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

Mr. DESLAURIERS:: How many members of the permanent Militia force, having served ten years or more, left the service between November 11th, 1918, and July 1st, 1919.


Hon. Mr. GRAHAM:: Seventy-two.
CANADIAN MERCHANT MARINE Mr. ARCHAMBAULT:
1.	How many ships of the Canadian Merchant Marine are actually in the Montreal harbour?
2.	What are the names of said ships?
3.	Are they out of commission or are they to be loaded with freight for a carrying trip?
4.	If the said ships are to be commissioned (a) where are they going, (b) when will they sail, (c) what freight revenue will be received from each, and (d) what are the total expenses of each voyage?


Hon. Mr. KENNEDY:: 1.	Six.
2.	Canadian Harvester, Beaver, Carrier, Runner, Ranger and Rancher.
3.	In a commission, with the exception of the last-named two.
4.	(a) Harvester and Beaver, British West Indies; Carrier, Glasgow; Runner, Cardiff and Swansea. (b) Beaver, June 8; Carrier, June 17; Harvester and Runner, June 21. (c) and (d) Tin ;e questions are impossible of answer at this time.
RETURNED SOLDIERS On the Orders of the Day:


Mr. W. F. MACLEAN (South York) :: Mr. Speaker, before the Orders of the Day are called I wish to ask a question of the Prime Minister (Mr. Mackenzie King). As one of the nine representatives of the Toronto and suburban ridings I have received during the last day or two many pressing telegrams from various organizations of returned men asking that at the earliest possible date the Government will announce their policy for dealing with the claims of returned men.


Right Hon. W. L. MACKENZIE KING (Prime Minister) :: As my hon. friend is aware, the whole subject of what it may be most advisable to do in respect to the representations presented by the returned men is being considered by a committee of this House which was appointed for that purpose. I am informed by the chairman of that committee that he anticipates the report will be ready very shortly. As soon as it is brought down the Government will be in a position to make a statement as to its policy.
PRIVILEGE-MR. CRERAR On the Orders of the Day:


Hon. T. A. CRERAR (Marquette) :: Mr. Speaker, I wish to rise to a question of privilege in regard to some remarks made by my ihon. friend from Lincoln (Mr. Chaplin) last night when addressing the House.
Privilege-Mr. Crerar

He brought into question some figures that I had used when I addressed the House last Monday as to the character of our exports.


Right Hon. ARTHUR MEIGHEN (Leader of the Opposition) :: I rise to a point of order, Mr. Speaker. I do not think the hon. member has a right to any special privilege on the Orders of the Day in relation to the budget debate.


Thomas Alexander Crerar: I submit, Mr. Speaker, that I have a right to correct a wrong impression that my hon. friend from Lincoln, unwittingly, I believe, gave the House.


Mr. SPEAKER:: I think the hon. gentleman is in order. If he was misquoted or misrepresented, he has a right as member of the House to state the facts as he understands them.


Arthur Meighen: If an hon. member has a right on the Orders of the Day to correct impressions that he believes are erroneous coming from another speaker in a current debate, I think I could occupy the Orders of the Day for several hours each day.


Thomas Alexander Crerar: My hon. friend from Lincoln last night said that in the statement I had made I had padded the returns; and in another part of his speech he made use of the following language: "I think hon. members would like to know what the object is in deceiving the House." I submit, Mr. Speaker, that I have a right to draw the attention of the House to these remarks, and to state that the figures I gave were supplied me by the Bureau of Statistics. I think it probable that in those figures, under the title "vegetable products" some of the articles my hon. friend mentioned were included.


Mr. CHAPLIN:: All of them.


Thomas Alexander Crerar: No, my hon. friend is not quite correct. But aside from that, I merely wish to assure the House, Mr. Speaker, that nothing was further from my mind than to convey a wrong impression, and therefore I give the House the authority for the statement I made.


Hewitt Bostock: In answer to the right hon. leader of the Opposition with regard to my ruling on the question of privilege,
I may point out that rule 47 reads as follows:
Whenever any matter of privilege arises, it shall be taken into consideration immediately.
I find the following at page 302 of Bourinot, fourth edition:
Questions of privilege may be always considered without the notice necessary in the
I Mr. Crerar.]
ease of motions generally. It is the practice in the House of Commons to bring up a question of privilege after prayers, and before the House has taken up the Orders of the Day.


