period of years to recognize that that is so. It shows that the high of farm implement purchases was in 1920, when it stood at $82,000,000; it was $70,000,000 in 1929; it was down to a low of
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$8,000,000 in 1933. The effect of this lack of purchases was immediately reflected in the financial results to the farm implement companies. It is only fair to point out that these companies sustained losses between 1930 and 1935. It cannot be established, however, that these losses were due to the prices of farm implements being too low; rather they were the result of the failure of farmers to purchase implements. This immediately brings up another aspect of the question, to which the hon. member for Haldimand has referred, namely that on account of lack of purchasing power there has developed a tremendous backlog of farm implement requirements on the part of the farmers. That backlog was estimated at $200,000,000, as against normal requirements of $51,000,000. My hon. friend from Haldimand doubted if that figure would be reached for some time. May I say to him in- passing, although of course this observation is localized, that he would be surprised at the purchases of agricultural implements in districts in western Canada where crop conditions have made them possible. I believe that with a return to reasonably normal conditions we shall be astonished at the purchase of implements, in western Canada particularly.
Having regard to the figures, one must immediately recognize the importance of the price increases. According to the bureau of statistics, and we know this from our own knowledge of the industry, the farm implement factories are mostly situated in eastern Canada. The record shows that there are twenty-six in Ontario and four in Quebec. Approximately seventy-five per cent of their business is done in western Canada. Of those companies, the two principal ones are the Massey-Harris and the International Harvester Company. Both do quite an extensive export business, that of the Massey-Harris Company being a particularly important factor.
So far as the committee was able to find, speaking from my reading of the report and from listening to the proceedings at many meetings of the committee, I think it is fair to state that the implement companies of Canada are not selling their farm implements to foreign countries at a lesser price than that at which they are sold to Canadian consumers. However we are concerned only with the Canadian business. Admitting for the moment that these companies did sustain losses through the period of the depression, taking the ten year period from 1926 to 1935 two companies showed reasonable profits on their capital. The auditor's report showed that the International Harvester Company

had an earning of 7-7 per cent on its capital, and that the John Deere Company had an earning of something over five per cent before income tax and allowance for profits retained in the parent companies due to customs regulations. The companies did not admit these figures, but they admitted a return about one per cent less. The Massey-Harris Company, it is true, sustained a loss of some fifteen million dollars. The other company, Cockshutt Plow, had a profit of about $20,000 during this period. So it cannot be said that the companies were not making at that time reasonable earnings; they are surely fair earnings particularly during a time of depression. So far as the Massey-Harris Company is concerned it was shown in the evidence presented to the committee that they had a distribution ratio considerably out of line with the other companies; it was thirty-three per cent on net sales, contrasted with an average of twenty-two per cent for the other companies. Surely the farmers of this country have reason to expect a better showing than that, and are entitled' to more uniform distribution costs ratio.
As I have said, in spite of the earnings of these companies during the depression, they made good earnings over the ten year period. The argument used in support of the increase in prices was the substantial losses which they had sustained' immediately previous to 1935, coupled with, as they claim, increased production costs. Reviewing the increased costs that have taken place, the evidence and the committee's report would indicate that they are not justified in making that claim. I have before me one of the tables, taken from the report, which deals with the cost of raw materials from 1913 down to 1935. Referring more particularly to the years 1930 to 1935, it includes such items as pig iron, bought scrap, steel, lumber, fuel oil, coal, coke, and cotton duck. In only two items in that list was there a price increase between 1930 and 1935. Steel, it is true, increased from $2.37 per hundredweight to $2.40; coke, from $6.33 to $11.07. In all the other items in the list the prices are either the same or lower. Then take the cost of labour. As regards the Massey-Harris Company the rate of wages in 1934 was 45f cents per hour, and in 1936, 45 cents. There is a slight increase in the wages paid by the John Deere Company; apart from that the wage rate is practically the same. On the basis of their costs of raw materials and labour there is no justification for the increase in price wilich took place in 1936.

Farm Implements Committee Report
The companies themselves, when being cross-examined by counsel for the committee, admitted that they could not justify their price increases by increase in the cost of production as regards raw materials, or any of the other items which enter into it, prior to 1936.
There is another thing I should like to interject here, and that is with respect to the argument so often advanced, by farmers particularly, on the basis of a comparison of prices of farm implements to-day with what they were in 1913, prior to the war. Farmers immediately asked: "Why are implements so much dearer to-day than they were prior to the war? Why is not the factor of mass production playing a part in the production of farm implements and their cost?" The implement companies' reply of course was that the factor of mass production had been in operation before the war as far as the ordinary farm implement is concerned and thus could not be a factor to-day. They referred to the tractor and made a comparison with what has taken place in respect to the automobile. It is true that to-day we have a very much better tractor than we had before the war, and at a lower cost. But as far as the ordinary farm implement is concerned that is not the case. Even with the possibility of my remarks being misconstrued I think we have a better type of farm implement to-day than we had in 1913 as far as the large machines are concerned, but I doubt very much whether our ordinary horse-drawn implement is substantially better than it was in 1913, either for efficiency or for durability. The large power unit to-day is unquestionably improved, and the farmer is therefore probably getting greater value for the dollars expended for his large type power machine than he did formerly. But in my judgment the price of the ordinary horse-drawn implement, which most farmers have to buy, and which the large majority will continue to have to buy for a long time to come, is considerably out of line with what it was about 1913 and prior to the war.
For the information particularly of the people in the country I want to refer to some price changes that have taken place since that time. The International Harvester Company were very valuable witnesses before the committee. Their costs were well detailed and complete, and in each branch of their costs they had an all-inclusive factor. I shall refer briefly to the years between 1913 and 1936.
The information is set out in the following table, taken from the evidence given before the committee:
Changes in the costs of producing an 8-foot International binder between 1913 and 1936
(Reference page 1230)
Factory Overhead	Experi-	Total	Agents	Cash price	mental	mfg.	commis-	Total	to farmer	Materials	Labour	Overhead	work	costs	sion	Freight	costs	at Regina	Mark up1913.	.. $45.56	$11.97	$17.96	$0.34	$ 75.83	$30.45	$17.80	$134.68	$167.02	$32.941920.	. . 92.74	31.78	47.67	1.31	173.50	33.80	19.17	226.47	269.00	42.531925.	.. 80.47	22.57	33.85	1.73	138.62	40.50	25.02	204.14	283.00	78.861930.	.. 76.35	24.39	36.44	1.31	138.39	46.50	25.42	210.31	278.00	68.691933.	.. 79.35	20.65	30.98	2.50	133.48	44.50	25.12	203.10	263.00	53.001935.	.. 70.56	20.48	30.72	1.56	123.32	44.50	25.87	193.69	263.00	69.261936.	.. 71.06	22.62	33.93	2.55	130.16	45.50	26.08	201.74	281.00	79.26
Repairs 75 per cent higher and are sold for cash.
It is hard to understand how some of these differences in cost can be accounted for. The differences in different years are very substantial. In addition to what this table discloses, the repairs which the farmer has to buy for his implements are now approximately seventy-five per cent higher than the figures used for the actual implement. And these repairs are sold for cash, so that there cannot be much loss in collections in respect of repairs. This table shows that between the laid-down cost and the manufacturing cost there was a difference in 1913 of $74 and in 1936 of S125. These in-between costs may be necessary; the fact nevertheless remains that this is a terrible burden of expense to be added for the cost of distribution. I propose
to deal with that in a little different way in a moment. Other hon. members have dealt with different features of the report, concerning which I do not propose to burden the house this afternoon.
I wish however to say a word with respect to the credit policy of these implement companies. It is generally known that they have a credit and a cash system of doing business. Taking again the information supplied by the International Harvester Company, the credit sales of this company amounted to thirty-five per cent of the total sales between 1926 and 1935. On their credit sales alone it cost them 8-44 per cent to collect, and they lost 12-92 per cent uncollected. In other words, their credit sales alone, being thirty-
2570	COMMONS
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five per cent of their business, cost them for collection alone, 21-36 per cent. Surely this is an abnormally high figure and one in regard to which this country should hope for some relief. I do not know how that loss and expense can be overcome, but I suggest to the implement companies that that is one item as to which some relief must be brought about, and that they give consideration and attention to the question of some sort of finance organization such as is used by the automobile companies.
With respect to general distribution costs the evidence clearly shows that they have a very expensive system. Farmers have become accustomed to the system already built up, and it may be necessary that it be maintained in part, having particular regard to our crop hazards and the necessity of having repairs and service carried out without loss of time. However, it should be pointed out that this is an exceptionally heavy burden to be added to the cost of farm implements, which in the final analysis the farmer has to pay. Taking the figures to which I referred a moment ago, they indicate that the difference, including freight but excluding agents' commissions, between the factory cost and the Regina cash price to the farmer is forty-four per cent. In other words, I point out here that if some other agency, such as a cooperative or something of that sort, could go to the factory door, purchase for cash and take delivery of say one hundred dollars' worth of farm implements, using the calculations made with respect to an eight-foot binder of the International Harvester Company, they could be bought for $56. I realize, of course, that such an organization would have to do its own retail selling, its financing and servicing -and take care of its losses, so it could not be expected that this whole saving would be secured. At the same time this indicates the very great spread that exists between the cost at the factory door and the cost to the farmer. It is not fair to state that this entire saving could be made, but it does indicate one point where some measure of relief should be attempted. Surely this is one place where farmers' organizations could do something which would be of advantage to them.
Much has been said during this debate with regard to the effect of the tariff on the prices of farm implements, and it has been pointed out that under the United States trade agreement the tariff was reduced but that the prices of implements increased. That is true, but it is also true that the price increases in the country where the implements are most ex-

tensively manufactured were due not to the tariff but to an entirely different reason. Those increases were due to the heavy purchases of raw materials for war purposes and so on, and also to the increased cost of labour. These things had their immediate reflection in the cost of farm implements in the United States. The Massey-Harris company admitted to the committee that its increased price in 1936 could not be justified because of the increased cost of raw material in this country or the increased cost of labour. Just here I should like to point out that the United States companies, International Harvester and John Deere, stated that the increased prices at that time on the implements imported into Canada would have been greater if the duty had not been lowered. Again it should be noted that when the duty was lowered by the budget of 1936 there was a definite reduction in price on imported implements almost equal to the tariff reduction, indicating that the tariff is a factor in governing prices.
I should like to refer to one specific incident which I think illustrates the situation in connection with the whole line of farm implements. The diesel tractor selling in Regina for $4,600 was immediately reduced to $3,720 when the 25 per cent duty was removed. Therefore it is beyond question that the tariff is a price-governing factor. If it is not then let us eliminate it and allow free competition to play its part. I should like to point out here in this same connection, because I think it is worthy of note, that information coming to my attention indicates that at least one implement company, and a United States company at that, did not increase its prices this year, stating that it was not necessary for them to do so. They are selling their implements at approximately ten per cent less than other implement companies. This also indicates that the tariff is a price-governing factor.
Now, coming more closely to home and attempting to secure a picture of the actual condition in Canada from a competitive point of view. In this country we have approximately thirty-six companies manufacturing implements, while in the United States there are some six hundred companies manufacturing similar implements. Before the committee we had evidence which would indicate that the companies work in pretty close harmony. I am not going to state that a combine exists, but I think it is safe to say that there is close cooperation between the companies with respect to general policy. We have the illustration that when a price change is made by one implement company it is

Farm Implements Committee Report
immediately followed by changes on the part of all other implement companies, and undoubtedly the International Harvester Company dominates the whole field. As further evidence in this regard perhaps it is not unfair to point out that this year, I presume following the action taken by the International Harvester Company, the companies have all changed the entire basis of their price lists and have brought out new lists. Every implement company that I was able to check has adopted practically the same sort of price list, in practically the same language. So if there is not a working arrangement between the companies certainly they all work very closely together.
The very nature of the industry tends towards monopoly, and because of the monopolistic character of the industry I believe we need every possible competitive factor in order to keep price relationships on a reasonable basis. Therefore it would be my suggestion to the house that if we are to allow the fullest possible play of competition with respect to farm implements the best thing we can do is remove the duty entirely. Like the hon. member for Rosetown-Biggar (Mr. Coldwell), the question that immediately came to my mind when this report was presented and concurrence was moved was what was going to be done with the report and what action the government might take. We have listened to arguments from all sides of the house as well as comments from interested parties outside the house. So far as I have been able to ascertain very few suggestions have been advanced as to what action might be taken. I refer particularly to the secretary of the United Farmers of Manitoba, to whom reference has been made on several occasions and who has taken an interest in this matter. He suggested that something had to be done, and asked what the government was going to do. At the same time that gentleman, for whom I have the highest personal regard, offered no suggestions. He is secretary of a farm organization which, to my mind, has a great opportunity to encourage the development of cooperative organizations which could bring about a greater saving in the price of farm implements than any other policy which might be adopted.


Mr. DOUGLAS (Weyburn):: Is the hon. member suggesting that the onus is on a farmers' organization to make suggestions?


William Gilbert Weir: I suggest to you, Mr. Speaker, that the farmers themselves through cooperatives might very properly do a good deal in bringing about a reduction in the cost of distribution of farm implements.


Thomas Clement (Tommy) Douglas: Is it not true that the United Farmers of Manitoba, at their annual convention later, suggested the setting up of cooperatives to handle the distribution of farm implements?


William Gilbert Weir: My reply to that question is simply that I believe true cooperation has to start with the rank and file of the people most vitally concerned. I doubt very much if cooperatives can be set up by government institutions or other outside bodies. The cooperative principle has to be inculcated in the minds of the people themselves. If our farm people wish to establish cooperative organizations, they are the best equipped people to do so.
Earlier in my observations I referred to credit sales. I do not know what can be done, but I do submit something should be done with respect to the financing of credit sales to farmers. Present credit arrangements are costly, and if some means could be evolved by which a finance corporation, similar to the kind operated by the automobile companies, could be established, it would be a step in the right direction.
I believe it has been established from the evidence in the inquiry that the price increases in 1936 were not justified. What are we going to do? What can the government do? That is the challenge which has been put up to the government and to this house. I think three things might be considered. A similar inquiry is taking place in the United States, one which will be much more extensive, complete and far reaching than the inquiry conducted in this country. Should that inquiry disclose abuses in the farm implement industry, either in manufacturing or in distribution, then I would say the government of Canada should not hesitate to use every means at its command to remedy them.
May I refer again to the substantial increase in freight rates. Hon. members will note that those rates have almost doubled since 1913. The farm implement manufacturing companies are situated in eastern Canada, but seventy-five per cent of their sales are in western Canada, necessitating a long freight haul and a heavy burden of freight cost. Possibly the government might take some action with respect to reduced rates, and thus effect a saving in the cost of distribution.
And lastly, because of the monopolistic character of the industry, and also because the tariff is being belittled as a price-governing factor, the government should remove the duty and thus allow the freest competition possible so far as prices are concerned.
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Mr. DENTON MASSEY (Greenwood):: Mr. Speaker, as a result of the speech the other evening by the Minister of Agriculture (Mr. Gardiner), the debate on the motion before the house has assumed far greater significance than might otherwise have attended the discussion of the report of a special committee of the house. The minister's statement was of the type usually described as provocative- possibly the most provocative statement made this session; certainly the most provocative from a responsible minister of the crown. In other words, it could do no other than generate heat rather than light, exasperate rather than stimulate, confuse issues rather than clarify them; and like most such utterances it was not distinguished by careful candour in the use of figures, or any seeming care to avoid the creation of false impressions.
It is not my purpose to attack the minister, or to criticize those views of his which he is so fond of ambiguously describing as Liberal principles. But when we have statements made in this house, inaccurate in themselves, that can have no effect other than to strike one more blow upon the wedge that is being driven between the various sections of the country, which will cause tempers to rise and substitute ill will and resentment for the spirit of mutual understanding and cooperation in the solution of a common problem, I feel it is incumbent upon me as a member of the house, in the interests of the country as a whole, to attempt to remove false impressions which have been created, and to restore this debate to an unprejudiced and analytical examination of this committee's report.


Malcolm McLean: That will be a
welcome change.


