1939-05-03

MISCELLANEOUS PRIVATE BILLS

[Stage Direction]
Third report of the standing committee on miscellaneous private bills.-Mr. McPhee.

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

Mr. REID:: 1.	Has the Bank of Canada disposed of any quantities of the silver acquired under the silver purchase agreement of 1933?
2.	If so, at what price was the silver sold, and at what cost was the silver acquired at the time purchased?
3.	Was any silver sold to the government of the United States? If so: (a) what price was paid for the silver by the United States government, and (b) was the amount purchased paid for in United States funds?
4.	Has the Bank of Canada retained in its possession any silver either in bullion or coin? If so, what quantities are now being held?


Mr. DUNNING:: 1.	It was the dominion government, not the Bank of Canada which entered into the international silver purchase agreement of 1933. Under the provisions of subsection 4 of section 29 of the Bank of Canada Act, the bank was required to purchase and hold newly mined Canadian silver during the years 1935, 1936 and 1937 as and when required by the minister, provided that the amount to be purchased was not to exceed 1,671,802 fine ounces, and under subsection 3 of section 25 of the same act silver held by the minister for redemption of dominion notes was transferred to the bank on the date of commencement of business when the bank assumed liability for the redemption of outstanding dominion notes.
2 and 3. Specific detailed information covering the price at which the silver holdings of the Bank of Canada were sold, or to whom the sales were made, is not available, but the following information is summarized from the annual reports of the governor of the Bank
of Canada:
Loss on
Silver	Silver	silver held
acquired	sold or sold
Year	ounces	ounces1935	
3,343,604	____ $489,3bs1936	
1.671,802	....	135,2111937	
1.671,802	....	13,8471938	6.687,208	135,746

4. According to the published statement of the Bank of Canada, as at April 12, 1939, the bank held no silver bullion and held subsidiary coin valued at $422,471.78.


CHEESE PRODUCTION
Mr. CASSELMAN:: 1.	What wras the amount of cheese of various grades, produced in Canada in 1938?
2.	What was the amount of cheese of various grades, produced in Grenville-Dundas counties in 1938?
3.	What are the number of farms in Grenville and Dundas counties?


Mr. RINFRET:: 1.	1,129,932 boxes of first grade, 95,883 boxes of second grade, 2,365 boxes of third grade, 601 boxes below third grade.
2.	77,367 boxes of first grade, 5,235 boxes of second grade, 33 boxes of third grade, 36 boxes below third grade.
3.	According to the census of 1931 the number of farms in Grenville county was 2,218; in Dundas county, 2,350.


Mr. STEWART:: 1.	What quantity of cheese grading 94 was produced in the county of Leeds in the year 1938?
2.	What quantity of cheese grading 93 was produced in the county of Leeds in the year 1938?
3.	What quantity of cheese grading less than 93 was produced in the county of Leeds in the year 1938?


Mr. GARDINER:: 1.	Cheese graded in 1938 as 94 score, 130 boxes.
2.	Cheese graded in 1938 as 93 score, 18,825 boxes.
3.	Cheese graded in 1938 as 92 score, 38.234 boxes; below 92, 5,408 boxes.


PROPOSED PENITENTIARY COMMISSION
Mr. CHURCH:: 1.	What action is being taken to appoint a penitentiary commission under the Penitentiaries Act, 1939, which was given royal assent on April 5, 1939?
2.	Will the appointees come under the provisions of the Civil Service Act of Canada, or will they be officials of provincial governments?
3.	Will the appointments be made on merit and efficiency?
4.	If the appointments have not been made, what is the cause of the delay in the matter?


Mr. LAPOINTE (Quebec East):: 1.	The penitentiary commission will be constituted in due time.
2.	The answer to both branches of this, question is in the negative.
3.	Yes.
4.	The matter is under consideration.
71492-220J
34'JS
li'ur Munitions



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. FRANCOEUR:: 1.	Who are the members of the Canadian National Railways board of directors at the present time?
2.	When were they appointed?
3.	Where do the said board hold their meetings ?
4.	Are such directors paid for their services? If so, through monthly or annual remuneration?
5.	What amount of remuneration is received by each?
6.	Apart from remuneration, have they any travelling or representation expense allowance? If so, what is the annual amount of such expenses ?
7.	Have the Canadian National Railways a purchasing agent? If so, what is his name, surnames and address?
8.	Does the jurisdiction of such purchasing agent extend over the whole country?
9.	Does the said agent purchase the necessary ties for the construction or repair of the railways?
10.	Are such ties purchased directly from the producers or vendors, or through a sub-agent?
11.	If such purchases are made through subagents, what are their names, surnames and residential addresses?
12.	Do such sub-agents receive a salary or a commission for their services, and what is such salary or commission?


Mr. HOWE:: Return tabled.


CIVIL SERVANTS OVER SIXTY-FIVE YEARS OF AGE
Mr. WARD:: 1.	How many civil servants, under the Civil Service Act, over 65 years of age, were employed on April 1, 1939?
2.	What are the names and ages of such civil servants, and in what departments or branches were they on above date?
3.	How many years of service had each, and what salary did he receive?
4.	What amount of superannuation was payable to each if retired at April 1, 1939?
5.	For what reasons was each retained in service, and by whom was such extension of time recommended?



WAR MUNITIONS AND MATERIALS


[Stage Direction]
On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, on the orders of the day yesterday the member for Weyburn (Mr. Douglas) inquired whether in view of statements made in the British House of Commons with reference to the possibility of a ban on the export of nickel from empire countries to aggressor countries the government would wish to make a statement in regard to the attitude Canada would take on this question.
I Mr. E. Lapointe.]
The whole question of control of exports of commodities such as metals, wheat, wool, oil, timber and other commodities which may be used for war as well as industrial purposes, was reviewed fully in a statement which I made in the House of Commons last year. Reference was then made to the increased importance of Canada's output and consequent export of base metals, the predominant industrial rather than military use of such materials, the very wide range of other commodities required by a country for military purposes, and the exaggerated importance attributed in some quarters to one or two such commodities, including nickel. It was stated that experience had shown the necessity, from both the economic and the military standpoint, of joint action rather than action by any single country, if restriction of any such commodity was to be made effective.
It is not necessary to go further into that statement of policy. I need only say that the Canadian government regards the whole question as one of importance and that it has been continuously under review.
As regards the statements by members of the British House of Commons to which the member for Weyburn refers, they do not present any new facts or considerations which require a restatement of Canadian policy. The statements were to the effect that Germany had imported in the first two months of the present year nearly five times the quantity of nickel and nickel ore as in the same period last year. The implication given was that this supply was drawn mainly from Canada, Both the statements of fact and the implications are highly erroneous.
The facts may be briefly stated:	First,
Canada, while the dominant, is not the sole producer of nickel, other sources being New Caledonia, Burma, Norway and Greece. Second, Canada has not in recent years exported and is not exporting at the present time any appreciable proportion of its nickel production to Germany. In the fiscal year ended March 31, 1939, of some forty-nine million dollars worth of nickel matte, nickel oxide and fine nickel exported to all countries, only a fraction over one per cent went from Canada to Germany, the great bulk being shipped to the United Kingdom and the United States. An appreciable amount of nickel of Canadian origin is imported by Germany, but it is imported from, and in part processed in, other countries than Canada. Third, there has not been an increase in the shipments of nickel from Canada either to the world as a whole or to Germany in particular. Canada's exports of nickel to all countries in the fiscal year ended March 31,

The Budget-Mr. Church
1939, were $12,000,000 less than in the previous fiscal year. As regards Germany in particular, exports of nickel from Canada were less in the fiscal year ending March 31, 1939, than in the fiscal year 1938, and the exports in 1938 in turn were less than they had bee^ in 1937. It may be added, also, that the exports were less in 1939 than in 1938 to adjoining countries, such as the Netherlands. Fourth, the increase in recent months in imports of certain forms of nickel from all sources into Germany, which was the basis of the question in the British House of Commons, is apparently true only as regards nickel ore. So far as can be ascertained at present, none of the nickel ore in question came from Canada. Canada's exports of nickel to Germany are in the form of matte or speiss, nickel oxide and nickel fine. Nickel in matte was shipped only in July, 1938; nickel oxide in June 1938, and nickel fine in the summer of 1938. No nickel of any kind was exported from Canada direct to Germany from October 1938 to March 1939, inclusive. Practically no nickel ore is exported from Canada to Europe.
The Secretary for Overseas Trade stated in the British House of Commons on May 1 that he understood that the ore imported into Germany this year was of low nickel content and that there was some ground for believing that these imports show that Germany was endeavouring to establish an alternative source of supply. In other words, so far as the statements of increased importation of nickel in the form of ore into Germany have any significance, it is not that Canada is contributing to that increase, but on the contrary that alternative sources of low grade supplies are being sought in other countries.



THE BUDGET


[Stage Direction]
The house resumed from Tuesday, May 2, consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Lawson, and the amendment to the amendment of Mr. Coldwell.
Mr. T. L. CHURCH (Broadview):: Mr. Speaker, I shall take only a few minutes. In fact, I should not have spoken in this budget debate had not the government forgotten about the consumer. The consumer is the forgotten man in this budget.
I do not agree with those who criticize the Minister of Finance (Mr. Dunning). Far from it. I believe h' will leave behind him
a record like that of my previous leader and of my present leader, the leader of the government and others-a record of unselfish service devoted unsparingly to the welfare and happiness of his fellow-countrymen.
I do not agree with those from the prairie provinces who have all their lives stood for a policy of free trade. That was one of the agencies which refused to enable the grain grower on the prairies to get a fair share of the profits of his labour, and aided middlemen and profiteers. The Conservative party has always been a consistent protectionist party from Vancouver to Halifax, and I believe that a right application of the doctrine of protection, brought up to date to meet modern conditions, would solve the economic problems of all the provinces-protection for all the people all the time, and not for some of the people some of the time. The old Liberal free traders on the prairies to whom the hon. member for Humboldt (Mr. Fleming) referred the other evening were real free traders whose policies were responsible for disaster to the grain grower. They believed that the grain growing industry was a north and south industry and not an east and west and oversea industry to the markets of the world in Britain, France and Italy. But they have veered around to protection now; they have become the most advanced protectionists in the country, wanting all kinds of it, and advocating stabilization funds, quotas, bonuses, subventions, subsidies and other forms of assistance for the great grain growing industry. The success or failure of that industry has a great deal to do with general conditions throughout this country. But when we on this side of the house asked for the application of these protectionist measures fifteen years ago, and when 'we asked for a subsidy on coal and a nalional coal policy, the idea was ridiculed in the house, although our coal supply is one of our main problems. The poor and needy are suffering untold hardships through the lack of a national fuel policy. The United States conservation commission report shows that that country will run out of fuel in a very few years; and it is the duty of the government of Canada to do all that it can to develop a national coal supply, from Wales and Alberta and the maritimes, so that sooner or later all the coal fuel used in this country will be mined and coked under the British flag. When I first put forw'ard that policy in this house in 1923 it was ridiculed. I was told by Sir Henry Thornton, regarding a bill and the resolution I brought forward, which went to a committee, that I was proposing a "lunch-counter system of freight rates" for
The Budget-Mr. Church

the maritime provinces. It would be far better, I told him, to have a lunch-counter system of freight rates than to send down
856,000,000 a year to the United States coal barons to build up another country. Yet to-day under that policy three million tons of maritime coal are being moved from the maritimes to the head of the lakes economically and successfully.
The policy of the Conservative party as regards all the provinces is that of equal rights to all and special privileges to none. I believe in the old doctrine that what is for the benefit of the maritimes is for the benefit of Ontario, what is for the benefit of Ontario is to the advantage of the west, and what is for the benefit of the west is good for the rest of the country. We should adopt for confederation the policy of the old Cornish battle-cry, "Each for all and all for each."
Last night I referred to the absence from this budget of any provision for reduction in taxation, or any effort to solve the problem of over-government. We have not had a balanced budget since before the war; that is one of the main reasons why we have unemployment in this country, and it is a drawback to industry. I have referred to certain public buildings in the city of Ottawa, not because I wish to criticize Ottawa; I am glad to see them secure them-it i3 a very fine city, and liberal expenditure in its behalf will be approved by the rest of the country

but because of the extravagance in times like these of spending $8,000,000 on public buildings here. Part of that money should have been used in Ottawa to provide some relief for the poor people on both sides of the river for proper housing and slum conditions. Some of the newspapers do not like the word "slums," so I will speak of the "mansions" in which the working classes have to live in this particular district. The government should have made some provision in the budget to relieve unemployment by providing money for slum clearance in certain centres of population in all our large cities where housing conditions, as every health officer knows, are a menace to the public health. I believe that this money should be given direct to the municipalities to enable them to carry out their local program in a local way according to local needs, on a standard plan approved by the government, and as an aid to reconstruction and unemployment. Let us make a start on it.
There is little consideration in this budget for the consumer. We have had many years' experience of regulatory bodies doing absolutely nothing. Although the high cost of living in Canada is a public scandal it remains uninvestigated and unregulated; nothing is done about it.
IMr. Church.]


Mr. SPEAKER:: Order. I wish to call the attention of hon. members to the fact that there is too much noise in the chamber, and that hon. members who are conversing should speak in a lower tone of voice. Although the hon. member who has the floor is speaking loudly, I can hardly hear him.


Thomas Langton Church: The poor and needy are the people who suffer through this neglect. There should be an investigation of the high cost of living in Canada. Ever since the session started I have been trying to find out why something is not done, because I represent one of the industrial ridings of toilers and workers, who constitute in Canada fifty per cent of the people of this country, and who are complaining not only of the high cost of living but of high telephone rates, interest rates, which were investigated by the banking and commerce committee, and insurance rates of all kinds-fire, life and gasoline. The city which I come from provided a high pressure system in downtown Toronto, giving a better water supply, and modernized the fire department, yet insurance rates were reduced little or not at all. Consider the revenue from lapsed policies in this country; they are comparable with those in the United States, where from half to three quarters of a billion dollars was confiscated in this way from the workers because they were out of work. We had an investigation of this matter ten years ago. I moved a resolution that these companies should not be permitted to invest in common stocks the world over. It is unfortunate that that proposal was not adopted. It would have saved huge losses later. Our system is good, but rates should be lower by far. In New York city the New York Life Company two years ago loaned $25,000,000 to aid housing and slum clearance, to clear out some of the slums of Brooklyn, at Gravesend Beach, but in this country the companies have been a little tighter and have rendered very little national assistance to the construction industry on these lines or as an aid to employment.
Then take the tariff board. After all is said and done the tariff will always be in politics. It is said that the tariff should not be in politics. It is a good thing for this country that the tariff is in politics. It has been in politics since confederation, and it always will be. What is our tariff board doing? Reference after reference has been mentioned, relating to the high cost of domestic services such as kitchen supplies, also of motor cars, motor trucks, radios, all kinds of things; yet up to the present we have had no report from the board. Something should be done about it, and the board should function more efficiently.

The Budget-Mr. Church
The principle of the budget seems to me to be, "To him that hath shall be given, and to him that hath not shall be taken away even that which he hath." The return from the three per cent excise tax amounted to about $18,000,000; it was all the protection which the small man got, and now it has been wiped out altogether and the small business man in the industrial provinces has been sold down the river. The people of those two provinces pay eighty per cent of the cash taxes of the dominion, yet they can get nothing in the way of protection for home industry and a real share of their home market.
There has now been proposed a measure of assistance to the western farmer. I do not object-far from it-to proper aid to the grain industry in a national emergency, but it should apply to all Canada. Every good citizen would like to see that industry on a proper basis. The government began by abandoning the wheat board altogether; they wanted to escape from the responsibility of pegging and bonuses. The aid they gave the farmer the past three years was going to be only a temporary measure, but it went on from 40 to 50 to 60 cents a bushel, and now, after a great lobby down here-that is what it was: I have been in Washington and never have I seen there a lobby worse than we have had up here-the government is increasing the guarantee to 70 cents, probably to 80 cents or a dollar, and before they stop it will be $1.10, the amount paid to the returned man a day when he fought in France and Flanders. Where is the government going to stop? Where is the money to come from? It will come out of the pockets of the income tax payers of this country in the central provinces. On Saturday in the city I come from I saw thousands of them lined up at the wickets at the national revenue offices in Toronto paying their income taxes. If the newspapers would only do something to give the facts, as did one paper-the Telegram-to these 236,000 individuals and 14,000 companies and corporations who pay the income tax; if they would tell the people that the cost of the pegging of all this grain must come out of their pockets, if they would tell them that all the income we have collected since 1917, when income tax began, right up to last year would not pay annually the deficits of a certain agency-the National Railways even- which you and I know about, it would be a very serious thing for this government. How will wheat bonuses be paid, by whom, and where will the money come from?
I believe it is the duty of the government to submit some consistent policy on wheat and defence. Government members seem on
the budget to be everything by fits and starts and nothing long. They have one policy on the prairies, another in Ontario, yet another in the maritimes. But the chickens on the prairies seem to be coming home to roost. The free traders at last have been smoked out, and now they are the most ardent of protectionists. It was contended by the Minister of Labour (Mr. Rogers) in a treatise of which he was the author that the east was getting a subsidy of $47,000,000. I should like to know where that fable of a "subsidy" comes from, and where it is, because as a result of this tariff nibbling and all that kind of thing there is practically no tariff left. We have so many trade treaties we have almost free trade to the ruin of our domestic industries.
One of the main things of which business men complain is the failure of the government to maintain a steady and stable tariff on which business can depend. We have been making these favoured nation treaties and pursuing a course in quotas in this connection which was condemned in the Van Zeeland report. To please the United States as an appeasement policy we made a political treaty-for that is all that it is-by which we have destroyed the effects of the Ottawa agreements. We have lost the benefit of the British grain preference of six cents a bushel, with the advantages it conferred on Canadian shipping and the British carrying trade; and once we lose such important items of the preference it means that the preference as a whole is on its way out forever, because Great Britain will make other arrangements and we shall never get back our former position of such splendid preferences. By this treaty we have given the United States the power to function as an economic unit and we have denied to the British empire that same right to function as an economic unit. Continued tariff nibbling and tinkering between 1921 and 1930 by hon. gentlemen opposite drove 600,000 Canadian citizens to the United States to look for jobs. Many of them were ex-soldiers who had fought for this country at the hazard of their lives.
There is over-taxation in the country and over-government as well, and there is the favoured nation provision. All these agencies have combined to cause unemployment and injure industry and business, and the result is that no business man will invest any further money in expansion owing to the heavy load of taxes he has to carry already, the artificial burdens imposed upon him by this government, the restraints on trade and all the other barriers in his way. The two industrial provinces, which are bearing the brunt of taxation, are up against it; they are the goat of confederation, and I do not know where it will all end. It seems to me that the
The Budget-Mr. Church

government, judging from this budget, ignored the business men of the country, labour and the industrialists. They have failed to consult industry and labour on questions of such great magnitude affecting trade and commerce in Canada. The tariff board is no longer functioning or consulted but little on important matters, although it was supposed to have been created for that among other purposes; its jurisdiction is nothing. As it is conducted now it is nothing but a farce. It was given regulatory powers, but those powers have been either interfered with or taken away from it. Let me read what one of our great industrialists is reported to have said last night at a meeting of the Toronto branch of the Canadian Manufacturers' Association:
"It is difficult to understand why, in order to make trade agreements with other countries, it is deemed necessary to embarrass Canadian industry, disturb confidence, and diminish opportunities for the employment of Canadians in their own country," said C. R. Conquergood, retiring chairman, addressing Toronto branch, Canadian Manufacturing Association to-day.
"There is ample capital available for investment in business ventures if a reasonable earning opportunity is assured.
"The recent budget invites capital investments in industry by offering a measure of reduced taxation, but if the products of such industries are not given adequate protection from foreign competition in the home market, those in a position to invest are not likely to accept the invitation."
Is it any wonder we have unemployment in Canada when all these burdens and artificial barriers are thrown up in the way of the business man, so that business cannot function? The budget offers no help whatever to the Canadian municipalities. Revenue from income tax has been denied the municipalities; that source has been taken away from them and they are hard pressed. Today all the relief charges are bearing down upon them. At a meeting of the mayors it was asked that the municipalities be relieved of this burden, and I suggest that the government would be well advised to give them some real assistance by removing some of the load that real estate has to carry now. To this end I submit that the social services should be paid for in the proportions of 45 per cent by the dominion government, 45 per cent by the provinces and 10 per cent by the municipalities. The mayors asked for bread and they were given a stone. They were told to wait for the Rowell commission's report. Well, if that report is ever received it should be relegated to the archives, because any information that we shall be given in that report will be fifteen or twenty years old. Nothing has been done so far as that
(Mr. Chureh.l
body is concerned. Its report will be ancient history; it will be received after the election.
With regard to public works, I think that the government should first of all consider in each particular work the revenues that are to be obtained in order to provide these services before they are acted on. Take the Toronto post office. Really, we have no post office there, and yet 28 per cent of the country's cash revenues from that source is obtained in Toronto. Over $92,000,000 in taxes all told are collected there each year. The Minister of Public Works (Mr. Cardin) was asked two months ago by order of the house to bring down the papers with regard to the post office in Toronto but up to the present time he has failed to give them. In my opinion, the Minister of Finance should have some say with regard to these expenditures; he should have a veto power. Instead of a committee of 245 members considering estimates we should have a very much smaller committee and the principle followed by the municipalities should be adopted of forcing officials to make reductions. If that were done there should be a reduction of $250,000,000 in maintenance charges and capital charges should be one-third less. If the Minister of Finance is responsible ultimately for the raising of the money, as in fact he is, he should be given the power of veto. We should not have the policy of lobbying, with all its consequences.
The people had expected some reduction in the income tax and in the sales tax as well. The sales tax should have been reduced by two cents at least in order to help the business man as well as the consumer, because all these nuisance taxes are passed on to the consumer anyway If it had not been for another branch of parliament the provinces would have been given, by a bill that passed this house two years ago, the right to impose a duplicate sales tax by way of indirect taxation and direct taxation in the provinces. The bill sponsored by the government at that time, had it been adopted, would have resulted in this strange state of affairs; in some provinces there would have been three sets of income tax, and in some provinces a duplicate sales tax.
The budget fails to take any cognizance of the defences of the country. After all, what we are doing here amounts to little if there is no security-security is better than opulence. But that question seems to be sidetracked by the government. This is the seventy-eighth day of the session and we have heard little or nothing about it, we do not know exactly where we are. Canada has been criminally negligent on defence matters. We have none except dependence on Britain.