Arthur Meighen: I do not dispute that at all, Mr Speaker. What I urged was that an objection to an argument made in a current debate does not constitute a question of privilege; it is merely a matter to be taken up in the debate itself.


Mr. FIELDING:: The correction of an error would be a legitimate question of privilege. It would not be a matter for argument, but it would be justifiable on the part of an hon. member to state that he had been misrepresented in a statement that had been made, and to do so as a question of privilege.


Arthur Meighen: If a question of error or alleged misrepresentation in a debate is to become a question of privilege, then I do not know where the Orders of the Day are going to end. I could now rise to about fifty questions of privilege that are in my mind at the moment.


Some hon. MEMBERS:: Go ahead.


Hewitt Bostock: On further reference I find that Bourinot, fourth edition, page 354, says:
It is a practice, sanctioned by usage but not by any positive rule, for members in both houses of the Canadian parliament to make personal explanations or ask questions of the Government when the Orders of the Day are called. They make them in reference to an inaccurate report of their speeches in the official record, or in the newspapers.


Arthur Meighen: That is my view.


Hewitt Bostock: I take it that we may consider this incident as disposed of.


Arthur Meighen: The hon. member did not allege any inaccurate report of his speech in a newspaper or in the official record. He did not allege an inaccurate report of his speech at all.


CHILDREN OF RETURNED SOLDIERS
[Stage Direction]
On the Orders of the Day:
Hon. R. J. MANION (Fort William and Rainy River):: Mr. Speaker, before the Orders of the Day are proceeded with,
I wish to draw the attention of the hon. Minister of Soldiers' Civil Re-establishment (Mr. Beland) to a news item that appeared in the Ottawa Journal this morning, in order that he may have an investigation made. The item deals with the ill-treatment of two children, aged ten years

Budget Debate-Division
and eleven years respectively, whose father was killed at the front, and whose mother it is stated is also dead. These little children were taken charge of by a farmer's wife, who severely ill-treated them. If the facts are correctly stated, these children should be entitled to a pension sufficient for them to be properly looked after. I ask that this very atrocious case be investigated by my hon. friend's department in the interests of the children of returned soldiers and of those who fell at the front. My hon. friend will understand that I am not making this request by way of criticism.
Hon. H S. BELAND (Minister of Soldiers' Civil Re-establishment):	If the
children's father was killed at the front, they undoubtedly are receiving a pension. I will take congizance of the article to which my hon. friend refers, and instruct my officials to have an investigation made immediately.



BUSINESS OF THE HOUSE BUDGET DEBATE-DIVISION

[Stage Direction]
On the Orders of the Day:
William Lyon Mackenzie King: Mr. Speaker, if the House will so permit, I would like to make a reference to the budget debate, which is now proceeding. As hon. members are aware, we had all hoped that the debate would be concluded this evening. I am informed, however, that there are still a number of members who would like to speak, and it is quite apparent that unless they are to be deprived of that privilege it will be impossible to have a division to-night. Indeed, it is very doubtful if it would come by the morning if we sat through the whole night. Under the circumstances the Government deems it wise not to endeavour to curtail the debate in any way, but to permit it to run on. It hardly suits the convenience of hon. members-indeed, it has not been the custom- to have a division on a Friday night or on a Saturday; it is therefore desirable that there should be a definite understanding on that point. If it meets with the approval of hon. members, what the Government would suggest is this: that the debate be continued to-morrow with the understanding that on Saturday, instead of continuing the debate, we take up such estimates as have not yet been passed or some of the non-contentious items appearing among the Government orders. We may then resume the debate on Monday
with the expectation of having a division some time on Tuesday.


Some hon. MEMBERS:: No.


William Lyon Mackenzie King: I would like to add, Mr. Speaker, that before the debate concludes, the hon. Minister of Finance (Mr. Fielding) will doubtless wish to make a statement to the House in the light of the discussion that has been had here and of representations that have been made to him, and may possibly suggest some modifications in the proposals that are now before the House.


Arthur Meighen: The procedure is rather unusual-for the Government to suggest a deviation from its own programme in the conduct of the budget debate, looking to an extension of the debate. It is something that naturally I could not give an answer to at the present moment; the matter has not been mentioned to me before. I would suggest that the debate go on. The whips are doubtless aware of how many more hon. members desire to speak, and they may confer on the matter as the debate proceeds.