Denton Massey: We have just listened to
a speech by the hon. member for Macdonald (Mr. Weir), a speech which when placed in juxtaposition to that of the Minister of Agriculture, delivered last Friday, is in sharp and pleasing contrast. I am sure in his remarks he was speaking in what he believed to be the fullest interests of those whom he so ably represents, the worthy farmers of this dominion. He spoke with consideration for all factors, and tempered his speech as he spoke. I am sure his speech will not be considered provocative.
It is scarcely necessary, Mr. Speaker, for me to repeat the statement I have made many times, in and outside the house that I and my family have no financial interest whatsoever in the Massey-Harris Company. I am however interested in the workers in that and any other industrial company, and as a Canadian I have a wider concern, a concern

for the unity of Canada and the damage that may be done to it by utterances such as those we heard from the Minister of Agriculture on Friday evening last.
We are all Canadians. We may be industrial workers; we may be farmers. It is true we may have our sectional interests, but our primary interest should be the interest of Canada; and we may well deplore efforts to pit one section of the country against another, and to play upon sectional emotions and class emotions for the doubtful benefit and under the doubtful dictates of political expediency. It is just the type of debate in which we are now engaged, which if we are not careful may stir up as nothing else can, sectional antagonisms which can do no good and which on the contrary may do irreparable harm to the country.
I admit at the outset of my remarks, as every Canadian must admit, that we are still a fundamentally agrarian country. Our basic industry is farming, and we have every reason to be proud of our agriculture and our farming, contributing as it does, and in the way it does, fifty per cent of the value of our primary products.
The Canadian farmer has made and is making a contribution to Canada which is inestimable, and making those contributions in the face of great hazards; for not only does he have local, national and international economic conditions to combat, but further he is always harassed by weather, pests and other uncontrollable uncertainties which may be described as acts of God. It is natural to him to wish to purchase at the lowest price and to sell at the highest price. One can fully understand his point of view on the costs of essentials, among which of course are numbered farm implements. One can subscribe fully to the ideal which should have motivated the farm implements committee, the report of which is now under debate, when its desire was supposed to be primarily to assist the farmer. Such a desire is of course highly laudable in itself.
But there are two factors in the case which must be considered. On the one hand there is the farmer, and on the other hand there is the farmer's fellow-Canadian, the industrial worker. It seems to me, not only from the minister's speech last Friday but also from the speeches of some of those who have supported the report, that there has been demonstrated a lack of perspective of the whole situation, as well as a lack of definition. On what foundation are the findings of this committee based? Was this committee a onesided or lopsided one? Is there anything in the report which indicates the

Farm Implements Committee Report
case of the industrial worker was considered on its merits at all? What of his job, which provides his means of livelihood, when his expenses are so heavy and when the uncertainties of his position these days are a constant source of echinated worry? Was there thought given by the committee to his part in the case? Was there consideration given to the fact that on the average he spends over 8400 a year for the product of the Canadian farmer? Was there any thought given to the fact that the Canadian market is the Canadian farmer's only sure market, and should be protected with the greatest care and used and cherished not only for the sake of protecting the job of the industrial worker but for the sake of the protection of the farmer himself?
Time and time again ridiculous statements have been made in this house to the effect that the Canadian farmer receives little or no protection. This hypocrisy was reduced in great part by the hon. member for Brantford City (Mr. Macdonald) who made a most able and capable speech from the Liberal benches as reported at page 1347 of Hansard. He referred to the direct protection which the farmer receives. But will those who are so keen to see what little protection is to-day afforded to industry reduced or removed altogether, continue to be blind to the irreducible fact that the protection of the industrial worker is the farmer's surest protection, for it protects his only secure market, that is, the home market. Every man thrown out of a job by the closing down of any industry represents on the average a loss to the Canadian farmer of a market worth $409.25 per year. Thus those who advocate the annihilation of the Canadian implement industry are recommending that the farmer jeopardize a home market running into millions of dollars.
Then, further, for years the implement industry has borne the brunt of vicious attacks in this house. Why it should be that this one industry should constantly be made the butt of flamboyant political speeches in this chamber and demagogic political harangues in the hustings, seems to be unexplainable except on	the	skinny	basis	of politicalexpediency. What about all the other industries that supply the farmer with essentials?	But,	no, it	seems	to be thepopular thing among some hon. members in this house,	and	certain	claptrap politiciansoutside of it, to play upon the emotions and sensitivities	of the farmer and	attempt to
portray the implement manufacturer as the arch-villian of the piece. Farm implements are only one of the multiple prime essentials
which the farmer requires, and their cost represents a small part of his total budget. It has been stated by those who have made a thorough investigation of this question that the average western farmer spends for farm implements only three cents of every dollar he spends. Before the hon. member for Melfort (Mr. McLean) rises to his feet, let me say that this figure has been challenged.


Malcolm McLean: Who is your authority?


Denton Massey: It came from the hon member's part of the world.


Malcolm McLean: When the hon. member quotas an authority, surely he should tell us who it is when we ask for it.


Denton Massey: I will quote the hon. member for Brantford City (Mr. Macdonald), who sits behind the hon. gentleman and supports his party.


Malcolm McLean: I am afraid he will not accept your authority.


Denton Massey: He knows the Liberal point of view. Double it, if the hon. member wants to; make it six cents, make it anything you want to.


Mr. MACDONALD (Brantford):: I obtained it from a newspaper called the Nor'West Farmer.


Denton Massey: That was also the source of my information and I have quoted it over and over again in this chamber.


Mr. DONNELLY:: Who wrote the article?


Denton Massey: That figure has been
accepted by those who are concerned directly with the industry, and by those in different universities, agricultural colleges, and other such places. However, I am willing to double the figure.


Malcolm McLean: Why use that one?


Mr. SPEAKER:: The hon. member is entitled to ask a question of the hon. member who is speaking, only with his permission.


Joseph Thorarinn Thorson: It is closer to ten cents.


Denton Massey: We will call it six cents.


Joseph Thorarinn Thorson: It is closer to ten cents.


Denton Massey: We will call it six cents.


Malcolm McLean: That does not change what it really is.


Denton Massey: Make it six cents, make it ten cents or even twenty cents if it makes the hon. member any happier.
Why should this one industry be constantly called upon to defend itself before parliamentary committees, to have the tariff on its
2574	COMMONS
Farm Implements Committee Report
products raised and lowered, lowered and raised? It has now been recommended that the tariff should be removed altogether. Before some hon. member rises to say it, I will say that in times when the prices for farm products are low, the farmer must reduce his cost of production to the minimum. With that statement I agree. What saving in production cost would foe achieved by the farmer if the 7i per cent duty on farm implements was eliminated and there was a corresponding reduction of 7i per cent in the price of imported farm implements? I have in my hand a table, which with your permission, Mr. Speaker, I should like to place upon Hansard. This is a most interesting talble which shows beyond argument, even that of the hon. member for Melfort, that the average saving to the western farmer with a half-section of land and a tractor would amount to $3.68 per year if the duty on farm implements were eliminated and if this elimination were accompanied by a similar reduction in selling price, and if the farmer purchased only imported machines. Three "ifs" and an "only"! Each of these assumptions is of doubtful value and highly questionable. The table is as follows:
Equipment on half section prairie (tractor) farm showing;	; duty that	would be	paid if theimplements were imported,	basis for duty	purposes l	>eing dealer's price f.	o.b. Chicagoless 25 per cent.	Less	Dealers'	25 per	Duty	Length	Burdenprices	cent for	1938	of life	of dutyf.o.b.	duty	at 7i	of imple-	perChicago	purposes	per cent	ment	yearTractor	Free	1-2 furrow tractor plow	$102.50	$78.88	$5.77	15 years	$0.38*1 set drag harrows	29.85	22.39	1.68	15 "	.181-8^ foot cultivator	115.00	86.25	6.47	15-3 "	.42*1-14 foot single disc	119.90	89.93	6.74	15-6 "	.43tl grain cleaner	40.00	30.00	2.25	15 "	.151-24 run drill	231.30	173.68	13.03	15-1 "	.861-8 foot binder	207.50	155.63	11.67	15-1 "	.771 wagon gear and box	117.00	87.75	6.58	20-1 "	.331 truck gear for fuel tender.. ..	43.50	32.63	2.45	15 "	.16Total per year.. ..	.. .. $3.68
'These are Canadian made implements-prices given for nearest comparable American implement.
fThis is estimated from Canadian price since none of the full line companies list this machine.
Mark you, with these questionable assumptions, those who advocate the elimination of the duty on farm implements, those who erroneously believe that this elimination would mean a reduction of 7i per cent in the list price of imported machines, are subscribing to the throwing out of work of thousands of industrial workers. All this for a highly speculative saving to the farmer of $3.68 per year. This amount of $3.68 per year represents a saving to the average farmer of one-fifth of a cent per bushel in the cost of the production of wheat. Hon. members had best sift down the evidence and the facts before making reckless and unguarded statements based upon inadequate information or lack of knowledge of that for which they are asking.
Let me deal now directly with the minister's speech made last Friday evening. I shall deal first with certain figures given by the minister and later with some of his general statements. In the time at my disposal I can deal only with a few of the figures used by the minister. For example at page 2422 of Hansard we find these words:
. . . but I would direct attention to the fact that the cost of labour entering into the construction of an International Harvester binder
IMr. Massey.]
in 1913 was valued at $11.97. In 1936 it was $22.62. The difference in the cost of labour as between 1913 and 1936 was only $10.65, but the increase in the price of the binder was $113.98
The fact of the matter is that the labour on a binder referred to by the minister includes only productive labour. The addition of non-productive labour would practically double the the amount. Instead of there being an increase of $10.65 in the labour cost between 1913 and 1936, it would be closer to $22.


Mr. GARDINER:: That is all in the next item.


Denton Massey: I am coming to that.


James Garfield Gardiner: You have to take all
the figures.


Denton Massey: Yes, where are the rest of the figures?


James Garfield Gardiner: If the hon. member will permit me, as I understand it, the labour item to which he is referring is included1 under overhead or burden, which is an extra amount. I dealt with overhead and burden in my remarks.

Farm. Implements Committee Report


Denton Massey: On page 2423 of Hansard the minister is reported as follows:
So I repeat that after having given consideration to these three items

Namely labour, material and freight.
-we find that the cost of the binder was increased by $113.98, not by only $44.43.
Of course that statement is highly misleading, for two reasons. In the first place, the terminology is incorrect. The minister refers to the cost of the binder having increased by $113.98, when he should have said the selling price had increased.


James Garfield Gardiner: The cost to the farmer.


Denton Massey: Yes, the list price. Second, the minister used the figure $44.43 as the increase in cost occasioned by the increase in material, labour and freight. This cost includes only a fraction of the total cost; the minister gave only a part of the story when he compared costs in 1913 with those in 1936. The minister's figuring is simply hopelessly incorrect. His figures are 125 per cent wrong, as I shall show in just a minute. I ask him not to get so excited and keep his seat. The increase in cost to the manufacturer between 1913 and 1936, based on the figures given in the table on page 1230 of the report, would be
as follows:
Increase in cost, material	$25 50
Increase in cost, labour	 10 65
Increase in cost, factory burden.. 15 97 Increase in experimental charges..	2 21

To this of course must be added:
Increase in freight	$ 8 28
Increase in commissions paid.. ..	14 50
Increase in cost of distribution-
(based on figures 22-13 per cent).	21 35
Total	$98 46
In other words, the minister claims that the increase in cost to the manufacturer in 1936
Retail price
Freight	 $17 80
Commission	 31 00
Cost at factory.
Mark-up	
Per cent of cost
over the cost in 1913 was $44.33, when actually it was $98.46. These figures are taken directly from the committee's report. The minister used only three of the elements and neglected four others. The three he used totalled $44.33, and the four he did not use totalled $54.03. Thus as I said the minister was 125% out in his figure.


James Garfield Gardiner: If I may correct the hon. gentleman, if he will just read the next portion of my speech he will find that I included the very items he is now including. They were all in, every item that he has touched upon.


Denton Massey: Yes, but not grouped together. I will read it; it gets worse as we go along. On page 2423, just following what I have quoted, the minister said:
In other words, the price of a binder could be reduced by $69.55, to sell at $211.45 without affecting increases in labour, material or freight costs, still leaving the same mark-up as in 1913.
Now the selling price of the International Harvester Company binder, which the minister says in 1936 was $281, carried the same mark-up over factory cost-note that-as did the binder of 1913, which sold for $170. This will be seen from the following table deduced from the figures given on page 332 of the committee's report, and I would ask that this be put on Hansard in tabular form.


James Garfield Gardiner: I understand the hon. gentleman is speaking of percentage of markup.


Denton Massey: The minister need not worry so much or often. I know he is quite convinced that he is wrong now.


James Garfield Gardiner: I was using dollars.


Denton Massey: Certainly-for a reason. My figures are taken from page 332 of the
committee's report.
1913 $170 00 48 80	$26 08 45 50	1936 $281 00 71 58	Increase $111 00 22 78
			
121 20	209 42	88 2275 83	130 16	54 3345 37	79 26	33 8959-8	60-8	
The minister used figures that were infinitely more impressive to make his case. He used dollars, and the figure is, of course, greater in one case than in the other because the selling price of the machine was greater.
But the percentage remained the same. Thus while the selling price has been raised from $170 in 1913 to $281 in 1936, an increase of $111, the increase in cost to the company
was, as I stated, $98.46. So obviously the
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price of a binder could not have been reduced, as the minister stated, by $69.55 without a loss to the company in round figures of $29.


James Garfield Gardiner: Oh yes, it could.


Denton Massey: The figures are there in the report. If the minister wishes to disregard the report-he has done so already, and I was suspicious that he would-he can do so. But my figures are taken from the report itself.


James Garfield Gardiner: I took all the figures from the report, at page 1230.


Denton Massey: Again at page 2423 of Hansard the minister says:
Therefore a binder could have been reduced in 1936 by $36.32 without the companies having to adjust any of the items of cost submitted in the table which appears on page 1230.


James Garfield Gardiner: And still have the same mark-up.


Denton Massey: Certainly, in dollars, but not in percentage.


James Garfield Gardiner: It is the dollars that count when you run a farm.


Denton Massey: It is not the dollar that
controls in this argument.
The statement of the minister I have just read is just as inaccurate as his previous statement.


James Garfield Gardiner: If my hon. friend got his dollars by running a farm he would know that it is the dollars that count.


Denton Massey: I fully understand that, but trying to compare dollars in this instance is fatuous. It is an argumentative statement on the one side which, given to someone who does not understand these matters, sounds evil. I have demonstrated to the minister perfectly clearly from the report itself that he is using dollars instead of percentages. If he were an agent selling these machines on commission, would he sell a $50 machine for the same commission as a $1,000 machine? Certainly not; it is percentage that controls. The same principle holds in both cases, as the minister knows.
Further, in the same paragraph on page 2423 the minister says:
If overhead costs were maintained at the 1913 level, a binder could be sold for $52 less without reducing any of the other costs and still leave the mark-up of 1913.
Surely the minister knows, and if he does not, every other hon. member knows, that overhead expenses in a manufacturing concern cannot be maintained to-day at the 1913 level. This is so obvious that it need not be elaborated further.
The conclusion of the minister's reasoning in this part of his speech is so preposterous

and so damaging and so far removed from the facts presented to and accepted by the committee that I wish to deal with it in detail and plan to do so. His conclusion is found on page 2423 and reads as follows:
I contend that a binder could have been sold at a lower price, and my contention is backed up by an examination of the cost basis in any one of the years with which I have dealt.
Now let it be remembered that the minister came to this conclusion following a review of the comparisons of mark-up by taking factory cost, freight and commission, and deducting the total of these three from the selling price in each year, and while so doing neglected the important items of factory burden, increase in experimental charges, increase in commissions paid, and increase in cost of distribution.


James Garfield Gardiner: I must object. I am sure my hon. friend does not want to misrepresent me. The figures he has just quoted included all five items, and if he will read my speech he will find that I included them.


Denton Massey: I have read the speech with the utmost care, and the minister's statement is very distinct. I am not going to take up my time now by reading it.


James Garfield Gardiner: It includes even freight and cost of distribution.


Denton Massey: I am sure the hon. gentleman will remember that when he made his extraordinarily provocative speech the other night he said he would permit one question if it were short. I did not interrupt again, and then he spoke for an hour. I am sure the minister is adding to my case the more he interrupts me, and I am delighted to have back-chat with him across the floor, but I do need all the time at my disposal. If I misquote him, of course, he has a perfect right to interrupt.


James Garfield Gardiner: That is just what I got through doing.