The Budget-Mr. Church
I should like to see the government introduce a policy of conferring with the municipalities with a view to having all employees allowed off to attend a military camp with pay and urge all employers to do the same. The municipalities should act as agents and the government should give bonuses on these lines to a certain amount or help to make up the difference in pay of the militia and their civilian pay. It would also help unemployment for those unemployed.
So far as the fleet is concerned-well, we have no fleet. I saw one of our ships in the Chateau Laurier lock of the Rideau canal. A crowd of people were standing at the retaining wall gazing upon a magnificent scow being replanked, because that is all the navy we have here in Ottawa at present. We do not know where our admiralty are, but in the meantime the government, by these scow repairs, is no doubt preparing a party platform so that when the fleet does take to the high seas we shall see fulsome advertisements of our magnificent army, navy and air forces. We are completely dependent upon the mother country, although it seems that we do not credit them for it but only criticize Britain. Our first line of defence is Britain and France. If they fail, there will be no such thing as defending our own homes or such a myth as defences of Canada. I do hope that this question will not be sidetracked any longer. What is the use of talking about the work that will	be	done	by	means of	the$63,000,000 we are going to vote? It will be anywhere from one to three or four years before some or all the equipment provided by that expenditure is delivered. And as regards the limitation of five per cent in profits, well,, hardly any manufacturers will undertake the work. I	am	not	criticizing	theminister, far from it>-all governments cut down on defence-but I	am	criticizing	thegovernment's defence policy, criticizing them for not telling	the	country	the facts	and
passing their estimates and taking action at once.
South Africa, Australia and New Zealand have all ordered registration of national resources. At the opening of parliament I asked for a national register of Canada's man power, Canada's industrial and economic power, but nothing has been done in that regard. It is heart-breaking to find in these days of extreme difficulty that the official voice of Canada is so lukewarm. The British government have no doubt made mistakes, because we all make mistakes. Even so there is no reason why Canada should not sustain Great Britain in her difficult period. It is a strange loyalty which will support the mother 71492-221
country only when she is in no trouble. I know that is not the real spirit of the people of Canada; we underestimate the great patriotism of the Canadian people. What can Great Britain say to the German dictator and the other dictators? If Britain falls, the whole world will go into utter darkness. So I plead with the government that this question should not be kept in the background any longer, because Britain's armament is the most important factor for peace at the present time, and the statement that the United Kingdom's rearmament program is to be concluded, whatever may happen elsewhere, is most reassuring. The prospect grows more certain every day that Britain, is becoming so strong that she will be again the dominant force in the world. This will mean peace with Hitler and Mussolini, instead of perpetual fear and ruin, and will stop the march of the Hun which began when he crossed the Rhine, in the course of which he captured Austria; it will put a stop to his bluff and his march. It will show him that an armed Britain means business, and will stop any further bandit raids of his on weaker nations for world hegemony.	.
I have frequently brought to the attention of the house the frightful submarine menace and the drastic reduction in merchant shipping. We have two thousand fewer ships of the merchant marine than before the great war, or 1,500,000 gross tons less than in 1914. Britain's tanker tonnage has increased during the same period from 500,000 tons to 2,500,000. This means that she is weaker in ships to carry food and materials to the extent of about 3,500,000 tons. Britain had 17,500,000 tons of such vessels in 1914 and has only 14,000,000 now. And Britain now has four and a half million more people. She imports ninety per cent of her food and ninety-six per cent of her raw materials, and could be starved out in a month as she almost was in Easter week of 1918. Further, every merchant ship is now in practice a belligerent and can be fired on. The navy depends mainly not on coal but on foreign oil supplies, from Africa, Persia and South America, and its supply can be intercepted by an enemy. Add the sudden-shock diplomacy of the dictators, their suddenness of attack, their ferocity and swiftness, and think of Canada without any aircraft to protect us.


Some hon. MEMBERS:: Time.


Thomas Langton Church: I believe that this budget, the more you read it and consider it, add it up and subtract, will be linked with the United

The Budget-Mr. Young

States treaty. All this tinkering with the tariff, all these appeasement features, have caused the ruin of industry in this country and before the year is out will bring widespread unemployment in Canada.
Mr. A. MacG. YOUNG (Saskatoon):	I
should like in the first place to join with those who have already spoken in saying how pleased we are that the Minister of Finance (Mr. Dunning) has been restored to good health and will be able to continue to devote his great abilities to the service of his country.
To-day I wish to bring before the house one or two matters which are of special importance to the part of the country in which I live. We have heard a great deal about bonuses to wheat, and protection to other industries in this part of the country. I have never been one of those who believe in special privileges to anyone. I trust, however, that these words may not be misinterpreted. As long as the condition continues in western Canada with respect to drought and other difficulties of the kind, it may be necessary, indeed I believe it is necessary, that some compensation be given. I have always opposed the special privileges which were given to manufacturing concerns throughout Canada,
Points	[DOT]Wholesale price inch sales tax	Refined at:Vancouver.. ..	cts. .. 15.00	loco, B.C.Edmonton.. ..	.. 18.50	Calgary 'Calgary	.. 15.50	CalgaryRegina	.. 18.00	ReginaSaskatoon.. ..	.. 20.30	ReginaMoose Jaw.. ..	.. 18.00	ReginaWinnipeg.. ..	.. 19.50	ReginaBrandon .. ..	.. 20.10	ReginaToronto	.. 14.00	SarniaHamilton . . ..	.. 14.00	SarniaOttawa	.. 14.50	Montreal EMontreal .. ..	.. 13.00	Montreal EQuebec City ..	.. 14.50	Montreal ESaint John.. ..	.. 13.50	Imperoyal 1Halifax	.. 13.50	Imperoyal
and I still oppose them. My view is that we should, so far as it is possible to do so, reduce the cost of the production of all our goods. To-day I want to discuss a matter in connection with which I believe it is possible to help reduce the cost of production in western Canada, indeed in all parts of Canada

 I refer to the crude oil production of this country, and the gasoline industry.
I have here a statement of the prices of gasoline and crude oil throughout this dominion. This statement was prepared by the Imperial Oil Company; therefore I assume it is accurate. It is a short table, and with the consent of the house I should like to have it -placed on Hansard for the benefit of all.


Walter Edward Foster: The hon. member cannot place the statement on the records of the house except with the unanimous consent of the house.


Some hon. MEMBERS:: Agreed.


Walter Edward Foster: Do I understand that the hon. member has the consent of the house?


Some hon. MEMBERS:: Agreed.


Mr. YOUNG:: I put on the record the
following table:
Normal	Prices at	Costs atcrude source	wells	refineriesCalifornia, U.S.A.	$1.1089	$1.4249Turner Valley, Canada	1.24	1.3942Turner Valley, Canada	1.24	1.9926Mid-Continent. U.S.A. Illinois, U.S.A.	1.0283 1.15	1.7461 1.6087Petrolia, Ontario	1.9002	2.1660Colombia, S.A. E. Venezuela, S.A.	.9250 .64	1.2944 1.0271East Texas, U.S.A.	1.10	1.6735East Texas, U.S.A. Peru, S.A. Colombia, S.A. E. Venezuela, S.A.	1.10 1.121 .9250 .64	1.5848 1.5759 1.1947 .9264
Wholesale price represents undivided dealer's price. 

The Budget-Mr. Young
The table shows that the price of gasoline at Vancouver, that is the wholesale price including sales tax, is 15 cents a gallon; at Calgary, 15-5 cents; at Regina, 18 cents; at Saskatoon, 20-3 cents; at Moose Jaw, 18 cents; at Winnipeg. 19-5 cents; at Ottawa, 14-5 cents; at Montreal, 13 cents; at Saint John, 13-5 cents, and at Halifax, 13-5 cents.
Hon. members will notice that in Saskatoon we have the unique distinction of paying a price for gasoline higher than that paid anywhere else in Canada on the main lines of railway from coast to coast. In the older days, when we got our crude oil from the United States, the situation was quite different. To-day we get the crude oil almost at our back door, but in spite of that the price is not reduced as it should be. The price at Calgary as I have just read is 15$ cents, at Montreal 13 cents, and at Halifax 13$ cents. But the crude oil used in the refineries at Halifax and Montreal is carried across half a continent, whereas the crude oil used at the refinery at Regina is carried only a very short distance.
In addition to this we are under another difficulty. Some years ago the Canadian National Railways reduced the freight rate on crude oil from Calgary to Moose Jaw and Regina to 18$ and 19 cents respectively. That applied to tank car shipments of 25 carloads. Objection was taken to this by a small refinery in Regina; they said it was discrimination against the cooperative plant and the consumers it supplied unless the same rate applied on one tank car. An appeal was made to the board of railway commissioners, and after hearing the case the decision was that this price should apply not only to trains of twenty-five cars but to one car of crude.
In Saskatoon we have a small refinery. The freight rate from Calgary to Saskatoon was not reduced. Let us look at the distance and the rates. The distance from Calgary to Regina is 475 miles; from Calgary to Saskatoon it is 400 miles. The freight rate on 100 pounds of crude from Calgary to Regina is 19 cents; to Moose Jaw the rate is 18$ cents. The Canadian Pacific railway, having the short line, hauls it over that line, but the Canadian National, coming through Saskatoon to Regina, also gives the rate of 19 cents from Calgary to Regina. The distance from Calgary to Saskatoon is 400 miles and from Saskatoon to Regina is 160 miles, making a total haul of 560 miles. In other words the Canadian National railway hauling crude oil from Calgary to Regina via Saskatoon hauls it 560 miles at a rate of 19 cents, but if that same car were stopped at Saskatoon, travelling 71492-221 i
a distance of only 400 miles, the rate would be 24 cents. That is to say, the railway which charges 24 cents per 100 pounds oq crude oil to Saskatoon will haul it 160 miles beyond Saskatoon for 5 cents less per 100 pounds.
Appeal was made to the railways to have this state of things corrected. The matter was taken up with the board of railway commissioners, and I wish to quote what they said. This is from the judgments, orders, rules and regulations of the board dated Ottawa, February 1, 1935. The first thing they say is this:
It is important that, as occasion occurs, these should be carefully considered and defined in order that they may be well understood and, if found advisable, enlarged or diminished by parliament. To assume jurisdiction which we do not possess and to shirk the exercise of that given us, would equally be breaches of duty.
That is in regard to the duties of the board. Then in discussing the matter further they say that parliament has not amended or changed the provisions in question. I wish those words to be noted. Section 317 of the act, which deals with discrimination, provides:
The board may determine, as questions of fact, whether or not traffic is, or has been, carried under substantially similar circumstances and conditions, and whether there has. in any case, been unjust discrimination, or undue or unreasonable preference or advantage, or prejudice or disadvantage within the meaning of this act-
Then in a judgment of the board they go on to say:
A difference in rates may be discrimination, but not unjust discrimination of the character forbidden by the Railway Act. The interpretation of the act in this respect, and the position taken by the board on the broad issue of unjust discrimination, has been set out in a great many decisions of the board and may be summed up by the following citations from two or three cases, which position has been uniformly followed in all other cases coming before the board.
One judgment is as follows:
The Railway Act, as I understand it, authorizes and justifies discrimination. It is only an undue, unfair or unjust discrimination that the law is aimed against.
Another judgment states:
Mere mileage comparisons do not afford criteria of discrimination, but all facts material must be given weight. In other w'ords, under the body of regulation which is developed under the Railway Act, mileage is not a rigid yardstick of discrimination; discrimination, in the sense in which it is forbidden by the Railway Act, is a matter of fact to be determined by the board.
Then another judgment:
In dealing with the question of discrimination, ilie matter of detriment, if any, to which the applicant is subjected by the alleged unjust
The Budget-Mr. Young

committee last year, which had to do with agreed charges by the railways, I asked the representative of the Canadian Pacific Railway Company who was on the stand at the time if the allegation made by the truck drivers that the railroads would give a rate so ridiculously low that the trucks could not compete was correct. I referred to the rate of 19 cents per 100 pounds for transporting crude oil between Calgary and Regina, and I asked him if they were hauling that product below cost. He replied that that was a profitable rate to receive for carrying crude oil *om Calgary to Regina. If a rate of 19 cents per 100 pounds is profitable for hauling the product 475 miles, it should be more profitable to haul the same product from Calgary to Saskatoon. Twenty-four cents per 100 pounds is charged in that instance, but the distance is only 400 miles.
The board of railway commissioners suggested that they could do nothing unless there was undue discrimination. A little later they stated that undue discrimination would mean that one locality was being placed at a disadvantage to another. In spite of that, Mr. John Stoneman, who was previously a farmer in Saskatchewan and who wrote the judgment, did nothing whatever to see that northern Saskatchewan was protected.


Clarence Decatur Howe: What is the size of the daily movement from Calgary to Saskatoon?


Alexander MacGillivray Young: It is much greater between Calgary and Regina, but the rate charged in that instance is based on one car. They cannot ship much less than a car, no matter where it is going.


Mr. HARRIS:: Instead of its being discrimination, is it not a case of charging whatever the traffic will bear? Would the hon. member enlarge on that point?


Alexander MacGillivray Young: I am glad my hon. friend suggested that. I believe that is exactly what it is. It is the law of the jungle.


Joseph Henry Harris: Is it not the same law as that of the medical fraternity?


Alexander MacGillivray Young: I am happy to say that I know something about the medical fraternity, and I must say that that is not true. It is just the law of the jungle. In other words, because Saskatoon is not in a position to get gasoline from the United States more cheaply, we have to pay the last cent the traffic will bear. That is exactly what they are doing, and that is exactly what jungk law is. When you cannot help yourself, you are going to be devoured.


An hon. MEMBER:: You should operate.
I Mr. Youms.]


Mr. MacNICOL:: An operation would be too expensive.


Alexander MacGillivray Young: I want to say a word or two with reference to another matter before I direct attention to the remedy I have in mind. I should like to refer to the textile inquiry conducted by Mr. Justice Turgeon. I congratulate the hon. member for Beau-harnois-Laprairie (Mr. Raymond) upon bringing this matter before the house the other night and directing attention to what has been done by certain textile companies. A mill was closed in Sherbrooke and the public were made to believe that the company could not continue to operate under the tariff protection then prevailing. That was as great a challenge as could possibly be made to a government of this country. I congratulate the government upon the fact that they accepted the challenge and immediately set up a commission to investigate the whole textile industry. I congratulate them also upon appointing as commissioner such an able gentleman. All the facts were brought out so that they can be read by anyone.
I believe that if everyone in this country who is capable of understanding what it contains would read this report from cover to cover, there would almost be a revolution. Let me give two or three items of information from this report. There was a protection- perhaps my hon. friends immediately opposite know just how this came about-of 386| per cent. On an invoice value of $43.60 the laid down cost of the fabric was $217. This was changed a little later on in order to assist t.he industry, and the resulting tariff was 494i per cent. When this government came into power amendments were made which brought the tariff down to 193-^ per cent, and one would think that was high enough. That is when the mill closed. On January 1, 1938, the tariff was still 143 per cent.
I want to deal shortly with the financial set-up of the company. In 1904 there was an amalgamation of several companies which finally became the Dominion Textile Company. The sum of one million dollars was put up by this company, and what did they get for it? Let me quote what the commissioner says at page 119 of his report:
The financial risk which the members of the syndicate assumed in entering into the carrying out of the venture which culminated in the creation and the putting into operation of the Dominion Textile Company was limited therefore to their $1,000,000 investment. It never exceeded that amount at any time. At the outset this investment gave them preferred stock of the par value of $500,000, and common stock of the par value of $5,000,000.

The Budget-Mr. Young
He goes on to say:
The syndicate's $1,000,000 investment proved unusually profitable. One of the members of the syndicate who was examined in Montreal said that he had retained all his shares, except some transferred as gifts to members of his family. I do not know whether any of the other members are in this position. The interest on the $500,000 in preferred shares has always been paid. The $500,000 invested in common stock has yielded an average annual return of over 98 per cent, reaching a high point of 150 per cent in several years and never going lower, after the first two years, than 50 per cent. No dividend was paid for the first two years.
There was another reorganization of the company. What really happened was this: By a process of revaluation the assets were written up about $7,500,000, and $4,500,000 was added for goodwill. Of the $28,000,000 investment which the company finally came to represent. $14,000,000 was added in the way I have mentioned by writing up the assets and adding millions for goodwill. Mr. Heward in his factum says:
Viewing the company's earnings in relation to the value of its investment, its earnings have been entirely inadequate.
Its earnings have been entirely inadequate? The commissioner then comments:
He (Mr. Heward) concludes that the protection afforded to the textile industry "is not sufficient to assure to that industry a fair yield on its investment having in view the risks involved."
At page 117 of his report the commissioner says:	_
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.
And at page 201 he says:
My intention is that all companies should supply the required information: public companies, private companies, subsidiaries, etc. The questionnaires prepared by the commission auditors and filed as exhibits might, I believe, serve as a model for the compiling of proper annual returns with possibly some modifications to ensure greater particularity in some respects.
The object of what I suggest here is twofold: (1) That information of the affairs of each of these companies and of this tariff-protected industry as a whole, at least as complete as it has been made by this inquiry, be available at all times to those who have the right to possess it, that is, the government, parliament and the tax-paying community; (2) that this information be required in such form, and with such particulars, that the element of secrecy and of consequent deception, in so far as it may exist (and the evidence does not show that it is all-pervading), will be done away with. As an instance of the secrecy to which I refer I may mention what came to be known during the inquiry as "secret reserves," that is profits undisclosed.
He goes on to say:
In so far as the community is especially concerned both as investor and taxpayer, it can properly exercise its rights in matters of policy, that is company policy and national economic policy, only on the condition of having access to full and accurate information. The element of publicity is essential to these purposes.
I have dealt with two concerns only. I could mention others, but I have not the time.
We in this house legislate and give special privileges of one kind or another to different industries. Then we seem to feel we have done our full duty. There seems to be no system of following up these special privileges to see what is being done under them. The leader of the opposition (Mr. Manion) said a short time ago that he was in favour of protection-I am not-but that he was opposed to manufacturers taking advantage of that protection. But I think we can all agree on this, and it is what I suggest, that parliament should see to it that means be provided for close supervision and scrutiny of everything that is done behind the protection of the tariff with respect to every commodity-wheat, if you like; I do not care what it is. But the people of this country have the right to know what is being done behind the tariff. Some may say: Leave it to the tariff board. But it is so long since we have had a tariff board of the kind I would call a tariff board that I do not know what a tariff board might do. So I do not agree with that suggestion. Nor can you ask the Prime Minister or the Minister of Finance to undertake this task, nor any of the other ministers, because they have all so much to do that it is not humanly possible for them to undertake a work of such magnitude. I suggest to the government that a minister should be selected, specially charged with the investigation and control of special privileges granted by parliament. It would be his duty, with the assistance of an expert group of accountants, to look into every industry that receives special privileges from this parliament, and then he would be able to inform the house of what was being done.
The tariff board situated on the shores of the Ottawa river is too far away for me. A minister should be specially charged with the duty of constantly investigating these protected industries, as suggested by Commissioner Turgeon. It would be a real job for any one minister. I think he would be the busiest minister in the cabinet, including even the Prime Minister. Until parliament takes serious cognizance of the fact that abuses are taking place behind the special privileges
The Budget-Mr. Young

that it grants, and until the necessary investigations are made to ascertain what is going on in these industries, we have not done our full duty and we have no right perhaps even to be here. Members of this house on all sides, serious men and women, have come here to do their duty. We do it as we see it, and then we go home and trust that something will be done to prevent abuses from arising. I am not blaming the members of the government. Indeed I give credit to this government as I can give it to no other, because as soon as Mr. Blair Gordon challenged the authority of government in this country, this government set up a royal commission to investigate the textile industry. That showed at least that the government was not going to be. bullied but was determined to find out the facts. We must have means at our disposal for making continuous investigations into industries receiving special privileges, and we must follow up those investigations vigorously to see that no unfair advantage is being taken of the tariff. I do not know whether the government is listening to me-


Mr. RINFRET:: lam.


