1939-04-28

Mr. SPEAKER:: I have the honour to lay before the house the organization and establishment of the permanent positions on the staff of the House of Commons, together with a letter from the clerk of the house recommending that the temporary clerks and employees performing continuous duties be absorbed into the permanent staff of the house.


Mr. MANION:: May I ask that this report be read? I understand it is brief.
The clerk assistant read the report, as follows:
Ottawa, April 28, 1939. The Hon. Pierre F. Casgrain, K.C., M.P., Speaker of the House of Commons,
Ottawa, Ontario.
Sir:
The Commissioners of Internal Economy having approved the recommendation that all the clerks and employees of the house doing continuous work be appointed permanent, a resolution of the house must be passed creating a certain number of positions which have been filled by temporaries for a number of years. This is necessitated by the fact that the provisions of the Civil Service Act dealing with organization do not apply to our service. The act only applies to our permanent positions in relation to appointment, transfer, promotion, salaries, increases thereof, classification, political partisanship and payment of gratuity on death. It has no application with regard to our temporary staff. The volume of work necessitated by sessions of parliament having considerably increased in the last twenty years, new clerks appointed as temporary had to be kept on the staff the whole year round, but they do not have the benefit of permanency and superannuation.
As to the sergeant-at-arms' division, most of the employees are now temporary. Their services being required the whole year, it is advisable that they should become permanent.
The list hereto annexed shows the present staff, the proposed changes and the permanent positions to be created. All the new positions mentioned therein are now filled and will not necessitate new appointments. Should this reorganization be approved by the house, it will be necessary, under the provisions of the Civil Service Act, to request the Civil Service Commission to make the appointment and fix the salaries.
The committee appointed by the Senate with the same purpose in view, with whom we both had the honour of holding a conference, have agreed to submit a similar plan to the upper house and the Civil Service Commission intends to consider simultaneously the recommendations made by the two houses of parliament.
In the event of these permanencies being approved, temporary employment on our staff when parliament is not in session will be discontinued.
I have the honour to be,
Sir,
Your obedient servant,
Arthur Beauchesne,
Clerk of the House of Commons.



BUSINESS OF THE HOUSE


Right Hon. ERNEST LAPOINTE (Minister of Justice) moved:: That the provision of standing order 28 respecting committee of ways and means be susDended for this sitting of the house.
Business of the House

He said: This motion is necessary in order to allow the hon. member for York South (Mr. Lawson) to proceed with the budget debate, as on Thursdays and Fridays under the standing order Mr. Speaker leaves the chair without motion being put.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
Robert James Manion: In the absence of the Prime Minister I should like to ask the Minister of Justice (Mr. Lapointe) if he could tell the house whether there is any more legislation to come down, or have we all the legislation it is proposed to introduce for this session?


Ernest Lapointe: I believe there is only one
piece of legislation left, and we expect it will be on the order paper for Monday; I refer to the projected bill of the Minister of Finance with regard to a mortgage rediscount bank.


Robert James Manion: Is there likely to be any
legislation arising out of the reports of committees?


Ernest Lapointe: I am sorry I cannot give a definite answer to that, but I do not see that there will be any. The committee has reported on the civil service; I do not know whether or not there will be any legislation in that connection.


Mr. NEILL:: Does the minister not anticipate legislation founded on the report of the superannuation committee, and of the committee dealing with the elections act?


Ernest Lapointe: Possibly. I cannot give any definite answer.



ROYAL VISIT


[Stage Direction]
On the orders of the day:
Robert James Manion: I should like to ask the Minister of Finance what progress is being made with regard to the issue of the silver dollar in commemoration of the royal visit, and when the minister expects they will be issued to the public.


Hon. CHARLES DUNNING (Minister of Finance):: My hon. friend will forgive
me if I make an offhand answer which may not be accurate in all respects. The process of manufacture at the mint is now proceeding, and arrangements have been made with

the post office and the banks for adequate and complete coverage and distribution. I expect that publicity in connection with it from the departments and officials concerned will be out in the course of a very few days. I can assure the house that adequate provision is being made. As far as manufacture is concerned I am reasonably certain that we shall be able to meet any public demand.


Robert James Manion: Could the minister give any idea as to the numbers that are likely to be issued? I suppose it depends on the demand.


Charles Avery Dunning: It depends entirely on
the demand. I might put it in this way: Every effort will be made through publicity and distribution facilities to stimulate the demand, and as far as manufacture and distribution are concerned the arrangements are such as will, I am quite confident, meet any demand which may be thus created.



UNEMPLOYMENT


[Stage Direction]
On the orders of the day:
Mr. R. A. PELLETIER (Peace River):: I wanted to direct a question to the Minister of Labour (Mr. Rogers), but in his absence I should like to direct it to the right hon. gentleman who is leading the government (Mr. Lapointe). I hold in my hand a stack of dismissal notices which have been sent to over five hundred heads of families in the city of Hull. In view of that fact I am asking the government whether it has received an ultimatum to the effect that either these people must get relief or they will not be responsible for the maintenance of peace and order. Further, what measures will be taken by the Minister of Labour to prevent hunger and possible starvation as a result of these dismissals? [DOT]


Ernest Lapointe: These questions will be submitted to the Minister of Labour for an answer, possibly on Monday.



EUROPEAN SITUATION


[Stage Direction]
On the orders of the day:
Robert James Manion: In view of the rather interesting statement by Chancellor Hitler to-d'ay does the government propose to make any statement on the international situation? The Prime

Minister (Mr. Mackenzie King) is absent, and I know the Minister of Justice (Mr. Lapointe) would not make any such statement, but perhaps he would draw the question to the attention of the Prime Minister. I am asking this question not with any thought of embarrassing the government, but merely because I think the house would like to know whether any such statement will be made.


Ernest Lapointe: I shall be glad to submit to the Prime Minister the question asked by my hon. friend. Personally, as far as I am concerned, I was rather pleased that it was not as bad as it might have been.


Robert James Manion: So was I.



WORLD WHEAT CONFERENCE


[Stage Direction]
On the orders of the day:
Mr. M. J. COLDWELL (Rosetown-Biggar):: In view of a recent press report that a draft plan for a five year wheat marketing agreement to establish a fixed minimum price, export quotas and some acreage control has been considered at the international wheat conference, will the minister inform the house regarding instructions to the Canadian delegates in regard to these matters?


Hon. W. D. EULER (Minister of Trade and Commerce):: There is not a great deal I can add to the reply I gave to a somewhat similar question two days ago. It is true that a committee of the international^ wheat conference has been discussing what might be called a tentative plan involving acreage control, minimum prices and export quotas. The Canadian delegates are authorized to participate in the discussions in a general, exploratory way, but they have no authority to enter into any commitments whatsoever on behalf of the Canadian government.



THE BUDGET


[Stage Direction]
The house resumed from Tuesday, April 26, consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Hon. J. EARL LAWSON (York South):: The Budget-Mr. Lawson

ucts in a foreign market. As Canada's export trade has decreased by 15-1 per cent, there is a corresponding decrease in the national income of our people from exports. I do not suggest that any government can compel foreign countries to buy more of our goods than they desire, but I do claim the effect upon our internal economy is lessened if we develop a balanced economy for Canada. Then we are less dependent upon foreign trade for the maintenance of agricultural prices and industrial activity, and more self-reliant because of our own capacity to consume.
This political philosophy is by no means new to the people of this country. It was enunciated many years ago by the Conservative party as a national policy. It has been described recently by our Liberal friends as economic nationalism. We of the Conservative party have never advocated economic nationalism. We realize that in order to return' to the days of prosperity there must be a balanced development of world trade. But we also realize that you cannot return to a maximum development of a balanced world trade while countries with large populations are spending their energies and their efforts on the production of the materials of war. They are struggling always and constantly for the development of self-sufficiency, and the least possible dependence on other countries for goods. That is our situation to-day.
In these circumstances why does the government sit idly by, expressing pious hopes for the future, realizing, as it must, that it can do nothing to increase that world trade? Surely in these circumstances the prime motive of any government must be, necessarily, the development of consumptive power within our own country to consume our own products. And here I am not referring to the sort of consumptive power which is to be given away freely, without payment therefor in goods or services, as advocated by our social credit friends. I am speaking of an effective consumptive power. How can you create a consumptive power for agricultural products, for boots and clothing, for all the things that people need, unless you provide those people with jobs? How, I ask, can you provide those people with jobs if the result of your fiscal policy is to have greater consumption of imported goods without a corresponding increase in the export of our own domestic production? To accomplish a balanced economy is the policy of the Conservative party. You can never do it by the consummation of trade treaties, such as those which have been made by this government with the United States.

In his budget speech this year, to bolster up the efficacy of the new trade agreement entered into with the United States, the Minister of Finance was careful to point out that our exports of merchandise to that country, exclusive of gold, for the first quarter of this year, 1939, registered a gain of nearly 16 per cent over the total for the same period for 1938. What does that indicate? I hope it means a great deal more than the result of the previous trade ; greement made by this government with the United States, the agreement which came into effect on January 1, 1936. Exactly the same experience was had then as now. In the first quarter that that trade agreement was in effect our exports to the United States were increased. Then they were followed by a gradual falling off until they reached a low point in the first quarter of 1938-which quarter the minister now chooses for comparison with the first quarter of 1939.
Let me now give figures to prove my statement. The exports of Canada to the United States for the first quarter of 1935 were valued at $78,540,000. The Canada-United States trade agreement came into effect on January 1, 1936, and the exports of Canada to the United States for the first quarter of 1936 went up to $80,273,000. As the effect of the treaty gained momentum, the exports jumped, and for the first quarter of 1937 they were valued at $108,623,000. Then, as we of the Conservative party in this house predicted, there came a time when our imports constantly climbed, but our exports to the United States went down. The result was that for the first quarter of 1938 we exported to the United States goods to the value of only $61,574,000, representing a decline of about $47,000,000 from the first quarter of 1937.


Robert James Manion: Lower than 1935?


James Earl Lawson: Yes, lower than the first quarter of 1935.


Robert James Manion: Lower than 1936?


James Earl Lawson: Yes, lower than 1936.


An hon. MEMBER:: Guess again.


James Earl Lawson: But greatly lower than 1937.


Robert James Manion: It is certainly nothing to cheer about, anyway.


William Daum Euler: And better than last year.


James Earl Lawson: Every Canadian exporter who could export his products to the United States hastened to do so as soon as the new trade treaty came into effect on January 1, 1939. Were it not for the quotas with respect to some agricultural products, limiting the quantity which may be exported to the

The Budget-Mr. Lawson
United States in any one year, there might be some chance for our maintaining our exports to that country on a level with those of the first quarter of 1939. But already many of the quotas for the whole year have been practically filled; consequently you will find a gradual diminution in the other quarters of 1939 in the volume of our exports to the United States, just as was experienced in connection with the trade agreement with the United States which came into effect on January 1, 1936.
Judging by the utterances of the Minister of Finance the government has at last come to a realization of the fact that our vital problems of taxation, unemployment and prices for agricultural products cannot be solved by the panacea of trade agreements. The minister went to some length to emphasize the necessity of the consumption of durable or capital goods in our internal economy. I would go farther than he has gone, because I am convinced that one of the major factors causing our depressed condition is the lack of consumption of durable goods. My recollection is that in a pamphlet published by one of the bureaux of research connected with the Rockefeller foundation it was stated that at the depth of the depression the falling off in the consumption and use of capital or durable goods was about sixty per cent, whereas the reduction in the consumption and use of consumable goods was only about ten per cent.
On two occasions in his address the minister, referring to bank deposits in Canada, pointed out that at the end of March, 1939, they aggregated $2,845,000,000, or 22-2 per cent above the level of March, 1938, and 8-8 per cent above the level of March in the boom year 1929. He stated further that comparing 1938 with the depression year 1932, the average volume of bank deposits in Sweden had increased by 15 per cent, in Australia by 16 per cent, in the United States by 22 per cent, in the United Kingdom by 23 per cent, and in Canada by over 25 per cent. In other words he proved that in March, 1939, we had a greater amount of money on deposit in our banks than at any other time in recent years, and that we had a greater increase, in proportion, in the volume of our bank deposits between the depth of the depression in 1932 and last March than had Sweden, Australia, the United States or the United Kingdom.
I submit, Mr. Speaker, that the volume of bank deposits is inextricably interwoven with the lack of consumption of durable or capital goods. When we realize that there are approximately 4,500,000 deposit accounts we must conclude that the reason for that 71492-2111
huge aggregate of bank deposits is that hundreds of people who have money to invest are not investing it in the creation of new Canadian enterprise. If that portion of those deposits which represents savings surplus, available for investment, were invested in Canadian enterprise and Canadian industry, you would immediately increase the consumption of durable goods by reason of new construction, new plants, new machinery, and that in turn would create new jobs.
Why have we this vast sum on deposit in the banks of Canada? The minister says it is because of lack of enterprise and courage on the part of the business men of Canada, and because of fear of war on the part of people who have money to invest. I will not for one moment suggest that all the business men of Canada have that vision for the future which the minister so much desires. I will not suggest that all business men in Canada have put forth their utmost effort for the development of new enterprise and new industry. But I do suggest that if this government will enunciate such fiscal policies as will give reasonable security for the investment of that capital in Canadian enterprise and Canadian industry, you will get results.
I should like to point out to the government that in these modern days industry is not organized on the basis of twenty or twenty-five years ago. The individual industrialists left in this country are few and far between. Canadian enterprise and Canadian industry are in large measure carried on in these modern days by corporations which are aggregates of large numbers of small investors or combinations or groups of business men. No matter how much courage or enterprise business men may have, they cannot embark upon new enterprise and new industry unless they can induce a vast number of the people who have savings, to invest their savings in new industries. Unless you give them a measure of security

some assurance that over a reasonable period of years they will be given an opportunity to compete in their own domestic market in the sale of the product produced by such industry at a price which will return a reasonable reward upon the investment made -they will not invest their savings.
To-day there is no such security. Every year since this government has been in power there has been constant tinkering with the tariff, either because of trade agreements or because of reductions contained in budget proposals. I do not suggest for one moment that we should have no change in our tariff. I do not suggest for one moment that in the past we have not had tariffs, in respect of some particular industries, the result of which
The Budget-Mr. Lawson

was to create a virtual monopoly in the Canadian market and thus penalize the consumer in the matter of price. But I still say that in order to induce business men to create new industries we must have stability of tariff. I repeat what I said on Tuesday last, speaking in this house, that when we created the tariff board I had hopes that if that tariff board were allowed to function free from political influence we would begin to have a scientific tariff-a truly protective but not monopolistic tariff-after the expiration of ten years. I still hold that hope. Now that this government has glutted itself with trade agreements, why not try stability of tariff as a means of creating new industries, greater consumption of capital goods, more jobs for the unemployed, and, resulting therefrom, greater consumption and better prices for our agricultural products?
Can it be done without penalizing the consumer?	I believe it can. We have
this quasi-judicial, non-political tariff board. Why not use it?	If this government
were to adopt a policy which would clearly indicate to business men and to those who have capital to invest that for the period of the next five years there would be no reduction in the tariff of this country, where such reduction would affect established Canadian industries, except as a result of a recommendation by the tariff board after due inquiry by the board, I will guarantee that that would do more to create new enterprise and industry, to cause the investment of accumulated capital in the production of goods, and to create jobs and payrolls, than would any measure for the reduction of income tax, such as is proposed in this budget. Let us have stability of tariff and security for industry and I venture to predict that you will soon be on the high road to prosperity.
The minister stated that foreign investors had convincingly demonstrated their faith in this country's future by investing their capital in Canadian enterprise. I fear he is all too altruistic if he concludes that that is done because of any opportunities afforded by any legislation of this government. Any capital invested by foreign investors in this country within the last few years has been so invested for only one of two reasons-either because it was driven from the country *whence it came by tax laws and restrictions which amounted to expropriation, or because a more profitable return could be assured from investment in Canada. It will fly from Canada to some other place as soon as a greater opportunity is available.
Now let the minister smile at this next statement. Into w'hat type of investment has

that foreign capital been put? Into Canadian government bonds, into Canadian National railway bonds guaranteed by the government, and into mining securities. Such capital has no fixed place of abode. It has no patriotism. Foreign capital is an asset to this or any other country only to the extent to which it provides the necessary capital for the development of domestic enterprises, where such domestic enterprise results from the development of natural resources, when domestic capital is not available. Canada will get more permanent benefit from the investment of one Canadian investor's dollar in industry than it will from every ten dollars of foreign capital invested in government bonds.