William Lyon Mackenzie King: Of course, we have not made the statement without conference with the chief whip, who, I think, has already conferred with the other whips. Certainly the matter would be dealt with by conference between the whips.


William Findlay Maclean: I would make the suggestion that we ought to try to have the division to-night.


Some hon. MEMBERS:: Hear, hear.


William Findlay Maclean: Furthermore, if the whips have not come to an arrangement, that being the view of the House, it is their duty to see if they cannot make that arrangement, and to let us know as soon as they can.


Mr. MARCIL (Bonaventure):: Hon.
members should not forget that many opportunities of discussing these resolutions in detail will be afforded to them when the House goes into committee. This debate is merely preliminary to the work that has to be done.


Mr. BOYS:: I may say that the original understanding was that the debate should close on Tuesday last. It was found impossible to carry that arrangement out, owing to the number of members who desired to speak and had not been given an opportunity to do so. We then felt that it could be arranged with certainty to close

The Budget-Mr. Stevens
the debate to-night, and up to a few moments ago the understanding, made in perfect good faith-I am not asserting anything but that-was that two Liberals were going to speak and two Conservatives, and that the remainder of this afternoon and to-night should be given to Progressives, twelve of whom, I understood, wanted to speak. I may say that there is a very honest desire on the part of hon. members on this side to come to a vote at this sitting, even if it takes place at three or four o'clock to-morrow morning.


Thomas Alexander Crerar: If I may he permitted, I would suggest that the debate proceed this afternoon, and possibly an understanding might be reached at eight o'clock to-night. If the debate is to go on tomorrow, then I am quite willing to support the suggestion made by the Prime Minister that the other business be taken up and a division be taken later.


William Findlay Maclean: When-this
week, or next week?


An hon. MEMBER:: Next month.



THE BUDGET


[Stage Direction]
The House resumed from Wednesday, June 7, the debate on the motion of Hon. W. S. Fielding (Minister of Finance) that Mr. Speaker do now leave the Chair for the House to go into Committee of Ways and Means, and the proposed amendment thereto of Hon. Sir Henry Drayton.
Hon. H. H. STEVENS (Vancouver Centre) :: Mr. Speaker, the occasion of the presentation of the annual budget to Parliament by the Minister of Finance (Mr. Fielding) is always one of great interest not only to hon. members of the House but to the business concerns of the country and to the people at large. This is more particularly the case upon the coming into office of a new Igovernment, especially, Sir, when the attainment of office has been preceded by indications and suggestions and statements that the public might expect some very important changes in the fiscal policy of the country. So that on this occasion, I say, the pronouncement of the Minister of Finance was followed with great interest by hon. members and with great keenness by the people generally.
I am forced to state this to my hon. friend the Minister of Finance: that his

utterances in connection with the budget, having reference more particularly to amendments to the tariff, will, I believe, tend at least to allay any alarm which may have been felt by the manufacturing interests who would have been seriously affected by the carrying out of any such radical changes as were indicated in the platform upon which he and his colleagues attained office. On the other hand, there are some things in the budget to which I feel it is my duty to offer very serious and pronounced objection. As a matter of fact, there is one particular item in the budget to which I intend to give special attention this afternoon, and which I shall come to in a moment, but first I would like to refer to one or two other matters.
There is the question of the stamp tax on cheques. I do not wish to labour this, I merely wish to say one or two things just in a general way. In the first place, I would point out to the House that the issuance of cheques has become a very important part of accountancy in the carrying on of business. It is a system of record more than a system for the payment of funds. In this regard the tax which my hon-friend proposes will, I think, very seriously interfere with the method of doing business to-day as it has grown out of the experience of recent years. I might give one illustration. Many firms, and particularly the best organized firms, attach a voucher to the cheque, which becomes a legal receipt for the transaction it covers.


Hewitt Bostock: Order. I would ask
hon. members on both sides of the House not to conduct private conversations in the Chamber. It is not conductive to the decorum of the House, and furthermore, it is not fair to the speaker who is addressing the House.


Henry Herbert Stevens: I thank you, Mr. Speaker. I quite appreciate that the hot weather and the prolonged debate make it perhaps somewhat unpopular for one to be on his feet. However, without desiring to be vain, I think I have something to say which may contribute in a small measure to the debate.