Alexander MacGillivray Young: -or whether the members of the house are listening, but I do know that when the people of this country are fully apprised of the facts and give them full consideration, they will demand a closer supervision than we have ever had of all these industries that are receiving special privileges from parliament.
There is the gasoline industry, for example. When we have crude oil within our own gates, right at our back door almost, why should we not be getting the benefit of low-priced gasoline? I have never yet been an advocate of governments going into business, but I would say this to the oil companies of this country, that unless they are prepared to look this matter squarely in the face and act accordingly, the governments of Alberta, Saskatchewan and Manitoba and the parliament of Canada should seriously consider whether they will not take over this natural product which is at our very doors and supply it to the people at the lowest possible price.
I hope that I am not standing in this house to-day uttering idle words. I trust the oil companies will realize that members of this house are serious when they make statements of this kind. I feel sure that, no matter in what quarter of the chamber we may sit, the views I have expressed have the approval of hon. members. We cannot permit private corporations to go on exploiting the public. An hon. member who interrupted me a little

while ago, and who is now out of the chamber, said that they are getting all the traffic will bear; that is exactly what they are doing.


John Ritchie MacNicol: The hon. member said that of the medical profession.


Alexander MacGillivray Young: No. If my hon. friend
knew as much about the medical profession as he knows little, he would never have said anything like that. Unless we are prepared to deal with this matter definitely and realistically we shall, be subject to and shall deserve the condemnation of the people. Western Canada, with great oil resources at its doors, should no longer be allowed to suffer as it is suffering.
As I said a little while ago, I congratulate the two provincial governments on the action they have taken. When the matter is finally decided in the privy council we shall know definitely where the authority lies. In the meantime I would urge that upon the appeal which is now before the Supreme Court of Canada, and will ultimately go to the privy council, the dominion government should be represented before the privy council by the ablest counsel obtainable, in order that the interests of the whole country may be protected. I believe that there must be very great changes in the British North America Act. I believe that the parliament of Canada must get greater control. The fact that we cannot to-day enact a measure of unemployment insurance indicates the need of greater control by the dominion; surely there is nothing which it is more necessary for this parliament to control than the practices which have grown up under protection by the creation of special privilege.


Hon. C. H. CAHAN (St. Lawrence-St. George):: I do not intend to follow the
hon. member for Saskatoon (Mr. Young) into his discussion of textile production. I have read the report of the learned justice, Mr. Justice Turgeon, to which he has referred, and my recollection is that those who have been criticizing the textile industry throughout the country have paid very little attention to that report. Only recently I heard a remark made by an hon. member who sits at my left about a $500,000 investment bringing great returns; to-day the hon. member (Mr. Young) states that the investment is a million dollars. I have not the figures at my hand; I am simply trusting to memory, but if these gentlemen will look into the facts they will find that the companies which were brought together represented an investment of ten or twelve million dollars, and that the extra $500,000 or a million dollars was required to put them

The Budget-Mr. Cahan
upon a sound working basis. I am prepared at any time to discuss with hon. gentlemen the question whether the tariff on textile imports is excessive and results in prejudice to the consumers of this country.
The hon. gentleman has mentioned Mr. Blair Gordon. I have not the honour of Mr. Gordon's acquaintance, and I have no personal relations with him. But when the hon. member criticizes Mr. Gordon's position in this matter I can say this, that he has not read intelligently the report of the learned justice, and that he has not made proper deductions from the findings of that report.
The textile industry is one of the most important industries in the province of Quebec as in the province of Ontario. It gives employment to thousands of men and women in this country who otherwise would not have employment. But a discussion of the matter requires more than the time now at my disposal. I rose to discuss the budget presented by the Minister of Finance (Mr. Dunning).
Having carefully read his observations, apart from the statistics which were presented with them, I may say that the budget address of the finance minister might accurately be described, without exaggeration, as a complacent expression of platitudinous inexactitudes, designed to please his hearers by combining into one innocuous pronouncement the variable tenets of the several political groups in this house. It was evidently intended to placate all classes and conditions of our population.
The minister assumes that our external trade is the chief source of this country's prosperity, but he also declares that to the extent that we promote our export trade with foreign countries, to that same extent the impact of every trade recession falls with special severity upon the producing population of this country. In other words, in so far as we look to the acquisition of external markets as the chief, if not the only, basis of our permanent prosperity, just in so far do we give hostages to fortune by placing the control of our economic conditions in the hands of foreigners, who have merely a temporary interest in the stable and efficient development of this country.
In recent years our export trade has not represented more than fifteen per cent of our annual production, while our domestic sales of our domestic products have represented approximately eighty-five per cent of our total production.
The minister also expressed his personal conviction that "it is not beyond the capacity
of an expanding Canadian economy" to absorb those now unemployed in Canada who are willing and able to work. In that conviction I personally share. But measures adopted to expand the sales of our primary products in foreign markets will never, in my opinion, suffice to create employment for Canadians who are now unemployed.
We have a practical monopoly of a few products, such as nickel-as appears from the statement of the Prime Minister (Mr. Mackenzie King) to-day, we have not a monopoly of it, although we are alleged to have-for which foreign countries are dependent upon Canada. Our other primary products find only markets, which are competitive markets, in foreign countries, markets which in times of peace are largely supplied by those of our competitors who pay lower wages and thus force their workmen and workwomen to adopt standards of living which our people will never willingly accept.
We cannot compete in these foreign markets with competitors in central and south American countries, or in European or in Asiatic countries, whose conditions of life are not far removed from those of earlier and more rustic times.
Knowing .as I do from personal contact and personal experience the conditions of life which prevail in many other countries with whose products we now compete in foreign markets, I cannot believe that the oft-repeated fact that Canada, of all countries in the world, with its comparatively small population, enjoys the fourth largest export trade, is a reliable index of national prosperity. In other words, the extent of our export trade, as compared with the export trade of other countries, is not, and cannot under present conditions be accepted as a reliable index of the domestic prosperity of this country.
The minister asserts that this government's "objective has been and is to promote the minimum possible level of unemployment by stimulating the maximum possible level of productivity that could be sustained over a period of time." Such an objective is highly commendable, but the methods adopted by this government to achieve that object are notoriously illusory and futile.
The minister commends the efforts of the government to "restore private capital creation" by an "easy money policy." Those efforts have completely failed of their objective. He says that the government has adopted measures "to restore more normal activity in the construction industry." But people will not exhibit greatly increased activity in the construction or acquisition of
The Budget-Mr. Cahan

hydro-electric resources of the provinces of the middle west, will greatly assist in the development of such secondary industries in those western provinces. I am convinced that our progressive development as a Canadian nation largely depends upon providing such remunerative employment to our own people as will serve to maintain reasonably high standards of living throughout Canada; and to attain that end I am persuaded that it should be one of the essential elements of our national policy, so far as reasonably possible, to conserve our domestic markets for the products of our own workers, rather than to facilitate and foster, as we are now doing, the employment of alien workers in foreign factories for the production of those common commodities necessary for our daily use and consumption, commodities which can readily be produced by our own people, even though in some cases at a slightly increased cost. Our profitable sales in foreign markets, in fact the export trade of Canada, though necessary and commendable, is subject to a hundred contingencies over which our government has no control, such as quotas, local prohibitions and regulations and even the exigencies of foreign wars and civil commotions, which always render foreign trade more precarious and often less profitable than our domestic trade, which Canada should ever assist and encourage. Therefore, while giving reasonable encouragement to a well-balanced foreign trade, an important objective of Canadian statesmanship should ever be to provide increasing, more secure and more profitable domestic markets for the Canadian farmer, as well as diversified and remunerative employment for all who can be employed in Canadian factories.
Employment at remunerative wages is, for the great majority of Canadians, the prime necessity. Their continuous remunerative employment at home is always a matter of paramount economic importance to them, to their families and to the nation as a whole. The warehouses of this country may be full of food products, but they would offer no permanent relief to idle men and women who seek domestic employment in Canada at remunerative wages, and who fail to find it here because the activities of our home factories are restricted by excessive foreign competition, which is chiefly made possible by lower wages and lower standards of living in those competing countries. The workmen and workwomen of Canada are becoming convinced that that economic policy is bad for Canada which tends to deprive them of employment in Canada while opening wide our

extensive and fairly profitable Canadian markets to commodities produced by foreign workers which we can effectively and efficiently produce here at home.


Mr. EULER:: Might I ask a question,
purely for information. I am quite in agreement with my hon. friend that we ought to-[DOT]


Charles Hazlitt Cahan: Would the hon. gentleman let me finish? Then I will answer every question that is within my power.


William Daum Euler: My hon. friend himself does not hesitate to ask questions.


Charles Hazlitt Cahan: That is so, but I would ask my hon. friend's permission to proceed, because I am within a passage or two of the end of my remarks and I do not wish to be diverted at the moment.
Experience has also proved that state intervention and state interference in the administration of industrial affairs and in business relating thereto are often needless and frequently pernicious. Governments which are selected by popular vote are not infrequently lacking in practical experience and trained efficiency, and frequently the members of a government, when acting as a political unit, are less clear-sighted and less capable than when as individuals they act separately and independently in relation to their own affairs. Governments are often more lacking in wisdom than the individuals who compose them. Edmund Burke once declared:
One of the finest problems in legislation is to determine what the state ought to take upon itself to direct by public wisdom, and what it ought to leave, with as little interference as possible, to individual exertion.
That problem is daily presented to every democratic parliament for more effective solution.
Now, if the hon. gentleman wishes, I will try to answer his question.


William Daum Euler: I do not yield to the hon. gentleman in my desire to see secondary industries in this country prosper and employ as much labour as possible. But the one thought in my mind was whether the hon. member would say that, even with regard to some of the commodities we ourselves can and do produce, he is in favour of the absolute exclusion of some of these products coming from other countries. I have asked this question of others previously.


Charles Hazlitt Cahan: In reply to the hon. gentleman may I say that I have not been examined recently for sanity, but if I gave that impression I should think I would be lacking in some mental quality.

The Budget-Mr. Kuhl


William Daum Euler: I am sorry I asked the question, since the hon. member does not treat it courteously. I withdraw it entirely. I think I know what his reply should be, but apparently he does not wish to give it.


Charles Hazlitt Cahan: I gave it, and I will give it again. Certainly the answer is no. There are certain commodities and certain goods which cannot be produced in this country-


William Daum Euler: That is not what I asked.


Charles Hazlitt Cahan: Then will the hon. gentleman repeat his question?


William Daum Euler: I do not think anyone would object to the importation of commodities that are not produced in this country. My question was with regard to commodities which may be produced here. Would the hon. member absolutely exclude all foreign goods which would come into competition with commodities we can or do produce? I am asking this as a matter of information, so that I may know where the hon. gentleman stands.


Charles Hazlitt Cahan: I would not exclude all foreign products which come into competition with our own commodities, but I would give our domestic factories a fair opportunity to compete with foreign factories.


William Daum Euler: So would I.


Charles Hazlitt Cahan: I would not allow the factories of Japan or Czecho-Slovakia or Germany-and I might mention some other countries-which because of low wages and low standards of living can reduce their prices, to compete on the basis of those reduced prices with commodities produced in this country at rates more remunerative to those employed in domestic industry.


William Daum Euler: I am not in disagreement with that.


Mr. W. F. KUHL (Jasper-Edson):: Mr. Speaker, I wish to state what I believe we must do in Canada if we are to have a united country and preserve national unity. But before entering upon my address proper, I should like to make just a few general remarks with regard to some of the observations which have been made during this budget debate.
If a government does not exist to do for the people what they cannot do for themselves, then I do not know of any reason for the existence of a government. It is, in my opinion, the duty of a government to do for the people what they cannot do for themselves. As the hon. member for Saskatoon (Mr. Young) pointed out this afternoon, there are obvious inequities in our price
r\lr. Cahan.]
structure, and glaring evidences of exploitation. In such instances where the people themselves are unable to cope with the situation, I deem it the duty of the government to step in and deal adequately with the problem. The Prime Minister (Mr. Mackenzie King), on the evening of the last election, stated quite clearly the duty of the government when he said:
We take up at once, as our supreme task, the endeavour to end poverty in the midst of plenty-
That, I believe, is the first duty of this or any other government in the world.
I am quite convinced that with our existing monetary policy and the manner in which we produce and distribute goods, it is a mathematical impossibility for the people to buy the products of industry without the assistance of the government. We of this group have produced statistics again and again to show that under our present methods of production the income of the people is never sufficient to buy back the products of industry. Therefore, I deem it the duty of the government to step in and so arrange economic matters that the consumption buying power is balanced with the prices of goods that are offered for sale.
It is the duty of the government to abolish poverty in the midst of plenty. The Liberals have had ample time to demonstrate whether they are able to do this. They have not done so. It is physically possible to abolish poverty in this country of ours. We have everything necessary for a high standard of living and there is absolutely no reason or excuse for poverty in the midst of plenty in the Dominion of Canada. The Conservatives had their time in which to endeavour to abolish poverty in the midst of plenty. I am satisfied that in fifty, a hundred, or even a thousand years neither of these parties will be able to abolish poverty in the midst of plenty if they continue to pursue the monetary policies they are pursuing to-day. Here is the reason why I believe they will never do so. As early as 1790 one of the greatest bankers of the world, Meyer Rothschild, gave utterance to this statement:
Permit me to issue and control the money of a nation and I care not who makes its laws.
That is a most significant statement. If that is true, and I believe it is, parliaments are absolutely helpless. The power to create money and put it into circulation is the supreme power. Again and again members of the Liberal and Conservative parties have stated that we must have trade, either internal or external. That is quite true, but in the first analysis trade depends absolutely upon
The Budget-Mr. Kuhl

money. We are not living in an age of barter, we are living in a time when the production of goods and their distribution and consumption depend absolutely upon the issuance of money. The issuance of money is the starting point, and there cannot be any trade without that. I am satisfied that so long as a private monopoly is permitted to issue money according to its own desires rather than according to the needs of the people, our parliaments will continue to be helpless and unable to cope with the problems with which they are faced. So long as the creation and issuance of money are in the hands of a private monopoly, we in this parliament will be merely playing house; we will be simply engaging in a phantasmagoria no more real than "Snow White and the Seven Dwarfs." We will be unable to deal with any problem just as long as we have nothing to say about our money, and we certainly have nothing to say under the present circumstances.
There has been a considerable amount of criticism of the government because of the unbalanced budget. Considered from the realistic point of view, I do not think we have an unbalanced budget. The cost of everything that we have done in this country has already been paid. In a real sense there is nothing owing. It is only our obsolete and insane bookkeeping system, our financial system, which says that we are in debt and our bills not paid. All our bills are actually paid. After all, what is the real cost of doing anything, whether it be waging a war, building public works or running a railway system? Is there any cost outside human energy, human skill and the consumption of physical materials? Considered from that point of view, we have paid for all the things that have been done in this country.
When was the war paid for? It was paid for when the last shot was fired and the last man killed. The war was paid for on the day on which peace was declared. All the materials, all the human energy and skill necessary to wage a war had been supplied. After all, that is all the cost there is to waging a war. After we have met the real cost of the war, why should we permit a bookkeeping system to insist that we are still in debt? Why should we be obliged to go into debt to a private monopoly simply to get the tickets necessary to bring about an exchange of labour and materials? The same thing applies to any other aspect of our national life.
For instance, take the position of our railways which have been described as a millstone about the necks of the Canadian people. Considered from the realistic poinl of view, our railways are paid for every day
[Mr. Kuhl.)
At the end of every run they are paid for. There are no other costs outside the consumption of human effort, skill and physical materials. The rest is merely bookkeeping. We have paid for all those things for which our bookkeeping system tells us we are still in debt. All these costs have been met. The same thing is true of public works. The physical materials and the human skill and effort have been supplied for all the public works that have been completed. Why should our bookkeeping system then say that we are in debt?
Frequently we are told we cannot afford to do certain things. We are told we cannot afford to build post offices or to carry on a large public works program. We are told we cannot afford this or we cannot afford that. What can we afford? We can afford exactly what we can provide in the way of human energy, skill and physical materials. We can afford whatever we can accomplish with those, the rest is merely bookkeeping. It is the duty and obligation of the government to institute a bookkeeping system which will reflect the real facts. The real fact of the matter is that we are able to afford in this country many things which we have not at present simply because our bookkeeping system and our monetary policy do not reflect these facts. I should like to elaborate considerably on these points, but I want to make my contribution by stating what I believe must be done to achieve national unity.
In so far as the amendments are concerned, I consider them to be in order and I am prepared to support them. I do not do this because I believe that the suggestions contained therein will solve our problems, I do it because I consider them a condemnation of the refusal of the government of the day to pursue adequate policies.
As was stated by the hon. member for Lethbridge (Mr. Blackmore), cabinet ministers are prone these days to conclude their public utterances with a plea for national unit}'. I do not believe that any group of individuals or any section of the Canadian people can claim a monopoly of an earnest desire for a harmonious, smoothly working union in the Dominion of Canada. All true Canadians, regardless of their geographical location, cherish alike this great national ambition. It is a common denominator of desire of all who desire national greatness.
That this ambition will remain merely a fond hope never to be realized is, in my opinion, a false assumption. National unity is possible. A harmonious, amicable relationship between the provinces and the dominion

The Budget-Mr. Kuhl
can be brought about. An efficient and effective democracy can be accomplished in Canada.
How to reach this objective is, of course, a question upon which there is much difference of opinion. My view is that this objective can never and will never be attained so long as the present financial policy is perpetuated, regardless of what political party or organization has the responsibility of administering the government.
The greatest cause of disharmony, dissatisfaction and discontentment is an impoverished, undernourished and underprivileged people. Canada has actually and potentially the natural wealth and the human resources, both mental and physical, to serve the highest standard of living of any country in the world, not only for her present population but for one many times as large. This enormous supply of real wealth is, however, not fully accessible to the Canadian people under modern methods of production unless the production is accompanied by an adequate monetary policy.
The starting point of all economic activity is the issuance of money. No production or consumption is possible without the issuance of money. Trade, either foreign or domestic, is not the starting point. Trade, either external or internal, is impossible unless it be preceded by the issuance of money. Without money, economic activity is an impossibility in a modem world.
Canadians are not economically secure, they are not healthy, contented and satisfied, because the monetary policy imposed upon them by unfaithful legislators prevents them from accomplishing for themselves that which is physically possible. The money put into circulation through the process of production is not sufficient to accomplish the distribution of the goods produced. It is the duty of the government to do for the people what they cannot do for themselves; otherwise there is no reason for the existence of governments. The present monetary policy cannot do the job it should do for the people. The people cannot alter financial policy; therefore the government must. The government at present in office has not done so, and by all appearances does not intend to do so. The people of Canada, to whom the government should be responsible, are consequently compelled to live far below their privileges. This unjust and inexcusable condition produces ill feeling and discontent, and a distrust in our democratic institutions.
The refusal of the dominion government to institute an adequate monetary policy for
Canada compels the provinces to assume obligations which are not theirs, and for which they are not equipped with the necessary financial facilities. When the provinces under these circumstances cannot satisfy the needs of their people, and the dominion refuses to do so, when it can, how can we expect anything but disharmony, friction and disunity? It is the only possible consequence of such circumstances.
The Liberal party, notwithstanding their fondest hopes to the contrary, have all but ruined even the hope for national unity by continuing to impose upon the people of Canada the existing criminally insane financial policy which they solemnly pledged in the last election they would alter. The Conservative party since changing its leadership has said nothing that even hints at a change in monetary policy were they again elected to power. Canadian unity, under a Conservative administration, would therefore be just as impossible as under a Liberal administration. Both parties, particularly in the last two parliaments, have taken their orders from the bankers instead of from the Canadian people. Why should the people any longer place any confidence in either of these parties when by demonstration they have proved themselves unworthy of any such confidence? Both parties have been given ample opportunity to prove whether they will serve the financial oligarchy or the Canadian people. It is quite obvious that they have decided to obey the money powers rather than the people, and they ought therefore to be dismissed from office forthwith. They have demonstrated that Canadian unity is an impossibility under their policies. They have proved themselves unwilling to institute policies which will make for unity and harmony, and therefore the Canadian electorate should tolerate them no longer.
Although an adequate financial policy would be extremely conducive to harmony and goodwill throughout Canada, I believe there is one other fundamental feature of our national life that must be dealt with. I refer to the constitutional position obtaining in Canada today.
I believe that the cause of disunity is also to be found in the anomalous constitutional position which the people of Canada are tolerating. My opinion is that our constitutional position constitutes a serious reflection upon our conception of democracy, and we are accepting circumstances that should not be tolerated in a country calling itself civilized, let alone democratic. The time is long past due for these matters to be dealt with and clarified. If we wish to gain the respect and
The Budget-Mr. Kuhl

the esteem of the outside world it is imperative that we put our house in order constitutionally.
Our utterly ridiculous and anomalous constitutional position, which I have discovered through a personal investigation, causes me as a Canadian to hang my head in shame. How those in authority can accept a position which to me as a mere layman is positively repugnant to my conception of democracy and my sense of justice, is beyond my ability to comprehend. I cannot, therefore, remain silent on a matter in which I believe a gross injustice has been done to the Canadian people, and to myself as one of them. On behalf of the people who are aware of. the real nature of the circumstances I must protest, and demand that justice be done.
I have presented my opinions on this subject on several occasions in this house. They have been ridiculed and scoffed at. but to this day no one inside this house has even attempted to controvert the arguments I have put forward or the deductions I have drawn from the facts I have presented. If I am in error in any way, it is the duty of those who know better to point out to me where I am wrong. If I am right, it is imperative that the situation be rectified just as soon as possible.
I am not a lawyer, constitutional or otherwise, but I have made an intensive study of this subject. Speaking in the house on one occasion, the Minister of Justice (Mr. Lapointe) stated that plain people were also interested in these matters. I am speaking as one of these plain people. The issues involved in our constitutional position, from the point of view from which I wish to look at it, are elementary and fundamental. Not only should all members of parliament be thoroughly familiar with them, but every Canadian citizen as well.
Because of my utterances upon this subject I have been accused outside this house of trying to destroy national unity; I have been charged with trying to break up confederation; I have been accused of advocating the setting up of nine sovereignties in Canada; I have been accused of suggesting the abolition of the dominion government. Nothing could be farther from the truth. These are false charges. To give an example of such charges I have here a copy of Liberty of April 1, 1939, and in an article, "It Can't Happen in Canada," I find this statement with reference to myself:
The chief theorist of the party, Mr. Kuhl, denied that the B.N.A. Act had any validity, and claimed for Alberta the status of a sovereign state.
Uu- Kuhl.]
That statement is true. I still contend it is true; I have produced evidence indicating why I believe it to be true, and I ask anyone in this house or outside it to produce evidence to the contrary. The statement continues:
Social Credit members in the federal House of Commons urged the abolition of the dominion parliament.
That statement is not true, and I challenge Liberty or anyone else to point to anything that I or any other member of the Social Credit party inside the house or outside it have said to that effect. I challenge anyone to point to anything I have said inside this house or outside which would give even the slightest suggestion that I had these thoughts in mind. I take second place to no one in my desire for national unity, but I am of the firm conviction that this objective will never be reached until our constitutional anomalies are removed in a manner satisfactory to the provinces and the people of Canada. To overcome these difficulties I have suggested, in every address I have delivered upon this subject, methods which are supported by eminent constitutional authorities in Canada. I had hoped that the Rowell commission report would have been tabled before this session concluded. Upon that occasion I would have discussed what I am now discussing. Since it is likely that this report will not be submitted this session, I am going to take advantage of this occasion once more to state what I honestly believe to be the only way to straighten out our constitutional affairs and consequently to bring about a more harmonious relationship between the various sections of this vast country.
On this point I wish again to quote Doctor Beauchesne's evidence as found on pages 125 and 126 of the report of the special committee on the British North America Act. I had intended to quote rather extensively from the evidence given by Doctor Beauchesne, but because my time is rapidly passing I shall read only a portion of it. I have placed on Hansard, on previous occasions when I spoke upon this subject, quotations from the evidence submitted by Doctor Beauchesne. I believe they are well worth repeating. I am going to read just the last paragraph of this particular section of the evidence which Doctor Beauchesne gave. He made a brief resume of the history of Canada and continued in this fashion:
We have since progressed very materially; our industries have been multiplied; our urban population has exceeded our rural population; the war and its dire consequences have appeared; imperial conferences have taken