Denton Massey: I do not want to be regarded as discourteous in any way, Mr. Speaker, and I try to yield to every member in a courteous manner, but I need all my time and if the hon. member will permit me to proceed I should appreciate it.
There are two points which must be considered before making any statement such as the minister made in this connection. First, the cost figures, as pointed out on the table printed on page 332 of the report of the special committee, include a fixed overhead each year of 150 per cent on direct labour. These costs, of course, based upon such an overhead figure,

Farm Implements Committee Report
are not actual costs for any of the years specified unless it happened that the actual overhead that year was 150 per cent of productive labour. There would foe several instances reported over the period covered by the table when the overhead would be much higher than 150 per cent, and many times 150 per cent, whereas it is doubtful if in any of the years the overhead would be less. Thus, on the minister's reasoning, whenever the overhead exceeded 150 per cent the company would necessarily have to absorb a loss. Then, second, as I have just stated, no consideration has been given in the figures quoted by the minister to the cost of distribution and reported in an exhibit on page 20 of the report of the special committee, which shows that distribution expenses vary each year from 13-63 per cent of sales to 37J per cent of sales. Using the percentages quoted in the report for the International Harvester Company of 22-13 per cent of net sales, which is fair, having in mind the fluctuations from year to year already pointed out, a decidedly different complexion is given to the figures quoted by the minister.
For example, let us take the year 1932, when the factory costs are recorded at $164.55, to which of course must be added freight of $25.12 and commissions of $46.50, or a total cost before distribution of $236.17. The selling price of a binder in 1932 was $273, so that a profit before distribution expense of $36.83 was shown for that year. Now, applying the percentage of 22-13 per cent of net sales, distribution expenses applicable to the binder in 1932 would be $50.12. As the profit before distribution expense was $36.83, this figure of course at once reflects a loss on the sale of each binder in 1932 amounting to $13.29. But if we look at exhibit A, section one of the report, page 20, we shall find that distribution expenses in 1932 were not 22-13 per cent of sales, but 32 per cent of sales, so that the figure used in arriving at the loss of $13.29 is low. Using the actual figure of 32 per cent the loss would be increased to $35.65 on each binder sold.
Are we justified in assuming, as the minister has assumed, that the mark-up for 1932 of $36.83 was profitable to the company and they should have been satisfied to continue operations upon that basis? Let us see what the minister suggests. He assumes first that the International Harvester Company was satisfied with the mark-up of $36.83 in 1932, and that the company profited with tihis markup, and so gleefully he looks at the mark-up of 1936, which amounts to $79.26, and assumes
that here is implied an exorbitant return to the company at the expense of the farmer. He is still dealing with dollars and not in percentages. Of course such is not the case. The mark-up of $36.83 represents a loss on every binder sold of $35.65. And thus, with a mark-up of $79.26 as is shown for 1936, the company was attempting to offset the loss of $35.65 and to make a small profit on the sale of a binder, to the amount of $6.78. And, as the retail price was $281, this represented a profit to the company of 2-4 per cent. Will the minister now say that there was an exorbitant profit? Mark, Mr. Speaker, that I have arrived at the profit of 2-4 per cent from the figures presented to the committee, accepted by it, and available to the minister before he made his speech. Thus it is that one cannot help but be led to the opinion that the minister, in arriving at some of the extraordinary conclusions at which he arrived, simply failed to take stock of the facts as presented to the committee and essentially disregarded its report.
Time will not permit me to deal further with the figures used by the minister, but perhaps what I have shown the house thus far may demonstrate that in the speech which the minister made to the house he certainly arrived at some extraordinary conclusions, based on figures which are hopelessly in error, and did not follow the evidence submitted to the committee.
Let me turn to some of the general statements made and conclusions reached by the minister. On page 2424 he quoted from page 1256 of the implement committee's report:
In the case of farmers purchasing on the terms set out on Table 1, it is shown that the credit expense expressed as an annual interest rate ranges from 24-7 per cent on the unpaid balance in the case of a 6-foot heavy mower to 42-5 per cent in the case of a W-30 tractor. In Table 5 the credit expense expressed as an -nnual interest rate ranges from 22-4 per cent on the unpaid balance in the case of a 6-foot heavy mower to 34-9 per cent in the case of a 7-foot single disc.
If the minister had gone further he would have told the house in his speech that evidence given before the committee definitely dispelled this misleading statement, which is based upon an erroneous interpretation of the commercial practice of giving a cash discount. To illustrate, if a merchant grants a two per cent cash discount for payment within one month, no intelligent person would say that he was charging a rate of interest of twenty-four per cent per annum if he was not paid cash. Further, let it be stated that, in deference to the views expressed by the committee, the "term policy" of most of the
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farm implement companies has been revised and may be regarded to-day as the most favourable basis of any industry dealing along similar lines. It is now confined to an interest charge of six per cent and a finance charge of one-fourth of one per cent for every three months, or approximately two per cent per annum. Of course the minister did not mention. On page 2426 , the minister makes this statement:
I think, after having considered these points, we would be justified in concluding that the credit business does carry itself.
In answer to that statement, it is obvious that the minister disregards the fact that from 1929 down to the present day one company, taking only one of the principal Canadian companies, has incurred losses on the credit business amounting to $4,100,000. Need anything be said further to explode the statement I just quoted?
Again, on page 2426 the minister stated:
Surely the people have a right to expect, when the argument is used constantly by industry, that up-to-date machinery must be placed in the hands of those who are carrying on the industry in order that they may be able to compete with other countries, that this up-to-date machinery which is placed in the factories would produce our implements at lower costs of production. If so, the lower costs of production should result in lower prices to the consumer.
Now, an examination of the records of any of the implement companies will show that modern machines, such as combines and tractors and tractor drawn machinery-not old machines, horse-drawn machinery, old from the point of view of years, such as the binder as selected by the committee; I admit it was agreed by the implement companies that the binder should be taken, and that was a gesture on their part which was far-reaching in some of its effects-but dealing with the implements which in the minister's part of the world are principally used, they are being manufactured with increasing efficiency, resulting in materially decreased prices.


James Garfield Gardiner: I should like to ask
the hon. member if he knows how many farmers in Canada use combines.


Denton Massey: I have not the figure in
front of me.


James Garfield Gardiner: A very small percentage.


Denton Massey: We will leave the combine out, if the minister wishes. I am sure, however, that as a result of the activities of the implement companies many more farmers are going to use combines.


James Garfield Gardiner: Only in a small area of Canada.


Denton Massey: That is very questionable.
They can be used in Ontario. That is not a small area.


James Garfield Gardiner: They never will.


Denton Massey: Well, that is a matter of
opinion. Certainly not the big machine. The small combine can be used. They are using it now. Take the 12-foot combine, which sold in 1930 at $1,875, and which is being replaced to-day with an 8-foot machine which sells for $900. It is half the price of the machine it replaces and does all the work that a 12-foot machine would do.


Mr. GOLDING:: Where are they using
combines in Ontario now?


Mr. LAWSON:: That has nothing to do
with the speech. Let the hon. member go on.


Denton Massey: I do wish to be tolerant,
but the hon. member knows well that while the combine is not in extensive use in Ontario, many are convinced that it will be used there,-and it will be.


Mark Cecil Senn: It is being used.


Denton Massey: The hon. member for
Haldimand (Mr. Senn) says that it is used. I do not want to discredit the word of the hon. member for Huron-Perth (Mr. Golding), but I think I would rather take the word of the hon. member for Haldimand on farming matters. However, I will go on. It is far beyond the point, and I am sure the hon. member will permit me to continue my speech.
In 1927 a 20-30 tractor with steel wheels sold in Winnipeg at $1,440, while this year a far more efficient and high powered tractor sells at $1,178. The minister was content to make no reference to anything of that sort.
Again at page 2426 the minister said:
Instead of a man as head of an individually developed, owned and controlled factory being satisfied with a reasonable earning on his invested capital, we have organizations financed on a basis which, in order to pay what appear to be reasonable profits on invested capital, must have twenty, thirty or forty per cent on the materials, labour, overhead, sales, distribution and freight costs.
I would point out that such a statement as that is so far removed from facts that it is hard to understand how it could be made by a responsible minister of the crown. Let me take the case of the largest Canadian company in the industry. Instead of extracting in profits-or extorting, as the minister would imply by that veiled reference-some twenty or thirty or forty per cent or some other astronomical figure drawn from the

Farm Implements Committee Report
ether, that company has paid no dividend whatsoever since 1930, and shows the following record of losses:
In the last twenty years of operation, ending in 1935, a loss of 3.7 per cent.
In the last fifteen years of operation, ending in 1935, a loss of 3-89 per cent.
In the last ten years of operation, ending in 1935, a loss of 5-9 per cent.
In the last six years of operation ending in 1935 a loss of 12-26 per cent.
Need the house be given anything further to show conclusively the recklessness of such a statement as that of the minister, which could be designed to do but one thing, to create a false impression in the minds of those who hear?


James Garfield Gardiner: That is a loss on the capital set-up?


Denton Massey: Loss on the capital set-up is what I was giving the minister.


James Garfield Gardiner: Read the next paragraph of my speech.


Denton Massey: I would read the whole speech if it were worth repeating. Does the minister cherish the sound of his own speech so much that he likes to hear it re-echo through these halls and feel his ears glow once more, like a young man fresh from his first triumph?
On page 2427 we find the minister saying:
Distribution costs must come down. The agricultural industry of this country cannot pay them in the prices of implements.


An hon. MEMBER:: That is right.


Denton Massey: Does my hon. friend realize
what he is asking for?


An hon. MEMBER:: The farmer cannot pay the prices.


Denton Massey: He would rather have the machines break down and stand in the wheat and not cut any more crop? That is what the hon. member is asking. That is why I say that no consideration has been given to the two sides of this question; just the one side. The minister neglects entirely the fact that distribution cost includes service cost, service upon which the farmer rightly insists. Of course the cost of distribution would be greatly lessened if the service given to the farmer were decreased or made less efficient. But how vital it is that at all seasons of the year a highly efficient service organization be maintained by every company that sells implements. The minister himself, as a farmer, well knows how important it is to be able to get prompt service in case of an emergency occasioned by a breakdown or accident.
Also, if there were fewer firms competing for the total volume of business, total distribution costs would be less. Let me give the minister an example from Ontario. As the result of the succession of reductions in the rates of duty in the past three years from twenty-five to twelve per cent and finally to seven and a half per cent, a number of American companies, who heretofore have played little or no part in the Ontario business, have now entered the market to compete against the established Canadian companies. These companies, in order to hold their position in the Ontario market against the newcomers, have been obliged to increase substantially their sales and distribution expenses. What does this mean? Of course it means increased cost of distribution; the Canadian companies are perforce spending more money in order to hold the business which they heretofore enjoyed. On the one hand, then, the minister cries out for reduced duties to permit companies from the United States and other countries to come into Canada and compete against the Canadian companies, but on the other hand and in the same voice he makes the statement that distribution costs must come down. What an anomaly! Surely the minister is not blind to the fact that distribution costs go up under keen competition and come down if there is less competition. Does the minister not know what brought into being the Massey-Harris Company in 1891 ? It was almost bitter competition, with very heavy distribution costs as the result.


James Garfield Gardiner: Competition under high protection.


Denton Massey: High protection had nothing to do with it.


James Garfield Gardiner: Forcing a merger of the two concerns.


Denton Massey: As the minister well knows, it was the high distribution costs, each company trying to outsell the other in a market where there was room for only one, with the result that the farmer was paying through the nose as a result of the bitter competition. Now the minister wants wide-open competition, wants foreign machines brought in, on which there will be no service, no parts available; a breakdown meaning perhaps the loss of a crop. Will any large outside company develop machines for the Canadian market only? Will any foreign company come into this country and endeavour to develop exactly what the Canadian farmer wants? This is a relatively small market compared with other markets of the world. Let it be remembered that a
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Farm Implements Committee Report
reasonable protective tariff is the farmer's surest protection against increased prices due to increased distribution costs.
On page 2427 the minister is reported as saying:
One only has to follow closely the evidence before the committee to realize that not omj does the law of supply and demand not operate in setting Aie price of farm implements, but the industry does not think it should. If the law of supply and demand operates when the demand is down, the price will be low.
The minister is a farmer, and I am not. The minister is obviously not an economist, neither am I. But I do know that the implement industry feels that prices should be based on costs, not on the law of supply and demand. If one were to follow the minister's reasoning and permit the law of supply and demand to operate, when the demand was up prices should go high. And further, if this were the case, it would mean that when the farmers were buying little they would pay low prices, but when consumption was great and they were buying heavily they would pay higher prices; which would of course create a highly unsatisfactory state of affairs from the point of view of the farmer, and be wholly illogical from every point of view.
On page 2428 the minister reminds us that the cost of a binder in 1914 was S167 whereas in 1921 the price had increased to $326. What would be amusing, if it were not so damaging in its implication, is what was said by the minister in regard to what happened when the duty was reduced by two and a half per cent in 1922, and the price of the binder was reduced by $60. He of course implies at once that following the reduction in duty the price of the binder was reduced.


James Garfield Gardiner: It was.


Denton Massey: I hoped the minister would say that. That price was reduced eight months before the reduction in duty!


James Garfield Gardiner: Just about the same time.


Denton Massey: No, no-eight months before. The minister carefully avoided stating that the reduction in the price of the binder was made not as a result of the reduction in duty, which came six months later, but as a result of the sharp decrease in material prices, and also lower rates for labour. The $60 reduction had no connection whatsoever with the two and a half per cent reduction in duty.


James Garfield Gardiner: Oh, it had some.


Denton Massey: The reduction in price was made before the reduction in the tariff.


James Garfield Gardiner: But the discussions took place before the reduction.


Denton Massey: Really I do not think one could be accused of discourtesy in neglecting to respond to that kind of interruption. The cost of material entering into the binder had dropped $31.61, and labour costs were down $9.09, a total reduction in cost, including overhead, of $53.64. Now let the minister, free of partisanship, survey what has happened to implement prices under tariffs. Let him not throw out to this country statements that leave an erroneous impression. He has had the facts before him in the report of the implement committee. Let him come to his conclusions from the evidence submitted under oath rather than temporize with figures that tell only part of the story.
Then, Mr. Speaker, on page 2428 of Hansard the minister says:
For that reason I repeat the statement that high protection, by inducing competitors to enter a field already provided with sufficient industry, forces prices down to that point where industry cannot pay, and therefore compels price fixing in order that it may remain in business and regain profits.
Again I suggest to the minister that he re-read the report and see if he will reiterate that statement; for in so far as the implement industry is concerned, the facts are quite the opposite. There are four large manufacturers of farm implements in Canada, two Canadian companies and two United States companies, the latter having established factories here under protection in order to avoid the payment of duty and loss of the market. Under the protective tariff these four companies would share the bulk of the Canadian business, and it would be unlikely that newcomers would wish to attempt to, break into the market and make the necessary capital expenditures to compete against those already in the field. This, as I have stated, at once means a reduction in distribution costs. But under the present tariff the number of firms competing for the total business available has increased, with the result that the expense of distribution has gone up, and with it the cost to the ultimate consumer, the farmer. That is the answer to the policy of my hon. friend's government. Remove the duty altogether and distribution costs will go up even higher.


An hon. MEMBER:: Why?


Denton Massey: I have given the story
over and over again, and still the hon. member wants to know why. Here is one of the strong reasons that prices always tend to

Farm Implements Committee Report
increase as the duty decreases, and a protective tariff tends towards lower farm implement prices.


Mr. ROBICHAUD:: I should like to ask
the hon. member a question. What was the cost of distribution in 1935 or 1936?


Denton Massey: I have not the figure
immediately before me, but the hon. member can read it in Hansard.


Louis-Prudent-Alexandre Robichaud: I understood the hon. member to say that it was about 32 per cent. Does he not think the best way of competing would be to reduce that cost to ten per cent?


Denton Massey: And give less service to
the farmer? Surely it is not necessary to go over all the points at issue again; the hon. member can read them in my speech. I said the cost of distribution was 32-13 per cent in 1932, and that the average for all years from 1926 to 1935 was 22-13 per cent.


Walter Edward Foster: Order. I must tell the
hon. member that his time has expired.


Some hon. MEMBERS:: Go on.


Denton Massey: I am almost through, Mr. Speaker.


Some hon. MEMBERS:: Go on.


Walter Edward Foster: With the consent of the
house.


Denton Massey: Thank you, your honour.
As I was just stating when my hon. friend interrupted, here is one of the strong reasons why prices always tend to increase as the duty decreases, and a protective tariff tends to lower the prices of farm implements.
Lastly-and I appreciate very much your courtesy, Mr. Speaker, and that of the house, in permitting me to continue-at page 2429 we find the minister stating:
Agriculture, which is the greatest primary industry of Canada, refuses to be bled any longer by half a dozen manufacturing plants which give as their only real reason the fact that they are employing 4,159 men.


Some hon. MEMBERS:: Hear, hear.


Denton Massey: Who says "hear, hear?" Let him go back to his constituency and say it.


Mr. WARD:: Hear, hear.


Denton Massey: Oh, our friend from
Dauphin. Is there any hon. member who comes from a centre where manufacturing is carried on, or who has any real interest in the welfare of the industrial worker, who will say hear, hear?


Some hon. MEMBERS:: Hear, hear.


Denton Massey: I wish we could have those names so that they might be placed upon Hansard. I notice the complete silence of my hon. friend from Renfrew South (Mr. McCann) ; I notice the complete silence of my hon. friend from Brantford City (Mr. Macdonald).


Mr. McCANN:: I was not paying any
attention to you at all.


Denton Massey: Well, Mr. Speaker, I am
sorry if I interrupted my hon. friend, but it is so hard to tell when he is paying attention and when he is not. In this instance I thought he was. Having sat for some time in this house no doubt he has become imbued with the sort of apathy that comes from the government benches, so that he may be suffering from a slight attack of amnesia.


James Joseph McCann: When it is worth while
I am a good listener.


Denton Massey: During the whole course
of his amazing and provocative speech the minister made no statement quite so staggering, it seems to me, as the one I have just quoted. The implications of it are so far-reaching and so obviously a play upon sectionalism, pitting one group against another. It is the kind of statement, Mr. Speaker, that can do but one thing; that is, to promote ill will and hard feelings, without possibly doing any good. The minister states that the implement industry in Canada employs only 4,159 men. That statement, of course, is no more accurate than many other statements he made.