Hewitt Bostock: Conversation may
also be coming from the lobbies. For the last two or three days we have been obliged to keep the doors leading to the lobbies open, in order to ventilate the

The Budget-Mr. Stevens
Chamber and prevent it becoming too stuffy. I will ask the Sergeant-at-arms to see that no conversation from the lobbies reaches the Chamber during the debate.


Henry Herbert Stevens: I will simply add that I shall try and be as brief as I think the importance of the subject will permit. Many firms, I say, have adopted this system of attaching a voucher to the cheque. It has therefore become a very important part of the system of keeping accounts, and I submit to the Minister of Finance that the cheque tax he now proposes is too onerous, and will seriously interfere with the legitimate and proper carrying on of business.
The tax on confectionery I consider to be of a discriminatory character and on that ground I object to it. I am not objecting to a tax on confectionery as part of a general tax upon other things, such as the sales tax, for instance, but to single out confectionery and put a tax on it seems to be unfair. However, we will discuss that further in committee. Now I merely cite these things and express my general objection.
There are three clauses repealed by this budget to which I wish to make special reference. One of those clauses is what is known as the anti-dumping clause. This was a clause passed, I think, last year, and I would call my hon. friend's attention to the fact that it was a clause passed merely to give proper effect to his own doctrine, in the anti-dumping clause of 1907, in his own tariff of that time. In 1907 an anti-dumping clause was included in the Customs Act. It is a good clause; it has been accepted as a sound doctrine, but it was found that certain commodities were of such a character that it was possible to evade the terms of that clause, and this practice grew up during the years. One of the articles to which I make particular reference is fruit, another is vegetables. The principle underlying the original anti-dumping clause is, that goods shall not be shipped into Canada and entered for duty at a valuation less than a fair selling price in the country of origin. But there are some goods the fair selling price of which in the country of origin it is difficult to ascertain. The price of fruit, for instance, fluctuates from day to day, and fluctuates very seriously. Local markets such as Buffalo, Seattle, New York, and others along the American line, might have a glut of fruit on one particular
day or in a certain week and be anxious to get rid of a surplus. Now, a fair market value on a day when the market is glutted would not be a fair market value on normal occasions. So, last year, another clause was inserted which provided in general terms that instead of taking the fair market value in the country of origin it was possible also to apply this principle, namely, the cost of production in the country of origin. In other words the two were interchangeable; either was optional. I may not be giving it exactly right, but I think the main principle I am giving is sound. We appeal to my hon. friend the Minister of Finance not to repeal that clause, or if he does, to amend his own original clause, of his own drafting-the idea originated with him, I believe-so that there cannot be the evasions which have occurred during recent years. If he will do that, it will be satisfactory, but if he merely repeals the anti-dumping clause as he stated in his budget speech he would do, I wish to say to him now that it will work very serious hardship,-no, not hardship, but ruin. My hon. friend smiles. He would not smile if he realized that it takes from ten to fifteen years to make an orchard a producing thing, something that will give a return. It is not at all comparable to a piece of land which can be ploughed in the spring and cropped in the fall. The investment in an orchard is heavy and the period of time the grower must wait is long, and there are many things entering into the business which are intricate, difficult, expensive. So I say to my hon. friend that it should be his object to safeguard an industry of that kind against utterly unfair competition.
Now I turn to what is to my mind the most important proposal in this budget, and that is the repeal of the Marking Act and the repeal of the Depreciated Currency clause of last year. The two go together.
I am not going to spend very much time on the repeal of the Marking Act. I think it is unwise to repeal it. I admit frankly that in the working out of that act the department officials have run up against difficulties; there is no question about that, but it was the duty of the government, of the old government and of this Government, to seek to overcome those difficulties, and not simply, because difficulties were met, to toss the whole thing overboard and say, "We will not bother our