The Budget-Mr. Kulil
place; the British Commonwealth of Nations has been formed; the statute of Westminster has altered our status. Most of the provinces have lived beyond their means, but they have let up on the autonomy principle in later years. Nobody will doubt that economic legislation in Canada is more difficult of introduction than in any other country in the world, on account of our dual system of government. The time has come, in my humble opinion, when the British North America Act, except as to minority rights, should be transformed and a new constitution more in conformity with present conditions should be adopted. Amendments here and there would be mere patchwork which could not last. The people of 1935 are different from those of 1867. What we want is a new constitution.
Those are not my words. They are the words of Doctor Beauchesne, and his suggestions. I agree with Doctor Beauchesne when he suggests a new constitution. I believe it to be the only thing we can do under existing circumstances.
I wish to summarize the facts and the arguments which I put forward last session and which to date have not been refuted, to indicate why I believe it is our duty and privilege to create a new constitution for Canada.
In my address of February 10, 1938, I showed first the distinction between the two terms, which are used interchangeably but which should not be; those terms are "federal union" and "dominion." I quoted Bouvier's law dictionary, which stated that a federal union was a union or confederation of sovereign states, created either by treaty, or by the mutual adoption of a federal constitution. I quoted also Doctor Ollivier, joint law clerk of the House of Commons, at page 85 of the committee report on the British North America Act, where he says:
A confederation is a union of independent and sovereign states bound together by a pact or a treaty for the observance of certain conditions dependent upon the unanimous consent of the contracting parties, who are free to withdraw from the union.
I stated that these definitions indicate that the status of sovereignty must precede confederation, and that a federal union can be consummated only by the mutual consent of contracting states adopting a constitution. With regard to the term "dominion," I quoted section 18, paragraph 3 of the Interpretations Act of 1889, which says:
The expression colony shall mean any of Her Majesty's dominions, exclusive of the British islands and of British India and where parts of such dominions are under both a central legislature and local legislature, all parts under the central legislature shall, for the purpose of this definition, be deemed to be one colony.
i claimed, therefore, that these terms were not synonymous, but were rather the antithesis of each other.
I showed that according to the preamble to the Quebec resolutions the fathers of confederation intended to create a federal union in Canada. The preamble reads:
The best interests and present and future prosperity of British North America will be promoted by a federal union under the crown.
I stated that the provinces of Canada were in a position to be able to federate because they were recognized by the imperial authorities as being sovereign. To support this, I quoted Mr. Gladstone in the British Hansard of March 28, 1867, at page 754, where he states:
We have for a full quarter of a century acknowledged absolutely the right of selfgovernment in the colonies.
With further quotations from Sir Frederick Rogers, under-secretary for the colonies, and the private correspondence of Sir John A. Macdonald, I showed that although the imperial authorities recognized the provinces of Canada as having the right to create a federal union, they did not see fit to grant them their desires at that time. The British North America Act, which was enacted by the imperial parliament, was not the British North America Act which our delegates desired. It did not conform with the Quebec resolutions.
Instead of becoming a federal union, as the Quebec resolutions called for, Canada was demoted to the status of a colony under the name of a "dominion," which, according to the Interpretations Act, enacted twenty-two years later, was defined as a "one colony." Had Canada become a federal union, an agreement between the provinces would necessarily have had to be signed and later ratified by the Canadian electorate. No such agreement was signed, and the British North America Act has never been submitted to the Canadian electorate for their approval, without which there cannot be a legal constitution. It was not in order for the British North America Act in the form in which it was enacted to be ratified by the Canadian people because it was nothing but an ordinary imperial statute with which the imperial parliament alone had the authority to deal.
The real issue involved at this point is the sovereignty of the Canadian people. Although it was recognized that the people of Canada were supreme over their affairs, owing to the unsatisfactory political relations which then obtained between the United Kingdom and the United States the government of the United Kingdom deemed it advisable to withhold from the people of Canada their independence of action.
The Budget-Mr. Kuhl

There is a significant difference between the opening of the preamble to the British North America Act and the opening of the preamble to the Australian Constitutional Act. The preamble of the Australian constitution begins:
The people humbly relying on the blessing of Almighty God, have agreed to unite.
Here the people are mentioned. It is they who have agreed to unite. In the preamble to the British North America Act, both the people and God are excluded.
Thus, as a united colony, under the name of "dominion," have we been governed since 1S67. As the provinces were not permitted to exercise their sovereignty they were unable to form a federal union or create a federal government. This was a privilege which could be realized only at some time in the future when circumstances would be more favourable to do so. The opportunity to consummate the ambition of the fathers of confederation eventually came in 1931 through the enactment of the statute of Westminster. Unfortunately, as a result, no doubt, of not having access to the proper information, the people of Canada have, as yet, not taken advantage of this opportunity.
There is a great deal of confusion over the significance of the statute of Westminster and of our constitutional position subsequently to its enactment. For some time I was decidedly confused, but after a considerable amount of study I think I can now see straight through the whole situation. If my opinions do not conform with logic and common sense, then it is the duty of those who know better to correct me.
I have already stated that there is ample evidence to show that through the British North America Act the sovereignty of the Canadian people was withheld from them. They were unable, consequently to federate. The statute of Westminster, in my opinion, now removes the obstacle to federation. By virtue of this act the overlordship of the British people was relinquished and the people of Canada are now in full possesion of their sovereignty. The provinces of Canada were given sovereign status in order that they might federate. They could not federate without this status, but to date neither the provinces nor the people have acted upon this attainment of sovereign status.
Immediately the statute of Westminster was enacted, the people of Canada could have proceeded to complete the task which was begun by the fathers of confederation, but because we have not taken the appropriate

action we are trying to govern ourselves under a constitutional set-up which is so anomalous as to be absurd and ridiculous. We apparently assume that since we have changed our terminology we have changed the nature of our position. This parliament has always been a dominion parliament and not a federal parliament. Calling it a federal parliament will not make it such. A federal government can be created only by agreement among the provinces, which agreement must be ratified by the electorate. This we have not done. What reason, therefore, have we for calling this a federal parliament?
Take the position of a constitution and its amendment. The British North America Act is not a constitution in the true sense of the word. It has been called a constitution and has been used as one, but that does not make it one. A federal constitution is an agreement between federating states and it must be ratified by the people. The British North America Act is not and cannot be a federal constitution. It was designed by the imperial authorities as a statute for the government of a colony, and obviously it cannot be used as the basis of an agreement for a federal union. That is no doubt the reason for the fact that there is no provision in the act for its amendment. If we are to have a constitution proper, then we must make one. We must do as Doctor Beauchesne suggested to the special committee on the British North America Act in 1935.
I had intended to quote Doctor Beauchesne further, but I fear that my time will not permit me to do so. But hon. members who have perused this document are aware that Doctor Beauchesne suggested that we begin this new constitution by calling a constituent assembly of representatives from the provinces, this constituent assembly to draft a constitution w'hich would later be ratified by the people. In the creating of this new constitution provision can be made for its amendment. This would end once and for all the controversy that arises whenever an amendment to the British North America Act is contemplated.
Let us consider another anomalous position which it is difficult to explain-that of the governor general. According to the report of the inter-imperial relations committee of 1926, the governor general is no longer an agent of his majesty's government in Great Britain or of any department of that government. I should like to quote a section of the report of the committee to indicate this. I

The Bridget-Mr. Kuhl
quote from their pronouncement on the position of the governor general, from the report of the inter-imperial relations committee, imperial conference of 1926:
In our opinion it is an essential consequence of the equality of status existing among the members of the British commonwealth of nations that the governor general of a dominion is the representative of the crown, holding in all essential respects the same position in relation to the administration of public affairs in the dominion as is held by his majesty the king in Great Britain, and that he is not the representative or agent of his majesty's government in Great Britain or of any department of the government.


Mr. POULIOT:: Does the hon. gentleman admit at least that His Excellency the Governor General is the official representative of His Majesty the King?


Walter Frederick Kuhl: Yes, that is quite true. He is now supposed to be a viceroy with no more responsibility in Canada than His Majesty the King has in Great Britain. If we are a self-governing nation, then this must be so; yet, on the other hand, the British North America Act provides for a governor general with authority over Canadian affairs and with a definite responsibility. According to section 11 of the British North America Act, the governor general has power to summon, appoint, and remove from time to time members of the privy council of Canada. According to section 14, he lias the power to appoint a commissioner for the Yukon territory, with autocratic powers accountable only to himself. Under section 24 he is instructed how to appoint the senate, and under sections 55, 56 and 57 the governor general has the power of disallowance over dominion legislation. Section 90 of the British North America Act gives to the governor general the power of disallowance over provincial legislation.
Let us consider for a moment the power of disallowance over provincial legislation. According to the section of the British North America Act to which I have just referred, this power is vested in the governor general personally, and the ministry is in no way responsible. On the occasion on which the hon. member for York South (Mr. Lawson) inquired of the Minister of Justice (Mr. Lapointe) what action the ministry had intended taking with regard to certain Alberta legislation, I protested against the discussion of this matter on the ground that this house had no authority to deal with it. As I was prevented by the Speaker from substantiating my claim with certain evidence, I wish to refer to the matter at this point. What I had reference to was sessional paper No. 116 of
1876. This return has to do with the circumstances in connection with the introduction of a resolution to the House of Commons by the member for South Bruce, the Hon. Mr. Blake.


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


Walter Frederick Kuhl: Would the house permit me to conclude this?


Walter Edward Foster: Only by the unanimous consent. Do I understand that the hon. member has unanimous consent?


Jean-François Pouliot: I will give my consent if he is kind enough to answer one question. Will he be kind enough to tell the house why such an argument was not submitted by the government of Alberta against any disallowance by the dominion government?


Walter Frederick Kuhl: I am not a member of the Alberta government and I cannot speak for it.


Mr. MARTIN:: As its constitutional
adviser?


Walter Frederick Kuhl: With the permission of the
house I should like to conclude what I have to say on this subject. As I was saying, the return to which I am referring has to do with the circumstances relating to the introduction of a resolution by Mr. Blake on February 22, 1865, protesting against the exercise of the power of disallowance of provincial legislation by the governor general personally. The resolution was withdrawn without a contest, after the correspondence of the Colonial Secretary affirmed that the power of disallowance was a prerogative conferred upon the governor general personally. The exact words of the Colonial Secretary were "that the question of disallowance of local acts is a matter in which his excellency must act on his own discretion and in which he cannot be guided by the advice of his responsible ministers". That was my reason for protesting against the discussion relative to the disallowance of Alberta legislation, and I still believe I was justified in doing so.
If the governor general is to-day merely the viceroy of his majesty in Canada, and has no responsibility to govern, then who exercises the power of disallowance? If the ministry exercises it, then by what authority was the transfer of this power made? For any individual or group of individuals to have the power to disallow provincial legislation within a sovereign self-governing nation is, in my opinion, diametrically opposed and repugnant to every conception of democracy.
The Budget-Mr. Graydon


Paul Joseph James Martin: There is no such thing as a sovereign nation.


Walter Frederick Kuhl: Disallowance is a relic of
colonialism, and should not be tolerated in a truly democratic country. Surely it is apparent that such arbitrary action as disallowance is highly incompatible with the fundamental principles of democracy.
With regard to the position of disallowance of provincial legislation in Canada my opinion is this: Through the statute of Westminster the people of Canada and the provinces of Canada acquired their sovereignty; since that time neither the provinces by agreement nor the people of Canada by ratification have delegated any of this sovereignty to a central government; the central government of a sovereign nation can acquire the power of disallowance, if such there be, only from the provinces which create and delegate authority to the central government. This has not been done in Canada.
Therefore, on these grounds I contend that the exercise of the power of disallowance of provincial legislation is illegal in Canada, and that every provincial statute which has been disallowed since 1931 is still valid. I contend that every statute of Alberta which has been disallowed since the enactment of the statute of Westminster is still valid and will remain so until the provinces by agreement delegate authority to a central government. These are my opinions. If I am wrong I demand to be shown where I am wrong and for what reasons.
Only by the creation of a new constitution do I believe we can remove the anomaly which exists in connection with the position of the governor general. When this new constitution is created it should provide for the position of viceroy only, and that only Canadian citizens may be appointed to that position. This would give to Canadian citizens an opportunity of aspiring to the highest position in the gift of their country, that of viceroy to the king.
Appeals to the privy council constitute a further anomaly in our position. I agree with the hon. member for St. Lawrence-St. George (Mr. Cahan) when he seeks to make the Supreme Court of Canada the court of last resort, but I am positively opposed to the manner in which he is attempting to bring this about. This is a matter in which the provinces are all vitally concerned. If we are to proceed democratically, then the provinces must be consulted. Again I say that the best, in fact the only way, in which this matter can be properly settled is through the

creation of a new constitution. As I did last year, I suggest that one supreme court justice be nominated by the bar association of each province, appointed to the position, paid by the legislature of the province and sworn in by the central government. This would be the most democratic method of procedure.
I believe that a new constitution should settle also our status as citizens. As it stands now, we claim that we are politically independent of the imperial parliament, yet we vote as British subjects of a British king. This is another anomaly. A new constitution should provide that Canadians will be recognized as Canadian subjects of a Canadian king.
Further, I believe that provision should be made for the term "Canadian" as a description of racial origin in Canada. Under the heading "racial origin" in the census books of Canada, the term "Canadian" should be accepted from those persons of white extraction whose fathers for three generations have been born in Canada.
Lastly, to typify our sovereignty and at the same time show our connection with Our Sovereign King George VI, it is imperative that Canada shall have a distinctive national flag. The hon. member for North Battleford (Mr. McIntosh) is to be highly commended for constantly bringing this anomaly to the attention of the country. I agree with him whole-heartedly in his proposal for a distinctive national flag, but I believe he is premature in his action. Let us first put our house in order constitutionally. Let us build a constitution in harmony with our status, and when we have accomplished this noble task let us crown our efforts by the adoption of a flag truly symbolic of what we have achieved.
A new constitution to eliminate the anomalies in our present position and to provide a basis for an amicable and harmonious relationship between the provincial governments and the central government, and a new financial policy which will reflect our collective ability to produce and consume, I consider to be major factors in creating a united Canada.


Mr. GORDON GRAYDON (Peel):: In my opinion these are days when action rather than words is demanded by the people of Canada. Therefore my criticism of the budget will be brief. In fact, Mr. Speaker, if you will scan the pages of Hansard for the last twenty years you will find man}' hundreds of better budget speeches than I am going to deliver this afternoon, but I do not think you will find any that are shorter. So, in stripping my language of all non-essentials and attempting to give my points in a simple

The Budget-Mr. Rowe (Athcibaska)
and understandable manner, I have the following references to make in connection with the budget address:
1.	The budget is still unbalanced. Every year the dominion government is spending tens of millions of dollars more than it is taking in by way of revenue. I think I am making a fair statement when I say that we cannot continue doing this without facing ultimate disaster in the broader dominion field in the same manner as we should suffer if the same practice were applied to our own household.
2.	Our present scale of taxation is higher than at any time since confederation. It is breaking the backs of the people of Canada. The taxpayers cannot stand much longer the burden which is now placed upon them. Regardless of what means are used to achieve a reduction in expenditure on administration by this government, in my opinion this must be done.
3.	Why cannot our government revert to the old-fashioned but sound idea of economizing all along the line of governmental and administrative overhead? Let us make our clothes from the cloth we have. Like many business men, and others engaged in pursuits of that kind, I am frankly afraid as to where we are drifting. We have to take care to avoid building in this country an economic Frankenstein which may destroy its makers.
4.	The budget is out of tune-with the times; more people employed in government services year after year; costly commissions dealing with problems which normally should be the field of members of parliament, new boards being set up which, in most instances, turn out to be just more spending bodies. The extravagance which seems so inevitable in government administration is, I believe, clearly unwanted by the general public of Canada.
5.	It may be dealing with something which is local in my own constituency, but I should like to suggest to the Minister of Finance that he remove altogether the sales tax which ar present is charged on sales of one particular branch of horticulture, that is cut flowers. It is practically the only branch in connection with which sales tax is still imposed, and the tax works a great hardship and discrimination on the growers. It is a very difficult tax to collect, and, more than that, I believe the growers had every hope that this budget would bring them some relief. I respectfully submit to the Minister of Finance (Mr. Dunning) that this should be done before this session concludes.
In conclusion, Mr. Speaker, without the slightest flavour of partisanship I would ask
this government, figuratively speaking to take off its coat, roll up its sleeves and fearlessly tackle, even at this late hour, the job of cutting down overhead, living within its means, putting our people back into gainful employment and giving effective leadership to help the hard-pressed farmers and working men in Canada.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Mr. P. J. ROWE (Athabaska):: Mr. Speaker, the Minister of Finance (Mr. Dunning), when presenting his budget last week, estimated the total national income of Canada as $4,460,000,000. Assuming that there are 2,500,000 families in Canada; if this total income were divided equally, it would mean an income of $1,785 a family. The Loeb survey of the potential productive capacity of the United States in 1934, after making a survey of the machinery on farms and in the factories of that country, came to the conclusion that the American people, without altering their industrial equipment, could produce the equivalent of $4,400 for every family in the United States. It has been stated in this house-the Prime Minister (Mr. Mackenzie King) is one of those who have made the statement-that Canada is a very rich country, more blessed by providence than any other country on the face of the globe. If that is correct, and I believe it is, I am sure that if a commission were appointed to make a similar investigation in Canada it would find that our potential productive capacity was even greater than that of the United States, that is, if scientific methods of production were applied.
Our present income, as I said a moment ago, is $4,460,000,000, but on the basis of $4,400 a family our national income would be $11,000,000,000. Of course the national income is not evenly divided and I am not suggesting that it could or should be, but it is clear that we are losing the difference between our present national income of $4,460,000,000 and what it would be if we operated our economic system on a cooperative basis and applied engineering principles to the production and distribution of wealth.
How is the national income of Canada divided? I want to spend a minute or two on that. I gave this analysis once before to the house, but in order to bring out my argument at this time I shall review the figures again. According to the brief submitted to
3524	COMMONS
The Budget-Mr. Rowe (Athabaska)
the Rowell commission by the Manitoba government, our income for 1934 was $3,580,000,000, slightly lower than the 1939 income but not very much. The 1931 census is the latest official record that we have available. Applying the 1934 income to the distribution of population shown in that census we find that 23,600 families, or six-tenths of one per cent of the population received $940,000,000, or $39,000 per family. We find that 4,000 families, or one-tenth of one per cent of the population, received $600,000,000, or $150,000 a family. At the other end of the scale we find that 36 per cent of our population, or 895,000 families, received $181,000,000 or $202 per family. We find that 1,617,000 families, or 65 per cent of the population, received $582,000,000, or $360 a family. We thus see that the 4.000 families at the top of the scale representing one-tenth of one per cent of the population received $600,000,000, or $150,000 a family per year, or $18,000,000 more than the 1,617,000 families at the bottom of the scale representing 65 per cent of the working population.


Mr. DUNNING:: Would my hon. friend give the authority for those figures?


Percy John Rowe: As a basis for my calculation I am using the brief submitted to the Rowell commission by the Manitoba government and giving an estimate of the 1934 income as $3,580,000,000. I am distributing the 1934 income on the basis of the 1931 census.