Charles Avery Dunning: Hear, hear.


James Earl Lawson: 
William Daum Euler: Who put it on in the first
place?


James Earl Lawson: I am not sure what that means, but unless the Minister of Finance makes a specific statement to this house, that at the time of the negotiation or the execution of the United States trade agreement the government contemplated the repeal of the excise tax in respect of all imports of all foreign goods,
I shall adhere to my opinion that the government did not realize until after the agreement was executed that in terms it involved the entire repeal of the excise tax.


Charles Avery Dunning: Will my hon. friend permit i question? I hesitate to interrupt him.


James Earl Lawson: Go ahead.


Charles Avery Dunning: He has asked for a specific statement. I can make the specific statement that the situation to which I referred in the budget was definitely contemplated at the time the treaty was made. The extent to which we would subsequently remove the excise tax was left for further determination, but certainly the whole question was envisaged, necessarily. I am not taking any credit for it, because one could not miss it; it stuck out plainly as something that had to be dealt with. I might point out to my hon. friend a slight error on his part, namely, that under the proposals the excise will still apply under the general tariff. To that extent he is in error.


James Earl Lawson: Yes, it will apply under the general tariff. But in view of the fact that this government boasts of the trade agreements it has made with all countries, in view of the fact that as a result of the Canada-United States trade agreement the most favoured nation clause applies to all our trade treaties, practically the vast bulk of the imports of the country come in under the intermediate tariff, and therefore what my hon. friend says does not apply.
Now let me accept the minister's statement. I find it difficult to conceive that this government, for the purpose of making a trade agreement with the United States, would pay the price which they must have realized they would have to pay by a complete repeal of the three per cent excise tax, which was in the nature of a tariff. I simply cannot conceive that this government would take that action in the interests of this country.
The minister further said:
I am sure that the action I am proposing today-
That is, repealing the excise tax.
-which will involve an estimated reduction in taxation of about $14,000,000, will commend itself to all interests in this country, whether manufacturers, importers or consumers.
[Mr. Lawson.}
I can readily appreciate that the repeal of the excise tax would commend itself to importers; but for the life of me I am unable to appreciate why it should commend itself to manufacturers or to consumers who represent the wage-earning class in this country. The excise tax added nothing to the price of goods manufactured in Canada.


Mr. DEACHMAN:: No?


An hon. MEMBER:: What about automobiles?


James Earl Lawson: The hon. member for
Huron North (Mr. Deachman) says no. My answer is no. As I previously stated, the excise tax was not a tax in the true sense of the word. It amounted, in truth and in fact, to a protective tariff against the imports of foreign goods. Nothing more clearly proves my point than the glaring example of what would have happened by reason of the repeal of that tax, an example so glaring that even this government, dull of perception, realized the effect it would have with respect to the imports of crude rubber and primary forms of tin. Consequently in this budget they substituted for the excise tax a duty of five per cent ad valorem on such goods.
To illustrate the effect of taking off the excise tax without imposing some corresponding ad valorem tariff, I am going to take two examples. First, let me illustrate the effect the removal would have had on the importations of crude rubber had a new tariff not been substituted therefor. The excise tax was first introduced in Canada on June 2,
1931,	to the extent of one per cent on importations, with a restricted free list. On April 7,
1932,	at the time of the empire trade agreements it was increased to three per cent. In 1933 the total amount of imports of crude rubber into this country was 728 carloads of
60,000	pounds each. Of that importation of 728 carloads, only four carloads entered Canada through Canadian ports. In 1935 the three per cent excise tax in respect of imports under the British preferential tariff was entirely repealed by the former Conservative government. Note what happened in respect of imports of crude rubber during the years 1936, 1937 and 1938; eighty-four per cent of all the imports of crude rubber into this country during those years entered through Canadian ports. Why? Because of the application of the three per cent excise tax if they had entered through United States ports. The result was that Canadian ports got the business of handling that importation. Rubber was hauled by Canadian railroads. The financial business in connection with the

The Budget-Mr. Lawson
payment for the shipments was handled by Canadian banks. Canadian harbour boards got revenues from storage, wharfage, and so forth. Canadian stevedores, longshoremen and labourers got work. The railways of Canada derived revenues from the hauling of crude rubber, thus providing employment for Canadian railway workers. Were it not for the special five per cent ad valorem tax proposed by this budget to replace the three per cent excise tax repealed in respect of crude rubber, all that business would go back to the United States ports. As there are no increases in tariff generally provided in the budget to offset the repeal of the three per cent excise tax, many other products will share a similar fate to that which would have resulted in the case of the importation of crude rubber.
Let me take another example. I choose the automobile industry, because it has been successively before the tariff board for three years; hence official data and statistics are available in connection therewith.
By the Canada-United States trade agreement of 1935 the intermediate tariff became applicable to automobiles and automobile parts entering Canada, resulting in a tariff on automobiles of 17-| per cent. The whole question of the tariff on automobiles and parts was referred to the tariff board, which conducted a most exhaustive investigation and made a report on April 27, 1936. In its report the tariff board recommended that the intermediate tariff imposed on imported automobiles should remain temporarily at 17J per cent. The tariff board however realized that it was quite possible that the automobile industry would not be continued in Canada under a 17^ per cent tariff, and therefore recommended that the government should take power by order in council to increase that intermediate tariff to 22i per cent should it be found that any motor car manufacturer ceased to manufacture in Canada. I quote from the report of the tariff board of April 27, 1936:
With respect to the suggested tariff item 438a, the board is of the opinion that under present conditions and after giving effect to the changes contained in the above schedule, the rates set opposite the above suggested item are sufficiently adequate to protect the industry in Canada.
Item 438a was the automobile tariff item, and the schedule referred to was the recommendation for an intermediate tariff of 17-J per cent. I continue the quotation:
If, for some reason or other, one of the manufacturers presently in operation in Canada should discontinue production, a situation might well be created whereby the position of the remaining ear manufacturers might be jeopardized. So as to provide for such an eventuality the board is of the opinion that the governor in council should be empowered to increase the rates to the extent indicated in the proviso-
That is, 22J per cent.

if in the judgment of the governor in council the situation created warrants such action.
The very same report recommended that a special excise tax of five per cent should be imposed on that portion of the dealer's price of automobiles which is in excess of $650, ivith a maximum levy on each vehicle not in excess of $250, in addition to the three per cent excise already in effect.
Subsequent to that recommendation of the tariff board the Studebaker corporation withdrew from manufacturing automobiles in Canada. IIudson-Essex continued to make a few cars in Canada, but tremendously curtailed its manufacturing operations. Despite the recommendation of the tariff board and the withdrawal of Studebaker and Hudson-Essex, not one thing was done by this government to meet the situation.
What was the result of the government's failure to act? In 1936 the total number of motor vehicles imported into Canada was 8,053. In 1937 imports jumped to 17,267. The number of motor trucks imported into Canada in 1936 was 1,850, but in 1937 the imports jumped to 2,808. Adding those figures together it will be seen that the total number of motor units imported into Canada in 1936 was 9,903 and in 1937 the total was 20,075. That is, there were 10,172 more motor units imported into Canada in 1937 than in 1936, or an increase in imports of approximately fifty per cent.
It will be observed that the tariff board recommended a special excise tax of five per cent on the top portion of the dealer's price, as well as the three per cent excise tax. The tariff board was of the opinion that this was a minimum protective tariff under which the motor car industry could subsist; yet by this budget it is proposed to repeal the three per cent excise, the result of which is further to reduce the tariff in respect of the automobile industry.
Is this industry worth while to Canada? Ever since I have been in this house I have heard this question bandied back and forth across the floor. Allegations were made pro and con without any findings of fact by an independent tribunal to back up the assertions. Now we have the advantage of the tariff board reports with respect to this industry, and their conclusions after weeks and months of investigation. Despite the fifty per cent increase in importations of motor units into Canada in 1937 over 1936 which I have detailed, the average monthly employ-. ment given by the automobile industry in Canada during 1937 was 31,494 and the wages paid during 1937 amounted to $43,069,973.
The Budget-Mr. Lawson

That indicates that the automobile industry-provided 31,494 jobs at an average wage of slightly less than $1,400 per annum.


Mr. YOUNG:: At what cost to the consumers of Canada?


James Earl Lawson: I am coming to that. If my hon. friend will hold himself in peace he will learn that always when I have a statement to make I finish it before I leave it.
Is not that industry worth while? There are those who say that the consumer pays too high a price for the benefit of jobs for those employed in the motor car industry. Well, the tariff board dealt with that. I quote from their report of 1936. In the summary they say:
In section A of chapter 8 of this report the board has listed certain factors that might have to be weighed before arriving at an appraisal of the economic value of the automotive industry in Canada. The figures given therein would indicate that the increase in the total amount paid by dealers in Canada for automobiles and trucks and replacement parts thereof, in 1934, to the Canadian automotive industry, in excess of the amount that they would have paid if automobiles were permitted free entry into Canada, not including freight or licences, is approximately $14,000,000. As against this amount the board has also listed in that section of the report the disbursements that were made in 1934 in Canada for taxes-federal, provincial and municipal-for freight to transportation systems, for wages and salaries and for expense, materials and service, which are directly attributable to the existence of the automotive industry in Canada. These disbursements were from $40,000,000 to $47,000,000.
The board, while not accepting the above comparison as an accurate measure of the value of the industry to Canada, is of the opinion, nevertheless, that the figures would indicate that it is good business for Canada reasonably to encourage the maintenance and the expansion of the Canadian automotive industry.
I think that is an answer to my hon. friend's question. I have heard the statement made that the repeal of the excise tax will wipe out the motor car industry in this country. I heard the Minister of Finance strenuously deny that statement and declare that the motor industry would carry on. In a measure I agree with the Minister of Finance. The primary automobile industries in Canada, those that make the cars as distinct from those that make parts for the makers of the cars, are in all cases subsidiaries of United States corporations. The only factor that determines whether or not they will manufacture cars in Canada is whether it is more economical for them to manufacture here than in the United States. Their natural inclination would be to manufacture in the United States. By reason of the fiscal policy of past Conservative governments these corporations were com-

pelled to establish plants in Canada in order to supply the Canadian market, thereby providing jobs in Canadian factories and payrolls for Canadian workers. The fiscal policies of former Conservative governments made it advantageous for the motor car companies to manufacture cars in Canada for export to other parts of the British empire, because of preferential rates of duty which they obtained for Canadian made cars in empire markets.
The United States motor car industry has a large investment in plant and machinery in Canada. It will continue to manufacture in Canada a certain number of motor cars for export and probably some proportion of cars for domestic sale, because of the preferential advantage that still obtains in empire markets and because it does not wish to have lying idle, plant and equipment in which it has invested many thousands of dollars. The fact remains, however, that as a result of the repeal of this three per cent excise tax the number of motor units manufactured in Canada will be tremendously reduced, thus causing further unemployment not only in the plants that manufacture the cars but also in the plants that manufacture parts for the motor cars, which parts industry is scattered widely throughout a large portion of the province of Ontario and in a considerable number of places in the province of Quebec. I cannot conceive of any reason for the failure on the part of this government to increase the automobile tariff by five per cent, as originally recommended by the tariff board, particularly now as a substitute for the three per cent excise tax which is being repealed, except to appease the clamour of the government's Liberal supporters in this house who come from western Canada.
The conditions I have illustrated by an analysis of the situation in connection with the motor car industry will apply to many other industries in this country. I predict that the removal of the three per cent excise tax without any corresponding increase in protective tariff against the imports from nearly all the other countries of the world will create further unemployment in and occasion further loss to the Canadian economy.
Now let us consider the financial aspect of this budget. The funded debt of Canada on March 31, 1939, is shown by the minister to have been $3,318,479,000. The funded debt of Canada as of March 31, 1938, the end of the previous fiscal year, was $3,252,587,000. therefore there has been an increase in the funded debt during the past year of $55,-
892,000.	The minister estimates an over-all deficit for the year just ended of $55,666,000. If you add that amount to the increase in the

The Budget-Mr. Lawson
funded debt during the last fiscal year, you get a total increase in our debt amounting to
8111,558,000.	In arriving at that deficit for the past year, however, the minister estimated a loss of only $25,000,000 in respect of the 1938 wheat crop. Previously this session, if my recollection serves me aright, the Minister of Agriculture (Mr. Gardiner) stated that the loss in respect of the 1938 wheat crop would amout to $48,000,000. If the figure given by the Minister of Agriculture is correct we must add another $23,000,000 in order to determine the total increase in the debt of this country under the administration of the present government during the fiscal year ended March 31, 1939. If you add that $23,000,000 you get a figure of $134,558,000. Therefore, despite the fact that $20,000,000 less was spent by this government for the relief of unemployment and agricultural distress in the past fiscal year as compared with the previous year, during next year Canada will have to pay interest upon an additional sum of $134,558,000, and that interest can come only from one source; that is, out of the pockets of the people in the form of taxes. That is the picture resulting from the government's management of the business of this country for the past year.
In speaking on the budget last year I made the statement that this government possessed the doubtful honour of being the greatest tax collector in the history of Canada. This year they have collected from the people in taxes an amount less by $13,000,000 than they collected in the preceding year; nevertheless they still hold the record as the greatest tax collectors in the history of Canada. For the fiscal year ended March 31, 1936, the total amount of taxes collected from the people was $317,312,000. The Liberal government came into power in 1935, so that they have been entirely responsible for any increase in taxation, or for the collection of any increased amount of taxes from the people, since that date. Last year they collected in taxes $435,-
705,000,	or $118,393,000 more than was collected during the last fiscal year in which the Conservative government was in power.
Let us look at their expenditures. I shall not refer to the total expenditures, because that would include unemployment relief, grants in aid to the provinces, the dominion's share of joint dominion-provincial projects, the western drought area relief, bonus to wheat growers, and so on. I shall deal with the total ordinary expenditures, namely those which are under direct control of the government, and which are not affected by special expenditures to meet distress, deprivation or want.
In the last year in which the Conservative administration controlled expenditures, namely
the year ended March 31, 1936, the total controllable expenditure was 8372,539,000. In the year ended March 31, 1939, the minister himself gives as his estimate of the controllable expenditures the sum of $416,372,000. In other words, in the last fiscal year the government spent $43,833,000 more than was spent by the Conservative administration in the last year in which its policies could have any effect upon the controllable expenditures of this country. Comparing the fiscal year ended March 31, 1939, with the previous fiscal year ended March 31, 1938, we have an increase in controllable expenditures of SI ,500,000 and a decrease in revenue from taxation of about $13,000,000. The revenues are down, but controllable expenditures are up-attributable not to the fixed price of wheat, not to the relief of unemployment, because those figures are not included in the figures I have given, but to a weak and wasteful administration.
Where did some of that money go? Well, $1,453,903.89 was spent on commissions authorized by this government to do jobs which in the main are the responsibility of the government, as the elected representatives of the people. Where did some more of that increase in expenditures go to?-increased civil service staff. At the end of March 1936 we had a total of 41,132 permanent and temporary employees in our dominion civil service. That figue is official. No figures are available at all as of March 31, 1939. Official figures are not even yet available for the year ended March 31, 1938. But I am credibly informed that an accurate estimate for the end of March 1938 would be 44,102. If that estimate is correct, then during the two years 1937 and 1938, under the administration of this government, the number of civil servants was increased by 2,970. I will guarantee that when the figures for March 31, 1939, are available we shall find that there is again a further increase in the number of civil servants employed by the federal government. Why is it necessary for this government to employ 3,000 more civil servants than were employed in 1935 by the Conservative government?
That is the record of last year. To what may we look forward in the next year? The prospects for the coming year are further deficits and further debt upon the people. The .minister states the total expenditures for the year ending March 31, 1940, leaving aside $29,400,000 of capital expenditures for defence-which will have to be added to our present debt-will amount to $550,100,000. He then proceeds to estimate that the revenue will equal $490,000,000. How on earth he arrives at that figure is difficult to determine.
The Budget