The Budget-Mr. Stevens
heads any more about it." The main difficulties, I think, could quite readily have been overcome. There are many articles that you cannot mark without great inconvenience and difficulty. There are certain citizens who object to the marking of goods. Who are they? The importer, the merchant, the jobber, the wholesaler, and men of that kind. And no criticism is to be offered because they object to it; their business is simply to deal in the transfer of goods, they have no direct interest, for instance, in the manufacturing of goods; they do not feel the competition with the local market; their gain lies simply in the interchange of goods between different buyers. May I refer to that class of business-'and I do it with all respect because I am in this business slightly myself-the brokerage business. In regard to that class there is very little capital investment, comparatively speaking, as against the amount invested by, for instance, manufacturers. The manufacturer is keenly interested, very keenly interested, in the competition that he meets with from foreign countries. I shall, in a moment, refer to the unfairness of the competition; but I am not doing that just at present. Now then, in order to overcome (that we passed last year what is known as the Markings Act, calling for the country of origin to be marked upon the goods which were imported. Now, I want to say that while a power by Order in Council to continue that is provided, I think that to carry out the doctrine which my right hon. friend the Prime Minister so often insinuates, that power should be in the act-it should 'be a statute rather than an Order in Council. What I think my hon. friend should do is to address himself-or the officials of the department and the Department of Customs should do so-to the task of meeting the difficulties which have arisen by experience in the application of the Act, rather than that the Government should take the obscure and rather nebulous power to themselves and say what shall or shall not be marked. There is a decided objection to the proposal now before the House. I do not wish to say this in any spirit of recrimination at all, but there is this objection: That it gives into the hands of the minister-or, referring further back, into the bands of the officials who advise the minister-the power which I do not think parliament should give, namely, of saying with respect to this class of goods that it shall be marked, and regarding . another 
class of goods that it shall not be marked. Therefore, I say it would be far better to maintain the Act as passed last year, amending it if necessary in the light of the experience of the year, and seeking to overcome the difficulties that have arisen.
Now, I come to the next point, and that is the depreciated currency clause passed in amendment to the Customs Act last year. It is not necessary for me to go into the details of what it was ; it was in effect pimply this: That in any country where the currency had depreciated below a point of fifty per cent of par, the valuation for duty purposes upon goods imported from that country should be figured at a rate not less than fifty per cent of par. Now, I am going to deal directly with the German situation, because unquestionably that is where this clause applies most extensively, although, Sir, I would pause to say this: The idea must not be too readily accepted that the Germans, or the German people, are the only ones against whom this is directed, or who would be affected. Now let me review-and I confess, Sir, that it is fairly complicated and perhaps dry and uninteresting on an occasion of this kind, but to me it is the crux of this whole budget, it is the most fatal thing in the budget, and I believe once fully realized by the House will make members pause before allowing it to pass into law-let me review briefly the situation as it is regarding Germany. Germany plunged this world into war. That is the first point I wish to lay down. Germany was defeated. Immediately after the defeat of Germany she began to scheme- and I do not blame her for doing it-'how she could evade paying reparation and to seize the fruits of victory which properly belonged to those who had defeated her.


Charles Marcil: She has succeeded, too.	.


Henry Herbert Stevens: She has succeeded, too, my hon. friend from Bonaventure says, and I will demonstrate that in a few moments. I make this statement, and I think advisedly, in the face of contradiction by eminent authorities, that she encouraged, actually encouraged, the depreciation of her own currency, and that I think I can demonstrate in a moment. As a matter of fact she was immune during the war;-I want the House to remember this-Germany was immune during the war, and she suffered no destruction, physical destruction, of her machinery, her factories, her plants, and so forth; as a matter of fact, her industrial life was stimulated. But

The Budget-Mr. Stevens
France and Belgium had hundreds of thousands of square miles of territory, and thousands of villages and towns, devastated; and hundreds of thousands-yes, I guess millions-of workmen thrown out of employment because of the absolute destruction of their implements of production- their factories,-their machines, and so forth-and their mines. Now France suffered that; keep that in mind. Since the war Germany has developed during the last two years-in particular in the industrial and in the commercial realm. She has contributed very, very little to the reparation of France and Belgium

she has contributed a little, but very little-and in the meantime France is bearing a terrific burden. Now, I knew that sometimes we think that France is actuated by passion, and revenge and resentment; but let us look at the simple facts. Here is a territory devastated and not yet renewed, belonging to those who resisted and conquered. On the other hand, here is a territory stimulated into greater activity than ever, the territory of a people who caused the war and who were defeated. It is an anomalous position that I do not think any logic can justify. Now, that is not all. If you look over the press from day to day, you will find that the great German capitalists, particularly that eminent gentleman Hugo Stinnes, are displaying remarkable activity. Stinnes is in Mexico, and his agents are in Russia, and all over the world. Doing what? Seeking trade, some one will say. That is true;-not only seeking trade but seeking the investment of German capital in foreign investments; seeking to invest German capital in Mexico, in Moscow, and in various parts of the world. Is not the situation monstrous? Germany protesting to the world at large that she cannot afford to pay any reparation to France, and at the same time sending millions upon millions of dollars in value out of the country for foreign investment?
Now I wish to go into the matter in a more statistical form-
Mr. BROWN Before you pass from that point-the difference between Germany and France as regards physical suffering. Do you regard that as an essential factor in the discussion cf the problem? For we must remember that some of the allied countries did not suffer any more than Germany.