Charles Avery Dunning: How does that reveal
the amount that each family got?


Percy John Rowe: The distribution is made on that basis in the 1931 census, and I am using the distribution in ratio to distribute the 1934 income. According to the same distribution, the farmers of Canada received $474 a family. I should like to indicate what the Brookings Institution have to say about an adequate standard of living on the basis of income. I quote from a book entitled, Income and Economic Progress, by H. C. Molton. In discussing the figures of the Brookings Institution at page 78, where reference is made to an income of $2,500 a family, he says:
This, as our studies have indicated, is not adequate to provide the necessities and comforts requisite to a satisfactory standard of life.
I quote that statement to indicate the very great distance we are from an adequate standard of living. It is clear that we are suffering from several evils among which are:
1.	The fact that nearly 1,000,000 of our people, or over 9 per cent of our population, are on relief and not producing anything. These

people must be fed, clothed, housed and otherwise cared for by the rest of the workers. The workers, farmers and fishermen must provide for their own families and a million idle as well.
2.	A large percentage of the workers are employed only part-time and are not therefore allowed to produce their full quota of wealth.
3.	A large number of workers are engaged in the manufacture of counterfeit, spurious and useless goods, and I shall deal with that later. While engaged in these useless and even harmful tasks they must be clothed, fed, housed and otherwise cared for by the producers of food, clothing, building materials and other necessary services.
4.	A large number are engaged in the production of gold, which is useless because it cannot be eaten, worn or used for fuel, and therefore every ounce of material and energy expended in its production is wasted. But those who produce it must also be clothed, fed, housed and otherwise cared for by the producers of useful consumable wealth. I refer to those underpaid and unpaid burden bearers, the farmers, workers and fishermen of this country.
5.	A large section of our population is engaged in the production of war materials, which are useful only for the destruction of life. Our exports of nickel to Germany increased over 1000 per cent between 1932 and 1938, according to the Dominion Bureau of Statistics, and our exports of nickel to Japan in the same period increased 5000 per cent.
Under the present system of competition we have by our trade agreements, discriminatory tariffs, et cetera, strangled the "have-not" countries until we drove them mad, then placed guns in their hands and provided them with the means of murdering their boys and ours.
What then are the charges which may fairly be brought against the present price-and-profit system? I charge it with the following fundamental evils, which are inevitable and not accidental consequences of the system:
1.	It has permitted extraordinary inequalities in the distribution of wealth and income, inequalities which carry with them the great extremes of luxury and abject poverty.
2.	Huge monopolies have developed under it, and competition has become increasingly imperfect. This has resulted in the exploitation of consumers and workers, has reduced production and helped to create unemployment.

The Budget-Mr. Rou-e (Athabaska)
3.	In the competitive industries widespread losses and waste of energy are everywhere apparent.
4.	Business depressions with their attendant miseries are the product of competition. There is no evidence that they will be abolished or greatly reduced so long as that system is retained.
5.	The profit system, by its emphasis upon self-interest, greatly lowers the moral tone of mankind. In business it forces men into greedy acquisitiveness. In private life it leads to competitive consumption. In politics it creates corruption. In the field of international relations it fosters war. It is admitted that the profit system in its earlier days furnished a powerful direct stimulus to effort, but large scale industry has removed this incentive from the vast majority of the urban population. They are employed by large corporations and neither receive profits nor have any real chance of becoming masters of their own business and of receiving profits in the future. Nor are the prospects of controlling combines and corporations any better.
In 1890, when the Sherman anti-trust law was passed in the United States, making monopolies a crime, less than ten per cent of United States business was controlled by trusts. In 1938, after forty-eight years of prosecutions and "trust-busting" crusades, more than seventy per cent of United States business is controlled by the trusts. The truth is, of course, that a monopoly is not the cause of anything but simply the inevitable consequence of competition.
I often hear it argued that if we established a cooperative society there would be regimentation, confiscation and loss of liberty. I answer that the unemployed are now being regimented in soup-kitchens and construction camps, without liberty or choice of action of any kind. They are not free to choose what they will eat or wear, or where they will live, nor can they make any plans for the future for themselves or their children. Neither is there any freedom for the farmers and the workers of this country. How could there be on an average income of less than $600 a family?
Under a cooperative system, on the contrary, instead of having their homes confiscated as now through unpayable debts, they would have a chance, both in the country and in the cities, to build and own real homes with all the comforts of life which science and invention could give them. Far from having their property and rights confiscated, the working class would have a chance for the first time in history to acquire from six to eight times the property they now have. It
is true that a cooperative society would entail obligations. No civilization is possible without the voluntary acceptance by individuals of rules and restraints under which the rights of all would be guaranteed. But in this case there would be something to work for. Twenty-five years ago the people of this country offered their lives for what they thought was democracy and freedom, thus proving beyond doubt their willingness to suffer and sacrifice for a great cooperative ideal. They discovered, to their bitter disillusionment, that the only freedom they won was the freedom to starve and wander unfriended through the wastes of a desolated land, sick in body and mind, clothed in rags, and suffering hunger and heartache as the single unemployed are doing in Ottawa tonight while I speak. I have faith that the young men and women of Canada are ready and willing to support a cooperative commonwealth, where the nickel, copper, iron and lumber which this country possesses in such great abundance will be used to minister to the needs of ourselves and our neighbours in other countries, instead of to murder them for the profit of a few as we are doing now.
Why are the defenders of the present system so afraid of planning? There is not a person in this dominion who does not plan every day of his life. Just as the Minister of Finance must plan his budget, which is simply a summary of the income and expenditures of the government, so must each family head plan with the utmost care how the family income shall be spent. The parents know how much they expect to receive by way of income during the year, and so they estimate so much for food, clothing, education, religion, entertainment, travel, et cetera, and everyone knows that failure to plan in this way means disaster. Similarly the business man plans his business, the farmer his farming operations, the housewife her food menus and shopping, the public man his speeches and meetings. If planning is so indispensable in our personal lives, not to mention schools and other public organizations, by what process of reasoning do we conclude that the community, the nation, or the community of nations, can go planless without inviting chaos? When we consider the completely interdependent nature of our relationships in trade and industry and our dependence upon other nations for certain vital materials as well as their dependence upon us to an even greater extent, the conclusion is inescapable that constructive cooperation, mutual aid, and common sense planning must replace the present blind, chaotic, destructive combatancy-
3526	COMMONS
The Budget-Mr. llowe (Athabaska)


Mr. HANSON:: If the hon. member is going lo read his speech, Mr. Speaker, I would ask him to read louder so that we can hear it.


Walter Edward Foster: I do not think the point of order is well taken. I do not think the hon. member is reading his speech. He might be referring to his notes.


Olof Hanson: Then let him speak louder.


Walter Edward Foster: I do not think he can speak louder. If there were less noise, everybody could hear him.


Percy John Rowe: Thank you, Mr. Speaker, for coming to my assistance. I am trying to speak as loudly as I can.
As I said, the conclusion is inescapable that constructive cooperation and mutual aid must supplant the present blind competitive chaos if civilization as we know it is to survive.
The advocates of planning under the price and profit system, whether big business men or those who call themselves Liberals, all seem to overlook a number of important though simple facts. First, capitalism is a system of competition and not of cooperation. Second, business lacks orders for goods, not plans for the production of goods. Third, purchasing power cannot be increased by lending. Business men have always planned. Never did business men plan with more expert assistance or better information than during the past ten years, and never were greater financial follies committed. Our present situation is the result of business planning. But planning for scarcity can succeed only by making things scarce, so that the price may be kept up in order that profits may be made. Abundance of anything means calamity for the price and profit system ; and you can no more plan for scarcity and get abundance than you can mix oil and water. Therefore, planning for profit can never be done scientifically. The better the planning for profit, the more certain is the result- profitless business.
May I now for a moment or two turn to an examination of some harmful activities of our present system, things which must be eliminated before a planned economy can be established. The first and greatest is, in my opinion, the one which the Minister of Finance would only make worse if he succeeded in persuading persons with capital to create new capital goods where there is already a plant capacity in excess of presently effective consumer demand. How can he expect the new factories which might be erected under this plan to sell their output, when the output of the present factories cannot be effectively disposed of? I have stated that the present plant capacity to produce goods exceeds the 
presently effective consumer demand, but I have already pointed out that the potential product capacity is eleven billion, while the present production is five billion or less, and the difference undoubtedly could be consumed if it were produced and equitably distributed.
Not long ago a large cement plant was dismantled in Alberta and shipped to Japan. That was not because no more cement was needed in Alberta, but because the effective consumer demand had fallen off. The railways are now talking of tearing up certain parts of their lines. When I was in Edmonton a couple of weeks ago I attended a meeting of farmers and business men who were protesting against the proposed tearing up of a considerable section of the Canadian National railway. They had invested their life-savings, had worked for twenty years, and were faced with the possibility of losing their entire livelihood. I suggest that is a retrograde step. We are not using our present capital equipment. We are using only a fraction of it. The present capital equipment is capable of providing a good living for everybody, but it is not being used. Why should we tear it up and destroy it until we can demonstrate that we have used it for the purpose for which it was created, namely, to provide the people of this country with a living.
There is plenty of capital in Canada. Capital is not the problem. I have here a classification of deposits which I should like to read into Hansard. This classification is based upon an analysis made as of October 31. 1938, of deposits payable after notice. I find here that there rvere 4,122,963 savings deposits in the chartered banks of Canada, but 3,797,481 of them have an average of only $119, a total of $452,808,233.46. Coming up the scale, I find that 284,243 persons have an average of $2,011; 38,077 persons have an average of $8,692; 2,541 persons have an average of $44,030; and 621 persons have an average of $298,285. This means that investors have plenty- of capital to invest, but there is no assurance that if that capital were invested in new production goods, factories and so on, the output of those factories could be disposed of. The reason why a great deal of that money is there is that there is no lucrative channel of investment for it. Therefore, I say, the first great difficulty we are facing to-day is this:	People rush blindly in to
compete when excess capacity already threatens the industry.
Mr. Stuart Chase, in his book, The New Deal, shows that 111,000 service stations distributing gasoline in the United States, out of a total of 157,000, are unnecessary, ana

The Budget-Mr. Rowe (Athabaska)
the waste or loss in materials and labour amounts annually to $450,000,000 as a result. This is an illustration of the overlapping and competitive chaos resulting from planlessness, and runs to a greater or less extent through all the fabric of our economic life. Business men have almost no knowledge to-day of production capacity in relation to market demand. With touching optimism, particularly when prices are relatively high, they feel that the new plant or organization which they are about to build is bound, as a result of their superior skill, to take business away from those already in the field, and to prove profitable. This continuous avalanche of new capital into a territory already thickly settled, results in over-production, unemployment, profound maladjustment, and an appalling industrial death rate. The secretary of any active trade association can furnish full details on this point. Money is indeed made, but in a closed market; an equal amount is lost, while the economic structure reels dizzily with repeated blows in a vital spot.
Under our present system there are various ways of making money, all of which operate to the injury of society, all of which make fearful inroads upon purchasing power, none of which could be permitted under a planned economy, and indeed, all of which must be eliminated before a planned economy can be established. It would be necessary to speak for forty minutes on each of these points in order fully to outline each one, but I shall mention some of them briefly, and possibly discuss them more fully at another time.
The foundations of a great many fortunes on this continent have been laid through the creation of monopolies and the raising of prices; the tying up of a patent or a secret process, and charging all that the traffic will bear; the ingenious overcoming of the interest rate in selling credit to the poor. Recent discussions on small loans brought out many startling facts in this regard. The saddest commentary I can make on that is that poor people must pay 26 per cent for money which they need desperately for vital things, while people in better circumstances can get credit at from four to seven per cent.
The manufacturing of a useless, adulterated or even vicious product, and the creation of a demand for it by high-pressure selling and advertising, must be familiar to us all. A toothpaste containing a poisonous chemical may be worth a million to its owners so long as it tastes good and its owners broadcast amusing radio features. Then there is the method, closely akin to this last-mentioned abuse and far more common, of creating a 71492-222
demand for a product which, good in its modest way, deserves no such price as is asked for it and no such use as advertising blasts out for it. According to the American Medical Association, menthol, mixed with alcohol and oil of lavender, is bottled and ballyhooed as giving relief for colds and sold at more than fourteen times the price of the original ingredients. This practice is widespread.
The creation of new fashions in costumes, of fads and novelties, and the astute manipulation of social pressure to market them is another striking feature. One branch of this method has been coarsely called the "annual model racket," applying particularly to the automobile. This includes the sale of smart forms of entertainment. Our recreation is being poisoned by mechanization and commercialization. Arid and unrewarding forms of play are being substituted for direct participation, clicking turnstiles for open hillsides. The manufacture and manipulation of more or less dubious stocks and bonds and the unloading of these upon the public by high pressure methods, are on all fours with the methods employed in connection with patent medicines. In this division there is normally no tangible property at all behind the brightly engraved certificates. The bulk of investment trust securities are a case in point. The men who manufactured these millions of par value paper in the last twenty years were not conscious of any wrong-doing; they merely saw an opportunity to make quite legally a large amount of money. The fact that their activities dried up needed demand for consumer goods, helped to bring on the crash of 1929, and made it worse after it came, was quite beyond their limited vision-an academic point that never touched them.


Olof Hanson: I rise to a point of order, Mr. Speaker. I have no objection to the hon. member reading his speech, but on account of the noise in the chamber I cannot hear what he is saying.


Walter Edward Foster: It does not seem to me that the hon. member who has the floor is reading his speech; so far as I can see he is merely consulting his notes. I must repeat, however, what I have directed to the attention of hon. members on many occasions, that there is far too much noise in the chamber. If hon. members would converse in lower tones we could hear better.


Percy John Rowe: I thank you, Mr. Speaker, I am having a little trouble with my throat and I am sorry if the hon. member cannot hear me.

3528	COMMONS
The Budget-Mr. Rowe (Athabaska)


Mr. MANION:: Send him Hansard tomorrow.


Percy John Rowe: 
Robert James Manion: Mr. Speaker, I should like to join with other hon. members who have expressed pleasure at the recovery of the Minister of Finance (Mr. Dunning), and the pleasure of the whole house at seeing him looking quite healthy and still in his seat.
The budget, sir, is always awaited anxiously, because like one's own personal budget the national financial statement is the people's business. It is more our business than any other matter except those that concern our own personal affairs. It is the nation's balance sheet, reviewing the past and forecasting the future, indicating particularly whether any new taxes are to be levied or any existing taxes removed, whether there are to be any tariff changes that may affect us all. This budget has been described many times in this debate as colourless and innocuous, and the favourite description seems to have been that it is a dismal type of budget. With that I wholly agree; for it has been a disappointing budget in its results, barren of ideas and lacking entirely in originality. In that sense it is, to my mind, the weakest budget we have had in this house in the last twenty-five or thirty years.
There is sufficient reading matter in the budget, if one reads the tables, to occupy about three hours, yet only one idea was suggested, beyond pious platitudes and oratorical appeals for courage and leadership, which the minister himself and the government seem to lack, and appeals to business, which business seems somewhat to resent. The one idea was that of deducting from income tax for the next three years capital expenditures made by business concerns during the present year. That proposal has been played up, and is the only idea in the budget that is at all out of the ordinary. But I point out this: Of course the Minister of Finance could not know that it is not a new idea; it is an idea we considered when we were in power. I do not remember the year, but I think it was in 1934 that we considered the idea very fully and decided it was not a proper provision to incorporate in the budget at that time. However, that is neither here nor there.
But in the national employment commission report made to the government on January 26, 1938, (his idea was proposed exactly as

The Budget-Mr. Manion
it is incorporated in the budget to-day. That was sixteen months ago. Let me read two or three lines to illustrate, from page 36 of that report:
The commission desires to direct the attention of the royal commission on dominion-provincial relations to the possibilities of granting some relief under the income tax for expenditures actually made in replacing obsolete industrial equipment. It suggests that a special allowance might be made under the income tax law for expenditures made in replacing obsolete plant and equipment. Such expenditures might be deducted from income before the income tax is computed, but only to the extent of the value which had not yet been written off in depreciation and only if and when the asset be actually replaced. It would of course be necessary that such a privilege should be restricted to periods of depression and unemployment.
It goes on to elaborate the idea. I mention that because I think the national employment commission should have been given some credit for it. After all, credit should be given where credit is due; and while I admit that there is nothing new under the sun, it might have been better to say that this was one idea out of twelve or fifteen proposals of the national employment commission which the government are attempting to put into effect. It is clear that the government have no ideas of their own, no originality; they merely grab whatever idea anyone puts up before them.
As I was thinking of this the other day I remembered a bird I used to hear of when I was a youngster-the cowbird. It is the one parasitic bird that we have. It does not build a nest of its own or care for its own young, but hunts up the nest of another bird and when the other bird is not there it drops its egg into the nest-


William Daum Euler: I thought that was the
cuckoo.


Robert James Manion: This government is pretty much like that. It adopts the ideas of others because it has none of its own. It has no leadership, no vision; it is indeed a pretty hopeless proposition.
The national employment commission report contains, on page 37, another proposal that the government have, in a measure, taken to their hearts. It is the proposal that the dominion government should carry a larger share of the relief bills for the unemployed so that the burden on the municipalities would be less.
With regard to this income tax remission I doubt if very much in the way of capital expenditure in Canada will result from that proposal. The companies that will take advantage of it within the next year will, for the most part, be those which had already laid 71492-222J
their plans and are all ready to go on with the work. Of course the government will take full credit for any capital construction carried out, and will collect just that much less income tax.
Regarding the financial aspects of the budget, we find that revenues last year amounted to $501,000,000. The year before, they amounted to $516,000,000. Those are the two largest annual revenues in the whole history of Canada. When I say "annual revenues," of course that means annual tax collections, because this government, when it takes off anything, which it has not done recently, in the way of revenue, says it is taking off taxes; but when it adds anything to taxes, it says it is adding to the revenue. They are, however, both the same thing in fact. Every dollar of that $501,000,000 that has been collected from the people of Canada is taxes except what is taken in by the post office and a few items of that sort. But nearly 90 per cent is taxes pure and simple.
The highest revenue that the preceding government had was $361,000,000, or $140,000,000 less than the revenue last year. Yet, despite the two highest revenue years that this country has ever had, the deficit this year is admitted to be $56,000,000. Undoubtedly the estimate should be more than that, because the minister allowed for only part of the probable cost of the 80-eent price for wheat, and in all probability, if the total figures were given, the deficit, instead of $56,000,000, would be somewhere between $70,000,000 and $80,000,000.
And what of the unbalanced budget that my hon. friends over there used to talk so much about when they were on this side? I well remember the "rides" we used to be given by my hon. friends when they were sitting on this side about our not balancing the budget. I well remember how often the word "deplorable" was used against us.


An hon. MEMBER:: You stood it pretty well.


Robert James Manion: Yes, and my hon. friends will probably stand it in the same way.
Business is down, trade last year was down compared with the year before by about $300,000,000. Of course my hon. friends opposite now say that that is due to world conditions. During the period we were in power the worst depression that the world had ever seen, without exception, occurred in the years 1932, 1933 and 1934. The bottom seemed to drop out of business, not only in Canada but throughout the world. There were estimated to be 30,000,000 unemployed in the industrial countries of the world; world
The Budget-Mr. Manion

trade had dropped from 68 billions to 26 billions, not much more than one-third of what it had been in the peak year. Wheat was below 40 cents a bushel, the lowest price in the hundreds of years of the recorded history of the grain trade. Yet not once in all the four or five years that we were in power, did my hon. friends, the then opposition but now the government, ever admit that there was a depression, although they were reminded of it. But now they tell us it is world conditions that account for the loss of a great deal of the trade we formerly had.
In addition to the drop in trade, tariffs throughout the world also were raised against Canada during the term of office of my hon. friends opposite up to 1930. The Fordney-McCumber tariff in 1922 was imposed while my hon. friends were in office, and the Hawley-Smoot tariff in June, 1930. Those two tariffs were set up during the term of office of my hon. friends opposite, putting the protection against us in the United States market so high as to be almost prohibitive. Yet all they could tell us was, "Oh, we must not provoke the United States." Even the wheat tariffs were raised against us throughout the world. That was the beginning of the wheat troubles. The tariff in Italy was raised to 73 cents a bushel, in France to 85 cents and in Germany to 98 cents, and later they went still higher, but they were sufficiently high to prevent Canadian wheat from going into those countries. As a result we had on August 1, 1929, a wheat carry-over of
127,000,000 bushels.
There is another aspect of this budget on which I wish to touch, that is the question of statistics. The Minister of Finance adopted a new method of putting out the budget this year, and I think it is perhaps worth while. He put the tables in an appendix. Pages 24 to 36 inclusive of this appendix are tables of various kinds. I consider that those tables are presented in a most unfair and unsportsmanlike manner. Let me explain. The years chosen for all these tables, with the exception of one or two, are these, which I take from the first table: 1927, 1929, then a jump to 1933 and another jump to 1936. The only year put in the tables from the regime of the late government is the very lowest year of the depression; then they go to 1936, 1937 and 1938. In the next table they take 1932 instead of 1933; the subjects are different and I suppose 1932 was a little worse than 1933, so they take the worst. In the next table they give the years 1926, 1928, 1932, 1936, 1937 and 1938. The purpose, of course, is to show the late government at its worst and the present government

at its best. Altogether I think there are some fifteen tables and about 130 indices. The first table has sixteen indices; physical volume of business, volume of manufacturing, mining and so on; and throughout that whole list of tables, with the exception of only one or two, we find that unfair, petty political method of picking out the worst year of the world depression in order to make a contrast with the better years under the present government.
Just to show where this is carried even further, on page 27 I find the value of mineral production, covering the various minerals and starting with gold. They give the value of gold production for 1926, 1928 and 1932, and then they jump to 1936. They did not bother to pqt in a foot note or to make any mention at all of the fact that gold was revalued at the beginning of 1934. The price was raised from $20 an ounce, in round figures, to $35 an ounce, an increase of about 75 per cent; yet no mention is made of that fact. If the value of gold production in 1932, which is given in the table as $71,000,000, were increased as it should be in order to make this a fair table, the production in that year would be almost equal in value to the production in 1936. I merely mention this because in my opinion it is not a proper way to put tables of this kind in a document having to do with the budget. If the Minister of Finance wanted to give real information to the people in general he would have carried on from 1927 to 1929, 1931, 1933, 1935, 1936 and 1937; but apparently 1935, our final year in office, looked too good in comparison w'ith present conditions, and so the worst year, 1932 or 1933, was chosen. In my opinion that is just another demonstration of the Liberal method of putting out the propaganda and ballyhoo which I mentioned in my speech on the address.
Then, sir, with regard to next year the Minister of Finance estimates a deficit of about $60,000,000. If he took in the cost of the wheat bonus system and the new wheat scheme-if it should happen to remain permanent for the next three or four days- and added those amounts as well, the deficit for next year would, in all probability, be closer to $100,000,000 than to $60,000,000. I interject that remark about the wheat scheme because, as a matter of fact, nobody knows what this government is going to do from day to day. This wheat bonus scheme has already been changed three or four times. At the moment I have before me one bill as it has been reprinted by the Minister of Trade and Commerce (Mr. Euler), which came to hand just a few moments ago, showing that the

The Budget-Mr. Manion
fixed price of wheat has been raised from 60 cents to 70 cents. I have no doubt that if they can leave a loophole they will raise it to 80 cents or perhaps 90 cents in order to get the votes. It is not a case of helping the western farmer; it is a case of helping this government to hang on to power. That is quite clear. No one knows from day to day what the government is going to do. The Minister of Agriculture (Mr. Gardiner) and the Minister of Trade and Commerce have changed their schemes and they will continue to change them in any way at all as long as they think they will please the western group. This government acts like a weathercock, so far as the political winds go; it justs points in whatever direction the wind happens to blow.