Mr. Lawson

In the year just closed the total revenue was $501,677,000. No increases in taxation are proposed in this budget. On the contrary we are going to lose at least $14,000,000 in revenue from excise tax. If the proposed reduction in the income tax of corporations accomplishes the purpose for which it is intended we will lose another $10,000,000 in income tax. If we take these losses of revenue, amounting to $24,000,000, and deduct that amount from the $501,000,000 collected last year, it leaves the minister with a maximum gross revenue of $477,000,000, plus a hope that changed world conditions will drift this drifting government into a tide of improved business conditions, and hence larger income.
However, on the basis of the estimate given by the minister we face the prospect of a deficit of $60,000,000 in the coming year. This does not take into account any loss in excess of $25,000,000 in respect of the wheat crop of 1938, or any loss on the wheat crop of 1939 by reason of the minimum guaranteed price per bushel or the bonus per acre. Nor does it take into account the $29,400,000 of capital expenditures for defence purposes. So that in the result I venture to predict that there will be a deficit of not $60,000,000 but close to $90,000,000 on current account, unless revenues tremendously improve. There will be a capital expenditure of $29,400,000 to be added to the burden of debt upon the people for deficit in current account, making a total increase in debt of approximately $120,000,000.
Is no vigorous, courageous policy to be announced by the government to meet this appalling situation? I agree with the Minister of Finance that we should not embark upon a policy of pump priming. I do not believe that will ever solve our problem. I agree with him that the mere fact of an unbalanced budget is not in itself injurious to general economic welfare. I agree that the government should not embark upon a policy of deflation, because to do so would only impose a further burden upon those who are least able to bear it. I do say that this government should adopt a vigorous, definite and determined policy to reduce that deficit by reducing controllable expenditures, instead of merely drifting with the tide of political expediency.
You will never reduce controllable expenditures by constantly increasing the number of civil servants. You will never reduce controllable expenditures by putting enactments on our statute books such as that sponsored by the Minister of Trade and Commerce (Mr. Fuler) this session to set up a motion picture bureau, entailing a commissioner and the staff which the commissioner will require. You

will attain it only by the government giving virile, strong leadership to business and enterprise and to the people of this country. The Minister of Finance "passes the buck" for leadership to the business men of this country. The minister said:
It is in the field of private investment that leadership and courage are most needed to-day.


Charles Avery Dunning: I hope my hon. friend will read what preceded that, because I had no intention of "passing the buck." I was acknowledging the deficiencies both of my hon. friends and of myself.


James Earl Lawson: I quite admit the Minister of Finance intended to put it in that way. I have not the quotation before me, but his words were to the effect that he was not placing greater blame on the business men than upon himself. I think that is a fair interpretation of his remarks. The minister says he was not "passing the buck," but in my opinion he was "passing the buck" to the business men on behalf of the government. I cannot agree with that statement. I do agree that the government requires the cooperation of private investment and of the business men of Canada to attain the solution of our problems, but the business men and the private investors were not the ones chosen by the people to give leadership. The people chose this government. If you want to get cooperation and activity from private investors and from the business men of this country, the government must lead. I am confident that business will follow. I am sure that if the government will come forward with a policy which has the qualities the minister so much desires in business, of leadership and courage; if it will attempt an administration that seriously seeks to curtail controllable expenditure instead of being blown 'by every wind of political expediency, the government will have the cooperation of private investors and the business men of this country irrespective of their political faith.
We have heard a great deal recently of the leadership league. Why was it created? It is but an expression of the demand of the people for that leadership which the government of the day should give and which this government promised when they obtained the votes of the people in 1935. The reason you have so much talk about leadership and leadership leagues to-day is that the public are becoming tax conscious and are realizing as never before the part that government plays in increasing or lessening their burdens. Last year the people of this country were called upon to provide in excess of $54,000,000 to pay the deficit on the people's railroad. What

The Budget-Mr. Coldwell
leadership has been given by the government to cut down that deficit and solve 'that railway problem? The only leadership I have been able to observe is that two ministers of the crown were the first to announce an expenditure on the part of that railway of 812,500,000 to build a new railway station in the city of Montreal.


Robert James Manion: During the by-election.


James Earl Lawson: Do not get ahead of me. The only leadership given there was to lead into a further deficit of 812,500,000 so that the Liberal candidate would lead all the other candidates in a by-election then pending in the territory immediately benefited by the expenditure. What leadership has the government given to effect savings in connection with the operation of the Canadian National Railways? Up to the present time the only contribution made to savings on that railway has been the minute amounts saved by reducing the number of sectionmen employed, or the trainmen and brakemen running on the line, instead of using a pruning knife effectively to eliminate the extravagant expenditure at the top for private cars and high-salaried executives who are failing in their primary jab of reducing the cost of the operation of the railway.
I repeat, the people of this country are becoming tax conscious. Almost every revolt in every country in the history of this world has had its origin in tax consciousness of the people, consequent upon tax oppression. The never-ending and ever-increasing expenditure of this government is driving the people to revolt, but, being Canadians, they are expressing their revulsion against this government for its do-nothing, drifting policy in the form of leadership leagues, tax repeal associations and committees for railway action. They are expressing their revulsion against this government for its increase of the public debt, for its lack of progressive policies, for its lack of leadership.
I therefore move:
That all the words after "that" in the said motion be struck out and the following substituted therefor:
"This house regrets that, in violation of its pledges to the electors, the government does not propose to lighten by reduction of controllable expenditure the heaviest taxation ever imposed on the Canadian people, taxation that retards exchange of goods and expansion of industry, discourages investment of capital in new enterprises, and perpetuates the major problem of unemployment;
That the government has failed to adopt measures for the preservation of domestic markets for the products "f the farm and fisheries*
That no adequate solution has been offered by the government of vital pressing problems relating to youth, work and wages for willing hands and cooperation with the provinces towards national understanding and the common good."


Major James William Coldwell: Mr. Speaker, my first word is one of congratulation to the Minister of Finance (Mr. Dunning) upon his very apparent improvement in health. I am sure we are all glad to see him able to perform the most arduous duty of introducing a budget and making a budget speech. I should like to do what I have done before, congratulate him upon the manner in which that speech was presented and the clarity of expression which, as usual, characterized it. I liked the new method of introducing the budget by which the various schedules eliminate from the speech a great deal of detail. Having said this, I am bound to say that considered from the point of view of the masses of the Canadian people the budget is a dismal document. It reflects an utter bankruptcy of the government and its policies in relation to the pressing problems confronting the country.
In this, the fourth budget delivered in the fourth session of this parliament, we see very very little indication-I was going to say no indication-that the government intends to fulfil many of the promises made to the Canadian people immediately prior to the general election of 1935. I have before me, for example, a report of the radio broadcasts delivered by the present Prime Minister (Mr. Mackenzie King) immediately before the general elections of 1935, and they make interesting reading now. Almost every word he uttered then in condemnation of the preceding government can be applied with equal or even greater force to his own present administration. He says on page 4, for example:
You have had one experience of being deceived by promises at general elections. Are you prepared to risk another? You have seen how long a period of time five years is; what opportunity it affords a ministry, if the ministry be so inclined, altogether to ignore, and even to defy, your clearly expressed will and your most evident wishes.
When I think of the numerous promises made by the present Prime Minister, by the official Liberal party and by members of the Liberal party, prior to the 1935 campaign, the force of the Prime Minister's preelection warning is driven home to me at least. Where in this fourth and perhaps preelection budget is the fulfilment of the promise, for example, to use currency and credit in terms of public need? Where the promise to establish an investment control board to prevent the

The Budget-Mr, Coldwell
exploitation of the public through the sale of watered stock and worthless securities? Where the promise to bring about more democracy in industry so that workers and consumers might have a larger share in the government of industry? Where the promises to lower the costs of production in agriculture by forcing a reduction in farm implement prices? What has become of the threats of the Minister of Agriculture (Mr. Gardiner), made immediately prior to the Saskatchewan general provincial elections, and made so eloquently in this house before those elections last June? Where is the dollar wheat promised to our western farmers so that they might meet their obligations and buy clothing for their families? All we have is several bills on the order paper foreshadowing 37-cent wheat on the farm- and ruination for western agriculture. Where is the Prime Minister's own promise to reduce the sales tax from where it then stood at six per cent? So far from reducing the sales tax the first budget introduced by the present government raised it from six to eight per cent, and there it still remains.
Where are the caustic criticisms of the sugar tax and of the other nuisance taxes against which members opposite declaimed so long and so loudly in the years before 1935? I had occasion a day or two ago to look up some of the old Hansards and I read the caustic criticisms of all these taxes made not only by gentlemen now comprising the government party but by members of the government itself. What has the government done to mitigate Canada's unemployment problem, which they described in 1935 as our most pressing national problem? In his radio address of August 5, 1935, the Prime Minister said, and again I quote from page 42 of this booklet, Mackenzie King to the Canadian People, 1935:
Taking the latest figures on employment supplied by the bureau of statistics, it can be shown that, on the most conservative estimate, there are to-day over 400,000 wage earners out of work.
The same government bureau of statistics estimates that in February, 1939, the latest report that has come to my hand, there were over 491,000 wage earners out of work, to which must be added, because in 1935 they were considered as unemployed, the 26,000 young persons employed under our farm placement plan and all other young people employed under forestry and other schemes. Referring to these unemployed and to others on relief in 1935 the present Prime Minister said, and again I quote from his radio addresses:
It is not with statistics, but with human lives, that we are concerned. You cannot measure fear, privation and want by any yardstick, or
fMr. Coldwell.]
adding machine. Who will venture to estimate what the enforced idleness of hundreds of thousands of human beings, and the enforced acceptance of relief from the state by a very much larger number, over a period of two, three, four and, for some, five years, has meant in the waJ .Physical suffering, of mental anxiety, and of human anguish to lives and homes of which there is no record whatever? Who will venture to estimate what the effect of all this may be upon the health and morale of the nation? Is it any wonder that to-day there is widespread unrest and discontent throughout l.? i*i ** ana that, in the case of young and old alike, many are in a condition of despair.
Thus eloquently the Prime Minister put the case in August, 1935. The Canadian people listened to his siren call, and to-day instead of two, three or four years of unemployment and relief these people have had six, seven and nine years of unemployment and relief.
To solve the problems of unemployment and of agriculture the Prime Minister, and again I use his own words, appealed for stability and an unmistakable majority." He got the majority and the Canadian people got the stability.
Contrast this record and this budget with those of another dominion government, elected also in 1935 to give effect to policies such as those .which the Cooperative Commonwealth Federation has consistently advocated-the Dominion of New Zealand. There they have ended unemployment and are actually busily engaged at the present time in recruiting certain classes of labour, particularly in the building trades, carpenters, for example, in the commonwealth of Australia because in New Zealand there is a shortage of such labour. We have heard Jeremiahs predict that New Zealand will shortly meet with economic difficulties. The regiments of reaction are organizing to destroy that government, and there is a consistent propaganda against it all across the world; but if they are destroyed for the time being, New Zealand will at least have had years of respite and its people will be better housed, better equipped, and with a better morale to grapple with any situation that may arise.
Here in this dominion, with the government facing failure all across the country, every attempt is now being made to end this session with our problems unsolved. We are told that if we do not agree to prorogue shortly we shall be forced to come back and sit here again in the heat of an Ottawa summer. Many of us have had a strenuous session; for we have tried to force the government to pay some heed at least to the problems to which I have referred. In my opinion parliament should adjourn for a few days to do proper homage to their majesties, but the king's business should thereafter proceed and

The Budget-Mr. Caldwell
be properly concluded. Mussolini and Hitler move into other lands to divert attention from internal difficulties. It seems to me that the Prime Minister is proposing to close parliament and tour this country and the United States as the north American adviser to his majesty, and I am persuaded that if his majesty knew the condition of his people on the farms and throughout this country generally he at least would wish that the Prime Minister and members of parliament should remain here to do their duty. For in Canada the dangers to democracy and to the throne-because the throne in this country rests upon the will of a democratic people-are to be found in the conditions within the country rather than in threats from without.
The budget, I repeat, is a dismal document. It is not a people's budget, it is a rich man's budget. There is no lowering of the sales tax, no lowering of the sugar tax, no measure of relief from taxes that strike the very poor. For the last year, according to the budget, the estimated yield from sales tax will be
8119,460,000,	or 23-81 per cent of our total revenue; from tariff and customs duties we derived S78,750,000, or 15-7 per cent of our revenue; and from excise tax, in which there is some reduction, 851,313,000 or 10-23 per cent. These I submit are taxes that are passed on in the main to the consumer, so that 49-74 per cent of our revenue last year was collected in burdens that bear heavily upon the consumers and upon their purchasing power. From this there will be some relief, but relatively little, and much of this little may not be passed on to the consumers by the monopolistic industries and distributive agencies.
Income tax accounts for some 28-31 per cent of our entire revenue. This is collected, according to the figures submitted to this house during the discussion of the estimates of the Minister of National Revenue (Mr. Ilsley) largely from a few wealthy individuals and corporations. The budget speech proposes indirect reduction of certain corporation taxes. Already the powerful and rich mining industry enjoys rebates on account of capital invested in new projects, and now the government proposes to extend this principle to industry generally. The minister in his speech said:
Any firm, therefore, which begins after May 1 next the construction, installation, betterment, replacement or extension of plant, machinery, or fixed equipment will be allowed a credit against income tax equal to ten per cent of the costs incurred for such capital projects prior to April 30, 1940-one year.
Hence in an indirect way the corporation income tax, and individual income tax in some cases as well, is being reduced. There
is no relief from sales tax or sugar tax, no substantial relief from the burdens of tariff taxation on the clothing of the people, but substantial relief, I take it, is being given to the textile and other industries that care to take advantage of this particular provision.
This, it will be argued, will create new employment. But will it? Obsolete plants will be reconditioned and rationalized so that perhaps the ultimate result may well be more, not less unemployment. Such is the price of progress and the dilemma in which modern capitalism finds itself. Besides, what are the requirements of modern industry in Canada? Already it is said that we are over-equipped, so that even in good times industry operates only to a fraction of its potentialities. This was demonstrated again and again before the price spreads and mass buying committee some years ago. Two years ago the government raised the tariff to protect the furniture industry-why? Well, because we had too many factories, too much competition, too little rationalization and high domestic prices -again, the dilemma of unplanned, unintelligent economy. Now it is proposed to bonus all industries so that they may expand their plants and become more efficient in order to make more goods. But what we need is greater consumption of the goods we already have and greater use of the potentialities which we already possess in the country in which we live. We lower income tax on the manufacturer but we take from the consumers, by the sales tax, the tariff and the excise, about $250,000,000 worth of purchasing power. Surely the minister is beginning at the wrong end. The corporation income tax is the last, not the first tax that ought to be lowered by a government which said that personality was more sacred than property.