James Garfield Gardiner: Again I must rise to
a point of order. The hon. member will find at page 1244 of the report the figures for 1935, the last year for which the complete figures are given. Those are the figures with which I was dealing, and I took the official figures from the report.


Denton Massey: Quite; those were the
numbers directly employed in the industry, but does the minister imagine that these are all who are employed by that industry? Are these 4,159 men all those who are employed in the farm implement industry? If the industry were wiped out to-day would there be only 4,159 men lose their jobs? Is that all. Is that what the minister says?


James Garfield Gardiner: Oh, it might be.


Denton Massey: Yes, it might be; quite. There are many times that number employed and the minister knows it. The industry as a whole should be considered, providing as it does a livelihood for persons gainfully employed totalling many times that number.

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An hon. MEMBER:: How many?


Denton Massey: Does it matter? There is a principle at stake. Does it matter whether the number is 25,000 or 40,000 or 12,000? Does it matter?


James J. Donnelly: How many does it
involve?


Walter Edward Foster: Order.


Denton Massey: It is quite all right, Mr. Speaker; I do not mind. Even taking a figure as ridiculously low as that used by the minister, I wonder if he thinks the jobs of
4.159	men, particularly in these times, are worth protecting?


Joseph Thorarinn Thorson: They will not lose their jobs.


Denton Massey: And now we have a lawyer who says these men will not lose their jobs. Is the minister prepared to rise in his place and say that the Canadian farmer is no longer prepared to play the noble part he has always played in the development not only of his vital primary industry but of Canada as a whole? That is the question at stake. Apparently I have greater faith in the Canadian farmer than some of my noisy friends, and more than the minister; for I do not feel that there is a farmer in Canada who, if the facts of the matter were fairly placed before him, would be willing to jeopardize the jobs of his fellow Canadians, the industrial workers, for a saving of a few cents in the farm budget. And now let this be noted, Mr. Speaker, that if the 7i per cent duty on farm implements were removed; if a similar reduction were made in the price of imported machines; if the farmer purchased only imported machines; since of every $100 the farmer spends a maximum of $6 goes for the purchase of implements and repairs, the farmer's budget would be affected by a maximum of 45 cents for every $100 he spends. In other words, Mr. Speaker, are the jobs of
4.159	men to be reckoned on a 45 cent basis? Is any Canadian going to regard his fellow Canadians in that light? That is what the minister says in his speech, and there can be no other interpretation placed upon it. As one who represents a constituency-


James Garfield Gardiner: I must correct the hon. gentleman again; he says it is quite proper for me to rise in my place to make corrections. If he turns to page 2429 of Hansard he will find that I said:
-but I suggest that the figures I have submitted to the house, which will carry us back into the years when twice as many men were engaged in the agricultural implement industry, will bear me out when I say that every time

better conditions under which to produce have been brought to bear upon the agricultural industry, the implement industry has prospered.
In other words, I was advocating a policy that would bring about the employment of twice as many men.


Denton Massey: I simply state to the minister that that is far from the interpretation that has been placed upon his remarks. Public opinion in many centres across Canada have been stirred by his utterances. For example, in my hand I have a clipping from the Globe and Mail which expresses its opinion in this matter in no uncertain terms. The statement appears in an editorial.


James Garfield Gardiner: I did not write the editorial.


Denton Massey: I rather thought the minister had not. Had he written it himself it would have been as accurate a description of his own opinion of his own speech as some of the figures he used. As one who represents a constituency in which there reside some 16,000 families dependent upon industry for their livelihood, and as a Canadian, I protest with all the vehemence of which I am capable against this statement made by the minister.
I deplore, Mr. Speaker, the advantage that a few have taken of what is called protection. Protection is designed for the benefit not of industry but of the industrial worker; not of farming, but of the farmer. And this country has been developed because all sections of it have worked together, farmer and industrial worker alike.
I am not one of those from the east who cries out against the financial burden that has been placed upon those of us who live in the east as the result of having to be of direct assistance to the west. It should be a privilege to have a share in carrying the other fellow's burden. The other day in this chamber we voted about $22,300,000 for relief, and other such purposes, in the dried out areas of Saskatchewan. The vast proportion of that money will be paid out of the pockets of the industrial east; but I ask this house, did any member from the eastern part of Canada rise in his place in protest against this payment? Not one of us. Why? Because we know, all of us, of the plight of the prairie farmer, and we are proud to be able to help him.
The policy that the late government put into practice is a policy that has been a policy of the Conservative party for generations. Protection has been a vital factor in the development of Canadian industry-not

Farm Implements Committee Report
high protection, not unreasonable rates of duty, not embargoes, and not a lot of other things, but reasonable protection. Where would industry be to-day had it not had protection? And without those industries protection made possible there would have been no Canada as we know it, east or west. When every country in the world, without a single exception, is endeavouring to safeguard its domestic market, we in Canada are asked to reverse the whole process, to put our trust in markets everywhere -Europe, Asia, Africa-but not at home, not in the development of our own country and the prosperity of our own people.
Mr. Speaker, it is not the 7| per cent alone on implements which is at stake in this debate. We are debating a principle, and tied up with that principle is not only the future welfare of this dominion, but the unity of Canada as well. I deplore such utterances as have been made in this house and in this debate-yes, and deplore them in the sacred name of Canadian unity.
Let me repeat in conclusion what I said in the beginning: We are all Canadians. We may be industrial workers and we may be farmers. We may have our sectional interests, it is true, but our primary interest lies in Canada. So I say, may we forget our sectional differences! May we forget parochialism, and together, each one doing his part to help the other, in unity of spirit, in unity of purpose and in unity of design, let us march forward to the development of a greater Canada.


Mr. R. J. DEACHMAN (Huron North):: Mr. Speaker, three factors enter into the selling prices of industrial products. With one of those factors, namely wages, I now propose to deal. The year 1926 is generally taken as the base year in a study of Canadian industry. In the five years of depression, from 1931 to 1935, wages paid in Canadian industry declined by 16-8 per cent. That was a relatively small decline. If we measure it, however, by the adjustment necessary owing to the change in the cost of living, it will be found that there were actually more wages paid per average year between 1931 and 1935 than in the pivotal year of 1926.


Mr. BENNETT:: In terms of 1926.


Robert John Deachman: It is a comparison of the actual wages in this period.


Richard Bedford Bennett: But in terms of 1926.


Robert John Deachman: Yes. If we take the wages, add them to the cost of raw material,
and deduct the total from the value of products produced, we have an item which I could 51952-1641
designate by no better term than the word "balance," and that balance remains to the manufacturer. Out of it he must pay overhead and interest on borrowed money, and from it he must take his profits.
In 1926 that balance amounted to $838,-
800,000.	For the five years of the depression it averaged $746,300,000. But when I make the necessary adjustment, due to the altered cost of living and express it in terms of purchasing power, the average becomes $918,-
600,000.	In other words, on the average, expressed in terms of purchasing power, the manufacturers of Canada received almost ten per cent more than they did in the base year 1926. Labour therefore got its share during the period of depression; those who were employed got their share. But of course I admit at once that there were a large number unemployed. The fact remains, however, that labour got its share, practically undisturbed. Industry got its share because in purchasing power it had more money and more value than it had in 1926. Let us consider the position of the farmer.


An hon. MEMBER:: What did industry pay in taxes during the same period?


Robert John Deachman: What does the farmer pay in taxes from the sale of his products? With what is he to pay taxes? That is the point I shall next consider.
In 1926 the gross farm income of the dominion amounted to $1,088,000,000. The average for the five years of depression, which I am sure the hon. member who has just spoken will be pleased to hear, amounted to $689,000,000. In other words, the manufacturer got more, but the farmer got an average of $399,000,000 less, or almost $2,000,000,000 less in the five year period than the comparative position would have been if he had received the standard which prevailed in 1926.
I appeal to the hon. member for Greenwood (Mr. Massey).


An hon. MEMBER:: Useless.


Robert John Deachman: Useless? No, I do not agree with that. I admit I cannot appeal to his economic sense, but I can appeal to his sympathy. He told us he was strongly in favour of giving justice, a square deal and a fair wage to the worker in Canada.


Denton Massey: And the same for the farmer.


Robert John Deachman: All right, my friend. But the conditions which we had in that period did not produce justice for the farmer, because the manufacturer got an increase, the labourer got an increase and, on the basis of
2584	COMMONS
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the story I have presented-which is accurate -the farmer got approximately $2,000,000,000 less.


Richard Bedford Bennett: The drought had something to do with that.


Robert John Deachman: Part of that was an act of God. Sometimes I have heard that an act of God is anything which happens for which a lawyer cannot collect a fee.
During that period there was a decline by $2,000,000,000 in what the farmer received. Now, cut that in two, if you will, for the drought, or for any other disaster which may have happened. A great deal of the decline in the value of what the farmer received was due to the restriction of markets and to the raising of tariffs not only here but abroad. But if you cut it in two, then I suppose you may cut it in two again-and then what have you left? You have the decline in earnings expressed in terms of purchasing power, after being divided by four, of $500,000,000. The hon. member for Greenwood who, I am sorry to say, has been compelled to leave the chamber-


Denton Massey: Here he is.


Robert John Deachman: I thought the hon. member had gone to revise his speech.


Denton Massey: It needs no revising.


Robert John Deachman: The hon. member gave us some advice-and I am always glad to have it. He said there was danger of driving a wedge between one section of Canada and another. Can anything in the world prevent the driving of a wedge between agriculture and manufacturing, between agriculture and labour, if we are going to accept the dogma in this country that labour must have its share-


Denton Massey: Is the hon. member asking a question, and does he want an answer?


Robert John Deachman: I will answer it myself; but for the benefit of the hon. member-


Mr. SPENCE:: You may not do it accurately.


Robert John Deachman: -we have a position in which labour gets its share, in which the manufacturer gets his share, with a larger amount in a period of depression than he did in a time of prosperity, while the farmer has to accept $400,000,000 less throughout the year. It is creating a cleavage engendered by fundamental circumstances. What ought to be the attitude of this house? What ought to be the attitude of the hon. member for Greenwood? He should revise his speech; he
(Mr. Deachman.]
should present a speech to us which would be a plea to the house and the country to consider the adoption of measures which would improve the condition of the farmer.


Denton Massey: That speech is up in my office prepared and ready for delivery at the proper time.


Robert John Deachman: I shall welcome it when it comes, if it contains anything worth welcoming. My hon. friend is interested in the workers provided they are not on the farm. According to the statement made by him this afternoon, he is more interested in the 4,159 workers-


Denton Massey: Oh, no.


Robert John Deachman: -in the agricultural implement industry than he is in those who work on the farm.


Denton Massey: I rise to a point of order. I have a high regard for the ability of the hon. member who is speaking, but he must not misstate or misinterpret my remarks. I read an excerpt from the speech of the minister made on Friday evening. The minister referred to those 4,159 workers, and I asked if the jobs of those men were to be jeopardized when it meant a saving to the fanner of only forty-five cents a year.


Robert John Deachman: I am coming to that
point. If I have offended my hon. friend and have misstated him in any way, I shall be glad to withdraw. But the fact remains that the average earnings of a worker in the Dominion of Canada reflect the conditions which exist. He has been able to get his share, while the worker on the farm, according to unquestioned and reliable authority, has not got his share. In part, that is the result of the fact that he is compelled to pay the prices he has to pay because of protection.
My hon. friend says that this represents only $3.68; that that is the share which the agricultural implement people got out of this. But they are not the only ones who are sitting up late at night watching the farmer when he comes home; there must be at least a hundred of them. If the agricultural implement people get only $3.68 and there are a hundred others doing the same thing, if the average net earnings of the farmer are $362 per annum, they have taken $6 more than the farmer earned. That is the situation.
My hon. friend made a plea for unity. Unity is impossible under these conditions. He has admitted that Canada is fundamentally an agrarian country. Agriculture is our

basic industry and you cannot restore prosperity when conditions are such as are recorded by these facts. In five years there has been a crash in income of $2,000,000,000 in the ^ case of the farmer. I want to say something else. Let us consider the situation of the farmer as it is to-day. I have offered to cut this in four and put the figure at $500,000,000. The estimate has been made that there is a backlog of $200,000,000 made up of the unfilled requirements of farmers for agricultural implements. In addition to that, it is estimated that it would require at least another S200,000,000 to restore the buildings, fences and equipment of the farms of Canada to their proper condition. The farmer has not been able to cultivate his land properly, and there is a further estimate that it would require at least $100,000,000 to bring the land up to the normal standard which existed in 1926.
When industry is in that condition, what can be done? If what the agricultural implement companies took from us was an isolated case, then it would not be so important. But protection is a national policy so far as the Dominion of Canada is concerned. It has been accepted and we have carried it on year after year. That ring has tightened around the farmer until he is ready to do almost anything to break through. I submit there are worse cases than the exploitation of the farmer by the agricultural implement people. There are other instances where the duty is higher. The farmer sees this ring around him tightening all the time, restricting his export market by restricting his imports, raising his costs of production when he has been in such dire straits for the last few years. Is it any wonder that he wants to escape? He wants to get away from these conditions and the agricultural implement industry offers a chance to break through. That is why he is out after it.


Mr. FRASER:: Would they be willing to
give up their protection?


Robert John Deachman: I am glad the hon.
member mentioned that. My hon. friend is a strong advocate of protection for the farmer. We have had protection for the farmer; it has been increased since about 1926. That was a case of luring the ducks over to the guns and shooting them when they had lost their power of flight. It was offered to the farmers to see if they could not be bribed by protection on a few articles on which protection could be applied, so that it might be more generously applied to articles which the manufacturers produced. I think the farmers of all people should regard with
5, 1938	,
Farm, Implements Committee Report
some measure of suspicion those manufacturers who come and suggest that the remedy for the conditions which now exist lies in protection for the farmer. My hon. friend wants to know how it works. In 1926, before there was much protection for the farmer, the gross income of agriculture was 22-1 per cent of the national income. In 1936 it was down to 16-8 per cent. That is gross income, while the net agricultural income in 1936 amounted to only approximately eight per cent of the national income of Canada. I think even my hon. friend will be willing to agree with me when I suggest that if the farmer thought he could get anything from a higher tariff on agricultural products, in fact he got a good deal less than nothing.


William Alexander Fraser: He is still asking for it.


Robert John Deachman: He is still asking for
it!


William Alexander Fraser: And still getting it.


Robert John Deachman: And still getting it
I suppose my hon. friend views with rejoicing the fact that some farmers come and ask for it. But can you expect anything else when everything that is produced by the manufacturer carries a high tariff, when the manufacturers themselves appeal to the tariff board or a reduction in the duties on raw materials and ask that there shall be incorporated in the description of the tariff items in which they are interested a phrase reading something like this, "Free when imported by a manufacturer for use in his own factories?" When you find things like that in the tariff, do you wonder that the farmer, driven to extremities by conditions which exist, sometimes thinks he can step in and get a'few of the crumbs that fall from the rich man's table? If the manufacturers are so fond of protection, is it not surprising that they sometimes ask for drawbacks. They tell us that tariffs do not increase the price. The hon. member for Greenwood told us that this afternoon, that tariffs do not increase the price of agricultural implements; yet I pick up a copy of the auditor general's report and here are some of the items I find.
Canadian Canners Limited received $150 000 m drawbacks. The Ford Motor Car Company which tells us every few days that tariffs do not increase the price, although the tariff board found that the tariff accounted for an extra price of $18,000,000 for motor cars received $1,286,000 in drawbacks. General Motors received $761,000. And here is a delectable item: The Massey-Harris Company received $34,583 in drawbacks, because they accepted the gospel that tariffs do increase the

Farm Implements Committee Report
price of commodities which they import, but apparently they do not increase the price of the commodities which the farmer wants to import.


William Alexander Fraser: These drawbacks were on export business.


Robert John Deachman: Why did they want the drawbacks on exports? When they had to meet the open competition of the world they wanted a drawback, but when they sold within the sheltered market of Canada they thought they could charge it up to the farmer and they did not ask for a drawback.


William Alexander Fraser: Maybe they have to compete with cheap foreign labour abroad.


Robert John Deachman: If the manufacturers want to stand up to the test, will they ask that the duties on these articles they import be retained? By their very action they have denied the gospel they support. They pretend to accept it when they want to apply it to others but not when it is applied to themselves. May I suggest to my hon. friend who is keenly interested in this problem that he should make a statement in the house and defend the cause of protection?


William Alexander Fraser: I have spoken.