Henry Herbert Stevens: I consider it as a very vital factor; not the whole basis of my
argument, as my bon. friend will see in a moment, but I say it is a situation that is utterly illogical, and I say this further: That we-who are after all participating in these conferences, who have our representative over there at the present time, I do not think he has yet returned-as a parliament ought to express ourselves in regard to this matter, ought to express ourselves, I think, more in sympathy with the French view than the German view at this time. Let me engage the attention of the House, if I dare do so, by some statistics. I do this for the purpose of laying a firm foundation for my subsequent argument. Germany has a deficit loudly talked about daily. There is not a day passes but what one sees, when he picks up the press, the discussion going on in Europe; and this question of the deficit that Germany is constantly faced with and her inability to meet the reparation claims is seized upon by many, for some reason or other, as an excuse why we should not press Germany for reparation. Now I propose looking briefly into that situation. Germany's budget deficits are caused by certain things. They are caused first by subsidies paid by Germany to industries within her own boundaries, and for wheat in particular; they are caused by themselves artificially keeping down the cost of living which I shall prove in a moment, definitely I think; they are caused by the issue of paper currency. During the last three years Germany has encouraged the creation of deficits by these methods I have mentioned. At the end of the year she made good that deficit by putting out another issue of paper currency, with the result that her gold mark, originally worth 23.8 cents, declined, and continually declined until to-day, it is worth about a third of a cent. These are facts I wish the House to remember. During last fall Great Britain had unemployment to the extent of 2,000,000 people, the United States 5,000,000, Canada 200,000. Germany had 150,000, which was below normal for Germany. Germany, with a population of 60,000,000, had only 150,000 to 200,000 unemployed, stated by their economists to be lower than normal; Canada with 8,000,000 people, had 200,000 and over unemployed. Now, we take another step. I want to make a comparison between 1913 and 1921, in order that the House may realize the situation in Germany and the political thesis of her position. In 1913 Germany had an adverse trade balance of 700,000,000 gold marks.



The Budget-Mr. Stevens


Mr. MACLEAN (Halifax) :: Can the hon. member give the exports of Germany for the period prior to the war, and the exports in the recent two years?


Henry Herbert Stevens: I can give my hon. friend some of the information asked for, but I am not quite certain that I can give it all. I think, however, that my argument will answer the question. In 1913 Germany had an adverse trade balance of
700.000.	000 gold marks. That looked serious, but it was not a serious thing at all; there were invisible exports and imports which covered this difference. Let me give these to the House. The invisible imports consisted of 1,250,000,000 gold marks on foreign investment, which was not shown in the trade returns. It was cash to hand, or goods in lieu of cash. There was also the international freight traffic: that is not for carrying German goods for German merchants, but her services rendered to other nations all over the world with her mercantile marine, estimated at over 1,000,000,000 gold marks. Then, from tourists she secured a revenue estimated by this gentleman at 750,000,000 gold marks, or a total of 3,000,000,000 gold marks. Against that, there were foreign labourers who left Germany and took funds with them-and there were a great many of them-and banking exchange, making up about 1,750,000 marks, leaving a profit to Germany, after taking into consideration the imports over exports in actual trade, of 1,250,000,000 gold marks. I am giving these figures from Germany's own statistics. I will take 1921, and I can now give my hon. friend some information, perhaps, directly bearing on his question. In 1921 German imports amounted to 118,000,000,000 marks, paper; and her exports were
96.000.	000.000 marks paper, leaving 22,000,000,000 marks, paper, of imports over exports, or an adverse balance of trade. That sounds very ominous-22,000,000,000 marks; but when you reduce it, at present exchange, to a gold basis, it amounts to from $60,000,000 to $90,000,000, so that it was not so very serious after all. But that was her deficit. Germany's mercantile marine has been taken away and her foreign investments have disappeared. She cannot make up the deficit in the old way by services to the world with her mercantile marine, or by interest on the investments abroad, the only way she can make it up is by selling goods abroad. I want to make it perfectly clear that I am not one of those who feel any malice towards Germany, or desire to put undue obstruc-