Miss MACPHAIL:: Who said that?


Major James William Coldwell: The Prime Minister, before the election of course. Through the years many of these industries have taken a heavy toll in profits from the people, and now they are the first to get relief from taxation. More recently the mining industry, exploiting our national natural resources, has made rich returns for many of those engaged in it. It is from such sources that more, not less, of our national revenue should be derived. In this industry, by governmental enactment and decree, the price of gold has been raised for example, from approximately $22 an ounce to $35.


Agnes Campbell Macphail: Then why not 80-cent wheat?
The Budget-Mr. Coldwell


Major James William Coldwell: Yes, why not 80-cent wheat? I remember hearing the leader of the opposition say on one occasion in this chamber, in relation to that increase, that since it was a creation of the government of Canada and therefore of the people, the difference ought to belong to the government and the people. In other words, when the government creates an artificial value more than commensurate to meet the needs of the industry, the government ought to consider that a national asset and use it as such.


Mr. SLAGHT:: Would the hon. member
permit a question now, or would he prefer that I wait until he is finished?


Major James William Coldwell: I would rather the hon. member would wait, but I do not mind answering a question.
Somewhere we have to find more revenue; for I am not one of those who believe that we can tell the Canadian people now or during an election that any government elected to office can reduce taxes in the bulk.


Robert James Manion: I am sorry to interrupt, but I was reading and only partly listening. I heard the hon. member say that the leader of the opposition had said that the mining industry belonged to the people, as I understood. I should like him to clarify that. I think it was to my predecessor that he referred.


Major James William Coldwell: Yes, I apologize-I was referring to what the former leader of the opposition, Mr. Bennett, said concerning gold.
I was saying that if any of us tell the people of Canada that, under the conditions that exist or are likely to exist, taxation in the bulk can be reduced, we shall be misleading the people. The obligations that are going to confront Canada will require more, not less revenue. I use the term "taxation" as synonymous with "revenue" at the moment. And in my opinion these revenues must come from corporations and persons who possess great wealth, making their ability to pay equally great. To continue a sales tax of eight per cent and give rebates to industries and corporations is, in my opinion, the very antithesis of democratic financial policy.
The effect of this rebate was shown in the budget forecast presented by the Minister of Finance last Tuesday. The minister indicated anticipated receipts from income tax to be slightly less this coming year-not as much less as the hon. member for York South (Mr. Lawson) indicated, but I am inclined to agree with the hon. member for York South in his estimate. The Minister of Finance estimated that the revenue from sales tax would be more than it was in the last fiscal year. That estimate may not be borne out by experience,

but the point I make is that the minister anticipates that receipts from income tax will be less and receipts from sales tax will be more. To my mind this,"from the point of view of the Canadian people, is a wrong policy. If we are to lighten the burden of taxation anywhere it should be upon the masses of the people and not upon the corporations.
What will this concession mean? I have in my hand a copy of a reprint from the Canadian Journal of Economics and Political Science, volume 5, No. 1, February, 1939, in which this matter of replacement rebate is discussed. I quote the comment made on the final report of the national employment commission on employment conditions in Canadian industry:
The suggestion is made in the final report that special income tax allowances might be made for expenditures undertaken in order to replace obsolete industrial equipment. Can a quantitative idea be obtained of how much this is necessary? Of the firms who were circularized on the modernization or obsolescence of their plant since 1929 the percentage who reported their plants were not up to date was 21-6, and only 16-2 per cent stated further expenditures were required (19-4 per cent did not reply). The 2,742 concerns who reported their specific expenditures spent the formidable sum of $294,260,000. The 1,254 among these stating themselves to be in need of plant reequipment actually spent $44,930,000 but placed their requirements at a further $78,646,000. This is a substantial amount, all or part of which might have gone to bolster demand in the capital goods industry if tax allowances had been made. However, this must be kept in relation to the record of as much as $250,000,000 spent by firms who according to their own statement remained up to date without benefit of tax remission. These are not complete figures, of course, and a number of other points arise which cannot be pursued, but there is perhaps enough here to counsel a less unqualified approval of the proposal than it might at first evoke. How much loss of tax revenue on expenditures that did not need a stimulus is to be set against the advantage of increased expenditures made by concerns wild do?
In other words the writer of this article states that in any event from the point of view of industry the suggestion is of doubtful value, reducing the revenue to the government and at the same time perhaps giving a stimulus to industries that do not require and ought not to receive such a stimulus. In my opinion the provision may be taken advantage of by the "lame ducks" of industry as well as by powerful corporations which do not need the assistance.
I now wish to move, seconded by the hon. member for Winnipeg North Centre (Mr. Woodsworth), an amendment to the amendment, as follows:
That the amendment be further amended by adding the following words thereto:

The Budget-Mr. Coldwell
"This house deplores the failure of the government to reduce or abolish the sales tax of eight per cent which reduces consumers' purchasing power while at the same time proposing to allow a reduction by way of a credit against income tax of ten per cent of certain capital outlays by any firm which conforms to the stipulated requirements."
That amendment really summarizes what I have been trying to say this afternoon in criticism of the budget. In my opinion these are the two features which ought to be placed in bold relief one against the other- the failure to relieve taxation on the great masses of the people, and at the same time the reduction of taxation upon industry and corporations.
We in this group are not enemies of industry. We believe industry is essential to our national life. We would do all we could to encourage industry, in the proper perspective, but what we are endeavouring to do is show that this government at least is beginning in the wrong place and in that respect doing the wrong thing. I know that those who support the government may be said at this time to be a rather strange family. I .am well aware of the political necessity for the introduction in this house at this time of a budget such as we have before us, a stand-pat budget which really makes no fundamental changes in things as they are. I have before me the Prime Minister's radio addresses. I need not quote them, but I remember how in the addresses he urged the Canadian people to return the Liberal party to power because then, he said, we would have a real national government, a really happy family of provincial and dominion premiers all across the country.


Agnes Campbell Macphail: Not in Ontario.


Major James William Coldwell: Not in Ontario, as the hon. member says. Well, I think I see signs of the breaking up of that family all across the country. As I said the other evening, even hon. gentlemen supporting the government at the present time seem to have very unusual wishes as to the fate of the government, if I may put it in that way. The hon. member for Vancouver-Burrard (Mr. McGeer) said that if he had the power to do so he would send members of the present government down to Mitch Hepburn's onion patch for three successive terms.


Mr. McNEVIN:: Members of parliament?


Major James William Coldwell: I read the speech as it appeared in the St. Thomas Times-Journal, in which my recollection is that it mentioned the members of the government. I do not know why they should go to the onion patch,
except that evidently the hon. member for Vancouver-Burrard thought their activities were enough to make even the angels weep, and that onions might have a similar effect upon the members of the government.


Ernest Lapointe: Springtime hallucinations.


Major James William Coldwell: The Minister of Justice (Mr. Lapointe) says, "springtime hallucinations." I am glad he recognizes that at least some members on his own side are suffering from springtime hallucinations. I am quite sure they have been so afflicted for a considerable time.
I do not propose to continue longer, Mr. Speaker, I am disappointed that nothing has been done in the direction in which I should like to see the government go. This is not a Liberal budget. As I listened to the hon. member for York South, who is nominally a Conservative, I thought this was a conservative budget and that it was very difficult indeed for a member of the Conservative party to criticize it. What we need to-day are progressive economic, social and financial measures, but we are not getting them. That is why all across this country at the present time there is a rising tide of discontent. We find it everywhere. Criticisms are being levelled against this parliament; criticisms that in the main I think are unfair are borne out to some extent by this parliament itself. To-day, for example, we have the budget debate; but while the hon. member for York South was speaking this afternoon I counted at one time only twenty government supporters in their seats, and there were not very many more on the opposition benches. That goes to show that parliament is apathetic, and I believe hon. members of this parliament are disillusioned. The time has come, I say, when in the Dominion of Canada we need a forward-looking policy for the people of this country, and the government is giving neither the policy nor the leadership necessary to bring about the formation of it.


Arthur Graeme Slaght: I wonder if the hon. gentle man would permit me a question now? I understood him to say that the Canadian government had raised the price of gold from S20 to 835. If that understanding was correct I want to ask whether the hon. gentleman appreciates the fact that the Canadian government had nothing whatever to do with the rise in the price of gold, which was due entirely to the government of the United States raising the price and offering to purchase and continuing to purchase world gold as well as Canadian gold at the increased price.
The Budget-Mr. Blackmore


Major James William Coldwell: If I said "the Canadian government," I am glad to be corrected. What I thought I said and intended to say was "governmental action, and then I went on to suggest that if we fell in line with governmental action and there was an artificial increase, our government ought to benefit as a result, whether that action was taken originally by the United States or by Canada itself.


Arthur Graeme Slaght: I thought that was what the hon. gentleman meant. I wish we could raise the price of gold in this country.


Mr. J. H. BLACKMORE (Lethbridge):: I should like to congratulate the Minister of Finance (Mr. Dunning) on his very fine speech and on the return to health which enabled him to make it. But, having done so, I must cease to congratulate him.
The minister closed his remarks with a fine appeal for Canadian unity, for facing up to realities and setting out to change the conditions which are making us lack national esprit de corps and all that. I notice, Mr. Speaker, that in these days members of the cabinet are prone to wind up almost every public utterance with some appeal for Canadian unity. This astounds me, because no other cabinet in the history of Canada has done more to destroy Canadian unity than this cabinet. I do not remember reading about any former cabinet ministers in the history of Canada who seemed more completely unable to see what was causing disunity than hon. gentlemen who now occupy the government benches. I had planned to vent my indignation against them to some extent; I was going to point out to them some of the things which right under their very noses are destroying western Canada.


Ernest Lapointe: What alternative does the hon. member suggest to promote unity?


John Horne Blackmore: If my right hon. friend will bring up the question after I have finished my speech, I shall have more time to deal with it. A great many things have developed through the years which are destroying the morale and strength of western Canada. I am not blaming this government for it, but do blame the government for doing nothing to improve matters to any great extent.
I was going to point out that western Canada is a primary producing area; consequently it is prone to fall into debt to a secondary producing area. In any well-planned economy there should be a conscious effort to extend favours to the primary producers so as to help them to overcome the handicap under which they are placed by simply being primary pro-

ducers. I do not intend to enlarge upon the matter to any considerable extent. I was going to point out, further, that according to the testimony given by Doctor Jacob Viner last year in Ottawa, the tariff policies of this government are costing the three prairie provinces $47,000,000 a year for the privilege of being in this nation.
I was going to point out further the absolute abominations which exist with respect to our transportation policies. I shall mention two or three, and then pass on, because before I close I must deal with some of the observations of the hon. member for York South (Mr. Lawson). There exists a set of circumstances touching our national transportation policies as a result of which, we have such glaring inequalities as the following: It costs 75 cents per hundredweight to ship barbed wire to Vancouver, whereas to ship it to Edmonton costs $1.98 per hundredweight, making the Edmonton rate 164 per cent of the Vancouver rate. Alberta needs barbed wire.


Mr. GRANT:: And good high fences, too.


John Horne Blackmore: If the hon. member speaks out again, the first thing he knows I will be saying something he will not forget. The rate to Vancouver on iron and steel bars is 65 cents per hundredweight, and $1.79 to Edmonton; on shoes to Vancouver it is $2 per hundredweight and $3.03 to Edmonton; on twine to Vancouver it is $1.30 and to Edmonton $2,334. I could go through a list of over a hundred items, every one of which would be just as glaring as the ones I have set out. We have allowed to develop in this country a set of unfair conditions like that, and we wonder why the provinces which are being bled to death are suffering. Apparently we do not have sense enough to take any measures to prevent the pressure of those burdensome realities upon the western provinces. And then we stand up and talk about unity!
There was another point I was going to develop, but which I shall only refer to in passing. It is this, that since 1914, by such measures as the eight per cent sales tax, the federal government has been invading the taxation field of the provinces, as a result of which it is drawing from within the boundaries of those provinces the very money that the provinces need in order to stand the pressure being placed upon them as a result of relief, increased social services and that sort of thing. And still the federal government, under the Conservative administration which has ceased to be and under the Liberal administration we now have, has proposed a loan council to force the provinces into such a position

The Budget-Mr. Blackmore
that they simply cannot move. I was going to deal at length with this point and perhaps with several others-because I have mentioned only four out of eight-but some observations of the hon. member who spoke for the official opposition I shall have to attend to.
The hon. gentleman pointed out that it was necessary to increase the durable goods in a country, and placed on record statistics from which he drew a conclusion which I should think any well-informed high school graduate would not seriously have drawn. However I shall not attempt to reflect upon his judgment; we will suppose he was just playing politics.
I ask this question: How are you going to increase the durable goods in a country when you cannot find markets in that country for the production of the durable goods which are already there? To put a concrete case: Let us suppose we are talking about coal mining machinery. How are you possibly going to increase the money invested in coal mining machinery when you cannot find a market for the coal which the present machinery can readily produce? That question calls only for the application of plain economics-the simplest A B C's of economics. One would think social crediters would not have to come down here to Ottawa to deliver a lecture to one of the prominent members of the Conservative party in respect to a matter such as this. It ought to be perfectly clear to anybody who has studied economics. The only way in the wrorld in which you will get more money invested in factories, durable goods and capital equipment in Canada is to increase the markets available for the product of the equipment already here.
The question confronting us is purely one of how to increase markets. There are only two places to find markets, namely, outside and inside the country. The Liberal government has devoted its effort to exploiting the possibility of obtaining external markets. Their aim is a laudable one, but the difficulty is that they run into certain realities which are extremely painful and which I believe tend to destroy the result of all their work.
For example, in order to sell New Zealand and Australian automobiles, rubber goods, wood pulp and the like, governments-not this one particularly-have reduced the duty on Australian and New Zealand butter and mutton and have allowed those products to come into a country which already is able to produce far more of those commodities than it can use. How can you improve economic conditions in a country by policies of this kind it passes any kind of simple common sense to see. But that has been done and is being
done. I believe the Liberal administration will discover that the results of these treaties, upon which it has congratulated itself, will be practically nullified or brought to a dead level by such factors as those I have indicated.
What can we do about internal markets? The social credit philosophy and the Conservative philosophy agree in this respect, that you must increase purchasing power in your country. Apparently the Conservatives have the idea that you can do that by raising the tariff wall high enough. The Social Crediters say that you will never do it by raising the tariff wall, that there is a deficiency of purchasing power which it is utterly impossible to overcome even though you keep every dollar's worth of goods from outside from coming into the country. The hon. member pointed out that he did not agree with his social credit friends. I rather think that is to the credit of those social credit friends. If he was no clearer in his reasoning than he was on the point I mentioned a few moments ago, it certainly would be no credit for the social credit people to be in conformity with him.
I am going to refer to a set of figures which I brought to the attention of the house once before, and which may be found in a book called The Income of the United States. These figures, which will be found on pages 242 to 248, deal with the economy of the United States in 1918. It is pointed out that 60 billion dollars' worth of consumable goods were produced in the United States in that year, that is, goods such as milk, cream, butter, shoes, clothes, and so on. But in that year only 45 billion dollars' worth of money was paid out to the people by every means that could be named-that is, by wages, salaries, dividends, bonuses, and the like. The problem which confronted the United States in 1918 was how to find the purchasing power to buy that extra 15 billion dollars' worth of goods.
The ordinary economist will say that the velocity of circulation should take care of that, but in saying so the ordinary economist makes the greatest mistake of his life. No matter how you juggle things around you cannot make 45 billion dollars' worth of purchasing power buy 60 billion dollars' worth of goods. The big question is how you are going to overcome that. Let us get back to the question raised by the hon. member with regard to durable goods. If you were living in a country where 60 billion dollars' worth of goods were being produced and the people could buy only 45 billion dollars' worth of those goods, what