Robert John Deachman: I have not had the pleasure of hearing him defend it. When I had the pleasure of hearing him he was on a different tack. It was during the election.
The whole problem before us is this, and I submit it to the hon. member for Greenwood and to all others in that part of the house, especially to the hon. member for Haldimand (Mr. Senn). The position of agriculture in the Dominion of Canada is a very serious one. It is one which requires the careful attention of every thoughtful man in this dominion, whether he be a manufacturer or whatever his business, and I would like to suggest that not only in parliament but among the members of the Canadian Manufacturers' Association there ought to be some consideration for the interests of the farmer because the burden is becoming too great to bear.
There is this basic fundamental problem before the people of Canada to-day, and unless you can solve your agricultural problem you will have more difficulties in this dominion in the next ten years than you have ever faced before. It was a great Englishman and a great imperialist, Lord Rosebery who once remarked, 11 There is not a crofters cabin in the Hebrides nor a close in the darkest quarter of Glasgow that is not a matter of imperial concern." There is not a farmer in the dominion, no matter how poor he may be, 
but ought to receive from this house the most careful and thoughtful attention in order that the problems he faces may be settled, and settled honestly.
I have submitted facts which show that under the conditions which obtained between 1931 and 1935 the labourer received his share, and the manufacturer received his share. They got theirs with interest, and the entire burden of the depression was borne first by the farmer, who suffered the greatest losses, and then by the other basic industries of the dominion. Unity? We ask for unity, but can you have unity without justice? Can you maintain in the dominion a condition in which to some companies are issued letters of marque, permitting them to exploit other people if they care to do so?
The hon. member for Haldimand told us to-day that he was quite willing to trust the manufacturers if the tariffs were raised high and the goods of other countries were kept out. But in the period from 1931 to 1935 he had the very condition existing for which to-day he prayed, and the figures I have given prove that, given the opportunity, and with every factor on their side, the workers and the manufacturers together said: We shall keep our share, and the farmer can take his chances so far as we are concerned. I submit to the house that under those conditions we cannot trust them, and the best way to control the situation is to remove the privilege which the manufacturers hold and let them meet open competition just as the fanners of the dominion have to meet it. Only as we do that; only as we approach that ideal, can we hope to solve the problem of agriculture in this dominion. That at least will help, and I know of nothing else that will.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Mr. W. G. CLARK (York-Sunbury):: With respect to the interesting and valuable report presented by the hon. member for Lake Centre (Mr. Johnston), I should like to make some observations. I have been connected since my youth with the farm implement business, and I can well recall many years ago having visited Brockville, which is I believe in the constituency of the hon. member for Leeds (Mr. Stewart), to buy farm machinery from a manufacturer then located there. It has been my expeiience that since that time there

Farm Implements Committee Report
has been an advance of two hundred per cent in the dealer's cost of certain types of implements then made there.
Having dealt with the International Harvester Company for forty years, I know that company to be a reliable, enterprising, strong, well managed concern, a good company with which to do business; but in all my experience of advances, the one put into effect on November 1 last seems the one impossible to justify, the one most uncalled for. It appears that it must have been planned for in the early summer, when the tendency, especially in the United States, was towards advances, but the present recession had come before the large advances were actually put into effect. This recession not only applied to certain materials entering into the manufacture of the implements but also to the prices of the products of the customers of the implement companies. I should like to mention some of the advances put into effect by the International Harvester Company on implements in general use by farmers, as applying to the east:
Advance on November
1,1937
Binder, 5 ft	
$18	50Mower, 5 ft	
10	00Rake, 10 ft	
4	25Manure spreader, No. 4 A	15	50Fertilizer drill, 11 disc.	17	00One-row potato planter, with fertilizer attachment	
16	25Potato digger, No. 4..	25	50Potato digger, No. 6. ..	27	50
Present (1938) price $267 00 115 50 59 75 204 50 190 00
168 25 200 00 204 00
It was stated in a letter quoted by the hon. member for Renfrew South (Mr. McCann) with regard to a cream separator concern. that it made a reduction in 1933 because of the low price of farm products. If the same consideration had been given generally to that idea, certainly the manufacturers in Canada would not this year have made such marked advances in the prices of farm implements. At the present time a large number of farmers in New Brunswick have, as their surplus crop to dispose of, potatoes. Potatoes are selling now for fifty cents per barrel of 165 pounds. That, I suppose, would be the equivalent of wheat at twenty-five cents a bushel, and we can well understand that if wheat in the west was only twenty-five cents a bushel there would be more demands from the west than there are now. We find that on planters with fertilizer attachment the advance put into effect on November 1 is $16.25, so it will take thirty-two barrels of potatoes to pay the increase alone in the price over last year. If a farmer wants to
buy a digger, the increased cost of which is $27.50, it will take fifty-five barrels of potatoes to pay the increase, or 400 barrels of potatoes, 165 pounds to the barrel, to pay for that digger alone, an equivalent in cost of production to, say 800 bushels of wheat. That is just for a horse or tractor drawn digger; it does not include the power.
It cannot be assumed that the advance is due to the increased cost of materials, because the parts that were on hand were advanced 15 per cent, and they did not cost any more on November 1 than they did on October 31. In that case it was simply a mark-up. Included in the advance are parts made of cotton, and it is well known that cotton has been reduced in price some forty per cent. In spite of that, the manufacturers advanced the price of the finished article. Evidently they got together in regard to prices and made the mark-up without due regard to conditions and costs.
I am uncertain as to whether the duty has any effect in this case, because the present duty on the principal farm implements is only 7j per cent. My suggestion is that the government should send a representative to the large manufacturers and ask that the last advance be cancelled and that the prices be restored at least to what they were last year; for it can surely foe shown that the drastic advance was not justified and will result in a materially lessened sale as well as being a hardship to many farmers throughout our dominion. I quite agree that the potential market for farm implements is great, and that if prices of farm implements were reduced and prices of certain farm products advanced the demand for implements would be very large. Let me give a little instance. In one part of New Brunswick a good salesman made a survey last season. He brought in the names of some fifty-five farmers who wanted to buy mowing machines, but they felt that on account of the low prices of farm produce and other difficulties they would have to postpone the purchase. The result was that not ten per cent of those farmers made purchases last season. Apply that to other lines and extend it throughout Canada, and it will be seen that a proper relation of prices of farm implements to that of farm produce would bring about an enormous demand for the manufacturers to supply. It would be to their interest now to reduce prices at least to what they were last year, and so win the good will of parliament and the people of this dominion.
2588	COMMONS
Farm Implements Committee Report


Mr. F. D. MacKENZIE (Neepawa):: In my opinion the chairman and the committee which brought in this report are to be congratulated upon the fine piece of work they have done. They have completed a thorough job and brought in a unanimous report embodying thirty-six conclusions and recommendations which the house should speedily pass for governmental action. The committee was composed of members of every group in the house, and the report was unanimous; why then should there be any delay in implementing the recommendations? The House of Commons appointed this select special committee on February 1, 1937, to continue and complete the inquiry begun the year before by the standing committee on agriculture. The report was presented to parliament on April 7, 1937, and the understanding then was that the house would be asked to express an opinion at the present session.
While the inquiry was national in scope, the problem is peculiarly acute in western Canada, and the position of western agriculture is emphasized in the report, although full consideration was given to the whole country.
Some trouble apparently arises from the fact that nearly all the Canadian companies manufacturing farm implements are located in the province of Ontario, so to the other difficulties under which western Canadian and maritime farmers suffer is added the cost of freight, and there have been indeed many other difficulties to which it can be added.
As regards the condition of agriculture in the last decade, let me quote from page 1217 of the report:
It needs little argument to support the general statement that the economic condition of agriculture since 1929 has been extremely bad. Almost every factor that could possibly affect the position of the farmer has operated to his disadvantage during that period. In western Canada the coincidence of poor crops over a long period and of abnormally low prices for farm products, combined with unfavourable world and local conditions, made the farmers position a particularly unfavourable one. While industry attempted to restrict its losses by decreased production, entailing the laying on of employees, the reduction of expenses, and by the maintenance of prices for its product, the farmer, by virtue of being forced to market his products at prices largely determined by agencies other than himself, has had very little control of the financial results of his industry.
Note these phrases: "Coincidence of poor crops over a long period and of abnormally low prices for farm products. This combination of factors would be disastrous enough alone, but note what accompanied them. 
Those factors, "combined with unfavourable world and local conditions," as we are told, could not fail to make "the farmer's position a particularly unfavourable one."
We know that both dominion and provincial governments stepped in and spent large sums of money by way of relief to keep the farmer in business, and large sums to stabilize agricultural conditions in parts of Canada. And, to quote again, the committee felt, or hoped:
.	.	. that it is quite fair and proper topoint out to the farm implement manufacturers that these governments are spending such sums in order to keep the farmers, who constitute the customers of the farm implement industry, on their farms, and to stabilize and improve their condition. It is therefore not too much to expect the farm implement companies, who will indirectly benefit thereby, to make a substantial contribution toward the same end, and that this contribution should consist of supplying the farmers of Canada with the implements of production at the lowest possible price .	.	.
That was indeed a pious hope of the committee, but apparently one of those hopes deferred that make the heart sick. Was that expressed hope of the committee well founded? Did the wish fall on receptive ears? Was the hope fulfilled by the future actions of the farm implement manufacturers? Let events occurring since that time be the answer. This report was brought to the house on April 7, 1937, and before that summer was over the farm implement manufacturers further advanced their prices by 7-8 per cent. That is how they answered the hope of the committee.
The committee also studied the financial structure and results of the principal implement companies from 1926 to 1935. They delved exhaustively into costs, prices and distribution of implements and repairs and parts over a large range. These matters are all set out and analyzed in many instructive charts, which well repay study. On the matter of repairs the finding is significant and well worth quoting. It is found on page 1275:
It should be kept in mind that the use of "repairs" is the "poor man's" method of keeping his implements in good condition when his financial position will not permit him to purchase a new machine, and that every effort should be made by the companies to keep the price of these repair parts as low as possible. This, in the opinion of the committee, the companies have signally failed to do.
Surely no comment is needed on that.

Farm Implements Committee Report
The committee also looked into the matter of tariffs, and made some pertinent statements on this subject. Here is one on page 1288:
The committee is of the opinion after considering all of the evidence submitted that a reduction in tariff undoubtedly should, and actually does, in the long run, operate to reduce to the lowest competitive figure the ultimate price to the consumer.
Again at page 1291 we find this summing up of the portion of the report dealing with the effects of tariffs and trade barriers:
To sum up, therefore, the committee is of the opinion that the reduction on tariffs should find its full effect in a comparative reduction in price levels unless the element of true competition is lacking. If this element is lacking it nullifies to some extent the natural effect of such reduction.
They go much further than that in the case of one implement, the cream separator. They recommend without reservation, in paragraph 16 appearing on page 1295, that cream separators be placed on the free list. On Tuesday, March 15, the hon. member for Selkirk (Mr. Thorson) dealt exhaustively and exclusively with the question of cream separators and made out what I considered, and other hon. members agreed, was an unanswerable case for cream separators being placed on the free list. The complete case for making cream separators duty free is embodied, I submit, in that speech.
Then in paragraph 17 we find this:
That reduction in the tariff should and does, in the long run, tend to lower the price level to the farmer, depending on the extent of free price competition in the industry.
In view of the findings of the committee; in view of all the information upon which those findings were based, and above all in view of the action of the implement manufacturers in impudently flouting the government and the committee by increasing prices in 1936, with a further increase of 7-8 per cent last summer, after this report was presented to parliament, which increase means a new and unjustifiable levy of around $4,000,000 on the farmers of the prairies alone for the benefit of the makers of the tools they use, I cannot see why these implements should not be placed on the free list, and why resolution No. 17 should not read in that way.
In closing, may I quote short extracts from two letters received within the last few days, which set forth the considered opinion of the thinking farmers in this country:
The report of the special committee of last year, they feel, is a call to action which ought not to be ignored, and there seems to be no action in sight just now. They view this with
extreme disappointment. That a widespread injustice should not only he permitted to continue but actually be allowed to increase creates a very grave situation.
Then, from the other letter:
We are very much concerned about this situation. The implement people appear determined to over-ride the conclusions and recommendations of last year's committee and to press still more extortionate prices in 1938. We think this is a challenge to Canadian democracy and we are looking for unified action on the part of the representatives of rural Canada.
As I see it, Mr. Speaker, that is the situation. Action is called for here, definite, effective and undelayed. That action should be, on the part of the government, to wipe out all duties on all farm implements.


Mr. BRUCE McNEVIN (Victoria, Ont):: Mr. Speaker, in rising to take part in the discussion of the report of the special committee appointed to investigate prices of farm implements, my first thought is to avail myself of this opportunity to extend my congratulations to Mr. Graham, the solicitor, and Mr. Macdonald, the chartered accountant, upon their untiring efforts and effective work, which greatly facilitated the investigation.
The point that interests me most in respect to this matter is the present extremely high price of farm implements, especially when compared with the past and prevailing prices of the products which the farmer must sell in order to pay for the implements required to operate his farm. The object of this investigation was not to set the farmer against the implement manufacturer or vice versa, but, through a complete survey of the entire question relative to the manufacture, transportation and distribution of farm implements, to ascertain whether or not the increase made early in 1936 in the prices of this type of farm equipment was justified, and, if not. what action within the scope of governmental jurisdiction might be undertaken to assist in reducing the cost of these implements. I am aware that power is not vested in governments to state at what prices produce or equipment or goods must be sold within or without the boundaries of our country. In fact, I am not one of those who believes in regimentation or government control of agriculture, industry or business. Yet governments have control of fiscal policy, which is an instrument that may be used to promote the best interests of the greatest number of people.
I now come to a point which must not be forgotten. I refer to the necessity of maintaining the lowest possible price for all implements used in the production of natural
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wealth by means of agriculture, mining and forestry. The prosperity of this dominion depends to a large extent upon the development of our natural resources. Huge quantities of implements and machinery are required for this purpose, and in my opinion it is the duty of the government to see that everything possible is done to prevent exploitation of the producers of natural wealth through extremely high implement and machine prices.
The argument has been heard in recent debates on this question that the cost of farm implements represents a very minor expense to the farmer. I take strong exception to this assumption. The cost of the ordinary group of farm implements to be found on the average Ontario farm-and in this connection I am referring to the horse-drawn type of implement, thereby eliminating tractor or power machines-would amount to approximately SI,800. During his lifetime the average farmer will wear out two outfits. Add to this the high cost of repairs, and I am confident hon. members will agree with me that this represents a major item of expense to the farmer. In support of that contention I might say that on my farm I am using my third plough, my second binder and my second mower, so I feel that this statement is quite within the bounds of reason and truth. If we take the net income of the average farmer in the province of Ontario as given to this house by the hon. member for Huron North (Mr. Deachman), amounting to S365 a year, if my memory serves me correctly, it is not hard to figure out how long a farmer spends during his lifetime working to pay for these implements.
I come to another point which I desire to bring to the attention of the house. If during the period when the sale of implements almost reached the vanishing point, due to the greatly diminished purchasing power of the farmer, the implement companies had substantially reduced the prices of farm implements, this would have stimulated the purchase of these implements, which would have resulted in greater profits for the implement manufacturers and increased employment for those engaged in the implement industry.
In connection with credit or time sales there seemed to be ample justification for the implement companies to provide for an increase in the percentage of the cash or down payment, as it is commonly called; yet, in my opinion an exorbitant rate of interest is charged the farmers for the balance of the time payments. Furthermore, in recent years this cost has been materially increased. Let

us take what might be described as staple implements on an Ontario farm, namely a binder, a disc drill, a mower, a ten foot rake and a four section harrow. The per annum rate oif interest prevailing in connection with time payments on these machines for 140 to 180 days will amount to at least 16 per cent, a rate of interest which, I am sure the house will agree, is much too high.
In order to determine the true position of the farmer with respect to an exchange of the product of his labour for the implements required to operate his farm, I shall place on record approximate figures covering this point for the years 1913, 1926 and 1936. For this purpose I am using two typical implements used on an Ontario farm.


Richard Bedford Bennett: Are they in the evidence?