Mr. GRAY:: What is the hon. gentleman's policy?


Robert James Manion: I will tell my policy at the proper time, but not in reply to a question by the whip of the Liberal party. As a matter of fact, I think the government in power ought to tell us their policy, in order to anchor the thing down, before we are asked to tell anything at all, because if we should state our policy now, I have no doubt at all that the government would go us one better to-morrow.


Mr. FRASER:: That would not be hard.


Robert James Manion: Well, my hon. friend is a pretty slick politician, and no one knows better than he that there was never a government in power in this country at any time that looked more wobbly than his government looks right now.
However, I want to get back to the Minister of Finance, who had the temerity to lecture business and tell it to have courage, enterprise and leadership-the courage, the enterprise and the leadership which he and his government lack altogether. It was no wonder that the staid old Financial Post came back at the minister in somewhat shocked surprise and spoke of his lip-service to economy and the inexcusable failure of government leadership, and then went on to ask of the government the leadership and courage the minister asked from business.
As a result of this budget the debt keeps on growing and growing. I am not one of those who believe than an increase in our debt is going to sink the ship. At the same time I believe that the government in power, when it increases the federal debt, should make an effort to get something in return for the money spent. Unfortunately our assets have not been building up in proportion to
the expenditures made by the various governments throughout the country, particularly in regard to unemployment and relief. It has been said many times that the expenditure on relief by federal, provincial and municipal governments during the last nine years amounts to something like 8900,000,000, and that about two-thirds of that money has been spent wholly without return of any kind. Imagine the good roads, the level crossing protection, the reforestation, the cleaning up of slums and all that sort of work which could have been done through the expenditure of this vast sum of money.
What is in this budget for the poor man? There is nothing at all that anyone can discover. The sales tax remains the same; the sugar tax remains the same; stamps are just as high in price. It is true that the government have removed the 3 per cent excise tax, just as we said they were going to do, although when we said so we were contradicted from the other side. Now they have removed that tax from practically everything, something else which was forced upon them by their bungling when they were negotiating the treaty at Washington. That bungling can be illustrated in many different ways, not only in connection with the 3 per cent excise tax but also in connection with countries enjoying favoured nation treatment. Perhaps that was not altogether bungling, because the government must have known that they would have to extend these concessions to the other favoured nations. But I have in my hand an item, which I am not going to read, which states that, because of the favoured nation treatment handed out to the Scandinavian countries, attempts are being made to bring pulp into this country, and the Minister of National Revenue (Mr. Ilsley) has had to put up the dump duty in order to keep out that pulp coming from those countries frcfm which we have received no favour in return. None of the favoured nations gave us anything in return, yet we have cut down our tariffs to them just the same as we have to the United States. I am receiving word from the industrial centres round my own constituency, London, with regard to a number of industries which think they are going to have to close their doors; in fact, some have already started reducing the number of employees as a result of this treaty. That only means so much more unemployment and so much more relief.
There is another illustration; I refer to the cattle quota. After some questioning in the house we discovered that the quota of 60,000 head per quarter really included cattle
The Budget[DOT]-Mr. Manion

from Mexico as well as cattle from Canada. That had not been mentioned when the Liberals put out their advertising and propaganda through their press releases. As a consequence, the ordinary Canadian cattle raiser did not know about the matter in time to hold up shipments of cattle to the United States. This was another blunder on the part of this government, in not telling the western producers and commission merchants the actual situation. I am told that at least 3,000 to 3,500 head of cattle were shipped to the United States by farmers in the belief that they were within the quota, when as a matter of fact part of the quota had been taken up by Mexico. This caused some farmers and dealers a loss of ljt cents a pound. In view of the fact that this government did not tell the people of western Canada that shipments of cattle were limited, not to 60,000 in the quarter but to 60,000 less the Mexican shipment, I suggest that some refund or correction should be made to these people who were unfairly allowed to ship their cattle across the border thinking they were within the quota.
What of the consumer? I am looking to my right to see if the hon. member for Huron North (Mr. Deachman), the consumers' league gentleman, is in his seat, but he is not. What is there in this budget for the consumer? What about the cost of living? Has it gone down at all since this government came into power? I remember when the Prime Minister (Mr. Mackenzie King) was leader of the opposition, he was playing jigs and reels and probably even bagpipes, he was playing many tunes about the cost of living. He was telling the people generally what his government would do about the cost of living when they got into power. I made it my business just the other day to look up the figures as to the cost of living, and I found that in 1935, when we went out of power, the index for the cost of living, which includes retail prices, rents, food, fuel, services and sundries, was 79-1. Last year this figure had risen to 84, up five points. How we used to be belaboured by the hon. gentlemen who make up the present government! I hold in my hand a picturesque looking document entitled, "The Forgotten Consumer." He has been forgotten for five years. I read:
Why do the necessities of life cost so much more in Canada than in the United States? Bennett is to blame. High tariffs. . . . Excise taxes. ... Increased sales tax. . . . Fixed valuations and nuisance taxes instituted by Bennett have made the cost of living a heavy burden in Canada. The Liberal party will restore to "The Forgotten Consumer" the rights of which he has been robbed by Bennett and Stevens during the past five years.

I do not know why the member for Kootenay East (Mr. Stevens) is included in this. At the bottom it says, "Vote Liberal and lower the cost of living!" I have shown how the cost of living has actually gone up five points from 79-1 to 84 under my hon. friends. That is only one of the many promises that were made. I have jotted down from memory a few others. They promised to lower taxes, and yet this year the Minister of Finance is collecting more in taxes from the people of Fort-he is taking more from the people of Canada-from the people of Fort William so far as that goes; we have to go back home sometimes-than any other Minister of Finance. Taxes were to be lowered; there were to be balanced budgets; unemployment was to be corrected; unemployment insurance was to be put into force; there were to be stable customs laws; there was to be an investment control board; there was to be a more equitable distribution of wealth, and so on.
The Prime Minister was quite pleased with the results of the election, and I do not know that I blame him very much. On October 14, 1935, he issued a rather lengthy statement which was published in book form. I have a copy here. I assure my hon. friends that they may rest easy because I am not going to read it all. However, there are a couple of passages I should like to quote. The first is:
It is a verdict in favour of the reduction of the burden of public debt and taxation, and in favour of the attainment of a balanced budget.
And a little lower down:
It is a verdict in favour of a more equitable distribution of wealth, with increasing regard to human need, to the furtherance of social justice, and to the promotion of the common good.
Then there is the famous quotation which is too good to miss. The last paragraph is in classical language, and it reads:
In the new era which dawns to-day, the struggle for the rights of the people will, in the realm of economic liberty and security, be carried on as never before. Poverty and adversity, want and misery, are the enemies which Liberalism will seek to banish from our land.
And again:
We take up at once, as our supreme task, the endeavour to end poverty in the midst of plenty, starvation and unnecessary suffering in a land of abundance, discontent and distress in a country more blessed by providence than any other on the face of the globe, and to gain for individual lives, and for the nation as a whole, that "health and peace and sweet content" which is the rightful heritage of all.
No wonder my hon. friends laugh.


Some hon. MEMBERS:: Laugh?

The Budget-Mr. Manion


Robert James Manion: It might be funny if it
were not so tragic. I have a number of circulars here. I am going to go through them quickly, and then I think I shall send them down to the archives and let them be kept there. Some day when we are old we can go down together, look them over and laugh over them. We may even succeed in getting some of the social crediters to go along.


Mr. DOUGLAS (Weyburn):: We are laughing now.


Robert James Manion: I do not blame you for
laughing. Here is one:
Vote Liberal and get back from the poor-house.


Ross Wilfred Gray: Is that in the hon. member's book?


Robert James Manion: It has all been put on
Hansard. On the other side it reads:
Jobs or doles-which ?
And again:
After five years of Conservative government more than one-tenth of the Canadian people are on direct relief.
That is just about the figure now. Then again:
Vote Liberal and get back from the poor-house.
Apparently there were a couple of poor-houses at that time. Here is another one:
Lower taxes.
My hon. friend the Minister of Finance has been doing it nicely. He has just increased them by about $140,000,000.
Taxes were reduced by Liberal governments.
And more to come. On the other side appear a number of lists: and again:
Vote Liberal for lower taxes.
We are experiencing the highest taxation the country has ever had. Here is another squib about balancing the budgets. This one is particularly applicable to the Minister of Finance:
Which is better finance? Budget surpluses or budget deficits?
Then they say that the tax burden was heavier under the Conservative government because incomes fell and taxes were raised.


Charles Avery Dunning: Hear, hear.


Robert James Manion: My hon. friend is the last person who should be applauding a statement like that. No one has ever taken so much from the people of Canada in taxation as has the present Minister of Finance. He is in a class by himself. That is the only thing,
we will admit, that he is in a class by himself when he takes more taxes from the people, $361,000,000 as against $501,000,000.


Charles Avery Dunning: What was the income of the people in the year in which you took $361,000,000?


Robert James Manion: The income of the people was lower, but the income of the people to-day is not very high. That is why my hon. friends are so afraid to face the people. That is why my hon. friend's friends are getting up and attacking their own government, because they are not satisfied with the income of the people.


Ross Wilfred Gray: How many?


Robert James Manion: I understand my hon. friend the chief whip kept a number quiet who had intended to rise and speak. If my hon. friend likes, I can name them. I notice he does not answer.
To return to my quotations, here is another real one. This gives the Liberal party's position on some economic problems.


Mr. MACKENZIE (Vancouver):: Fourteen points.


Robert James Manion: Probably there are fourteen, but they were all jettisoned and thrown overboard by this government as soon as they got into power. The first was:
Unemployment is to be our first concern.
They have not done much for unemployment.


John Ritchie MacNicol: They have made it worse.


Robert James Manion: Right underneath I read:
A representative national commission which will cooperate with the provinces and municipalities in the administration of unemployment relief.
That has not been carried out. They appointed a commission, but they disbanded it. They were to institute a national system of unemployment insurance. We all know that nothing has been done about that. Then they said that the government would abolish all unwarranted extra taxes. The Minister of Finance has raised the sales tax from 6 to 8 per cent. That is the heaviest tax on the ordinary man. On the next page it says that they will substitute stability for uncertainty in the administration of the customs law. Then, " Control of credit." I know my hon. friends to my left will be pleased to hear that the Liberal party are going to control credit. They were to create a central bank, filling the functions of rediscount, the control of credit and the issuance of currency considered in terms of public need. I knew
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my hon. friends would rise to that. Then they say they believe that an investment control board should be established. That was just a blind to hoodwink the people. Then there was to be a restoration of responsible government.


Some hon. MEMBERS:: Hear, hear.


Robert James Manion: That is the biggest joke of all. Since confederation we have had nothing but responsible government. The closest we have come to getting away from responsible government is at the present time when this government, with its huge majority of 179 or 180, is trying to steam-roller various things through the house.
Here is another statement:
Liberalism stands, as always, for the principle of a free parliament.
That is the usual balderdash they put out. It goes on:
Liberalism stands, as always, for the British principle of free speech and free association, and to this end will repeal section 98.


An hon. MEMBER:: And we did it.


Robert James Manion: They did repeal section 98, and I think they are Sony they did so. Here is another statement, and this is for the Minister of Finance:
A balanced budget
The Liberal party believes the aim of every government should be the balancing of its budget.
It would seek to effect that end, by retrenchment of public expenditures, by reduction of principal and interest on the public debt, by a reduction in taxation.
It will seek to effect a reduction of the cost of government in Canada.
Then there is another statement on the next page; they waste no space:
More equitable distribution of wealth.
I am going to send this down to the archives so that we shall be able to see it again.


William Alexander Fraser: Change the name and use them in the next campaign.


Robert James Manion: I do not know anybody that knows better how to hoodwink the people than does my hon. friend. I shall have to give consideration to his suggestion.


William Alexander Fraser: That is what I am suggesting to you.


Robert James Manion: He knows his own power and authority. Here is another Liberal folder or dodger-that is a good word in this case.


William Alexander Fraser: It is dodging from here over there.


Robert James Manion: You will pretty soon. I have a clipping here relating to the Canadian Magazine. It says, "The Canadian Magazine suspends publication." This magazine was founded in 1S23 and has been published continuously since 1893, a period of forty-six years. Here is what this magazine said when they were about to suspend publication:
To-day, after an expenditure within the last fifteen years of over $600,000, it has at last been found necessary to discontinue publication of a magazine that has done so much for so many years to foster the spirit of understanding among the peoples of this dominion.
It has not been easy to reach this decision, but as long as the studied policy of those in power at Ottawa remains definitely hostile to effective national publications, there can be neither commensurate profit nor satisfaction in producing magazines edited exclusively for the benefit of Canadians.
Since 1926 Canadian Magazine has paid out to the dominion government $135,000 in postage alone. Millions of copies of foreign periodicals are carried in Canadian mails without paying Canadian postage. Although foreign periodicals enter Canada absolutely free of duties or taxes, the cost of materials and advertising in Canadian magazines is increased by duties and taxes not imposed upon their foreign competitors. Almost everything that the Canadian publishers require is taxed. Foreign competitors contribute nothing in duties or taxes.
The suspension of Canadian Magazine throws many persons out of employment. It reduces the revenue of Canadian writers and artists, and those who gain their livelihood through the manufacture of engravings, paper and ink, and in actually producing the magazine, will suffer the not inconsiderable loss of a quarter of a million dollars annually.
In a time when the world is full of foreboding, in a time when Canada urgently needs every unifying influence of the Canadian'and all other national periodicals, the publishers find no other course to follow but to lay down the load.
There is another industry closed; the publication of that magazine has ceased, throwing more men out of work to walk the streets. But what is more important in this particular case is that we have lost good literature that was being produced in Canada. The Canadian Magazine was a credit to this country. But its publication has ceased and now we have more trash coming in from the United States. It is to the discredit of this government that in the 1935 trade treaty with the United States they took off the duties that we imposed on United States magazines, with the consequence that there is much rubbish coming into this country from the United States. Far be it from me to suggest there are not good United States magazines, high-class magazines like the Atlantic Monthly and others, but I think our tariff against the rubbish that is now coming in from the neighbouring republic was a very good tariff law.
[Mr. Manicn.l

The Budget-Mr. Manion
There is in this budget nothing except grief that I can find for anyone. It is another type of my hon. friend's budget of 1930. We all remember how it was tooted all over this country what a marvellous piece of work the 1930 budget was. It gave free entry to cast-iron pipe and cut flowers from England; also to cattle, sheep, hogs, meat, hay, eggs in the shell, beets, cabbages, buckwheat, rye, and farm implements from England. That was the Dunning budget of 1930. This is a different type, I will admit, but of no more use than the Dunning budget of 1930.
I come now to another matter, railway deficits. This year the railway deficit is $54,000,000. Despite the fact that in 1933 the world was at the bottom of the trough of the worst depression it has ever known, our deficit on the Canadian National Railways in that year was only $8,000,000 more than it is to-day, or $62,000,000. In 1935, when the world had not completely recovered from the depression, the deficit was $6,000,000 less than it is this year. What has this government ever done for the Canadian National Railways except play politics with it?


Clarence Decatur Howe: Given the employees a little more money.


Robert James Manion: My hon. friend is now trying to take credit for that when he has no more to do with what the employees are paid than I have. That is a matter of arrangement between the employees and the railway company, and my hon. friend dare not claim any credit for increased wages on the Canadian National. If he does, he will have to bear the discredit if wages go down. But he has nothing whatever to do with the wages.


Charles Avery Dunning: My hon. friend was quoting the increased deficit on the railway, and the increased deficit is to a certain extent due to increased wages.


Robert James Manion: It may be partly due to that, but no one who has been in charge of the Canadian National Railways has added more to its debt in a year than did the Minister of Finance when he was minister of railways.


Charles Avery Dunning: That is not true.


Robert James Manion: He added more to the
debt of the Canadian National Railways in one year than any other minister of railways ever did in one year before.


Ross Wilfred Gray: What did the hon. member do?


Robert James Manion: I did many things, and I got very little thanks-just criticism, from such men as the whip of the Liberal party. He was on the railway committee and tried to discredit our attempts to clean up the mess the Canadian National Railways was in.


Ross Wilfred Gray: What did the hon. member do?


Robert James Manion: We cleaned up the mess. I will tell the hon. member one thing we did, and this came out before the railway committee the other day. We saved in the salaries alone of the headquarters staff of the Canadian National Railways, $2,500,000 a year. I had been saying that we had saved something over one million dollars on that account, but I was too modest because it was stated before the railway committee only a few days ago-I have it here if the hon. member questions it-that the saving was $2,500,000 a year.


Ross Wilfred Gray: What was the hon. gentleman's attitude towards Sir Henry Thornton?


Robert James Manion: We curbed his wild
extravagance; that is what we did, and rightly so. If I never win a seat again in my life I say now that I am prouder of having cleaned up the mess in which hon. gentlemen opposite put the Canadian National Railways than of anything else in my public life. I challenge my hon. friends opposite to show that they have ever done anything of value to the Canadian National-except play politics with it as they did when the Secretary of State (Mr. Rinfret) and the Minister of Public Works (Mr. Cardin) announced the building of the terminal station in Montreal before negotiations had been concluded and during a by-election, and when, if anybody should have made the announcement, it should have been the Minister of Transport (Mr. Howe). That is the kind of politics they played with the Canadian National between 1921 and 1930, when they were in power. The interest owing to Canadian National bondholders increased $20,000,000 a year between 1921 and 1930, when hon. gentlemen opposite were in power, and the interest owing to the government was increased by $12,000,000 a year during the same period. So there was an actual increase in the annual interest in those years of $32,000,000 a year. That is the way they played politics with the National Railways, doing it a great disservice.
I am not pretending or suggesting that the present condition of the railways is due any more to my hon. friends than it was due

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to us. It is the consequence of changed conditions in the world, particularly of the increase in motor traffic. I am going to cite a couple of figures which seem to me startling, and which were given to the senate committee a year ago. The passenger traffic of the Canadian National Railways and the Canadian Pacific Railway dropped from 38,000,000 passengers in 1923 to 18,000,000 in 1937, or by more than half, largely because of the use of the motor-car, although to a very slight extent, perhaps, because of the aeroplane. Even in freight revenue there was a serious reduction; during the same period the freight revenue dropped from $80,000,000 to $65,000,000. That is the answer to the question why we have a railway problem. The business is not there; and anybody who says that we have the business to solve the railway problem, by which I mean, the wiping out of the deficit of the Canadian National Railways, is not stating what is the fact-and that is putting it mildly.
The trouble with this government is that it has been doing with the railways the same as it has been doing with everything else- with unemployment, the youth problem, the budget. It floats with the tide; it drifts with the political winds. It has no ideas or plans, no originality, vision or courage.


Ross Wilfred Gray: What is the solution?


Robert James Manion: There is no solution-if my hon. friend wants to know.


William Daum Euler: We should like to know your idea of the solution.


Walter Edward Foster: Order.


Ross Wilfred Gray: What is the solution?


Robert James Manion: I do not want to get into that now. I had not intended to take so long as I am taking, but my hon. friends enjoy so much interrupting me that I may have to take a little more time than I intended. I have given some study to this question of the railways.