The Budget-Mr. Blackmore
would be the use of erecting factories to fabricate more goods? If you lived in such a country, would you go into the production of coal when there already was more coal in the country than could be sold? Would you be willing to spend any money to develop a shoe factory when there was already being produced more shoes than the people could buy? I could go down the whole list of commodities. We should ask ourselves with respect to how many diiferent commodities do we produce more in Canada than the people can buy. I think hon. members would be amazed to find out how many there are. I do not say we are producing more than the people could buy if we gave them the necessary purchasing power, but we are producing more than they can buy with the income at present at their disposal.
When hon. members on both sides of the house finish thinking through that problem they will be ready for social credit. Of course they are not ready now, because it is quite clear that they have not thought through the problem. The problem is there, however, and by and by even they will see, although they cannot see to-day.
A good deal of more or less superior, patronizing tolerance and indulgence is shown by certain wise men in parliament to-day toward social credit because we talk about putting money into the hands of the people. The men who assume that attitude are quite unconscious of the type of men with whom they are colliding when they take a more or less scornful attitude toward this idea of putting purchasing power into the hands of the consumer.
As an example, I should like to quote Doctor Leonard Alston, lecturer in economics at Cambridge university. I should like to quote from page 77 of his book entitled The Functions of Money, published by the Macmillan Company in 1932. I am going to ask hon. members to indulge me while I read from this publication. Apparently there is no use in my talking, but if I put on Hansard the words of a man who at least deserves respect, whether or not they agree with them, hon. members may read those words and reflect. Here is what he says:
The banks are accustomed, when expanding monetary supplies, to pump them in at the producers' end; and producers and bankers together may well make the gravest mistakes as to the proportions in which the rest of us will want to buy cotton goods or coal, houses or cars, cinema tickets or beer. . . . And so the producers, however fully informed of the state of affairs at the moment, may come to be disappointed in the end, with the natural, and probably inevitable, result that we have gluts and shortages (of types of labour and of plant) simultaneously present all over the field.
rMr. Blackmore.]
I am closing the quotation there. That is an admirable picture of the condition that exists to-day all over Canada and the United States because we have chosen to inject money through production. This is to be found on page 78:
Would it, then, be possible to neglect the producers and pour the new money freely into the hands of the consumers-that is to say, into the hands of all of us (seeing that consumers are not a class, but the whole community under another name) ? If all possible buyers were to be given the extra money, their demands on the traders should ensure . . . that all the things they desire would be produced in almost the right proportions, and we should no longer be faced with the recurrent problems of overproduction of this and relative underproduction of that . . . leaving hands stranded high and dry, along with their unemployed machinery, unable to buy their customary share of the textiles and coal and cinema performances that other wrorkers would have been eager to supply if satisfactory buyers could have been found, but owing to the absence of these buyers were constrained to stop supplying and become unemployed themselves.
From the coldly intellectual point of view there would seem to be a great deal to be said in favour of this way of handling the problem. We should all be getting a larger share of the things we desire, and we should all be getting a larger demand for our own services, so that under-employment would be confined to those, in the specially overpopulated industries, who were specially immobile and unadaptable for other work ... it would work admirably, no doubt, if all of us were unemotionally intelligent and realized clearly what was happening.
I submit that here is a man who surely is worthy of some respect, and his statement supports perfectly the social credit contention. Of course the hon. member for York South does not agree with him. Naturally he is a greater economist than this man. I have here another quotation which I think almost everyone in this house should give ear to. I intend to quote from a book entitled Prices and Production, written by Friedrich A. von Hayek, lecturer in economics, university of Vienna, and director of the Austrian statistical institute. I quote from page 23 as follows:
... it is perfectly clear that, in order that the supply of and demand for real capital be equalized, the banks must not lend more or less than has been deposited with them as savings. And this means naturally that they must never change the amount of their circulation. At the same time it is no less clear that, in order that the price level remain unchanged, the amount of money in circulation must change as the volume of production increases or decreases.
Now I am going to ask this question: If already in a country there is more coal ready to be produced than the people can use, and consequently the banks can no longer lend money and the owners of money can no

The Budget-Mr. Blackmore
longer invest it in the production of coal, how-will the coal industry be able to put into people's hands any money with which to buy coal other than that money which they would ordinarily get through their labour? It is a well known fact that to-day modern machinery is replacing labour, and therefore decreasing the amount of money which is going into the hands of labour. The result is that unquestionably the amount of purchasing power available to buy coal is decreasing progressively. That is characteristic of the age we live in, this age of plenty, this age of machinery. It has a bearing on the quotation.
I read again from page 11:
Everything depends on where the additional money is injected into circulation, and the effects may be quite opposite according as the additional money comes first into the hands of traders and manufacturers or directly into the hands of salaried persons employed by the state.
By that of course he means consumers.
We hear the statement often made these days that the banks will not lend any more money to industry. We hear again that the banks are full of money. We had the president of the Bank of Canada express in committee a few days ago the idea that the banks can do no more through monetary policy. He is perhaps correct. The banks probably can do no more through monetary policy so long as they continue to think they can put money into circulation only by lending it for production. But if they begin to put it into circulation as consuming money, then something certainly can be done by monetary policy.
The next question that arises is: Will new money that is paid out to people cause inflation? It needs to be borne in mind that so long as you have unemployed men and unemployed resources you cannot have inflation. Unemployment of both men and resources means deflation. Once that fact is fixed in our minds we can begin to do effective thinking on this question of increasing money and its effect on inflation.
I am going to give a quotation or two from an eminent authority across the line, Senator Owen, who testified before a committee of the United States senate in the course of a discussion on farm commodity prices, on June 9, 1937. Here is the first quotation that has a bearing on the question under discussion:
Inflation does not occur until maximum employment and production is achieved. If it should occur the volume of money could be immediately reduced by selling bonds, by sales tax and other taxes and retiring such excess money from circulation.
It is quite clear what he means. I read another passage from his evidence:
And the minute you go beyond the point where you employ all the labour in this country at fair wages for the turnover of their products and services to the country-whenever you go beyond that requirement you are inflating, and when you are down below the normal of full employment, you cannot inflate.
Statements like that appear to be somewhat at variance with the ideas ordinarily expressed by men like the Minister of Finance (Mr. Dunning), the president of the Bank of Canada and other financial authorities in this country. The question arises, who is right? Well, I am wagering that Senator Owen is right, and the next generation will prove it. Here is another quotation from Senator Owen before the same committee:
It is a matter of supreme importance to keep in mind, and at all times to remember, that when you double production it has a tendency to decrease the market price of commodities and thereby to offset the rise in the price of commodities which would take place as a result of expanding the money supply. So long as the expansion of the money supply results in the expansion of employment and increased production of commodities, the one offsets the other. The commodity index is diminished hy the increase of commodities unless the money supply increases at the same time. Increasing the money supply will absorb the unemployed until maximum production is achieved. Maximum production and the absorption in private industry should be our objective.


Mr. GRAY:: What is the hon. gentleman quoting from?


John Horne Blackmore: I have already cited it This evidence was given before a committee of the United States senate in the course of a discussion on farm commodity prices.


Ross Wilfred Gray: From what magazine is the hon. member quoting, may I ask?


John Horne Blackmore: I am quoting from the report of that committee.


Ross Wilfred Gray: I should like to know the
name of the magazine, so that I can get it.


John Horne Blackmore: If the hon. member will come to me afterwards I shall give him the quotation. Let the hon. member challenge the accuracy of the statements made by Senator Owen. I defy him to do that.


Ross Wilfred Gray: I want to read it, to check up on it.


John Horne Blackmore: I am vouching for the correctness of the quotations I have made. Does the hon. member think these are not the words of Senator Owen?


Mr. HANSELL:: They are just fooling.
The Budget-Mr. Blackmore


John Horne Blackmore: Yes, just fooling.
The next question is, how is the money to go out into circulation? There has been a good deal of discussion on that ipoint. The Minister of Finance and a great many of his supporters have apparently assumed that the social credit people have advocated running the printing presses. That is not so. The credit should be issued through the banks. Senator Owen puts it rather well. If the committee will allow me to give one more quotation from him, then I think they will have something which they can understand quite well. Senator Owen says:
I think it would be a better plan to pay it out by cheque against a direct credit placed with the reserve banks. It would not be paid out in currency, but could be converted into currency if desired.
In a general way that well expresses the social credit idea. The technique by which that is to be done we must leave to the banks to work out; but it can be done.
It is commonly said, as I mentioned a few moments ago, that nothing more can be done by monetary policy. Those in this country who take that standi are directly at variance with at least one eminent authority from Great Britain. This man is William A. Shaw, editor of the Calendar of Treasury Records. The quotation I am giving is from a book entitled The Principles of Currency, Credit and Exchange, by William A. Shaw and Alfred Wigglesworth, published in 1934. Here is what they say:
In enunciating for the banks the simple principle which must guide them in this task of controlling an upward or prosperity phase, it is not difficult to lay down a rough-and-ready datum line from which to start. That line is simply such a level of prosperity as will keep the whole of our economic system functioning healthily, and will provide suitable sustenance to every man, woman and child in the land, and suitable employment to every employable person: a level which will yield a fair return to capital and make a fair provision for the development of social and other services which have become so important a factor in our national life. We think that such a datum level can be defined, not as a theorem, but as a matter of practical common sense.
There is what that eminent authority thinks. When men maintain, that nothing more can be done by monetary policy they are certainly in direct contradiction to that authority.
It is argued at the present time that if more money is put into the hands of the people it will hurt somebody, but no effort is made to explain how that will come about. I have, on three or four occasions, noticed in the press reports to that effect. Let me put before the house this simple situation. Suppose that Henry Ford were to move to Can-

ada and were to bring with him $1,000,000,000,
Suppose he settled in western Canada and proceeded to spend that $1,000,000,000. Is there anyone in this house who would suggest that this would hurt anyone in Canada? It sounds nonsensical, does it not? Many times we have heard people say what a good thing it would be to have capital come into the country, and yet the moment it is proposed that we should print $100,000,000 of bills and pay a bonus to the farmers in the west therewith, w,e are told that it would hurt someone. Well, it remains for the people who take that stand to show that the printing of $100,000,000 of Canadian bills would have a different effect from the bringing into, this country of, say $100,000,000 by a Henry Ford or anybody else. Suppose that instead of $100,000,000 we had one billion. Personally I think that would be too much at the present time, although to think that Canada could not be made to absorb one billion dollars is a piece of nonsense, considering the number of people who could go. to work, and the extent of our resources. But suppose one billion dollars were spent all over Canada, distributed per capita throughout, the country and spent in the large cities. How in the world can anyone consistently and logically reason that the expenditure of this money would hurt anybody?
I think I have said enough at present, but I am going to lay this down as a solemn principle and be laughed at again. I say that you will never be able to change conditions in this country; you will never be able to solve the unemployment problem; you will never be able to diminish taxation; you will never be able consistently to balance your budget or pay off the debt until you change the system under which we are working. I do not hesitate to leave that statement on Hansard and let future generations declare whether I am right or wrong. And all that is happening throughout the world at the present time, all that is happening in every country, I call as evidence in support of my contention.
We have reached the point where the machinery and technical skill that we possess can create goo'ds in greater abundance than the income of the people will permit them to buy, and until we supplement the buying power of the people to enable their purchasing power to equal the value of the goods produced, we shall go on doing absurd things, as pointed out by the hon. member for Rose-town-Biggar (Mr. Coldwell). We shall continue taxing away from the people the very money that we wish them to have to spend.

Industrial Loan and Finance


Mr. VIEN:: I would call your attention to standing order 105.
and yet we shall be utterly unable to see how we can carry on without taxing the people, without taxing industries to an extent that it is impossible for them to carry on, with the result that they are obliged to close their doors and throw men out of employment so that we have to raise taxation again, more taxation, to keep men on relief.
The absurdity of such a state of affairs will be apparent to the most elementary intelligence. I repeat, we can never solve the problem until we change our system.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock. PRIVATE BILLS



CONSIDERED IN COMMITTEE-THIRD READINGS

[Stage Direction]
Bill No. 65, to ratify and confirm the agreement respecting the joint use by Canadian Pacific Railway Company and the Midland Railway Company of Manitoba of certain tracks and premises of Canadian Pacific Railway Company at Winnipeg, Manitoba- Mr. Maybank.
Bill No. 103, respecting -The New Brunswick Railway Company-Mr. Emmerson.

[Stage Direction]
Mr. THOMAS VIEN (Outremomt) moved the second reading of Bill No. 21, respecting Industrial Loan and Finance Corporation.
Motion agreed to and bill read the second time.
Thomas Vien: I move:
That standing order 104 requiring that such bills be referred to a standing committee be suspended, and that the bill be now considered in committee of the whole.
I do this for the reason that if the bill went to the standing committee on banking and commerce, that committee is presently very much occupied with its duties on the reference concerning the Bank of Canada, and the bill would have to come back to the committee of the whole to be considered.


Mr. WOODSWORTH:: Mr. Speaker-


Walter Edward Foster: Order. I have considered the motion made by the hon. member for Outremont. My attention is drawn to standing order 116, which says-


Walter Edward Foster: But standing order 116 says:
Except in cases of urgent and pressing necessity, no motion for the suspension or modification of any standing order applying to private bills or petitions for private bills shall be entertained by the house until after reference is made to the committee on standing orders, or to one of the committees charged with the consideration of private bills, and a report made thereon by one of such committees.


Thomas Vien: With the unanimous consent of the house.


Hon. H. H. STEVENS (Kootenay East):: Not only is there the standing order cited by the Speaker, but this bill and Bill No. 20, respecting Central Finance Corporation and to change its name to Household Finance Corporation have been standing on the order paper since February 13 and February 14 respectively; they have been called every night that private bills have been called; they could have gone to the banking and commerce committee over two months ago. To move now the suspension of the rules and rush these bills through is, to my mind, grossly unfair to the house. It is just playing ducks and drakes with the rules. Personally I am absolutely opposed to the motion. These bills should take their ordinary course.


Thomas Vien: It is evident that without the unanimous consent of the house the motion could not be considered. But in answer to what the hon. member has just said as to these bills standing on the order paper, it has been said by the hon. gentleman himself, I think, and by several hon. members opposite that these bills should not be considered by this house-


Henry Herbert Stevens: My hon. friend is wrong; I have never made any such suggestion.


Thomas Vien: Then I stand corrected so far as the hon. gentleman is concerned, but I know that several hon. members suggested that these bills should not be considered before the government brought down a public bill with respect to small loan companies.
However, in view of the opposition of the hon. gentleman which prevents unanimous consent being given I move:
That this bill be now referred to the standing committee on miscellaneous private bills instead of the standing committee on banking and commerce.
I do so because the standing committee on banking and commerce is more than fully occupied by the references already sent to it.