Thomas Bruce McNevin: Yes; they are a six foot mower and a 13-run single disc drill. As regards farm produce, for the purpose suggested I am using two items produced extensively in Ontario, namely butcher cattle and butter fat, based on the market price at Toronto.
In 1913, 1,008 pounds of butcher cattle were required to purchase a six foot mower, while in 1926 1,600 pounds were required, and in 1936, 2,373 pounds. In connection with the disc drill we find that in 1913, 1,391 pounds of butcher cattle were required to purchase the drill, while in 1926, 2,464 pounds were required, and in 1936, 3,407 pounds.
Then, covering the same point, and using butter for the purchase of these two machines, we find that in 1913, 205 pounds of butter fat were required to purchase a six foot mower, while in 1926, 244 pounds were required, and in 1936, 423 pounds. In connection with the drill we find that in 1913, 267 pounds of butter fat were required to make the purchase, while in 1926, 376 pounds were required, and in 1936, 608 pounds.
I come now to the recommendations of the committee with respect to placing cream separators on the free list. In this connection may I say that during the debate some objections have been made with respect to the amount of time given by the committee to representatives of companies manufacturing cream separators to present their views. I am of opinion that sufficient time was allowed to cover the important points, in addition to'the information secured by correspondence with the interested companies.
I shall now proceed to give comparative figures in connection with cream separators, on approximately the same basis as that used a few minutes ago with respect to typical

Farm Implements Committee Report
farm implements. We find that in 1913, the proceeds from the sale of 320 pounds of butter fat were required to purchase a No. 16 De Laval cream separator, while in 1926, 250 pounds were required and in 1936, 430 pounds.
In connection with costs in the production of cream separators I understand the costs of the De Laval Company consist largely of materials purchased from the parent company in the United States or Sweden. According to information filed with the committee this item amounted to $50 for the No. 16 separator. The labour cost on each separator in the Canadian plant amounts to only $1.64. Therefore this company cannot do a very great deal of manufacturing in Canada in connection with the production of cream separators. The Canadian plant is in reality only an assembly plant. I would not be surprised to find that as a result of this situation substantial profits are retained by the parent company in either or both of the countries referred to, thus affecting the profit of the local company.
In view of these circumstances there seems to be ample justification for the attitude taken by the committee in recommending that cream separators be placed upon the free list. During the afternoon and formerly in this debate much has been said with respect to cooperation and unity in Canada. No one is more anxious than I am to promote sentiment of that kind. But let us consider what the farmer, the farmer's wife, son or daughter who turned a cream separator from 1931 until the first of this year received by way of an hourly wage. What did they receive for the labour expended in that operation? The answer is, far below a living wage. I am free to admit that in the months of January, February and March of 1938 butter fat did reach a substantial and profitable price. In my remarks I do not desire in any way to speak disparagingly of any citizens of the dominion or with respect, particularly, to those of the city of Toronto. But what did we find? We found that when butter reached thirty-eight or forty cents a pound, the women of that city banded themselves together to force down the price. I maintain that if we are going to develop unity in Canada, we are fully justified under such circumstances in rising in our places in the house and defending the rights and needs of those engaged in butter fat production in this province of Ontario.
In view of the foregoing facts it is not surprising that agriculture enjoyed prosperous times in 1926, because there existed
at that time a reasonable balance of value between the farmers' sales of produce and their purchases of machinery and other commodities, I am sure the house will agree that the prosperity in the period referred to was not confined to the agricultural population, but was enjoyed to the same extent by all citizens of the dominion.
In order to determine whether the suggested increase in price early in 1936 was justified, or not, I shall make an analysis of the total costs in manufacturing implements in Canada in the years 1934 and 1935. We shall divide the costs into three classifications, namely, material, labour, and burden, based on 100 per cent of the net sales realization. In 1934, the cost of material amounted to 40-22 per cent, the cost of labour, 11-1 per cent, and the cost of burden-which means all other items entering into the cost of the implement-to 35-82 per cent making a total for that year of 87-05 per cent of the net sales realization.
In 1935 the cost of material amounted to 37-08 per cent; the cost of labour, 9-92 per cent, and the cost of burden, 19-75 per cent, or a total of 66-75 per cent of the net sales realization. A comparison of the costs for the above-mentioned periods fully demonstrates that the suggestion of the implement companies to increase prices may be described as absolutely unwarranted.
Mr. Speaker, a discussion of this question would not be complete without reference to the budget of 1936 when the duty on farm implements was reduced to its present level of approximately 7i per cent. One cannot recall the discussion which took place in the house at that time without remembering the fear and apprehension which prevailed in the minds of some of the ihon, members to my immediate left. May I direct attention to some of the remarks made at that time by the hon. member for Greenwood, whose family has had a long and distinguished connection with the agricultural implement industry in several important countries throught the world. The hon. member is reported at page 2539 of Hansard of 1936 as follows:
The reduction of the duty on farm implements to 7J per cent does one thing and one thing only; it spells disaster to the implement industry of Canada. This means that the jobs of 18,000 men are threatened by the introduction of this tariff.
The hon. member is also reported on the same page as having stated that his chief interest was not in the implement industry, but in the men employed in that industry and their jobs.


Mr. DANIEL McIVOR (Fort William):: Mr. Speaker, I am not going to make a speech, but I am going to state a few facts and draw my own conclusions.
I visited a farm twenty-two miles west of Fort William, and I saw a separator which had done its work and was being cleaned up for duty again. I saw five gallons of cream in a can, and I asked1 the farmer how much he would get for it. He said, "Eighty cents." I was appalled. Five gallons of cream for eighty cents 1 And as I sit in this house and listen to the minister trying to induce the youth of Canada to take up farm life, I wish he would take a peek into that can of cream -five gallons for eighty cents. Those who have been brought up on a farm know what work that means. It meant many a tired hand. It meant getting up early in the morning; it meant the care of cattle, long hours of work. I do not say that is an argument against the price of separators, but I do say it is an inducement to protect not the seller of the separator but rather the man who buys it. I know something of organized labour, and I know it is pretty well able to take care of itself, but those who work on the farm have not been able to take care of themselves. The man in the factory works eight hours a day and gets at least forty cents an hour, but the young man on the farm could hardly make a living if he worked only eight hours a day. He works more like ten or twelve hours a day and more, and he does not get forty cents an hour. It would take many a can of milk to show enough profit to buy a pair of overalls for the farmer or a new hat for his wife.
We are told that the farmers in the west, as I view them in southern Saskatchewan, should be induced to go into mixed farming, but I would ask those who urge the farmers to do that to take a peek at that five gallons of cream for eighty cents.


Mr. EDWARDS:: Eighty cents a gallon?


Daniel (Dan) McIvor: No. Who should be protected-the manufacturer who makes the machine or the man who uses it? I congratulate the committee most earnestly upon the encouragement it gives to our farmers in recommending that cream separators and other implements be put on the free list.


Mr. E. O. BERTRAND (Prescott):: Mr. Speaker, I should like to make a few observations on this motion for concurrence in the report of the special committee that has been considering the high price of farm implements. So many have spoken already in this debate that it is difficult to avoid touching on some things which have already been discussed, but I noticed this afternoon that the hon. member for Haldimand (Mr. Senn) stated that during the period from 1890 to 1935 the implement manufacturers in Canada had merely made a profit of 3J per cent on the stock issued by these companies during that period.
To put before the house what the position of the implement manufacturer is, may I be permitted to state that one company merged with other manufacturers in 1891 with a capital of approximately 83,500,000, plus $1,000,000 added later, about 1911, and what has been the result for this company? In the period from 1891 to 1912 the following profits were made, and I am giving these figures because I want to show, in answer to what was put on the record by the hon. member for Haldimand, that in some periods the farm implement manufacturers have been fortunate enough to make large profits. The company in question paid cash dividends to the amount of SI 1.212,349; stock dividends to the amount of $8,500,000; a rest account was created of $6,500,000, and a special contingency account set up of $1,680,000. In addition, there were unallocated profits of $1,062,000, or a total of $28,959,349 on an investment of $3,500,000, plus $1,000,000 invested later. All that was made in a period of about twenty-one years, and when we are considering the whole situation in regard to the high prices of farm implements I think this should be noted and drawn to the attention of the government.
May I also observe that these immense profits were made during a period when farm
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implements were selling at comparatively low prices. In 1912, for instance, a six-foot mower, Eastern, was selling at S43.50; a six-foot binder, Eastern, S102; a six-foot hay loader, Eastern, S60; fifteen-disc seed drill, Eastern, $69. In 1937 the same machines had increased in price as follows:	Six-foot
mower, Eastern, S96.50; six-foot binder, Eastern, $225; six-foot hay loader, Eastern, $122; fifteen-disc seed drill, Eastern, $166. It will be noted that these priecs indicate an increase in the selling price running from 100 to 125 per cent over prices in 1912. In spite of that the farm implement companies again increased their prices on some lines of implements on November 1, 1937, the increase to take effect in 1938. Let us see how these increases compare with the prices of the commodities produced by the farmers. The index price, based on 100 in 1926, of all farm products in 1913 was 64. In 1930 it had risen to 86, and in 1937 the figure was 85. So 1937 shows a reduction of one point as compared with 1930, and an increase of thirty-three per cent over the index figure of 1913. How can the farmer stand an increase of 100 to 125 per cent in the price of farm machinery if he receives an increase of only thirty-three per cent in the price of his own products in the same given period.
The hon. member for Greenwood (Mr. Massey) said this afternoon that one of the problems facing the government was not so much to reduce the tariff on farm implements or to take other steps to reduce the price of farm implements, but rather to increase the purchasing power of the farmer. May I say at this juncture that the hon. member for Greenwood is simply suggesting that the increased buying power of the farmer should be used to enable him to buy machinery produced on a protected basis. But how can that be done? The farmer in this country has a surplus of products which has to be sold on the markets of the world and in competition with the products of other countries. Consequently, on the one hand he is compelled to sell on a world-wide competition, while on the other those on the opposite side of the house would require him to buy on a protected market the implements necessary to his production.
Let me point out that from 1930 to 1936 many farmers had to write down their invested capital, and the amount of money which was borrowed by them had also to be reduced in many instances in order to enable them to stay on their farms. Might not the manufacturer of agricultural implements be asked to write down his capital investment

correspondingly during a period of crisis, or be asked at least to arrange that profits should be paid only upon the real capital investment and not upon stock issued during periods of expansion? He might be enabled thereby to reduce the price of machinery.
The hon. member for Greenwood also said that the farmers of Canada have played a noble part in the development of our country and that they will gladly pay a few dollars more to help their fellow citizens who are working men. I do not doubt that they have done so in the past; indeed I am sure they have done it, and I am quite positive they are willing to play the game again in the future, but not to give larger profits to manufacturers of implements or any other products upon an unreasonable capital set-up. Consequently, I would ask the government to take means through the tariff structure not only to bring back these companies to reason but also by suitable measures to restore and secure to the farmer the ability to obtain his implements of production at the lowest possible prices. Canada will be prosperous if its farmers are prosperous.
In concluding these very brief remarks, I take pleasure as representative of an agricultural county, in supporting the report of the hon. member for Lake Centre (Mr. Johnston), and in asking the government to take whatever steps are practicable to secure in future for the farmer his implements of production at the lowest prices possible.


William Hayhurst: The debate on this subject is taking considerable time, but I feel that I should say a few words upon some of the questions which have been discussed.
As regards the remarks of the hon. member for Fort William (Mr. Mclvor), some hon. members interjected that no one would sell cream at eighty cents a can. In many parts of western Canada cream has been sold at seventy-five cents a can, and eggs at five cents a dozen, so that it has been extremely difficult for the farmer to live, especially during the depression years. It is certainly true that the farmer is kept solvent not by -his gross but by his net income. If the prices of farm machinery must be just and equitable, so should the prices of the farmers' production.
The speech of the Minister of Agriculture (Mr. Gardiner) was excellent in spots, and delivered with his usual force and precision. But I should like to remind him that it takes time for any policy or the benefits of that

Farm Implements Committee Report
policy to develop, and the report shows that when benefits are being obtained from a policy it frequently happens that the policy is changed or at any rate the underlying conditions are changed. Three years have now elapsed since the commencement of the agricultural investigation by the original committee; practically two years have gone by since the special committee first began to investigate the price of farm implements, and conditions have certainly changed during that time. I should like to read a little piece from the Manchester Guardian with regard to conditions on the North American continent since September, 1937:
The severe slump in American business activity, which started in September of last year, wiped out the gains of a three-year industrial recovery within the brief period of four months Many vague reasons have been put forward to explain this unparalleled decline, but it has now become evident that it was primarily due to (a) sharply rising costs and price disparities.
These have been largely discussed in the reports given by various members of the committee.
(b)	Excessive inventories.
There is no doubt that inventories of farm implements have been increasing especially when the purchasing power of the farmers has been so low.
(c)	Labour troubles.
That applies especially to the United States.
And in both countries:
(d)	Ever-increasing taxes. . . .
The downward trend was temporarily checked in January, and many administration experts confidently predicted that the depression had run its course. But the lull proved short-lived, and by the beginning of February trade indices showed signs of renewed recession. Some industries, such as utilities, building, and retail trade, whose business had held up extremely well, fell back rather sharply. . . .
The most serious obstacle to any recovery is to be found in the inventory situation. There is no doubt that the over-rapid piling up of inventories at the beginning of last year, as a protection against inflationary price advances and labour troubles, created a most unhealthy industrial boom, which people mistook for real prosperity. Although good progress has been made in the reduction of these excessive stocks, they are still out of line with current consumption in many industries.
The hon. member for Selkirk (Mr. Thor-son) spoke at length upon the cream separator industry. I should like to touch upon this subject, because it affects so many people in my constituency. One of the most important sources of revenue for the farmers
not only in Alberta but all over Canada is the cream cheque. While it may be true that large dairy farmers who are milking quite a number of cows with the intention of selling the cream after separation may not regard the price of a separator as high, many of our farmers are dependent upon a few cows, and the cost of a separator means much to them, especially when their cream cheques do not amount to more than $150 anually and, as I suggested at the beginning of my remarks, when the price of cream becomes at times so low. These farmers usually raise large families and depend upon them for assistance around their farms. The cream cheques of these farmers are too small to enable them to pay high prices for their cream separators.
There is no doubt that tariffs increase the prices of home manufactured articles, or why would the manufacturers fear the competition in>
the dairying industry of the Viking and other imported separators. In the investigation it was found1 that prices of implements frequently rise because of the increase in the cost of raw material, which may be brought about by rearmament or other factors. But it is equally evident to the committee that excessive inventories and excessive capitalization increase the prices of articles within the country. It seems to me that if the tariff were lower, Viking and other makes of separators could be delivered in this country at a reduced price. We in the west realize that the country must have revenue to carry on its development and at the same time assist in creating local markets for our products. Hon. members realize that the consumer eventually pays the duty, and that wherever the consumer lives, whether in the east or the west, he is indirectly contributing to the revenue of the government. No objection can be taken to a tariff that affords industries indigenous to Canada reasonable protection against competition from low wage countries. It is strange to hear some members of the Liberal party advocating a higher tariff and others a lower tariff. Certain provinces gain by the tariff; others lose by it. This inequality should be offset by some form of compensation for those which lose by the tariff. Canada's national tariff policy is costing the prairie provinces much more than it should, because the price increase occasioned by duties is a burden that western people find it hard to bear. It is both short-sighted and inaccurate to say that the prairie provinces have brought their present troubles on themselves by their own action, and that it is up to the west to work out its own solution. I
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should like to quote from an article which I wrote myself some time ago on the national policy of Canada:
Canada is admittedly a difficult country to govern, as its geographical configuration suggests. What pleases one part of Canada frequently displeases another part. Tariffs are difficult to adjust with any degree of satisfaction all around. When the national policy was brought down in the budget of 1879 it was made abundantly clear that it was designed, as its name implies, to confer benefits upon the varied interests of the entire dominion. The government of the day denied in the strongest terms that it was intended to confer special advantages upon any one section of the country. On the contrary it was calculated to strengthen, revive and create manufacturing industries in all the provinces of the dominion, thereby establishing, it was declared, a larger home market for agricultural products in each and all of the provinces. Such were the motives and purposes of the national policy. But what do we find? To-day western Canada is suffering for want of local markets.
In pre-depression days the purchasing power of the prairie provinces contributed substantially to t)he industrial employment and general prosperity of eastern Canada. In fact, it was only with the development of the west that eastern Canada began to prosper. In the west there has been overemphasis in the past on wheat production. Less work is expended for the amount of returns in large scale wheat production than in any other branch of farming. Consequently, when mixed farming became general, western people took a deeper interest in the price of farm implements, such as the cream separator, used in this work. It is all very well to talk about raising the prices of farm machinery because you have to increase the wages of the employees, but when these men enjoy life through higher wages the farmers should be able to enjoy life because of the better demand and better prices for their products. So, if it is necessary to raise the price of machinery, some measure of justice should be done the farmers by raising their prices. These prices must bear some relation to costs. So long as manufacturers' prices are falling they can regard prices for their products with equanimity. Naturally manufacturers' costs do fall with the introduction of more efficient labour-saving devices. This enables them to sell at a lower price with a sufficient margin of profit, thus benefiting the consumer. Our farmers are mostly small scale producers who cannot employ large labour-saving machinery in order to reduce their costs to a minimum. Their standard of living is lowered because of these things, and they cannot purchase the machinery which the manufacturers produce.