tions in her way at all. That is not my attitude on this question. I think ' Germany should have an opportunity to sell her goods abroad, if she can do so, but only to do so on a fair basis, and not at the expense of the allied countries. Now she can only make up that deficit of $60,000,000 by selling goods abroad. Canada imported from Germany last year, in spite of the obstacles placed in the way of that trade by this clause to which my hon. friend takes such objection, about one and a half million dollars' worth of goods, but there came into Canada by other ways a much larger amount of goods than that, to which I am going to refer in a moment. Before doing so, however, let me take the House a step further; this, Sir, is the crux of the whole business. First I make this assertion, and then I shall demonstrate it beyond, I think, all possibility of question. The difficulty in determining our relations to Germany in trade matters is increased because the international purchasing power of the mark in Germany is three times its exchange or international value. That may seem extraordinary, but I think I can demonstrate it. I will first give two sets of figures, and then quote certain authorities which, I think, no one will question. And I submit this to the Minister of Finance (Mr. Fielding) : if what I say on this point can be accepted as accurate and true, I claim the minister must revise his decision in regard to this depreciated currency, and I most earnestly ask him to endeavour to follow me in this matter. I have simply the one earnest desire, to get at the root and the truth of this matter, because I believe it is going to be a serious thing. I am going to give the House further figures, taken from Dr. Elsas of Frankfurt, a recognized authority on economic subjects in Germany. On September 1, 1921, the internal value of the mark was eight pfennings and the external value five pfennings, a ratio of 8 to 5. November 1, 1921, this had changed to 7 pfennings internal and 2 pfennings external-three and a half times. January, 1922, it was 6 to 2i. March 1, it was four to one and three-quarters, May 1-only a few days ago-it was 3.19 to 1.44. That was the ratio or the difference between the internal and the external value of the mark. But I can give another illustration from figures, also from the same authority. I will give first the bald statement; the depreciation of German currency, from December 4, 1914, to December, 1921, was 4,735 per cent. The cost of living in Ger-

The Budget-Mr. Stevens
many, covering exactly the same period, was increased 1,638 per cent, or only one-third of the depreciated currency. Here are the actual figures :in 1914 one pound sterling equalled 20 marks: 1921 one pound equalled 947 marks, and that has increased enormously since December, 1921, which is the last figure I am giving in the comparison. The cost of living in 1914, the index figure, was 26.5 marks, but in December, 1921, the figure was 439 marks. In other words, currency had depreciated on the international exchange 4,735 per cent, while the purchasing power of the mark in Germany has depreciated only 1,638 per cent, or only one-third of its exchange value. Now I wish to quote an authority which the hon. member from Brome (Mr. McMas-ter), if he were here, would at once accept, Mr. Maynard Keynes. He is perhaps one of our most outstanding economists in the British Empire. I do not agree with all the conclusions at which he arrives; but his aim at the present time is to secure a revision of the Versailles treaty in order to make the figure of reparation possible for Germany. That is his general argument and object. With that, I am not concerned at the moment, I refer to it merely so that the House may know that when I quote him, I am not quoting a .prejudiced person. At page 82, of his "Revision of the Treaty", a book recently published, he makes this statement :
During the summer of 1921 the mark gold equalled 20 marks paper. The internal purchasing power of the paper mark for the purposes of consumption was still nearly double its corresponding value abroad.
That was in the summer of 1921, a year ago. He goes on:
In December 1921 it was between 45 and 60 paper marks to' one gold mark, while its purchasing power in Germany is three times what it is outside.
I give another authority, and that is Dr. Melchior, who was the chief of the German economic staff at Versailles, when the treaty was signed. Surely no one will question that authority as regards prejudicing the case of Germany. Dr. Melchior is recognized as one of the leading philosophers on economic questions in Germany, and indeed, in the world. Before reading what he says, let me refer to a statement made by the hon. member for West York (Sir Henry Drayton), that this constituted free trade with Germany.
168|
I want to say to the House that it does not constitute free trade with Germany; it constitutes paying a premium on Germany imports. The statement whidh I am about to quote was made by Dr. Melchior in the Manchester Guardian which, I am sure, would be endorsed by every hon. gentleman opposite, a paper which, I think, is one of the best papers in the world on general economic subjects as regards the assembling of information. I do not always agree with its deductions; but I must pay a high tribute to the Manchester Guardian as being one of the finest periodicals on commercial questions in the world. Dr. Melchior, in a special article in the Manchester Guardian, makes this statement:
The international value of the mark has a natural connection with its purchasing power in Germany, which in turn depends on inflation. The internal purchasing power of the mark .... is at present (April 1922) between two and three times its international value. . . .
I want the House to follow very closely these last few words:
The falling currency has, it is true, brought apparent prosperity to German industry by means of a premium on exports-
Then he goes on:
-which at the same time cripples the industries of the competing countries.
This is not my statement; this is not the statement of some wild-eyed, prejudiced person seeking vengeance on Germany; this is the statement of the highest economic authority in Germany who was at Versailles, who was the head of their economic agents and experts, and who has been at the head of almost every one of their conferences. Let me emphasize the words of Dr. Melchior