Industrial Loan and Finance


James Shaver Woodsworth: I move in amendment that
this bill be referred where it ought to be, to the committee on banking and commerce.


Walter Edward Foster: I call the attention of
hon. members to standing order 104, which states:
. Every private bill, when read a second time, is referred to one of the standing committees as follows: bills relating to banks, insurance, trade and commerce and to trust and loan companies, to the committee on banking and commerce; bills relating to railways, canals, telegraphs, canal and railway bridges, to the committee on railways, canals and telegraph lines; the bills not coming under these classes, to the committee on miscellaneous private bills. . . .
Therefore I am of opinion that this bill must be referred to the standing committee on banking and commerce. Mr. Vien moves, seconded by Mr. Macdonald (Brantford), that the said Bill No. 21, respecting Industrial Loan and Finance Corporation, be referred to the standing committee on banking and commerce.


Thomas Vien: I will accept the suggestion
of the hon. member for Winnipeg North Centre-


James Shaver Woodsworth: No, not my suggestion, the ruling of the Speaker.


Thomas Vien: Well, I think I like that better. I would, however, move that standing order 105 in connection therewith be suspended. Standing order 105 deals with the necessity of giving eight days' notice of these bills before they can be considered by the committee. I should think the committee could easily consider these bills without the formality of having the notice affixed for eight days, at this late stage of the session.


Walter Edward Foster: I am of opinion that
the motion of the hon. member is not in order. We come back to standing order 116, dealing with the suspension of standing orders, which states:
_ Except in cases of urgent and pressing necessity, no motion for the suspension or modification of any standing order applying to private bills or petitions for private bills shall be entertained by the house until after reference is made to the committee on standing orders, or to one of the committees charged with the consideration of private bills, and a report made thereon by one of such committees.
Therefore I am of opinion that the hon. member is not in order in asking that this rule be suspended.


Thomas Vien: Then may this be considered
as a notice that the motion be referred to the standing committee on standing orders? [Mr. Vien.}


Walter Edward Foster: The notice will have
to be a notice of motion in the votes and proceedings.


Ernest Lapointe: I might suggest to my hon. friend that under the circumstances he ask the committee on. banking and commerce to give precedence to his bill in order that it may be considered. I do not suppose it would take up much of the time of the committee, and that would seem to be the best way to deal with the matter.


Thomas Vien: I would accept that suggestion if it were not for the fact that, unless standing order 105 is suspended, we have to wait eight days before the bill can be considered. Then, after these bills are given third reading and passed here, they have to go to the senate.


Mr. McIVOR:: I am not a lawyer, but speaking to the point of order-


Thomas Vien: There is no point of order.


Walter Edward Foster: I have rendered my
decision. Is it the pleasure of the house to , adopt the motion of the hon. member (Mr. Vien) that this bill be referred to the committee on banking and commerce?


Some hon. MEMBERS:: Carried.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The house resumed from Tuesday, February 14, consideration of the motion of Mr. Macdonald (Brantford) for the second reading of Bill No. 20, respecting Central Finance Corporation and to change its name to Household Finance Corporation.
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

[Stage Direction]
Bill No. 101, to incorporate The Association of Canadian Clubs.-Mr. Vien.
Bill No. 105, for the relief of Blanche Anna Bousquet Pepin.-Mr. Hill.
Bill No. 106, for the relief of Agnes Keating Bigelow Reddy.-Mr. Hill.
Bill No. 107, for the relief of Ethel Rothpan Staroselsky.-Mr. Factor.
Bill No. 108, for the relief of Myrtle Jane Ramsay Fox.-Mr. Hill.
Bill No. 109, for the relief of Joseph Maurice Durieux,.-Mr. Factor,

Companies Act-Mr. Raymond


[Stage Direction]
On the order:
House in committee on Bill No. 3, an act to amend the Railway Act. (Committee recommends that this bill be not further proceeded with).-Mr. Lacroix (Quebec-Montmorency).
Thomas Vien: Mr. Speaker, when this bill was considered by the standing committee on railways, canals and telegraph lines, it was fully discussed, and by a vote of twenty-two to nine the committee decided that the bill should be not further considered. That decision of the committee has been reported to the house.


Walter Edward Foster: Then it is up to the hon. member to make a motion if he wants the bill to be considered by the house.


Ernest Lapointe: Stand.


Walter Edward Foster: Stand.



COMPANIES ACT


[Stage Direction]
Mr. MAXIME RAYMOND (Beauharnois-Laprairie) moved the second reading of Bill No. 31, to amend the Companies Act. 1934.
He said: Mr. Speaker, the object of the bill of which I now move second reading is to amend the Companies Act, 1934, to give the Secretary of State the means of exercising adequate supervision over the operations and conduct of companies incorporated under this act, and especially to enable him to ascertain that companies enjoying the protection of the customs tariff are not guilty of abuse and are not exercising the powers and privileges granted to them to the detriment of the public and the workers.
I was prompted to introduce this bill by the crying abuses revealed by the royal commission on the textile industry which was presided over by Hon. Mr. Justice Turgeon, abuses intolerable in a well-organized society, which have deeply stirred public opinion and which call for drastic repressive action by parliament.
Although the principle of the bill does not apply to any one industry I shall limit my remarks to the industry which was the cause
of the investigation just mentioned.
On January 15, 1936, Mr. Blair Gordon, managing director of the Dominion Textile Company, disgruntled at the refusal of the
Minister of Finance (Mr. Dunning) to agree to his request that a tariff equivalent to a tax of 494J per cent be maintained on Japanese goods, undertook on his sole responsibility to suspend operations at the Sherbrooke mill and notified the federal authorities that the refusal of the Minister of Finance would throw 500 to 600 textile workers out of employment. As a matter of fact, the following notice was issued the next day:
This mill will close on Friday, January 17, and will remain closed indefinitely.
(Signed) G. B. Gordon,
Managing Director.
Mr. Gordon immediately informed the public, through the medium of the press, that on account of Japanese competition with respect to certain types of artificial silk the mill had to be closed, and would remain closed as long as a possibility of manufacturing goods that would sell could not be foreseen. And this incident took place in the middle of the winter and in the midst of general unemployment.
I do not even attempt to qualify such a process of intimidation on the part of the managing director of an industry which thrives on privileges granted by parliament. The government's answer was the appointment of a royal commission presided over by the Hon. Mr. Justice Turgeon, with power to inquire "with respect to all matters surrounding the operations and conduct of the textile industry." The order in council was passed on January 27. Two days later the Sherbrooke mill was reopened, and it has been in continuous operation ever since. Mr. Gordon's bluff had been called. But here we have an idea of the inhuman measures that this young dictator can resort to in an attempt to intimidate the government and achieve his purpose, and without any regard for the distress of the workers.
A brief analysis of the facts revealed by the evidence adduced before the commission shows the odiousness of his conduct. In March, 1935, Japan had complained of the restrictions placed on the imports of Japanese goods to Canada. Ensuing negotiations had been unsuccessful, and following mutual reprisals the duties were again raised, to such an extent that they constitute an almost prohibitive barrier between Canada and Japan.
Since August, 1935, customs and excise duties on a bolt of artificial silk worth $43.60 amounted to $215.62, this last amount corresponding to a tax of 494i per cent.
Under an agreement concluded in November, 1935, to take effect on January 1, 1936, the duties were substantially reduced. By virtue of this agreement the customs and
[Stage Direction]
Companies Act-Mr. Raymond
excise duties on that same bolt of artificial silk worth S43.60 were only $83.42, an amount equivalent to a tax of 191i per cent.
In spite of this reduction in the customs duties claimed to bring about the ruination of Mr. Gordon's industry, the Sherbrooke mill, which was reopened two days after the passage of the order in council appointing the royal commission, on January 29, 1936, has been in continuous operation ever since. On December 7, 1936, wages at the mill were raised to a maximum of 7 per cent. This raise was accompanied by the following announcement:
General improvement of our operations as shown by the number of orders on hand at the present time is the main reason for this increase, of salaries.
The annual report on the operations of the company for the year ending March 31, 1937, contained the following paragraph:
We have been fortunate in securing a good volume of business over the past twelve months or so, despite further reductions in the tariff during the interval.
The royal commissioner was severe in his condemnation of the unjustifiable attitude taken by Mr. Gordon, and in his reference to the duties of tariff protected industry he added:
Without this tariff the consumer would be at liberty to buy his requirements in whatever market he chooses, and at free trade prices.
. . . The community has consented, through parliament, to tax itself for the benefit of an industry which turns out a product which everybody must use, and which, in a large measure, is not indigenous to Canada. . . . The community, therefore, is entitled to some substantial benefit from such an industry in return for the great privilege bestowed on it.
And his report concludes as follows:
In the case of a manufacturer operating under a protective tariff . . . there is surely an implied undertaking on the part of the manufacturer, so long as he continues to enjoy the advantage of the tariff, to refrain from throwing workmen out of employment, especially in times of distress, without reasonable justification or excuse.
This is an outline of the situation obtaining at the Sherbrooke mill. The order in council, however, went much farther. The commissioner was ordered to secure complete information with respect to the textile industry, with a view of ascertaining, among other things, whether it actually discharged its obligations to its employees and the public.
Let us examine the operations and conduct of some of the textile companies in the light of the revelations made in the course of the inquiry, and let us see how those companies understood their duties.
It was claimed by the leaders of the textile industry, as the commissioner pointed out in

his report, that their industry could not subsist without the protection of a customs tariff. The customs tariff is a tax imposed on the consumer by the state for the benefit of certain industries. Such a tax constitutes a very heavy burden for the workers themselves. The customs tariff compels the consumer to pay for an article manufactured in Canada a much higher price than if that same article were purchased in the open market.
Why, then, should the state be willing to impose a special tax on the consumer for the benefit of the textile industry? Why should the consumer be compelled to pay more for a product made in Canada? Surely it is not to enable some financiers to accumulate colossal fortunes at the expense of the public and the workers. It is because the state expects and has the right to expect, manufacturing companies enjoying special privileges for which the public pays the shot, to give the workers steady employment and pay them fair wages that will enable them to live and bring up their families decently. It must be kept in mind that the profits actually made by an industry such as the textile industry, claiming that its very existence depends on tariff protection, are derived from this tax placed on the consumer, and also from tax exemptions and bonuses granted by municipal corporations.
It is, therefore, the duty of every company thus protected by a customs tariff to give regular employment to the largest possible. number of workers and to pay them a living wage. Further, wages paid by an industry thus protected, should be given priority over the allotment of dividends, and particularly over dividends paid on watered stock.
Let us take the case of The Montreal Cottons Ltd. In 1880, the capital invested in that company was $385,000. That same year, the company paid a dividend of eleven per cent to its shareholders. The following year, profits were so high that an amount of $110,000 was paid to the shareholders in the form of a share bonus, at the same time as a 20 per cent dividend was declared. Between 1881 and 1911, The Montreal Cottons Ltd. paid its shareholders, on both actually paid and watered capital stock, dividends ranging from 6 per cent to 20 per cent. These were paid at a time when the company enjoyed tax exemptions and secured a bonus of $50,000 from the city of Valleyfield, the seat of its operations.
In 1911, its capital had swelled to $3,000,000. Notwithstanding the generous dividends paid, the accumulated profits were so large that a

Companies Act-Mr. Raymond
stock bonus amounting to $3,000,000 was paid to the shareholders. Since 1911, the company has continued to pay dividends on a capital of 36,000,000, although the total investment does not exceed $2,890,000.
In short, besides the substantial dividends paid on the capital actually invested, The Montreal Cottons Ltd. has paid, with the consumers' money-thanks to tariff protection- with the exemption from municipal taxes, with the money that should have been paid in wages to the worker, and with the money obtained in the form of bonuses, dividends approximating $4,000,000 on watered stock. This watered stock is now carried on the books at a value of $5,000,000. This represents but a portion of the profits, 'because some accumulated profits were not distributed.
What was the share of the workers compared with that received by the shareholders who benefited from tariff adv ,ntages granted by parliament to the textile industry? The workers were treated like slaves. Their average annual wage does not exceed $300. In Valley-field, where the mill is located, the worker is constantly made to feel that he owes his very existence to the company. Alas, what an existence! The man who sweats in the mill from six o'clock at night until seven o'clock the next morning for a measly pay of $1.08, upon which he has to support four children besides his wife, does not live; he barely keeps body and soul together. I could mention dozens of cases of which I have conclusive evidence, to show that the wages received for two weeks' work range from $6 to $20. When the workers go to get their meagre wages twice a month they are kept waiting for hours, in the rain or in the cold, in a yard without any shelter, and their pay is handed to them in the form of a small ticket., about the size of a postage stamp, on which appears the amount paid and the date of payment. They have no way of knowing the terms of their employment, whether they work by the hour or by the piece, or whether what they receive is the pay they are actually entitled to.
Not a day goes by that I do not receive complaints from these fine workers, whose only wish is to make an honest living. Not long ago I received a letter from one of them asking me to find him another job. This man stated that he had been working at the Montreal Cottons Ltd. mill for the last six years and had never received more than $12 for two weeks' work, with eight children to support. As one may well suspect, the health of the 71492-212
children is often impaired as a result of the unjust poverty in which these people are compelled to live.
Under the threat of dismissal young women are compelled to request the minimum wages commission to permit them to work at rates lower than those set by the commission.
That is the worker's share. Yet the president of the company, in his annual report of March 15, 1938, had the impudence to refer to the general prosperity of the employees and to hint at a reduction in wages in order to bring down the cost of production.
When it is seeking to obtain a tax exemption, the company threatens the citizens that it will close down its mill unless the by-law granting the exemption is passed. When the workers complain, they are told that the reason why a larger number are not given employment and wages are not higher is that the customs tariff is too low.
Since the workers organized a trade union they have had to live in the shadow of unrelenting spying. In his evidence given before the commission the general manager stated that he would not deal with that organization. He said:
We are the people running the mills and we know what we have to do.
In summarizing the situation, it may be said that at Valleyfield The Montreal Cottons Ltd., because of the privileges granted by parliament and without which it claims it cannot exist, constitutes a "state within a state." On the other hand, the workers are rightly asking for adequate measures of protection.
The number of employees has had a tendency to diminish. The machine is displacing the worker, and the latter is being assigned a greater number of looms to operate. In 1931 and 1932, the company purchased machinery to an amount of $1,500,000. Production increases for the benefit of the shareholders and to the detriment of the weaver. For instance, exhibits filed by the company at the inquiry showed that in 1903 the total sales amounted to $2,384,416, as against $5,-
189,000	in 1935, with 246 fewer workers being employed. The production had more than doubled, yet the number of workers employed had been reduced by a few hundreds. If we compare 1935 with 1929, we find that the average number of workers employed decreased by 898; the number of weavers employed decreased by 50 per cent, and the total wages paid to them also decreased by 50 per cent. This is a brief summary of the situation with respect to The Montreal Cottons Ltd.
[Stage Direction]