Ross Wilfred Gray: We all have.


Robert James Manion: I say there is no solution, if by solution is meant the wiping out of the deficit of the Canadian National Railways. The business is not there; it has dropped so much.


Ross Wilfred Gray: Then why condemn the government?


Robert James Manion: But something could be done. The Canadian National Railways and the Canadian Pacific Railway could do very
I Mr. Man ion.]
much more in the way of cooperation than they have done, and by that means both of them could effect economies. Most of the economies have been made, thanks to the last government, on the Canadian National Railways, but the two railways together could, there is no doubt, do more than they have done and so wipe out part of the deficit. In my opinion, however, there is no method possible whereby the Canadian National Railways deficit can be completely eliminated, or whereby we can even approach wiping it out.


Ross Wilfred Gray: Then let us quit talking
about it.


Robert James Manion: The trouble with my hon. friends opposite is, as I say, that they have no ideas of their own. They merely plagiarize other people's ideas on various questions.
Take the wheat problem. They have criticized us in that regard, yet what is there original about anything which they are proposing to do? They are retaining the wheat board, and they are putting in a fixed price of perhaps 70 cents, although probably it will be 80 cents the day after to-morrow. It started at 60 cents, is jumping to 70 cents, and will go wherever the political winds may blow it. Our party established a wheat board. Our party established a fixed price, and made that price 871 cents. We appointed the wheat board. It is true that the bonus scheme is something new, but who knows what the bonus scheme will be, even when we read tomorrow the bill of the Minister of Agriculture (Mr. Gardiner)? It will not be the same as was originally intended. The minister has admitted that some changes have been made. Who knows what it will be when it is finally completed?
Then there is the rehabilitation bill of the Minister of Agriculture. What is that but a pure playing of politics on the western prairies? Far too much power-far more power than should be given to any individual at any time-is conferred by that bill upon the . minister. Our party's policy on wheat was that in 1932 we gave a bonus of five cents a bushel, which cost the country $12,500,000; that money went into the pockets of the western wheat farmer. We then appointed Mr. John I. McFarland, and he stabilized the wheat market. It has been said, and I believe without fear of successful contradiction, that he saved the western farmer or put into the pockets of the western farmer about a hundred million dollars. In the end, despite statements made in this house by hon. members opposite that the scheme was going to cost the country a great deal of money, it was cleared up with a

The Budget-Mr. Manion
profit of 89,500,000, and the profit would probably have been three times as much if it had not been for the "fire sale" which the present government allowed to be put on to get rid of the wheat which our party saved for the farmer. We were criticized because we established a wheat board and appointed John McFarland.
We also gave to the west tens of millions of dollars for the relief of the people in the drought areas. We had passed marketing and other similar legislation. As a result of present conditions-I do not know whether it is because of the existing treaty with the United States-even the wheat farmers of Ontario are in difficulties. We had to bring up in this house the question of wheat being imported from the United States into Canada, thus taking away business which originally belongs to the Ontario wheat grower. Now we are faced with this deal-what the end of it will be I do not know-between Great Britain and the United States for the purchase by Britain of 100,000,000 bushels of wheat. I do not know whether the minister has any further information about it; but it seem likely that a barter deal will go through, and if it does, as the hon, member for Qu'Appelle (Mr. Perley) pointed out last night, it will cut out more than half of the whole market for wheat in the United Kingdom.


William Daum Euler: Do you blame us for that?


Robert James Manion: Yes, I do blame this government, because we had a preference of six cents a bushel on Canadian wheat, a preference which this government threw overboard.
Then consider the cheese plan. The other day the Minister of Agriculture brought in a plan with regard to cheese. I do not know anything about cheese except as one who consumes it. But as I knew very little about the cheese business I thought that, before the bill came up in the house, I should try to learn something about it. I therefore wrote to probably ten cheese dealers in this country, and not one of them told me that he thought the present bill was a good bill. The gist of their objections was that it would run up temporarily the price of cheese, would increase by greater production the competition in cheese, that the British buyer would lower the price-it is he who fixes the price, anyway-and all it would do would be to muddy the waters still further. Not one of the ten or twelve to whom I wrote upheld the scheme of the Minister of Agriculture.
I suggest there is more merit in what I mentioned the other evening, during a discussion of the bill, that something should be done to increase the home consumption of
71492-223 i
cheese. The Minister of Agriculture, in reply to my questions, told us that Great Britain and France each consumed three times as much cheese as we do, that Switzerland uses five times as much, and that every one of the sixteen European countries of which he has a record consumes much more per capita than we do in Canada. We can build up the cheese industry in this country by expanding demand in the home market. As I have said, it seems to me that this government blunders in everything it touches. Cheese is one illustration. In respect of wheat they are still blundering along, changing their plans and trying to correct their blunders. It is no wonder that this government is talking about holding off the election until 1940. They are afraid to face the people. That is the explanation. No wonder that a large number of the 180 members on the government side, including incidentally some of the ministers, are trembling in their shoes at the thought of going back to their constituencies.


An hon. MEMBER:: Not a bit.


Robert James Manion: No wonder that, because
of that fact, there is rebellion in the ranks and that some of them are trying to save their seats by attacking their own government.


William Daum Euler: How long did you hold off
the last election?


Robert James Manion: We held it off a year-very foolishly, I think. I will go further. In 1934, a year and a half before the election, I was absolutely convinced that in view of public opinion we were beaten.


Mr. ROWE (Dufferin-Simcoe):: As they know they are beaten now.


Robert James Manion: I am quite convinced
that my hon. friends will be beaten at the next election, no matter when they hold it. Undoubtedly public opinion to-day is as much against my hon. friends as it was against us in 1934, and the result for them will be exactly the same as it was then for us.


An hon. MEMBER:: The hon. gentleman
is wrong.


Robert James Manion: I have been wrong sometimes, but so have my hon. friends. It is a little hard to be in politics and not to be wrong in regard to prophecies about elections, because you have to say you are going to win even though you do not think you are.


Some hon. MEMBERS:: Oh, oh.


Robert James Manion: I am glad that I am giving my hon. friends something to cheer about, because they have not been looking very
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cheerful since I rose to my feet. As a matter of fact, I was referring to the period during the election because I admit frankly I prophesied success for our side, though, frankly again, I did not believe it at the time.


William Alexander Fraser: How are you going to convince the people this time?


Robert James Manion: I answer that question by throwing out a challenge to my hon. friends opposite to go to the country at the earliest possible moment. I challenge them. I am so convinced this time that my hon. friends are on the skids and unable to turn back, that any time they propose to hold an election will suit us over here. It does not matter.


William Alexander Fraser: I cannot speak for the government, tout I will take on any member on your side at any time.


Robert James Manion: The hon. gentleman will have an opportunity to gratify that wish in the next election, and he will probably not be back here to boast about it.


William Alexander Fraser: I am ready to make a bet with you on that.


Robert James Manion: 
William Daum Euler: Nobody claims that it is.


Robert James Manion: Well, it is about all the present government is doing. Then there is the offer of the Minister of Finance of an allowance on income tax for capital expenditures. I say nothing against it, but there is no lowering of the cost of living for those out of employment and not on relief, because, after all, the number on relief is only about one-third of those out of employment.
In the speech from the throne it was stated that the report of the commission on dominion-provincial relations was to be presented to parliament in the course of the present session, and the speech went on to state that that report would provide the basis for and the material essential to the deliberations of a national conference at which the problem of unemployment and social services generally would be dealt with. That was the cure for relief and unemployment after four years. Since that time it has been stated that the commission will not report until July or later. Therefore, what becomes of the proposed conference? I suppose it is "gone with the wind" like so many

of the promises that I have quoted. Incidentally, in the same speech from the throne it was stated:
The government have not altered their view that a national unemployment insurance scheme is essential to a permanent policy of meeting the problem of unemployment.
This is merely another promise gone into the limbo of forgotten things.
What is there in the budget for the unemployed, for youth, for the security of our people? Absolutely nothing. It is no wonder the people are holding the door open for this government and offering them their hats. It is no wonder the government, as I said, are considering hanging on a little longer'-that is the best information we have at the present time. If they do we shall be very sorry because they would certainly face a merry hurricane of antagonism if they went to the country at the present time.


Mr. MICHAUD:: Thanks for the advice.


Robert James Manion: Well, I expect my hon.
friends will take it, and like all governments that hang on for five years will get a worse beating than if they went to the country after four years.
The Minister of Labour (Mr. Rogers) was one who was to clean up the unemployment problem. He is one to whom I refer, as I did to the Prime Minister in the debate on the address, as a theoretical reformer and a practical reactionary. It is another case of a professor gone wrong, another intellectual crashing his head against the wall of reality.
I say we can correct these problems within our own system without any change to social credit or socialism or anything else. With our huge area, our great resources, our sparse population, without regimentation such as they have in Italy, Germany and Russia, we can cure these problems. And we must do so. But to do it we must have vision and courage and leadership on the part of the government in power.	[DOT]
Of evidences of this government's failure I will give an even dozen: After four years of power, unemployment and relief figures are practically the same as when we went out.
Discontent and disharmony throughout the country.
Dominion and provinces quarrelling.
New parties springing up all over the country, I remember that the present Prime Minister when he was in opposition said that new parties always sprang up when the Conservatives were in power. Well, the Conservatives must be in power now because a number of new parties have been springing up that were never heard of before.

The Budget-Mr. Slaght
Then there is the spread of pessimism among the people, business men not spending their money, the Minister of Finance trying to tempt them with a promise of 10 per cent off the income tax.
There is the large number of transients and panhandlers on the streets.
There is the hit or miss policy of the government, no plan after four years.
There is the national income down 7J per cent according to the budget.
There are plants closing, the government afraid of an election, and, finally, the very low prices of farm products.
I have here a copy of the Economic Annalist, put out I believe under the authority of Hon. J. G. Gardiner, Minister of Agriculture. It shows the prices of farm products. In February and March last year the index figures were 85 and 83. For January and February of this year the figures are 64 and 64, down 20 points. This is another illustration of the very low condition of our country.
No one has any confidence in this government, because it has done everything wrong; there is no stability for business, no lessening of unemployment, no real .plan for the west, a policy of hit or miss and hope for the best, but always play politics with everything, and take the path of least resistance.
I remember some years ago being in St. Paul's, London. As you enter, there is a plaque on the wall in memory of Sir Christopher Wren who built the cathedral. On this plaque it says:	"If you wish to see his
monument look around you." That can be said of this government. You find discontent and disharmony and demoralization of our youth; these are the monuments this government has built up.
What the country needs is stability, courageous government, a government which will give real leadership and stop tariff tinkering, unless someone behind the tariff wall is exploiting the consumer. It needs lower municipal taxation giving encouragement to people to build, a greater proportion of relief paid by the dominion government, and a real plan to relieve unemployment. Then capital construction will go on without 10 per cent of the income tax being cut off. Then, sir, there is another real opportunity for the Dominion of Canada. European holders of money are anxious to get that money into this dominion, and as long as it comes in for investment rather than merely for hoarding we should welcome it to our shores.
I suggest again, Mr. Speaker, that at the earliest possible opportunity in the autumn, after the royal visitors have come and gone,
this government should go to the people and, if successful, get a mandate from them or allow a fresh mandate to be given some other group in order that we may have an opportunity to clean up our problems and wipe out the fear, the uncertainty and the lack of stability that now exist among our people. I submit that the youth problem and the unemployment problem can be solved by real planning, real vision, and real courage on the part of a government which has the confidence of the Canadian people.
In closing, Mr. Speaker, I should like to refer to the amendment to the amendment.
Mr. POWER.: Vote against it anyway.


Robert James Manion: I would if there were
reason to vote against it, but I should like to read it to the house first. The amendment to the amendment, moved by the hon. member for Rosetown-Biggar (Mr. Coldwell) and seconded by the hon. member for Winnipeg North Centre (Mr. WToodsworth), reads:
That the amendment be further amended by adding the following words thereto:
"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."
I say that is merely a condemnation of this government for having raised the sales tax to 8 per cent and for having shown no sign of cutting down that tax which weighs heavily upon the people of this country. In that way this is merely an elaboration of the amendment we moved; therefore, if the Prime Minister (Mr. Mackenzie King), with whom I am paired, is in the house, so far as I am concerned and so far as the party which I have the honour to lead are concerned, we will support the amendment to the amendment.


Mr. A. G. SLAGHT (Parry Sound):: Mr. Speaker, I desire to speak very briefly on the budget because I believe my .people in Parry Sound have a real and vital interest in this important measure. With some of its provisions I am in complete accord; with others I am not, but I wonder if hon. members realize and have paid full tribute to the problem that presents itself to a finance minister under the world conditions from which we are presently suffering. A little later I propose to pay my respects to the leader of the opposition (Mr. Manion) and some of his front benchers of the old gang who might be expected, if he were ever permitted to form a cabinet, to set themselves up as being
The Budget-Mr. Slaght

capable of running the affairs of Canada once more. Before doing that, however, I should like to indicate why my people have a real interest in this budget.
My district comprises virile, industrious people who are themselves pioneers or who are descended from a hardy pioneer race who went into, the north country, cleared the land, cut out roads and spent their lives in opening up and developing a large part of that great district by means of their thrift and courage. We do some lumbering and some farming, but the land is of that rugged type which does not readily lend itself to the growing of grain. So for the most part our settlers and farmers must content themselves with raising cattle and some sheep, what is known as mixed farming. It follows that we have developed a very large tourist trade, which may properly be said to be our chief industry.
We have not sought from this parliament preferential treatment such as the bonus on wheat sought by the west, the bonus on cheese and the special bonus on butter sought by the dairymen of the east, the special bonus by way of tariff protection awarded the manufacturers of motor-cars, and the other benefits enjoyed by privileged, protected and bonused industries. Of necessity our chief occupations are seasonal. Therefore you will appreciate, sir, that my people are chiefly interested in the budget from the point of view of consumers. I have listened to the special pleaders for the wheat bonus, to the special pleaders for the cheese bonus, to the special pleaders for the manufacturers and to the special pleaders for the money lenders, and I have wondered whether it was not time that someone in this parliament had a word to say for the consumers of this country in the matter of the budget. In making that comment let me not be misunderstood, but I want to sound a note of warning that this type of sectional, vocational and occupational reaching out for special privileges, such as we have witnessed in this debate, ought to find its boundary and its limits.
Let me return for a moment to the "forgotten man," the consumer of Canada, and what the budget means to him. After all, his big problem is the cost of living, the cost of the necessities of life, and this budget deals with those matters in no uncertain way. The trade agreement to which it refers; the dropping of the excise duty to which it refers and the tariff and excise changes resulting therefrom mean a great deal to the consumers of Canada and the consumers of Parry Sound. As we know, the government made a threeway agreement; and that friendly agreement,

arrived at after months of negotiation between the United States, Great Britain and Canada, is at this moment, to my mind, a contract of goodwill and unity. So that agreement has brought about an international defensive alliance of greater importance, and bringing more benefits, than any treaty in which Canada has ever before participated.
We have been treated to-night by the leader of the opposition to a new doctrine in political life in Canada. He has told us that during the last campaign, although he did not believe his party would win, he asserted to the public of Canada that his party would win. That, it seems to me, as a doctrine held up to the youth of Canada, who are more and more looking to the standards of public life, is indeed novel and perhaps might be regarded as unsafe. Perhaps the leader of the opposition will pardon me if I ask him how we are to know when, on the hustings or in the house, he is telling the truth and when he is romancing. A little instrument used by the police is known as a lie detector. This is used at times for the purpose of determining whether a man is telling the truth or whether he is prevaricating. I suggest to my hon. friend that for our guidance in this house he should equip himself with red and green lights. When he is telling the truth, for our benefit he can flash the green light; when he is again stating what he knows to be untrue, he can throw out the red light.


Robert James Manion: Perhaps my hon. friend will correct some of the misstatements he made in the last provincial election about stocks.


Arthur Graeme Slaght: The leader of the opposition is introducing provincial politics in order to draw the attention of the house away from the extraordinary position which he and his party have taken during this budget debate. In answer to his insinuation, may I say that I made no misstatement of any shape or kind in the last provincial election.


Robert James Manion: If anyone had taken your advice he would have lost a great deal of money.


Arthur Graeme Slaght: You may be a gambler looking for advice; you may bet and lose, but you did not lose on any advice that I gave. I should not address the hon. member directly.


Walter Edward Foster: The hon. member should address the chair.


Robert James Manion: I was too wise to take the advice.

The Budget-Mr. Slaght


Arthur Graeme Slaght: I gave no advice of any kind. I repeat the advice that the hon. member for Vancouver-Burrard (Mr. McGeer) offered on one occasion, and if my hon. friend had followed it perhaps he would not have found himself in a great deal of trouble. The leader of the opposition treated the house to an allegory to-night when he likened the government to a bird. Since he has introduced bird life into the house, perhaps he will not complain if I refer to a rather famous bird known as the mugwump. The political definition of a mugwump is a man who owes allegiance to one political party, but when it suits him he deserts his political friends to go over to the enemy. I suppose my hon. friend would have justification for his remark. I see a similarity to the mugwump, he having once been a Liberal.


Mr. CASSELMAN:: Cheap.


Arthur Graeme Slaght: He will probably listen to the school boy's definition of a mugwump, which has been put forth in Canada on previous occasions. I do not think my hon. friend can complain if I give this house and the country at large the yardstick which he has laid down in his little red book in connection with the tactics to be followed by an opposition when they desire to oppose a trade treaty or in connection with tariff matters. We all know that in the debate on the trade agreement my hon. friend led his little band, and thirty-two of them recorded their votes against the trade agreements made with Great Britain and the United States at the express request of both countries.


An hon. MEMBER:: No.


Arthur Graeme Slaght: The hon. members of the two other groups voted with the government, which is to their credit. They refused to follow the cheap party politics which were played in an endeavour to defeat that agreement. My hon. friend has laid down for himself and for the Conservative party which he leads, a rule of conduct in connection with trade and tariff matters. I should like to refer to page 266. This has not been revealed before, but here is what he says:
Conditions generally were somewhat depressed through 1924 and 1925, and the tariff question became a very prominent one in the discussions in and out of parliament.
And again:
But in 1924 and 1925 it particularly affected the relations between Canada and the United States, giving rise to exceedingly antagonistic feelings on the part of the Canadians toward their neighbours. We who composed the opposition-
That includes some of his illustrious front-bench friends. I take it that is their confession of faith.


Robert James Manion: No; I take all the responsibility.


Arthur Graeme Slaght: I have not heard them repudiate this doctrine. If ever it has been exemplified, it is in this present budget debate. I quote again:
We who composed the opposition took full advantage of the irritation, working day and night, in and out of parliament, advocating retaliatory treatment toward the United States.
Picture my hon. friend with his coat off at night along with the hon. member for St. Lawrence-St. George (Mr. Cahan) fanning the flame of the antagonism of the Canadian people toward their neighbours.


Robert James Manion: Just nonsense.


Arthur Graeme Slaght: My hon. friend says it is nonsense. Now he will have to get a third light, a yellow one. One time he is telling the truth; another time, on his own statement, he is romancing and telling what he knows to be untrue, and then, when he solemnly puts something in a book, we are to have a third classification, that it is nonsense. Let me tell my hon. friend that it is a dangerous kind of nonsense to put in a book to be read by the youth of Canada.


Robert James Manion: Are you sure you bought it? Most members of the house borrowed it from the library.


Arthur Graeme Slaght: The hon. gentleman will not draw me off my text with any such jocular remark as that. Is it just a joke with him when he says that they, as an opposition, finding antagonism in Canada to certain conditions, worked day and night, in and out of parliament, advocating retaliatory treatment and took full advantage of the irritation?


Robert James Manion: Where are the cheers?


Arthur Graeme Slaght: It is onty in keeping with the political training my hon. friend has had. He is a member of a party which in the old days said, "No truck or trade with the Yankee.'' He sat cheek-by-jowl for five years with his distinguished leader in the Manion-Bennett government and preached that goodwill doctrine of blasting Canada's way into the markets of the world. Is it any wonder that we find him exposing in the printed words the standards that he sets up and in which he apparently believes? As he says now, they are nonsense.
The Budget-Mr. Slaght


Robert James Manion: What I said was nonsense was the suggestion that I had preached any antagonism to the United States when I was talking about trade. My hon. friend knows that. He is just using some of his usual lawyer tactics; that is all.


Arthur Graeme Slaght: That is refreshing. I made it abundantly clear that my hon. friend was dealing with trade irritation and trade antagonism, and w'hen you tie him up with "No truck or trade with the Yankee"-


Robert James Manion: I never said that either.


Arthur Graeme Slaght: Your party said it over
and over again, and it appeared on all the billboards of Canada, much to your shame.


Robert James Manion: No, they did not.


Mr. STEWART:: They did not say it.


William Earl Rowe: Your
party put it on the billboards.


Arthur Graeme Slaght: Perhaps he will now tell
me that he dissociates himself from the language of his chief lieutenant, the hon. member for St. Lawrence-St. George, who to my mind insulted the United States beyond measure on the floor of this house on February 21. My hon. friend, the leader of the opposition, sat with his hand over his face on that occasion. I would expect him to repudiate that language and to do all he could with me to cure the evil effect upon the people of Canada of any such declaration in this day and date in connection with that great republic, with those friends of ours for whom we cherish the closest and greatest friendship. I am indicting not only the leader but his front benchers as a whole, because no word of protest came from them against the statement made by the hon. member for St. Lawrence-St. George.
Mr: WALSH: And no protest was necessary.