It was stated by the hon. member for Macdonald (Mr. Weir) that all groups in the house had sufficient representation on the committee, especially the special committee. But I am very sorry to say that the members of the committee were not selected for their representation of agricultural areas. I should like to commend all the members of the committee for their long-suffering patience in hearing the tremendous amount of evidence submitted. But, on looking over the names of those forming the special committee, I find an unusual situation in regard to representation by provinces. We find one member from Nova Scotia, two from New Brunswick, three from Manitoba, three from Quebec, six from Ontario, seven from Saskatchewan, three from British Columbia, and none from Alberta or Prince Edward Island. Looking at the hon. member for Edmonton West (Mr. MacKinnon), if the Liberals wanted to put on the committee a Liberal from Alberta they might have chosen him. This all seems strange when we consider that Alberta is one of the largest mixed farming areas in all Canada. It seems to me that that province should have received more recognition in regard to the committee personnel.
It is well known that many Liberals advocate the raising of prices by means of tariffs, and many propose to lower prices by lowering tariffs. The choice offered to the free and enlightened elector is twixt Tweedledum and [DOT] Tweedledee. In that regard I should like to read a short extract from a speech delivered in the session of 1937 by the right hon. leader of the opposition (Mr. Bennett) in regard to this question as we have observed it this afternoon, when we saw certain members of the same party sniping at each other as to what is best in the interests of the farmers in regard to tariff policy on farm implements. It is strange that after we have an expert committee investigating, and experts giving their views to this committee, we are no further advanced, because evidently they have not persuaded any hon. member whether he should vote for high or low tariffs, or whether the agricultural implement companies are dealing justly with the farmer. Speaking towards the end of last session the right hon. leader of the opposition said, as reported at page 2924 of Hansard for 1937:
In the circumstances, Mr. Speaker, in taking my seat I can only congratulate the government upon this masterly demonstration of their ability to hold under their banners troops who are marching to different objectives; who in times past marched shoulder to shoulder in a battalion to accomplish the defeat of a common enemy; and who, that victory having been won,

Farm Implements Committee Report
find it no longer pleasant to reflect upon that past, and instead of fighting shoulder to shoulder, are now fighting back to back, not for the purpose of destroying protection but for the purpose of rendering some assistance to a downtrodden country. And in the meantime the consumer who is not a member of the league can but hope some day to join it.
Every effort is made to rivet the attention of the public on tariffs, while crisis succeeds crisis and the mortgagee grips the land with ever greater tenacity. Political democracy is beginning to perceive that its very life depends upon winning economic democracy. The equitable distribution of opportunities, income and property within our nation will not only ensure internal peace and progress but, by the diminished pressure of the need for external markets for our goods and capital by reason of the increased volume of home consumption, will abate the perils of international conflict. The productivity of brains in industry and agriculture has hitherto found lucrative vent in supplying the growing needs of a rapidly increasing population, but the disastrous collapse of industry and employment since 1929 has made it evident that full recovery demands higher wages and more leisure for labour together with an expansion of public expenditure on works and services calculated to reduce the profits of capital.
I trust that something good will come out of the discussion which has taken place in the house with regard to this investigation into the prices of farm machinery, and that these prices to the farmer will be reduced to conform to the prices of the products which the farmer has to sell. Because there is no just relationship between the prices at which the farmer has to sell and the prices he has to pay for manufactured articles, a great deal of unrest has developed in Canada. That is not good for the country. A better situation can be brought about only when the farmers, who are the back-bone of the country, live in a certain state of economic independence.


Mr. G. W. McDONALD (Souris):: Mr. Speaker, I have read and studied the report of the special committee appointed by the house to investigate the prices of farm implements, and I agree with the recommendations of that committee. It is quite true that the committee was composed of men inclined to be sympathetic to the best interests of farmers; but no fault should be found with that, because if the house would legislate and do more in the interests of the farmers there would not be very much wrong with the implement industry. That industry would be prosperous, because, as the farmers of this country become prosperous, there is 51952-165
no doubt that the number of men employed in the manufacture of implements will be very greatly increased.
Abuses creep into every business and industry as time goes by, and I am quite sure there are some in the farm implement business. For some thirty-five years I have been engaged in the retail end of that business. I do not pretend to know anything of what it costs to make an implement; but I do know something about the retail side of the business, which has to do with the cost of distribution, because in the price of all farm machinery a certain amount is allowed for agents' commission. Sometimes, when the companies find competition pretty keen, they perhaps employ too many salesmen, and in the set-up of the implement companies I think there is one weakness. They have two separate departments, a sales department and a collecting department, and the one has little or no sympathy with the other. The salesmen are instructed by the company to go out and sell as much as they can, which is a very natural thing to do. Then, in the fall of the year, if conditions happen to be bad, they put on more collectors, and those collectors are out to get every possible cent. Some of the makers of farm implements in this country are not running their own business at the present time; they find themselves in financial difficulties. To-day one of the biggest manufacturers of farm implements is in the hands of one of the great financial houses of Canada. These people know little or nothing about the troubles of the farmer, and they are going to collect every cent possible; that is their business.
I believe that in the early days of this business some of the companies did make money. I know the United States companies doing business in this country are pretty well financed; they are pretty strong and are able to stand a few years of depression. On the other hand, I believe some of the Canadian companies are not in a very good financial position. They may have made good profits in the past; there may be too much water in their set-up at present-I know nothing about that-but they are in difficulties to-day, and I am not sure that the removal of the 7| per cent protection which they now enjoy is going to improve the situation very much or reduce the price to the farmer. I am just a little afraid that it will not do all that the house is expecting it to do. However, since abuses have crept into the industry, and since this is about the only weapon the house has available, I shall have to support the recommendation of the committee if they advise the abolition of that protection.

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That is particularly true with regard to cream separators. My good friend the hon. member for Fort William (Mr. Mclvor) was not in error when he said that five gallon cans of cream were sold for eighty cents. I saw them being sold for that amount, at a time when manufacturers of cream separators in this country were enjoying the very highest protection, though the farmers were getting the lowest revenue they had received in years. Such conditions cannot continue, and if this committee recommends something that appears a little drastic it is not to be wondered at.
The complaint has been made that the cost of repairs is too high. It is true that repair parts cost more than the parts which go to make the complete machine, but there is no doubt that repair parts should be somewhat higher. It takes an army of men to look after these repair parts. I think I am not exaggerating when I say that in the city of Winnipeg to-day there is between 8500,000 and SI ,000,000 worth of repair parts, and it costs a great deal of money to carry them. The best machine in the world is no good if it is standing broken down in a field of wheat, and there is no repair part within fifty or a hundred miles. These parts must be kept at the shops of the agents if they are to be of any service to the farmers. That costs money; it means express charges, and there must be a man on hand who knows his business. They change these machines so often that it almost requires an expert to get the right parts.
Someone has suggested that the machines should be standardized. Apply that to any other business in this country and see what you get. For example, try to apply it to ladies' wearing apparel and see how far you can go. If the machines were standardized and every company could make the same kind of wheel or boxing or gear, there would be no competition. What would be lost in quality might be saved in price, but that does not help you on a harvest day when a machine is broken down and you cannot get it to give service. It costs money to carry all the repair parts.
Someone has said that distribution charges are too high. They may be. But I wish to point out that no one knows to-day how many binders, how many threshing machines, how many tractors or how many machines of other kinds will be needed to harvest Canada's crops this year. If those crops are heavy a great deal of machinery will be required. That stuff cannot be made in July and August; if we wait until that time it will be too late. The warehouses must be filled

with goods ahead of time. The machinery must be placed at strategic points throughout the country if it is going to be of any use to save the crops which it is hoped we will harvest, in view of sufficient moisture in the western provinces.
In 1915 I was in the implement business, and as part of my business I supplied binder twine. I do not know where the crop of that year came from. I thought it was a short one, but I do know that we sold more twine in that	year than	we	had sold in any	yearbefore.	We could	not	get the twine in	Canada. I	was agent	for	the International	Harvester	Company.	I	would telephone	our
office at Brandon, and every second day the express car on the train of the Great Northern, which ran through Boissevain to Brandon, would bring us 10.000 pounds of twine. Had it not been for that supply we would not have harvested the crops. There was at the time no company in Canada which could supply the twine in sufficient quantities. We happened to be on a branch line where we had good service with St. Paul and Minneapolis, and we succeeded in getting our twine every second night.
As I have said before, no one knows what the crop in Canada this year will be. If we are to harvest it and save it, we must have machinery stored at certain points where the harvest is likely to be heavy. It costs money to do that. I have made these statements in favour of the implement companies. Possibly, if the committee had sat down with the different farm implement manufacturers and asked them about their problems, some better arrangement might have been reached.
In 1931, when I saw the price of farm produce going down to a point where I knew the farmer could not pay high prices for farm implements, I wrote the International Harvester Company and the John Deere Company, for which I acted as agent, and pointed out that if they wished to keep the good will of the farmer the best thing for them to do was to reduce their prices by at least 25 per cent. I gave as a reason that the farmer would not be able to buy unless a big cut was made in the price of implements. He was not receiving prices which would permit him to pay high prices. However, they both wrote the same kind of reply in which they stated that they were confronted with the high price of labour and materials in the implements they had1 to sell.
I know it would not be wise to accept and I know that no manufacturing company would accept, as a long term policy, one which stipulated that it should sell goods below

Farm Implements Committee Report
cost of production. But I must point out to the house that the crop harvested in 1930 cost just as much to grow as crops for which the farmers received $1.25, $1.50 or $1.75 a bushel. For the 1930 and later crop they had to take a dollar, seventy-five cents and sometimes as low as twenty-five cents a bushel at points where freight rates were high. As is pointed out in the report, in order to retain the good will of the farmer I believe the manufacturers of farm implements should1 not have advanced their prices.
May I point out, however, that manufacturers of farm implements are not the only big business men who have made mistakes. The pulp and paper industry of Canada is suffering to-day because it got into the hands of big financiers, with a resulting over-production. Our flour milling industry is able to produce three or four times as much flour as it can sell. If any Canadian industry becomes prosperous, the financial interests are only too quick to get hold of it. They buy at the most reasonable prices, turn around and sell to the country at twice the price, and then slip out of business. That has been done in many instances. It may have been done in the past with the farm implement business; I think it was, to some extent.
There are certain factors which enter into costs. The statement has been made that the implement manufacturers are not making better machines to-day than they did some years ago. I say that is not so. The farm implement people to-day have made just as much progress in the perfection of their products as have the automobile manufacturers. We know the advances which have been made in the automotive industry, and I know we have better implements to-day than we ever had. The people who make farm implements are really the farmers' best friends, except that, like everybody else, they may be selfish in that they would like to see the farmer prosperous because they know, when he is prosperous, they will prosper with him.
I believe the committee is within its rights in recommending that the makers of farm implements should take into consideration the fact that the farmer is their only customer, and a time when he is not making money is not the proper time for them to advance prices. They should be willing to take their losses along with the farmers; no doubt some of them have done so.
If I understood the hon. member for Greenwood correctly, I understood him to say that in the new finance plan the makers of farm implements were charging only two per cent per annum.
5X952-165*
Mr. MASSEY; I said six per cent, and then one-quarter of one per cent for three months, which is two per cent per annum, making a total of eight per cent.


George William McDonald: In the west it is seven per cent. In addition to that, on an eight-foot binder there is a penalty charge of $11. If a farmer buys a binder on the 1st of August he has to pay for it on October 1. In the meantime he has to pay forty per cent for it when he gets it; there is a penalty charge of $11, plus a seven per cent per annum charge. I can see quite plainly where the makers of farm implements have overcome the hardships of the Farmers' Creditors Arrangement Act. When a man buys a machine to-day, a price, which is not the cash price, is set. There is a penalty included in it. If he desires credit for one month, three months, twelve months or two years, he must pay the interest for that period as computed, and add it in the note. It becomes part of the principal of the note, and in that way when these companies appear before a board of review, or when a farmer seeks to take protection under the Farmers' Creditors Arrangement Act, they are not going to have their interest cut off, as it has been in the past.
No matter what we do in this house, these men will try to protect themselves. That is only human nature; we would all do it if we had the chance. I am not speaking for the makers of farm implements, because I know nothing about their business. I do know, however, that they perform a good service for the farmers, and I should like to see the farmers and the manufacturers of implements working in harmony. I will support any measure the house may see fit to suggest to protect the interests of the farmers, because in Canada I believe their interests must come first.


Mr. D. G. ROSS (St. Paul's):: 
Mr. DEPUTY SPEAKER:: I regret to have to interrupt the hon. member, but his time has expired.


Douglas Gooderham Ross: I have only a very little more to say.


Some hon. MEMBERS:: Go ahead.


Douglas Gooderham Ross: The farmers have also had other privileges with respect to their products extended to them by empire and foreign countries under the trade treaties. That is as far as this country can go in that regard. It is not the fault of the industrial workers if the world price of certain farm products is too low. Some other method of assistance is necessary with respect to this problem. The dog in the manger attitude of suggesting taking away the livelihood of industrial workers because the farming community is in difficulties does not make for national unity, and it is a pity that such sentiments should be expressed. The prosperity of this country depends to an equal, if not greater, degree upon the prosperity of the secondary producer, the worker in the secondary industry, and upon team work between the primary and the secondary producer. We cannot have unity by attacking one section of the community, and in this case the attack is on the industrial worker.
In a spirit of all fairness I urge that this parliament recommend that this report be referred, lock, stock and barrel, to the tariff board in an effort to free industry and the workers in industry once and for all from political persecution.


Mr. HUGHES CLEAVER (Halton):: I
should like to take this opportunity, Mr. Speaker, to advance as fairly as possible the attitude of the farmers of my constituency with respect to this question, but before discussing that point I should like to answer one or two arguments which have been advanced by those opposed to the report.
A determined effort has been made to minimize the importance of this problem. I realize perfectly well that no farmer would be misled by any of the fallacious arguments that have been advanced in the house, but in order that hon. members who are not farmers might have a true picture of the

Farm Implements Committee Report
problem I should like to place on record some of the figures and evidence given before the committee. In advancing the argument that " Oh, well, the problem does not amount to anything anyway; it is a trivial matter," one hon. member went so far as to quote from an article which appeared three years ago in the Nor'West Farmer, stating that less than three per cent of the money spent by the farmer is spent on agricultural implements. If that hon. member had taken the trouble to read the evidence given before the committee, he would have found that the article in question was absolutely in error. In connection with one item the article was just over $200,000,000 in error. Anyone who has followed the proceedings of that committee could1 not be misled by such a quotation. It seems to me, however, a matter of great regret that an unreliable article, containing an unreliable conclusion such as this, should find its way into Hansard.
What are the actual figures? By referring to page 1215 of the proceedings of the special committee it will be found that according to the last census the farmers of this country had something over $650,000,000 of their hard earned money invested in farm machinery. Since there are just over 700,000 farmers in Canada, this means that the average investment in farm machinery per farmer across the dominion is between $800 and $900. It is a well known fact that farm machinery requires replacement much oftener than anything else in which the farmer invests his money. His house, his barn, his fences are much more lasting than his farm machinery. I think it is quite fair and within reason to suggest that farm machinery must be replaced at least twice as often as any other permanent equipment in which the farmer invests his money. If that conclusion is correct, it means that the actual investment of the farmer in machinery is closer to 24 per cent, or, in other words, nearly one-quarter of his total capital investment. That being so, this is no small problem to our farmers.
I must apologize for bringing this matter up again, but I think it is important. The hon. member for Haldimand (Mr. Senn) to some extent discounted its importance, but I do not agree with that. During the years of the depression, from 1930 onward, the farmers of this country were unable to buy the implements they required, or even pay for the repairs which were necessary. As a result, a deficiency or a backlog, as it has been termed, which is conservatively estimated at $200,000,000, has been built up during the years. If one considers also the fact that the normal purchases of farm machinery
by Canadian farmers amount to $50,000,000 annually, one will see that during the next five years, if the condition of the farmers continues to improve, they will be buying close to $500,000,000 worth of farm machinery. Is it not an important problem to them in connection with what they must pay for that machinery?
The next argument advanced was that we are persecuting the manufacturers of. farm machinery by holding an inquiry such as the one recently concluded. Personally I do not understand such an attitude. Here we have an industry subsidized by parliament to the extent of more than the total wage content of the goods they are producing; yet it is suggested that we are persecuting these companies if we ask for an accounting, if we ask what they are doing with the subsidy, the protection or the benefit we are giving to them. I submit that an inquiry such as this is not persecution, but that it should take place periodically in regard to all subsidized industries in Canada.


William Alexander Fraser: Would the hon. member agree to a similar inquiry into his jam manufacturers and the canners?