Companies Act-Mr. Raymond
When we consider the Dominion Textile Company, we are faced with still more outrageous conditions. We have there the most cynical example of abuses committed by a certain type of financiers who are constantly asking parliament for new privileges in order better to exploit the public and the worker, while posing as benefactors of humanity.
The Dominion Textile Company was incorporated in 1905. Mr. Howson, accountant to the royal commission, computed that on an initial investment of $500,000 in 1905, the shareholders, among whom were Sir Charles Gordon and Sir Herbert Holt, had received between 1905 and 1936 a sum of $14,837,000 in dividends, and in addition, the shares had a value of $14,671,105. Those shareholders are still receiving dividends at the rate of 150 per cent on their original investment.
This represents but a small fraction of the profits made by the company, Exhibits filed before the commission showed that the Dominion Textile Company, in addition to the dividends allotted, is accumulating huge profits from year to year, some of which appear on the balance sheet under various heads, while others are concealed. The commission's counsel claims that, since 1926, in addition to declared profits, the company would have made $1,000,000 yearly which does not appear on the balance sheet.
Do hon. members think for one moment that the company is satisfied with those profits? Oh, no! Let me quote a statement made by the president in his annual report in May, 1922, when he was receiving dividends at the rate of 120 per cent on his investment of 1905, and shortly after he had caused a bonus of $35,000 to be voted to him:
I really cannot see myself why the finance minister should bleed Canadian industry for the benefit of Great Britain or any other country.
Every year this same lament, that the tariff is too low and that profits are small and barely allow for a modest return to the shareholders, is heard from the president.
The company's counsel stated before the commission:
The earnings of the company have been and are entirely inadequate, and do not represent a fair yield upon the value of the investment.
How do the wages paid to the workers compare with the shareholders' profits, and what advantages have the workers derived from the privileges granted to the textile industry?
Information published by the company itself shows that between 1905 and 1914, the average annual wages paid to the workers amounted to between $266 and $291-and this while

the shareholders were receiving dividends of 50 per cent and 60 per cent on their investment.
In his brief to the commission, the company's counsel dared to state:
The company has provided continuous employment, at rates of wages reasonable.
In September, 1930, the employers asked for an increase in the tariff-more privileges, in other words-promising that they would employ a larger number of workers. The manufacturers have taken advantage of the increased protection to augment their production, not by increasing the number of employees but by purchasing machinery of foreign origin, which has displaced the workers. Between 1926 and 1936, the textile industry imported machinery to the value of $38,000,000 -production was increased, but labour was reduced-and in 1933, while the Dominion Textile was paying dividends at the rate of 150 per cent on the 1905 investment, the wages of its employees were reduced by 10 per cent to 20 per cent. This is the way in which the company passes on to the workers the favours it obtained from parliament in 1930 and 1931.
The intention of parliament, as it was stated by Mr. Bennett at the time, was "to ensure additional employment to a larger number of men and women in Canada."
Mr. Whitehead, managing-director of the Wafoasso Cotton Company Limited, admitted that the labour percentage in a manufactured product had decreased from 32 per cent in 1928 to 20 per cent in 1935; that to manufacture sixteen million yards of cloth in 1928 he had employed 2,450 workers, with total wages of $1,500,000, whereas in 1935, to manufacture thirty-seven million yards of cloth, he had employed only 1,858 workers, with total wages of $971,000. The company's production was more than double, but its employees have been reduced in number by 25 per cent and their wages by 33 per cent.
What are the advantages accruing to the workers? The inquiry revealed that the manufacturers had but one thing in mind: to secure an ever-increasing tariff, to increase their production by substituting machinery for workers, and to reduce wages-and all in order to increase their profits. To achieve their purpose, all methods of intimidation were considered fair. Was it with the intention of serving such a purpose that parliament granted to the textile industry the privilege of taxing the consumer?

Companies Act-Mr. Raymond
The employers are prosperous while their employees live in misery.
Parliament is laughed at; the consumer is laughed at; and the worker is laughed at!
Each year, in his report, the president of the Dominion Textile Company repeats that the protection granted to the industry is inadequate to ensure a fair return to the shareholders, and that the workers are well paid and well treated. On occasions he has even stated that salaries and wages were too high. And all this took place while the president was cashing in on dividends at the rate of 150 per cent on his initial investment, while he was causing a $35,000 bonus to be voted to him, as in 1921, and while he was receiving an annual salary of $20,000 to $25,000 as president. But during all this time he was paying starvation wages to his workers.
Take a glance at the advertisements inserted at great cost by the company-and mind you, it is the consumer who pays for them-in the newspapers, and look at the pamphlets it publishes, not to advertise its products but to publicize its good deeds. Well, Mr. Speaker, if it is the intention of the company to publicize its so-called generosity, the bill now before us should help it to achieve its purpose.
This is a picture in miniature of the operations and conduct of companies which have enjoyed special privileges, representing heavy charges upon the consumer, and which have, in return, persistently refused to acknowledge their responsibilities to parliament, to the public and to the workers.
The inquiry has revealed the prosperous condition of the shareholders, in contrast to the physical and mental distress of the workers, in an industry taxing consumers and workers alike. It would be a challenge to common sense to imagine that this denial of common justice was meant to be perpetrated by virtue of powers and special privileges granted by parliament. Drastic legislation is imperative to curb the activities of those ogres of finance and industry who, with the cynicism of gangsters, profit by the misery of thousands of workers. Parliament is supreme; within its jurisdiction it has the power and the duty to act. If parliament does not take drastic steps, it will become the accomplice of this exploitation.
Limited companies exist only by the will of the state. Our Companies' Act has already been amended in 1934 in order to protect the investor; it is now time to amend it to protect the public and the workers-workers who are sometimes defenceless, like those at 71492-212$
Valleyfield, who are at the mercy of the cupidity and threats of a powerful company exercising a tyrannical power over them.
In his report, the royal commissioner emphasized, in unmistakable terms, the duties and obligations of an industry enjoying special privileges, and the duties and obligations of the granting authority. The amendments I now propose to the Companies' Act are based on that report, and are intended to put an end to the abuses revealed by the investigation.
In order to dispel any doubt that might exist in the minds of members of this house, I point out that section 121, which the bill proposes to amend, does not apply to loan companies, trust companies, railway companies, insurance companies, penny banks or to the chartered banks. Further, some of the proposed amendments apply only to tariff-protected companies. Section 83a applies only to public companies incorporated by letters patent issued by the Secretary of State, and protected by the tariff.
To justify these amendments I cannot do better than to quote certain passages in the royal commissioner's report. At page 117 he says:
It is the fact that the Canadian textile indus-enjoys and has enjoyed for many years, the advantages of a protective tariff, which makes it accountable to the community for the condition of its affairs. The community, having accepted the sacrifice of the tax imposed upon it for the industry's benefit, has the consequent right to know what is going on under the regime thereby created, presumably in the interest of the nation. ...
[DOT]	.	. it is in my opinion, equally important,
looking to the future, that the affairs of each member of the industry should be so regulated as to make information of this character available, from time to .time, and at fairly frequent intervals, to all concerned.
And on page 127:
Having in mind both the investor and the consumer of manufactured goods-especially of tariff-protected manufactured goods-I suggest that ithe question of the efficient, comprehensive supervision of these company incorporations is well worth the attention, and possibly the cooperation, of both dominion and provincial authorities.
"^°Pinion Parliament which provides the tariff has the right, I may venture, I think, to say the duty, to see to it that true facts are made known, as often as necessary and practicable, concerning, among other things, the profits made by .those who operate under the protection of the tariff.
Further down, the commissioner adds:
Some of the balance sheets shown me under the Companies Act, 1934, are quite deficient.
# It is Quite apparent that the commissioner is of the opinion that it is the right and duty of parliament to inquire into the business*
[Stage Direction]
Companies Act-Mr. Raymond
and particularly into the profits of tariff-protected industries, which, in exchange for such protection, have given their undertaking to the public to account for their operations.
We could thus find out, from the Dominion Textile lavishly advertising that prosperity is everywhere to be found where it operates, how much it pays to each worker in the course of any one year-because, in the end, the worker's main consideration is the total sum required to provide a living for his family during the year. Briefly, we could ascertain whether companies enjoying tariff protection discharge their obligations in return for the privileges they enjoy.
The proposed amendments to section 121 of the Companies' Act would enable us to obtain that information.
Section 83a affords an indispensable protection against the abuses of financiers, by enabling the Secretary of State to control the allotment of dividends. Through manipulations, fictitious capital is created. Shares issued are divided time and time again, in no way corresponding to the investment, and an apparently modest dividend is declared. Thus, in the case of the Dominion Textile, Sir Charles Gordon and Sir Herbert Holt receive actually 150 per cent in dividends on their investment of 1905, although the apparent rate is only five per cent; in 1921 Sir Charles Gordon caused a $35,000 bonus to be voted to him and as president of the company he received an annual salary of between S20.000 and $25,000. This is an illustration of the manner in which the worker is despoiled, for the benefit of shareholders and directors.
A company deriving its profits from a tax on the consumer should be rigidly controlled and strictly limited in its profits, because each dollar of profit is the proceed of a tax.
The following is what Hon. Mr. Justice Turgeon had to say on pages 204 and 205 of his report, with respect to the particular obligations incumbent on the companies enjoying tariff protection:
One might say that the advantage of protection is granted to these companies subject to certain conditions, which parliament should recognize and government should enforce. The first consideration industry puts forward to support its demand for protection is the service it renders and the obligation it assumes respecting employment. . . .
The shareholders' interests may have to give way on occasions to those of the community.
Wages are the essential element of the workers' sustenance and should be given priority over dividends, particularly so when dividends are paid on watered stock or from benefits derived from a tax imposed on the consumer.

I am confident that the control I am now proposing will inspire certain financiers with a somewhat keener sense of humanity and justice in the conduct of their business.
James Shaver Woodsworth: I should like to have the privilege of congratulating the hon. member for Beauharnois-Laprairie (Mr. Raymond) upon one of the strongest and most convincing speeches I have heard since I have been in this house. I would not delay for a minute the passing of this bill, but it is obvious that it cannot be passed to-night. The case as presented is a telling indictment not only against these big textile companies but indirectly against parliament itself. It is a shame that we have allowed this condition to continue for so long. I would plead that if we cannot go through with this bill to-day the government should afford us special facilities to deal with the matter during this session of the house.


Some hon. MEMBERS:: Question.


Walter Edward Foster: The hour for private bills having expired, the house will now revert to the business before six o'clock.


Some hon. MEMBERS:: No. Question.


James Shaver Woodsworth: Question.


Ernest Lapointe: On behalf of the Secretary of State (Mr. Rinfret), who has charge of this bill, and on behalf of the government I move the adjournment of the debate. I believe that was agreed with my hon. friend.


Mr. RAYMOND:: That was agreed.
Motion agreed to and debate adjourned.



THE BUDGET


[Stage Direction]
The house resumed consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into the committee of ways and means, and the amendment thereto of Mr. Lawson, and the amendment to the amendment of Mr. Cold-well.
Mr. J. S. TAYLOR (Nanaimo):: 3376	COMMONS
The Budget-Mr. Johnston (Lake Centre)
The hon. member for York South, at the close of his address, chided the government for what he termed its lack of leadership and stated that if the government would lead, business interests would follow. I wish to quote in reply from a statement by the Canadian chamber of commerce, which, as hon. members know, is composed of representative business men from all sections of Canada. I quote from a publication got out by the Searle Grain Company of Winnipeg, Manitoba, under date of January 5, 1939, containing a statement of policy by the Canadian chamber of commerce, clause 13 of which, dealing with international trade, reads: The contraction of international trade-
I draw this particularly to the attention of the hon. member for York South:
-resulting from widespread increases in tariffs, adoption of quotas and other restrictions, has contributed directly to unemployment in the primary industries of Canada, and in industrial plants, and indirectly has increased general unemployment through curtailment of the purchasing power of the Canadian people. While government action and business initiative have enabled Canada to regain its place as fifth trading nation of the world, the chamber urges the government to continue, through the conclusion of trade agreements, to assist in the development of external markets for our primary and industrial products.
The editor of this publication comments on that statement as follows:
It should be noticed particularly that the chamber gives its opinion that not only have high tariffs reduced the sale of Canada's primary products-which include wheat-but that in addition these same high tariffs have contributed directly to unemployment (and so, of course, to loss of profits), in industrial plants; a fine piece of excellent reasoning, based on keen economic vision, and which opinion and reasoning it would be well, we courteously suggest, for all Canadian industrialists to consider carefully.


James Earl Lawson: Would the hon. member tell me what he is quoting from?


Mr. JOHNSTON (Lake Centre):: I gave it at the outset.


James Earl Lawson: I am sorry I did not catch it.


John Frederick Johnston: I am quoting from a publication got out by the Searle Grain Company of Winnipeg, Manitoba, under date of January 5, 1939, and I quoted from what is known as clause 13 of the statement of policy of the chamber of commerce for the present year.


James Earl Lawson: What chamber of commerce?


John Frederick Johnston: The
Canadian chamber of commerce. If the Canadian chamber of commerce is right, I
[Mr. J. F. Johnston.)
suggest that the hon. member for York South is out of step with big business in this country because they take a position directly opposite to that which my hon. friend took this afternoon.
In presenting his budget and annual financial statement the other day, the Minister of Finance (Mr. Dunning) referred to the fact that the funded debt of this country had been increased materially. But I suggest, if one may for the moment assume the role of a Pollyanna, that there are features of the national debt from which we can extract some comfort. One is that the carrying charges are no greater on the increased debt than they were when the funded debt was about one billion dollars less than it is to-day. Second, 74-15 per cent of government bonds are to-day held within the Dominion of Canada and 12 per cent in the old country,, making a total of 86-15 per cent that is held within the British empire.
It is also pleasing to note that the Minister of Finance intimated that Canada is no longer in the fifth position among the trading nations of the world as set out in the statement of the Canadian chamber of commerce, but to-day has gained the fourth position among the great trading countries of the world.
The Minister of Finance also referred to the initial payment for wheat and to the guaranteed eighty-cent price paid last year. Western members coming to Ottawa for the opening of the session had not been here very long before we learned that some of the eastern members were not in favour of this system of paying a bonus on wheat. That is not to be wondered at. As one who was brought up in Ontario but has since lived many years in the west, I can readily understand why that attitude might be taken. The eastern provinces of Canada produce very little wheat, none at all I think for export, and when it is pointed out to the labouring classes in these eastern provinces that the payment of this bonus on wheat may make their bread dearer, one can understand that opposition to this system might grow; but I shall not deal further with that phase at the moment.
Hon. members will recall that the Minister of Finance in his speech referred to wheat as the back-bone of international trade. I took the trouble to look up the statistics on the production of wheat and its value to the western provinces over a period of years, and I found that in the last twenty-five years western Canada produced a total of 7,371,810,000 bushels of wheat, or an average yearly production of 294,872,000 bushels. Deducting

The Budget-Mr. Johnston (Lake Centre)
our domestic requirements, I find that we had
5,373,786,000	bushels of wheat and wheat products for export. The average price of wheat during that twenty-five year period was ninety-two cents a bushel. This gave to Canada in new wealth in every year of that twenty-five year period an average sum of $214,951,000. One does not need to stretch his imagination very far to understand why during recent years Canada has felt the depression more than she would have done had western Canada been producing her usual crop of wheat. But we have not been producing our annual bushelage, and on top of that the price has been greatly reduced.
For wheat and other grain shipped from western Canada during that twenty-five year period there was paid in transportation costs nearly one billion dollars. These figures, I submit, indicate the importance of the wheat industry in our Canadian economy.
This brings me, Mr. Speaker, to a consideration of the policy to be adopted for the marketing of this year's w-heat crop. Something has already been said on that, and there has been a great deal of missionary work done by certain interests. Those of us who come from western Canada know that it is the big question in the eyes of western people. We have been receiving many letters about it from our constituents. In replying to these letters that I received I invariably pointed out to my people that the representation of Saskatchewan in this house amounted to only a little over eleven per cent of the membership and that consequently we were in no position to force our will upon the house. An initial price of sixty cents has been mentioned, but I can say right away that from the outset I felt that was too low. Under existing conditions our people cannot get along with an initial price of sixty cents.
With regard to the acreage bonus as submitted to the house by the Minister of Agriculture (Mr. Gardiner), I am all for it because I believe that in its working out it will assist those who need assistance most. We all know that under last year's policy the man who had most got most and the poor fellow who had little or no wheat got little or nothing. Under the acreage bonus scheme the man who has least will get most, and that I submit is a sound principle. Why do I say that sixty cents a bushel is not enough? I have here an index of the prices of things which the western farmers have to buy, comprising 147 items. Taking the 1913-14 index of 100, we find that these 147 items stand at 136-6 to-day, and the price of wheat No. 1 northern as at November 15 last was 38 per cent lower than in 1913-14-that is, the open 71492-213J
market price. On the basis of the board price it was 10 per cent lower. This means that a bushel of wheat in western Canada in November last-there is little change to-day -had a purchasing power in relation to the things farmers have to buy, on the open market, of 45 per cent in comparison with a purchasing power of 100 before the war. On the basis of the board price to-day the farmer of western Canada has a purchasing power of 66 per cent of what he had before.
Under these conditions I suggest a higher initial payment than sixty cents is necessary if western Canada is to carry on. I believe, however, that a lower price than eighty cents with the acreage bonus will work out better for the majority of farmers than 80 cents without the bonus. As a farmer from the west, knowing the conditions there, I am quite satisfied and would be greatly pleased if this parliament sees its way to give an initial price of eighty cents, but I do not believe that is likely.