Arthur Graeme Slaght: It was not only necessary but it was made from this side of the house. I refer the hon. member to page 1187 of Hansard where the word "shame" was uttered, and no one on the other side dared to rise in his place and say that the statement was shameful.


Mr. WALSH:: If the hon. member for
Parry Sound conducts himself as well as the hon. member for St. Lawrence-St. George all will be well.


Arthur Graeme Slaght: Let me put the statement to the judgment of the house here and now, and then let my interrupting friend rise and say that he endorses this kind of talk. At a time when declarations towards Great

Britain and towards Canada and in the cause of world peace, such as were made by the great leader of that country to the south of us, were ringing in the hearts of British men and women and Canadian men and women, with all the relief and sense of friendliness that human emotions can evince, this is what was said by the hon. member for St. Lawrence-St. George, and I give it for my hon. friend's benefit. I am sorry the hon. member for St. Lawrence-St. George is not in his seat to-night, but it is so necessary to tie this up with the whole campaign adopted by the opposition throughout this whole session, and it will throw a light on the type of tactics they adopt that will enable the people of Canada to say, when the election comes round, whether they propose to entrust the government of this country for [DOT]the next five years to men who have no better regard for the decencies of international life and of debate than to use the language I am going to read. Here it is at page 1187 of Hansard.


Mr. MacINNIS:: On a point of order, Mr. Speaker-


Walter Edward Foster: The hon. member cannot quote from a previous debate this session.


Arthur Graeme Slaght: I shall quote only the effect of it.


Miss MACPHAIL:: It is all right when the Liberals do it.


Arthur Graeme Slaght: There is another voice in the wilderness.


William Allen Walsh: A voice directed towards the wilderness.


Arthur Graeme Slaght: What the hon. member said in effect was that when he was in London, England, in 1903-mark you, thirty-six years ago-it was alleged that President Roosevelt, then Theodore Roosevelt, had notified the British government through the United States ambassador that if the boundary line which the boundary tribunal might thereafter establish were not in accord with his personal views he would send into Canada a sufficient military force to draw the line as he saw fit. That was the statement made by the hon. member. In fishwives' gossip in London, England, thirty-six years ago, someone had told him an untruth of that kind, and he sees fit to bring it into a debate in this House of Commons in the year 1939 under the conditions that are facing us to-day.


William Allen Walsh: On what authority does the hon. member suggest it is an untruth?

The Budget-Mr. Slaght


Arthur Graeme Slaght: In the first place there is no truth in the suggestion that the hon. gentleman said that someone had told him so in London thirty-six years ago. It was a vile slander against the then president of the United States, a man whose memory is revered in Canada, a man who before his country went into the great war raised a regiment and desired to take it overseas himself, a man whom all Britishers have reason to regard as one of their greatest friends and a great leader of a great neighbouring country.


William Allen Walsh: I rise to a point of order, Mr. Speaker. Has any hon. member a right, under the rules of this house, deliberately to suggest that another hon. member in a previous debate uttered an untruth? Those were the words used by the hon. member for Parry Sound.


Walter Edward Foster: I do not know to which rule the hon. gentleman refers. The hon. member for Parry Sound has made a statement, and if some other member knows it is not true he may rise and deny it.


William Allen Walsh: Still on the point of order, Mr. Speaker, the hon. member for Parry Sound quoted certain words that were used in debate by another hon. member, and under the rules of this house I submit that no member has the right to suggest that the words uttered were not true.


Jean-François Pouliot: Speaking to the point of
order, Mr. Speaker, a statement may give rise to a point of order or a question of privilege raised by the member concerned; for example, that a member has made a declaration which is untrue and that, while he himself knew it was untrue. The hon. member for Parry Sound has just declared that an hon. member of this house made a statement that was untrue, and it was his perfect right to say it was untrue. The hon. member for I do not know where-


Mr. VIEN:: Mount Royal.


Jean-François Pouliot: [DOT]-has not even read the rules of the house, or if he has he does not understand them. It is the privilege of any hon. member to deny a statement made by any other member. Assuredly the hon. member for St. Lawrence-St. George was speaking in good faith when he repeated something that was not true; he believed that it was true; that was a mistake on his part. But I submit that the hon. member for Parry Sound was perfectly in order in using the language he did.


Arthur Graeme Slaght: Let me set at ease the mind of the hon. gentleman who raised the point of order, as to the truth or otherwise of the second-hand statement listened to in London, by telling him that the hon. member for St. Lawrence-St. George went on at the same page of Hansard to say-and I shall give only the effect of it out of deference to my hon. friend opposite-that that correspondence had never been produced if it ever took place, and that evidently if it did take place it was excluded from the state papers of the United States. Somebody in London told him that it was supposed that Theodore Roosevelt, then president of the United States, had written a letter to the British ambassador, and then the hon. member for St. Lawrence-St. George goes on and says that if the correspondence ever took place it was excluded from the state papers of the United States. What is he doing there? He is charging the then president of the United States, since deceased-he died in 1919-with having threatened Canada with armed force over the question of the boundary and with then having, in effect, falsified the state records of the United States of America to cover up his threat. Surely it is time the people of Canada were told that we of the House of Commons are not in accord with that type of vile traducing of the head of a neighbouring friendly country, dragged into a debate for purely political purposes.
This is the spectacle provided by hon. gentlemen who have a record in this country, a record of government for the five years from 1930 to 1935. We find that the leader of the opposition has taken as his second lieutenant the hon. member for Kootenay East (Mr. Stevens), a gentleman whom he indicted in his book, in language which is already upon Hansard, as having deserted his party for the sake of the emoluments of office which he hoped to gain. I have no brief for the hon. member for Kootenay East, but I do not believe that the leader of the opposition, who stuck to a party whose policy well-nigh ruined Canada, and put a man ahead of principle, can throw any stones at the hon. member for Kootenay East, who said in effect, " The man does not matter; his policy-the Manion-Bennett policy-is rotten, and I am going to get out." Choose if you will between the two men if you are looking for a higher moral philosophy of public life in Canada.


Robert James Manion: I do not think we shall look to the hon. member for it.


Arthur Graeme Slaght: Well, my hon. friend's retort discourteous must be overlooked.
The Budget-Mr. Slaght

An, hon. MEMBER: It was no more discourteous than yours.


Arthur Graeme Slaght: Well, I will overlook the remark of the second hon. gentleman.


Mr. PERLEY:: It could not 'be more discourteous.


Arthur Graeme Slaght: I leave to the judgment of the people of Canada what they think of the type of abuse showered by the present leader of the opposition upon the hon. member for Kootenay East, whose contributions throughout the session have, to my mind, been better reasoned, better mannered, and much more thoughtful than the contributions of the leader of the opposition himself. That, however, is a matter of opinion.


Robert James Manion: I agree with that.


Arthur Graeme Slaght: My hon. friend agrees with me. Now that we are in accord, let things go along nicely from now on. I just want to say this to my hon. friend. I do not use the word " gang " offensively, and I think I should pause here to pay tribute to the high qualities of the leader of the opposition personally, because he knows that I admire him and admire them. My remark is political only, in the sense that I differ from him. But are the people of Canada going to be fooled again by the old gang?


Some hon. MEMBERS:: No.


Walter Edward Foster: Order.


Ian Alistair Mackenzie: Make it unanimous.


John Ritchie MacNicol: The gang on the opposite side of the road.


Arthur Graeme Slaght: The old gang have done
as they did in Ontario. They have put up a new front man; they did not dare to go back to the old leader. In Ontario the hon. member who sits behind his present leader, and for whom I have the greatest respect, was also thrust into the gap, but there it was a case of the old gang with a new front man, and we see the same thing across the house [DOT]to-night. Most of them are still there, and they want to come back and repeat the disastrous government to which they treated this country during the five years they were in office. If my hon. friend has repented of some of his narrow nationalism which he has repudiated to-night, why did he not come out and support a trade agreement which has lowered the cost of the necessities of life for the fishermen of my district, for the settlers of my district, for the men in the towns, for the women in the household? Why

did he not support the lowering of prices through the removal of the excise tax and the tariff negotiations consummated in the trade agreement? No, he could not forego his philosophy that the duty of an opposition is to oppose. Let me point out to him, if he takes any satisfaction from the vote against that trade agreement which has helped to cement Great Britain and the United States and Canada, that when it went to his house leader in the senate, the Right Hon. Arthur Meighen made some remarks with regard to it, to the effect-again with deference to my friends who do not like quotations-that he thought the treaty was something which it was his duty to support, and in the senate every Conservative but one voted for the treaty.


Some hon. MEMBERS:: Order.


Walter Edward Foster: I do not think the hon.
member has a right to refer to things which happened in the other chamber, or to any statements made by members of that chamber.


Arthur Graeme Slaght: Let me regret that I referred to anything in the other chamber.


Arza Clair Casselman: You have it on the
record.


Arthur Graeme Slaght: I do not suppose that all
hon. members read the debates in the other chamber.


William Allen Walsh: Read the rules.


Arthur Graeme Slaght: I thank my hon. friend.


William Allen Walsh: Page 95.


Arthur Graeme Slaght: The hon. member himself
so seldom keeps the rules that it is a treat to have him stand up for them. Now, Mr. Speaker, I think I have made it clear-


An hon. MEMBER:: Clear as mud.


Arthur Graeme Slaght: why I am opposed to those on the opposite benches who seek again to be entrusted with leadership. I do not know that any hon. member has said that they are asking to be returned to power, but I suspect from the criticism which they made of the budget that they would accept office if they could persuade the people of Canada to elect them, and therefore it is time we warned the people of the record which these gentlemen enjoyed.
May I conclude by summarizing the doctrine we have heard from the Conservative opposition? I do not want to include in this the two other groups, but the speeches from the Tory party on the budget are full of criticism, they are of the regular tear-down

The Budget-Mr. Moore
type, they are full of doctrines of despair and gloom. The party's course throughout the session has been consistent. The hon. member for Greenwood (Mr. Massey) trumpeted to the nations of the world that a thousand people in Canada had died from starvation.


Some hon. MEMBERS:: Thousands.


Arthur Graeme Slaght: Thousands of people had
died from starvation.


Mr. MASSEY:: On a point of order, I would ask the hon. member for Parry Sound (Mr. Slaght), if he wishes to quote me, to quote me accurately. I did not make the statement to which he referred. I said that thousands had died from exposure, illness, actual starvation and lack of care, and from accident.


Arthur Graeme Slaght: I am glad to accept the hon. member's correction if I did him an injustice. But let me ask him if he thinks that by trumpeting that sort of thing to the nations of the world, letting the British people read it in the London papers, letting Hitler and Mussolini chuckle over it in Germany and Italy, he is serving either his country or his party in making extravagant statements of that kind?


Denton Massey: I was speaking for those people of Canada who are suffering.


Thomas Clement (Tommy) Douglas: Does the hon. member for Parry Sound (Mr. Slaght) think it is better to hide it?


Walter Edward Foster: Order.


William Earl Rowe: Better to hide it, before the elections.


Arthur Graeme Slaght: Now, Mr. Speaker, let us remember that the doctrine laid down in that book-although perhaps I am regarding it almost too seriously-that oppositions should oppose, is the Tory viewpoint of their mission. Theirs is a very loose life in opposition; there is plenty of opportunity for criticism, but little real responsibility for the proper carrying out of national affairs. They have lived up to that idea. They do not "worry over-much about constructive suggestions, aiming rather to point out the blunders of a government, and rarely showing sufficient generosity to praise worthy actions." That is not my doctrine; it is the doctrine of the leader of one of the great national parties in Canada, plus the fact that he states on the hustings what he pleases, right or wrong, true or false in order to ride into office, and then brazenly admits it on the floor of the House of Commons.


Mr. W. H. MOORE (Ontario):: Needless
it is to remind this house at this late date in the debate that our country faces an extremely critical situation. The minister in his budget speech met the situation I thought very frankly. I congratulate him upon a masterly presentation of the budget. But the implications are not good. After ten years we have continued unemployment, and distress prices and unbalanced budgets, and the situation is the more serious because we have not located the cause.
The minister intimated that we were a part of a crazy old world. Well, I cannot help thinking that we have made a substantial contribution to the general lunacy, when one considers that we have in Canada a land of opportunity and that for ten years past under two administrations we have been an emigrant country. Since 1930 we have had a net loss of something like 80,000 people to the United Kingdom, and still 9 or 10 out of every 110 families in this country are incapable of sustaining themselves. I am speaking to-night very largely because of something that was said the other day by the hon. member for Kootenay East (Mr. Stevens), that it was our duty to get at causes, and I wish to mention to-night, and merely a mention, what I consider to be several basic causes of the world's depression and particularly of our own.
It was quite natural in 1929 that there should be confusion, and when the tower tumbled down, that we should talk in divers tongues. Some of our hon. friends in one section of the house maintained that it was the money that was wrong; others maintained that we had a cyclical dip, made unusually severe by conditions of war; others that we were in a wave of nationalism, the aftermath of war, which had become a tidal wave of autarky. Most people put the blame on the tariffs that had been erected after Versailles. We all know that there were more tariffs because there were more countries, and we all know that there were higher tariffs. But when one turns to the record one finds that between 1908 and 1913 there was an annual increase in world trade of 4-52 per cent, which about represented the total development or growth of trade; and between 1925 and 1929, when tariffs were high and tariff boundaries more numerous, there was an average annual increase of 4-85 per cent, or an increase in international trade in those years in which the tariffs were rising and tariff boundaries had increased.
I urge that a structural change has come over world economy, and when I speak of world economy I would remind some hon. members that it was an arrangement of trade between nations of the world of specialized
The Budget-Mr. Moore

production, according to relative costs, and exchange; something different from mere trade between nations. That system of trade, of world economy, was never generally adopted; but with the repeal of the Corn Laws in 1849 there came into existence a classification of industrial countries and agricultural countries. England, of course, is the outstanding example of an industrial country and Canada is largely an agricultural country. It is that system which came crashing down in 1929, and we must either restore it, or turn to a new distribution of national economies.
My time is limited and I wish to set out four or five reasons for the break-down. For years it was said that world economy means modern civilization. Recently Professor Ohlin, a most distinguished European economist, referred to world economy as extraordinarily successful and pointed out that within sixty years, after 1850, the trade of the world had increased ten times. But "extraordinarily successful" for whom? It was not extraordinarily successful for the farmer. It has not been extraordinarily successful for the agricultural countries.
Shortly after 1929, when we began to be critical, we examined the financial accounts between the creditor and the debtor countries. The main creditor countries were the United Kingdom, the United States and France. The main debtor country was Canada, the first of the debtor countries, the heaviest debtor country. The other day the minister referred with pride to the fact that this country had become the fourth exporting nation of the world. Well, in 1929 we were fourth or fifth In exports. We supplied a very high percentage of the world's imports then. In proportion to our population we were probably the world's greatest exporting country. In 1929 we had an annual deficit in our payments of $217,700,000 a year. And that condition had gone on for years. Argentina was next. Germany followed. It is not an agricultural country, and it needs a little explanation why Germany was a debtor country. Australia followed, and then the Netherlands. It is very easy for us to glorify primary production; I have done it, I am still prepared to do it. But in the exchange between the industrial countries and the agricultural countries we have failed to take into account the profitability of the respective trades. We have said we balanced our accounts; we have the theory of the balance of trade; but we are overlooking the fact that while $100,000 worth of wheat may pay for $100,000 worth of glass or some other industrial product, there is a difference in the respective profit to the producers. We may keep the thing

going, how? How have we kept it going? By reinvestment in the agricultural countries of profits made in the industrial countries. But there must come a time when debt has to be paid.
I want to mention another matter in respect to the disparity between the industrial and the agricultural countries. And this, it seems to me, is more serious still. International trade-modem international trade-has in recent years developed a contagion of depression. Depression is carried from one country to another. A local cause, say a strike in India against the products of Lancashire; we feel it. Or insufficient industrial production in France, or a social revolution anywhere; we feel it. And during these depressions the industrial countries pass on a portion of their burdens to the agricultural countries, by reason of the disparity of prices. According to a compilation made for the international labour office, Great Britain in the years 1930 to 1935 passed over 50 per cent of its burden on to the agricultural countries; Germany between 1930 and 1933, 15 per cent; France between 1930 and 1935 over 36 per cent. We have to realize that if we restore the old condition of world economy, it will only be to face that situation again.
The second cause I want to mention-and I want to avoid party politics so far as I can, but I am afraid this is going to bear on party politics, because I want to talk about the United States-is this. The world has a new international banker. In the old days when the United Kingdom was lending money and investing capital throughout the world, she allowed people to pay her in goods. But now we have a new banker. As a result of the redistribution of credit during the war and its aftermath it came about that in 1913 the United States was a debtor country on long term investment to the extent of $1,895,000,000. In 1930 the United States was a creditor country to the extent of $8,370,000,000. And we are her principal debtor.
But how can we pay our debts? We have had some meetings of the banking and commerce committee lately and have been discussing that very question. How can any country pay debts to the United States, except with exotic goods? The United States, according to a compilation of the League of Nations economic committee, produces 45 per cent of the world's factory goods. The United States produces as much in factory goods as England, Germany, France, Poland and all the countries of Europe together, with the exception of the European Soviet.

The Budget-Mr. Moore
Even if the United States took down her tariff walls we could not pay in factory goods. She will not let us pay in agricultural goods, because her farmers also are distressed. In 1S34 the United States passed a Trade Agreement Act and we had high hopes of it. I doubt if we should ever have held them, because that act was passed for the express purpose of expanding the exports of the United States. A creditor nation with people all over the world unable to pay their debts, yet still trying to expand exports! As to how far that has been done, apart from gold, let me give a brief statement. This is from Professor' Bidwell who was at one time with the tariff board of the United States. It was written in 1938. He says:
It cannot be said that the agreements thus far concluded have done more than modify slightly the rigorous protectionism of the Hawley-Smoot tariff. The reductions in rates have been confined for the most part either to specialties not directly competitive with any American product or commodities in which American production so dominates the home market that increased imports can have little or no effect on prices, or commodities of which the domestic supply is deficient, such as manganese. Whenever there appeared danger of a substantial increase in purchases from abroad import quotas or tariff quotas were imposed. (Tariff quotas do not limit total imports but only the amounts that may benefit in any year by lower rates.)
I am not going to prophesy-I have heard enough about predictions to-night-as to what the new treaty will bring forth. But if I were optimistic I would take a chance on a bit of prophecy.
There is a third cause of the structural change in world economy. Hon. members who were brought up in the school of Adam Smith and Thorold Rogers will recall that in the days of 1850 there was world competition of a large number of small producers. That condition has changed. Now you have exports that are not competitive. In industry you have cartels; in agricultural products you have pools. In 1923 our western wheat producers formed a pool, after the manner of the Australian pool, for the express purpose of the export trade. Importation was free, at the beginning of 1924, in eight out of twelve European countries, but by the beginning of 1929 the number of free markets had shrunk to four. If I had time I should like to go on-


Some hon. MEMBERS:: Go on.


William Henry Moore: -and point out the statement made by the German agrarian economists, that they did not believe in the pool system, as far as agriculture was concerned, at that time. I should like to give the name of Professor von Dietze, who said that no selfrespecting country would allow its food products to come under the control of a foreign pool. I wonder if we would. I can remember that we resented the importation of butter into this country under the Paterson plan. Particularly would no foreign country- at least I doubt if any foreign country would -allow its supply of daily bread to come under the control of any foreign organization where there was a suspicion of state interference or intervention.
Now I must hurry on; I do not want to detain the house. There is a fourth reason for the break-down of world economy, and I believe it is a decisive one. It is a rediscovery of land as the breeding ground of all nations. I wonder how far hon. members-it seems to me we have not discussed it-have looked at England's reason for protecting her own food supply. In 1931 England had a gainfully employed population of only 5-6 per cent in agriculture, forestry and fishery, and in 1926 the birth rate in England fell below the replacement point. Doctor Louis Dublin put the implications of the birth rate in 1933 in this terse form: that if the birth rate decline continued, within two generations England would have only half its present population. That is the situation, practically, in all the industrial countries of Europe; and that is one of the reasons, although not the only one, why we and other countries have been closed out of their markets. The statement was made by Astor and Murray that in the United Kingdom to-day there are direct and indirect food subsidies amounting to forty-three million pounds sterling a year. In August, 1938, we announced a wheat subsidy. In November, 1938, only a few months later, England raised the amount upon which she would subsidize wheat from thirty-one and a half million hundredweight to thirty-three million hundredweight, which means a further increase in the production of wheat.
I shall not detain the house longer, Mr. Speaker, except to say that we are facing an agricultural revolution, a revolution in mechanization. It is not my opinion but the finding of the League of Nations that one-half the agricultural population of any country is capable of producing that country's food, compared with only a few years ago. How are we going to face that situation? That, it seems to me, is something upon which we have conveniently, if you like to put it in that way, turned our backs, something we have tried to put out of our minds. What is the solution? Well, I come back again to Adam Smith, and if you do not mind I will give just one short quotation, because it is a prediction. It was Smith who laid out a plan of world economy by which nations
J*

The Budget-Division
would specialize in industry and food and exchange their products. Then he goes on to say:
The desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary.
I can see no future for this country unless we face the condition of a readjustment of the economic activities of our people. We have in the world to-day 860,000,000 gainfully employed people, of whom 550,000,000 are trying to live out of the proceeds of the land. It cannot be done with profit to the agricultural population.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Sir Eugene Fiset in the chair.
Progress reported.
At 11.20 p.m. the house adjourned, without question put, pursuant to standing order.
Thursday, May 4, 1939