Hughes Cleaver: I have a great personal regard for the hon. member for Northumberland (Mr. Fraser), and I am quite prepared to debate with him any other problem which may come before the house. But I have a message which I wish to deliver on behalf of my constituents in regard to the question now before the house, and I must say that I decline to be side-tracked.
The farmers in my constituency have often reminded me, and if I read my history aright I believe it to be true, that the whole theory of protecting and subsidizing industries in this country was introduced and given to the Canadian people on the theory that infant industries required subsidies in order to become established in their early days. A great many of the farmers in my county are commencing to wonder when this lusty child is really going to grow up.
By referring to the report one finds that with respect to the industry in Canada 75 per cent of the business in connection with selling farm machinery is done by four large companies. The International Harvester Company do 33 per cent of the business; the Massey-Harris Company, 19-2 per cent; Deere and Company, 12-2 per cent, and the Cock-shutt Plow Company Limited and Frost and Wood, 11-6 per cent. In other words, these four large companies are doing 75 per cent of the total business.
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I should like to place on record as fairly as possible some figures showing the profits of these companies through the years. Time would not permit me to show the financial statements of profits of all of them, so for the purpose I have chosen the largest company, namely the International Harvester Company. Referring to the proceedings of the committee one finds that the International Harvester Company of Canada was incorporated in 1903, with an authorized paid up capital of $1,000,000, which was held by the United States parent company. What profits did that company make during the first ten years of its operations? On a capitalization of $1,000,000 the company made profits totalling $3,500,000, or an average annual profit during the whole of the ten years of 35 per cent. I do not need to make any comment as to whether or not that profit is a fair and reasonable one. The facts speak for themselves.
Then, during the next seven year period, from 1913 to 1919 inclusive, the company earned profits of 7-2 millions of dollars, or an average annual profit over the whole period of 18 per cent. Hon. members wishing to have those figures before them will find them at page 1224 of the report of the committee. It is obvious that a state, of affairs whereby there was an average profit of 35 per cent in the first ten years and an average of 18 per cent in the next seven years could not be permitted to continue. The companies would either have to reduce the selling price of their goods or increase their capitalization, in order to conceal the profits. What did this company do?
We find that in 1917 the practice of the company of making temporary borrowings during its heavy financing season was discontinued, and instead the capitalization of the company was increased not once or twice, but ten times. The following year, in 1918, the capitalization was again increased from $10,000,000 to $15,000,000. Notwithstanding these heavy increases in capitalization, the average yearly net profits over the whole period from 1913 to 1919 again held at 18 per cent. Once again no comment from me is necessary as to the fairness or adequacy of those profits.
For the period between 1920 and 1925 the company ran into rather serious times, and profits were materially reduced. The auditor for the committee stated that during this period a dividend of $3,000,000 was paid in 1921, and that in addition to this there was a definite retention of profits in the United States of America by the parent company estimated at over $4,000,000. There is some
[Mr. Cleaver.J
difference of opinion as to the actual profits earned for this period, but it would appear to be in the neighbourhood of five per cent.
Coming to the last period taken up by the committee, namely, that between 1926 and 1935, admitted profits were earned of $24,500,000 by the one company, operating in Canada. In addition to this the auditors for the committee stated there was a retention of profits by the parent company amounting to approximately $17,000,000, making a total profit, for the period 1926 to 1935, of $41,-
500,000.	I omitted to state that during the latter years the capitalization of the company was again increased, and in 1935 it stood at approximately $27,000,000. Imagine the capitalization of one company at $27,000,000, and it still being an infant company asking for protection! The company claimed that added to this capitalization there should be about $12,000,000 for machines produced in the United States plant and simply distributed by the Canadian company. To me it would make very little difference as to whether we considered the increased capitalization, plus the retained profits, or whether we disregarded both. But in order to be fair to the company I have added both of these to my computation.
If I read the statement correctly, the result is that the total profit earned in Canada by this one company, over the ten year period above referred to, from 1926 to 1935, would be $41,500,000. If we compute this on a capitalization claimed by the company, it shows a net profit over the period of just over ten per cent. On the other hand, if you wish to disregard entirely the profits retained by the parent company-and I urge that these should not be disregarded-the profits of the International Harvester Company in Canada over the last ten year period, ending in 1935, was 7-7 per cent. Did any farmer make any such profit during that period?
There is another matter I should like to discuss which I suggest shows conclusively the truth of the contention of the auditors to the effect that millions of dollars were retained by the parent company, and were not shown in the statement of the Canadian company, although actually earned by that company. In this regard it is only fair to say that the companies were not to blame, and certainly the farmers were not to blame. But some overzealous officials of the Department of National Revenue followed the dumping clause, or the value for duty clause, in the customs regulations somewhat too religiously. As a result we find a very startling state of affairs, one which is almost unbelievable. On account of our own tariff regulations we were

Farm Implements Committee Report
compelling the head office of the International Harvester Company to keep in the United States profits actually earned in Canada. How was that done? It was done in this way: The company found that they must bill machines built in the United States to the Canadian subsidiary at a price higher than they were billing the same machines to the United States plants. If they did not bill at that exorbitant price they were charged a dumping duty by our Department of National Revenue.
At this point I should like to read into the record a few of the questions put to and the answers made by the manager of the International Harvester Company. I read the following from page 417 of the proceedings of the standing committee on agriculture and colonization for the year 1936. Mr. Morrison was being examined in the following manner:
Q. Take a. $300 machine, a machine that you would invoice to the American selling company at $300, at what amount would you invoice that same machine to the Canadian company? Have you the answer?
.A. Yes. The price to the United States distributing company would be $300.
Q. Yes?
A. The price to the Canadian company would be $346.
Q. Yes. Well then, I suggest to you that the question I put to you a few minutes ago is correct; that on account of our tariff regulations you found it more profitable to make your profits in the parent company than to make them over here; you charged the Canadian company $46 more for that one machine than you charged the American selling company for the same machine?
A. You realize, Mr. Cleaver, that the price that we charged the Canadian company was one that we were compelled to price at.
Q. I realize that. I am not saying that you were wrong in doing it. I am saying that our silly tariff regulations encouraged you to do it?
A. The profits of the Canadian company, of course, are affected by the higher price that they had to pay for these implements than if they had been purchased at the same price as the United States distributor paid.
Q. Now, we have the figure on this one type of implement, let us have the figure on another type-a tractor. Take a tractor that would sell to your American company for $1,000; what would you charge the Canadian company for that same tractor during the period when there was the full twenty-five per cent spread. Just recall your evidence of yesterday.
A. Yes. I want to give you the figures. I will give you an illustration, Mr. Cleaver, based on a tractor that would be priced to a dealer in the United States at $1,000.
Q. Yes.
A. The American distributing company would pay $750 for that tractor, the Canadian company would pay $950.
Q. So that the Canadian company was charged $200 more money for exactly the same tractor than you charged the American selling company ?
A. That is correct.
Q. And once again I suggest to you you found it profitable to keep your profits in the United States and never to let the Canadian company make them?
A. I don't like the inference that might be taken from that statement that we found it profitable. It sounds like we had elected to do that.
Q. I am not suggesting that.
A. The way it turns out.
Q. Then shall we say necessary?
A. That is better, and that is the reason I have not subscribed to your statement.
That accounts for the fact that the auditor of the committee said that millions of dollars of profits were retained with the parent company of the International Harvester Company and did not show in the operating statement of the Hamilton company. I contend that we should keep this in mind when dealing with the set-up of this company and considering the profits which they have made.
The question then arises as to whether a reduction in tariff will operate to reduce the price of implements to the Canadian farmer. I should like to read a letter written by the International Harvester Company, the same company with which I have been dealing, to all its agents with respect to prices after the tariff reduction had taken place. This letter is dated Hamilton, May 8, 1936, and reads:
Subject: Price reduction on account of changes in duty
Changes in the tariff which became effective May 2, 1936, reduced the duty from 12J per cent to 7i per cent on most of the items in our general line which we import into Canada. Goods which are manufactured in Canada are, of course, in no way affected by this change.
We have on hand in Canada a stock of imported goods which represents a considerable part of our 1936 requirements. This stock was brought in at the higher rates of duty previously in force. Regardless of this fact it gives us great pleasure to pass the saving made by the duty reduction along to our customers.
You will, therefore, effective immediately, reduce prices, both wholesale and suggested retail in accordance with the attached list.
We suggest that this information be given to your dealers at once, using the first three paragraphs of this letter as the letter to your dealers.
Then followed a list of something over 100 implements. The argument has been advanced that implements are selling in the United States at practically the same prices as in Canada. The further argument is advanced that the amount of tariff protection is not being taken advantage of by the Canadian companies. I should like to refer to a report to be found at page 1266 of the report of the committee, containing particulars of some ten implements which were considered by it. In this report will be found particulars with refer-
2610	COMMONS
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ence to an eight foot binder, a five foot mower oil bath, a seventeen tooth spring-tooth harrow, a manure spreader and so on. Of the thirteen implements referred to in that list, in one instance the price is the same in Canada as in the United States; in two instances the prices are a little lower in Canada, and for the other ten implements taking one of each kind, the total selling price in the United States is $1,410.19 as compared with $1,560.55 in Canada, an increase of 10-5 per cent.


John Alexander (1874-1948) Macdonald: Who gave that evidence?


Hughes Cleaver: If the hon. member wants to look over the tabulation, he will find it at page 1266 of the report. If he would like particulars of any individual machine, I shall be glad to give them now.


John Alexander (1874-1948) Macdonald: Who gave the evidence?


Hughes Cleaver: There are something over a thousand pages of evidence, and I think the hon. member as a solicitor will realize that it would take some little time to look it up. If he is interested in having it, I shall be glad to give it to him privately. The difference between the United States and Canadian selling prices is 10-5 per cent for ten implements, and our duty is per cent plus an excise tax of three per cent. I wonder if that is just a coincidence, or is it cause and effect?
The argument has also been advanced that the companies are not making money; that they are suffering losses. I think the financial statement of the International Harvester Company that I have attempted to give since its incorporation rather answers that argument. There is one further piece of evidence that I should like to read into the record. At page 1230 of the report will be found complete particulars of the break-down in the cost of an eight foot binder, retailing to a farmer in Regina at $281. If you reduce that figure by the cost of freight amounting to $26.08, you have a net laid-down price of $254.92. That machine costs the International Harvester Company $22.62 for labour, a total of $71.06 for material, and for all overhead, $36.48. These are the company's own figures; they are not mine. In other words, the total cost to the company of that eight foot binder is $130.16. This is the binder that is sold to the farmer for $254.92. There is a mark-up of $124,86, or 95 per cent, on a machine costing the company $130.16. Are the companies making any money? Do they need the pro-
tection upon which they are insisting? I am not attempting to answer these questions; I simply give the house the figures and let the members judge for themselves.
There is one other matter to which I should like to call attention. On this particular machine the difference between the Canadian and United States selling prices is $31.40, whereas the total wage content is only $22.62. The tariff protection, even at the present low rate, is considerably higher than the total wage content of the machine. That makes me wonder whether all the speeches adverse to this report which have been given in the house have been made by hon. members who are really interested in labour. I wonder whether they have not been partly interested in capital?


Denton Massey: Mr. Speaker, on a point
of order, the hon. member cannot impute motives to any other hon. member, and I suggest that he withdraw that statement.


Hughes Cleaver: If the hon. member for Greenwood (Mr. Massey) takes offence at what I have said, I withdraw unreservedly. But I did hear a dozen hon. members on the other side give as the basis of their argument the fact that they were sponsoring labour. I am suggesting that labour is not getting any of the benefits of the tariff protection which we have been giving to these companies.


Denton Massey: Again, if the hon. member will permit me, I do not think there are dozens of members on this side of the house who have spoken on the subject.


Hughes Cleaver: Perhaps they spoke so long that it seemed like that.


Denton Massey: The hon. member's views on that are about as accurate as some of his other views.
Mr.	CLEAVER:	In conclusion, Mr. Speaker, I congratulate the committee upon the way in which it has performed the very important duty allotted to it, and I would urge with all the force at my command that its recommendations, especially recommendations Nos. 16 and 28, be carried out.
In regard to the recommendation in regard to cream separators I have just one word to say. Cream separators have a tariff protection of 25 per cent. A good many cream separators are being imported from Sweden. These cream separators are bought in Sweden at $13.05. That includes labour costs, material cost, overhead, profit, everything. They are

Farm Implements Committee Report
shipped to Canada and laid down here at a total cost, including transportation charges, duty and excise, of $17.65, as will be found at page 1240 of the committee's report, and they are sold to the Canadian farmer at $44.85. Should this house be a party to any such exorbitant charge as a spread of 160 per cent on a cream separator. I submit that every justification has been brought forward in the evidence for the entire removal of the duty on cream separators.
As to the 7i per cent duty on implements I want to be entirely fair, and if the house feels that the committee has been prejudiced and that a judicial tribunal should deal with the question I would be quite content that it should be referred to the tariff board for hearing, but I submit, Mr. Speaker, that the evidence would abundantly justify the entire removal of the duty.


Mr. LIGUORI LACOMBE (Laval-Two Mountains) (Translation):: Mr. Speaker, the report of the committee of inquiry on prices of farm implements shows that the average purchases of farm implements were largest in 1928 and 1929. The decline between 1930 and 1935 is chiefly due to the depression which hit this country. However, prices of farm implements were too high, even during the depression. On account of high protection, farm implement companies made unreasonable profits, at the expense of the farmer. Such a situation constituted, I dare say, real exploitation, and called for the utmost optimism, enterprise and industry.
It is a fact that the farmer, who could not sell his products, had to pay $263, $273 and $278 for a binder. Several companies were even asking as much as $281. No matter what the companies have to say about the cost of labour, of raw materials and of transportation, and about commissions to agents, they cannot justify themselves in the eyes of the people. They were responsible for the aggravation of the plight of agriculture.
What I said about binders also applies to cream separators. The farmer paid $107.58 for a certain type of cream separator made by the International Harvester Company and costing $41.72 at the factory. However, the trifling sum of $2.47 must be deducted for transportation.
It may be objected that most of these implements were sold on time. For the information of the house, I wish to place on Hansard the following table showing price increases in the case of sales on time:
	Eastern		Western	
	Canada		Canada	
1 yr.	2 yrs.	1 yr.	2 yrs.International	p.c.	P*c.	p.c.	p.c.Harvester Co.. ..	6-52	8-11	7-51	9-75Massey-Harris Co. ..	6-82	8-79	6-16	9-93Cockshutt Plow Co..	4-92	7-61	6-57	11-23Frost & Wood.. ..	4-77	7-49	Deere & Co	8-57	11-06
May I now quote prices of other essential farm implements. A hay rake sold for as much as from $52 to $62. The farmer paid from $171 to $204 for a manure spreader, while he had to pay $100 to $120 for a 5-foot binder. These figures are taken from tables published in the report of the special committee, No. 20.
Mr. Speaker, if I may be allowed to continue for another five minutes, I will conclude, with the consent of the house.


Walter Edward Foster: The hon. member cannot proceed except with the unanimous consent of the house. If he desires to speak for five more minutes, I am entirely in the hands of the house.


Liguori Lacombe: The figures I have quoted are found in the tables published in No. 20 of the report of the special committee of inquiry. Therefore, I feel it my duty to draw the attention of the house upon part of the recommendations of the report which seem particularly appropriate to me:
It is the opinion of the committee that the cost of cream separators to the consumers should be reduced and with that end in view recommends that this item be placed on the free list.
Reduction in the tariff should, and does, in the long run, tend to lower the price level to the farmer, depending on the extent of free price competition in the industry. i The provisions of the Customs Act and the Customs Tariff Act affecting the importation of farm implements should be clarified and simplified.
The cost of credit to the farmer purchasing farm implements on time is excessive and the companies should take immediate steps to reduce these credit charges.
The profits to the farm implement companies on the sale of replacement parts is excessive and the price of these to the consumer should be materially reduced.
The increases announced by the companies in January, 1936, were not justified by an increase in manufacturing or distribution costs or by the financial results of the companies in so far as these were affected by the price level of farm implements.
Over the period 1891 to 1936 retail prices of farm implements have been maintained at too high a level as shown by the financial returns to the companies engaged in the industry, during that period.
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I do not propose to add anything more to my remarks, Mr. Speaker. But whether one likes it or not, no practical solution to the important problem of farm implements can be found in theories and speech-making. Ideas remain fruitless if not followed by action. The excessive prices set by farm implement manufacturers are responsible for the long delayed economic recovery. In many instances during the last few years, the returns from a year's harvest proved insufficient to meet the cost of a binder, a mower, a cream separator, nay, even a plough. So what has taken place? Moral failure succeeded to economic misfortune. The discouraged farmer, who had found his greatest joy in hard work, left for the city to join the ranks of the unemployed on relief.
Let not the farm implement manufacturers ever forget that their duty in the first instance is to co-operate with the farmer. Are they not themselves dependent upon farming activities for their living? Do they realize that? If they do not, sufficient power rests with the Government of this country to bring them to reason. They will undoubtedly exercise it, in accordance with the evidence of Mr. J. K. MacKenzie, as reported on page 1288 of the minutes of proceedings and reports, No. 20, of the investigating committee.
The evidence of Mr. J. K. MacKenzie, representing the Caterpillar Tractor Company, shows that as a result of the removal of the duty on tractors valued at over $1,400 in January, 1936, the prices of its tractors to the Canadian purchasers were reduced by the amount thus saved to the company in duty. The reduction in price was $880 in the case of one particular tractor.
Mr. Speaker, should the manufacturers feel inclined to retaliate or to resort to combines, the Government would still be in a position to apply the law as contained in the Revised Statutes of Canada and thereby overcome their obstinacy.
On motion of Mr. Wood the debate was adjourned.


[Stage Direction]
It being seven minutes after eleven o'clock the house adjourned, without question put, pursuant to standing order.
Friday, May 6, 1938