An hon. MEMBER:: Why not?


John Frederick Johnston: The hon. member asks, why not? The answer is that we from western Canada constitute merely a fraction of the membership of the house. Saskatchewan has little over 11 per cent of the membership; how, then, can we force our opinion upon the house if the eastern sections object?


Mr. FLEMING:: Will the hon. member indicate how much western Canada has paid to eastern Canada in tariffs?


John Frederick Johnston: 
Mr. PERLEY:: Did the hon. member think that in 1921?


John Frederick Johnston: I thought exactly that in 1921, and if I had two minutes more, since my hon. friend has interjected that remark, I should like to refer to some of the posters that were displayed during the Assiniboia by-election. If I had known the hon. member was going to interject that remark I would have brought those posters containing these words:	"Come and hear
Perley speak in the interests of William Irvine." I want to say here, as I have said to some of my Conservative friends, that it is actions such as those of the hon. member for Qu'Appelle that have put the Conservative party in the position it now occupies in Saskatchewan.


Mr. THOMAS REID (New Westminster):: 
Arthur Graeme Slaght: Would that include minerals?


Thomas Reid: The figure I quoted for the
total trade of Canada does include minerals, but I understand that the figures concerning British Columbia do not. In brief, this means that British Columbia had over 18 per cent of the total trade of Canada for that year.
My remarks are going to deal particularly, however, with the trade of British Columbia as it applies to other provinces. I shall refer to figures supplied by the bureau of statistics. British Columbia's total export trade with the empire, might I first point out, was valued at $60,850,696. Her export trade with foreign countries was valued at $74,713,776. We imported from other provinces of Canada goods to the value of more than $71,000,000, while we sold to those provinces goods valued at only $29,718,861. In other words, Mr. Speaker, it took all British Columbia's exports to the British empire, and some more, to pay for what British Columbia purchased from the prairie and eastern provinces. In that year we had an adverse balance of trade of $41,317,056. The total of British Columbia trade in that year with the rest of Canada was valued at $100,754,776.
I believe those figures speak for themselves, and show to what extent the other provinces of Canada are dependent upon the trade of British Columbia. To me those figures are startling when we realize-and I want to repeat it-that all our exports to empire countries including Great Britain, New Zealand, Australia and all other empire countries did not pay for what we had to purchase from the eastern provinces. Little wonder that we in British Columbia feel we are paying quite a heavy price for confederation, when one considers that the tariff policy of the country is made mostly for the central provinces of Ontario and Quebec.
Approximately 70 per cent of British Columbia's importations came from the rest of Canada, whereas Ontario, Quebec and the three prairie provinces took only 23 per cent of British Columbia's goods. Prior to coming to the chamber I was looking at the figures
indicating the number of cars British Columbia purchased last year from the eastern provinces. I find British Columbia purchased a total of 9,426 cars, buses and trucks, all from Ontario. If one estimates that, on account of the tariff, each car, bus or truck cost on an average $300 more, he finds that the purchase of those cars, buses and trucks cost the people of British Columbia $2,827,800 more. That is one of the prices British Columbia is paying for her place in confederation. If there were no tariff on automobiles they could be imported from the United States at prices which would give savings of more than $300 on each vehicle. However, the average price of cars in British Columbia is at least $200 more than the people in Ontario pay. I have given my figure on the assumption that the price would be $300 lower than that at which we could purchase the same make of vehicle in the state of Washington.
When the budget was brought down I was pleased to hear the minister say that radio tubes would be lower in price, or that he expected that as a result of tariff changes, prices would be lower. Last year British Columbia purchased in Ontario 22,514 radios. Had those radios been purchased from across the line or at the same price as was paid in Ontario the people of British Columbia would have been saved $337,710. I say these figures are startling. In quoting that sum of money I am taking an average of $10 to $15 more for radios purchased in British Columbia as against the price for which the same radio could be purchased in Ontario. If I were figuring on United States prices the difference would, I believe, be even greater.
I want now for a moment to speak on behalf of one of the great races in this country, a race which I say, without fear of successful contradiction, has done more for the development of Canada than any other race. I realize the French people in Quebec have done considerable in that province, but when I speak I am speaking of the development of Canada as a whole. That race, the Scottish race which at the present time in Canada number 1,400,000, feel not only aggrieved but insulted at the treatment meted out to them this year. They have been appealing through associations, through myself, and, I believe, other hon. members, to the Minister of Finance, and have asked that when the budget was brought down he remove the duty on kilts coming into this country.


Some hon. MEMBERS:: Hear, hear.


Thomas Reid: I thought that might create a smile. But we of that race feel that we have been insulted. Back in 1747 the English
The Budget-Mr. Reid

king was more honourable even if severe, because he had notices posted up and by proclamation forbade the wearing of the kilts. In these days, however, we have become scientific with our cruelties, and we can be very cruel in many fine ways. So we have had a 40 per cent duty imposed which makes it almost prohibitive, if not, in fact, prohibitive for those of the Scottish race to-[DOT]


Mr. HAYHURST:: The English have a sense of humour.


Thomas Reid: I am afraid that man has no ambition. In this country there are some
34,000	good Canadians who speak Gaelic. I also took the time to go over that little red book, sometimes called the stud book, and looked at the lineage of members of parliament as indicated therein. It may surprise the hon. member who interrupted that in numbers the Scots have it-and they have it over all others. In that I include hon. members who were bom in Scotland or whose fathers or mothers were bom in that country. I feel sure all are proud of it.
I must appeal seriously and ask the government before the items in the budget are passed, to give some recognition to the plea and cry which has been raised. The tartan is not manufactured in any country other than Scotland. The Scottish people are the finest weavers in the world. There is no better cloth woven or finer in pattern than the tartan. And yet, although the importation of Scottish tartans does not enter into competition with any Canadian industry, and while the cloth manufactured into kilts is not produced in Canada, yet we find this government has adamantly refused our appeal that it reduce this prohibitive tariff of approximately 40 per cent. I am taking this opportunity to make this plea in all seriousness in the hope that the government may yet relent. One may ask why this cry is being made at this time when the duty has been in effect for some years, but there is a reason. Many are doing their best to outfit themselves anew, in view of the visit of their majesties; for they want to look their very best. Many have sent back for new outfits and many more would like to do so, but they find the 40 per cent tariff prohibitive. I think it would be more honest for the government to say that they do not want these to come in at all, rather than to refuse to make a reduction in this tariff.
I am going to make a plea now for another class, the first native of this country, the Indian. I have with me some of the work of these Indians to which I should like to draw attention. We have been spending considerable money to help the Indians of this

country become self-sustaining. At page 192 of the report of the department I find this:
The revival and advancement of Indian handicraft has been given particular attention during the past year. The services of one of the officials of the branch have been devoted entirely to the organization of this work among the Indians in eastern Canada.
Our Indians have been encouraged to carry on handicrafts. I hold in my hand a small totem pole carved by one of the Indian chiefs in British Columbia. Visitors to British Columbia like to purchase these, but here is what they are faced with. I hold in my left hand an imitation that comes into this country from Japan and is sold to our visitors at about the same price as genuine Indian work. When one looks closely, he will see that there is no resemblance between the two, but visitors who know nothing of Indian lore very often buy the Japanese product because sometimes the price is just a little lower. The painted figures are not even Indian, they are Japanese. I exhibit these to hon. members, and I ask the minister to give some consideration to the prohibition of entry into this country of this kind of work. I hold that no outside nation should, shall I say, appropriate what rightfully belongs to one of the older races in this country.


Mr. POULIOT:: They look more like
Buddhas than the figures that should be on a totem pole.


Thomas Reid: There is another matter to
which I should like to direct the attention of the government and particularly the attention of the Minister of Mines and Resources (Mr. Crerar). I am taking this opportunity of bringing up these matters because I am afraid that in the rush to close the session no one will have a chance to say anything when the estimates are being considered. Considerable money is spent on health work among the Indians, but the statement has been made by the health officials of British Columbia that Ottawa is really hampering the control work among the Indians in connection with tuberculosis. The rate of tuberculosis among the Indians is from ten to twenty times greater than among our white population. The British Columbia government are doing everything possible to control this disease, but their work is seriously handicapped by lack of dominion funds. There are something like 2,600 known cases of tuberculosis in British Columbia, and it is felt that the grant of 360,000 is not adequate to take care of the situation. If Indians with tuberculosis are allowed to go among the white population carrying the disease, the final eradication will be a most difficult matter.

The Budget-Mr. Reid
I have only one more statement to make about the Indians. We sometimes hear these people referred to as the poor Indians. I know of no bill that is harder to get through this house, even in the rush hours, than the one connected with the Indians. The other evening the hon. member for Winnipeg North Centre (Mr. Woodsworth) drew the attention of the house to the fact that a family in one of the eastern cities received only $1.90 a week. I have gone into the expenditures made in connection with the Indians, and I find that last year the total income was over $6,000,000. That is the income from wages earned, from fishing, from crops and so on. This parliament voted over 84,000,000, making the total income $10,247,322. There are 112,510 Indians in Canada, so each Indian man, woman and child received almost $100. There are many poor whites who would be glad to be treated on the same basis as the poor Indian is being treated.
Some time during this session the hon. member for Rosetown-Biggar (Mr. Coldwell) placed on Hansard a resolution which had been passed by the Cooperative Commonwealth Federation. This reads in part:
The national executive of the Cooperative Commonwealth Federation expresses its sincere sympathy with the victims of religious, racial and political persecution in central Europe, and requests the government to admit, on humanitarian principles, in the same manner as other democratic nations are doing, a reasonable number of the victims of persecution to this dominion.
I am going to take issue with that statement, but in doing so I am advancing only my own views. I do not intend to raise any racial cry, but I feel that we have 'been too prone to make mistakes by opening up our gates to refugees from European countries. We have one example right now in British Columbia in the Doukhobors. I defy any hon. member to rise in his place in this house and say that the Doukhobors now in British Columbia are an asset or should have been permitted to enter this country. Only the other day they bombed two more schools.


Major James William Coldwell: There are some good ones in Saskatchewan.


Thomas Reid: They may have done well in Saskatchewan, but they certainly have not done well in British Columbia. What I have to say I say in all kindliness. I take issue with the national organizer-I am not saying this because he is not in the house-of the Cooperative Commonwealth Federation in the remarks he made in a radio address in November. At that time he spoke along the
same lines as the resolution introduced by the hon. member for Rosetown-Biggar. Then he went on to speak against an influx of settlers from Great Britain under the Hornby scheme or such like schemes.


Major James William Coldwell: Two different things.


Thomas Reid: They may be, but my view is that we should not give any encouragement at this moment to people outside our own country to. come and settle on the land in British Columbia. Charity begins at home, and if we have money at all to spend I think every encouragement should be given first to those in our cities who would gladly settle on the land if they were given $1,500 each. When I look up the figures of establishing people on the land and find that it costs $3,000 or more, I just wonder what is going to become of these Sudeten refugees whom we are allowing to enter Canada and who in a few years will be able to claim Canadian domicile, if not Canadian citizenship. The hon. member may say that is a different matter, but I think I have placed a fair interpretation on that address. I have not time to read it here, but I am sure that the hon. member for Rosetown-Biggar and those round him will agree that I have been fair in my criticism and that I do not want to place his party in an unfavourable light. I will quote just the opening remarks of Mr. Garland's address on November 27:
What I am about to say must not be taken in reference to the tragic situation that has arisen in Europe. Every effort should be made to absorb the victims of that terror on compassionate if on no other grounds.
The rest of his address was an argument against the policy of bringing settlers from Great Britain to settle in the Peace River country. I cannot reconcile the two statements. I cannot understand how the secretary of the Cooperative Commonwealth Federation party could say, on the one hand, that he would be agreeable to bringing in a certain portion of Sudeten refugees, and, on the other, say that we do not want any settlers from Great Britain.


Major James William Coldwell: Will the hon. member permit a question?


Thomas Reid: Certainly.


Major James William Coldwell: Does he not think there is a difference in this regard, that in the one case you are bringing in people from good conditions to poor conditions, and in the other case you are bringing in people from indescribably bad conditions to better conditions?
The Budget-Mr. Reid


Thomas Reid: That might be true, but I am looking at the national well-being of Canada. It is sometimes said of me that I am too prone to raise the racial cry, but I must confess I am alarmed at the drop in British stock in this country. Hon. members may not agree with me, but while I do not want to raise any racial cry I do know that if Hitler had used the same persecution on the race from which I spring, many of whose ancestors were burned at the stake, as he has done to the Sudeten people, either he or some of them would have gone under.


Major James William Coldwell: But these refugees are not Jews; they are Christians.


Thomas Reid: I am looking at the welfare of Canada as a whole, and I say that the greater the encouragement we can give to more people from Great Britain to come and settle here, if at all possible, the better for Canada. I am not against bringing people in from other lands, not at all; but when I look at the proportionate decline in British stock that has taken place in this country in past years, and see that from 1921 to 1931 the British-born have increased by only 119,000 odd, while the foreign-born have increased by 251,000 odd., and that during the same decade the increase in British stock has been 32 per cent, compared with an increase of 30 per cent in French stock and 38 per cent in others, I may be pardoned if as a Britisher I wonder what the political outlook of the peoples of this land will be, say twentydive or thirty years hence. I have dealt as plainly as I could with this question because I feel that if we are going to encourage anybody to settle on the land we should encourage our own people first, and I know many who would be glad to go to the Peace River or other districts were they given the same encouragement that is given to people outside this country. When I see what has happened to that one class to whom we opened our doors and remember the millions of dollars that it has cost British Columbia and Canada,
I doubt the wisdom of such a policy even upon humanitarian grounds, especially in these days of distress, and particularly when it costs about three thousand dollars or more to become properly established on any farm or ranch in British Columbia, and these people who are being settled are receiving, so far as my information goes, only some $1,500.
I shall have more to say on local matters, Mr. Speaker, when the budget items are up for consideration, but I felt it my duty at this time to rise and say what I have said on these larger questions.
[Mr. Coldwell.l
On motion of Mr. Douglas (Weyburn) the debate was adjourned.
On motion of Mr. Lapointe (Quebec East) the house adjourned at 10.50 p.m.
Monday, May 1, 1939