[DOT]" Which at the same time cripples the industries of competing countries." I turn from that for a moment to another picture, and I use France in direct comparison for the purpose of impressing upon the House the seriousness of this situation. I am not going to go into any great details; I want to visualize, if I can in a few words, the situation in France. We must remember the prosperity, the activity of Germany; the fact that there is practically no unemployment there; the extension of her trade; the upbuilding of her industries; the safe, sure and preserved position of all her industrial life during the war. France's budget for 1923 shows an estimated deficit of 4,000,000,000 francs. I
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will translate that into Canadian currency as $360,000,000. To this must be added four or five times as large a sum for pensions, for reconstruction charges. France, for the year 1923, must find $1,-
860,000,000. That is what France is faced with, in addition to the ordinary expenditures of the country. Germany, however, says that she cannot afford to pay France reparation. Why does Germany say that? " Because," she says, " we have an annual deficit, and if you crowd us, our mark will go lower and lower, and we shall have economic ruin in Europe." This is her whole argument. But if we pay any attention to France with $1,860,000,000 to find for reparations, pensions, and to make up her internal deficits, the situation is appalling. The question I ask of the House is this: To whom is our duty due? Is it our duty to help Germany out of her hole and to plunge France into a worse condition; or is it our first duty to be at least neutral in the situation? I am not at the moment asking the minister to lend any special assistance to France; but I say: Be neutral; do not pay a premium on German goods and thus force France deeper into the mire than she is at the present time.
Austria is also affected deeply by this clause. I am not going into any details; I am going to say only this: Recently, Austria has placed her customs on a gold basis. What does this mean? Hon. gentlemen will know something about what it means when I tell them that at par on a gold basis, the Austrian crown is 24 to the pound sterling, and that is the basis upon which she admits goods
4 p.m. to her country. What is the exchange value of the Austrian crown to-day? The other day, May 16, it was 42,600 crowns to the pound. What is Austria doing? Austria says: For customs purposes, the gold basis will rule. Why, she has increased many of her customs charges in addition to that, 1,000 per cent in the last couple of months, and then we, forsooth, are going to throw away this bit of a safeguard that we have and admit German and Austrian goods in competition with our own. In Hungary, the other part of the old Empire of Austria-Hungary, hundreds of articles are absolutely prohibited. I do not need to give the House the particulars; let hon. members turn to the speech of the hon. member for East Quebec (Mr. Lapointe). That hon. gentleman read from records the 
actions of many European countries in regard to this matter.
I wish to go into another phase of this question. Let me take a specific case, that of knives-and I am using this one illustration, because I think it conveys clearly the whole situation. The figures which I am going to give are absolutely authentic and accurate and may be verified. Germany is exporting to Canada all sorts of stuff, and while I have in my possession a list of the articles, I am not going to go into that, because to do so would only confuse the issue; I will take the one article to which I have just referred. A certain standard pocket-knife is recognized in connection with all manufacturers of cutlery and knives; it is what is known as a pocket-knife, and it may be taken as a sample article. That pocket-knife can be landed in Canada by Germany for 70 cents a dozen, including duty. I want to give my hon. friends who argue that we ought to be privileged to buy in the cheapest market, a few facts and let them come to their own conclusions. This is what will occur, if this clause is removed, that Germany can land pocket-knives in Canada at 55 cents, plus a duty of 16 cents, or 71 cents a dozen. Let me figure this out on the basis of the depreciated currency clause now in the act. This 55 cents is equivalent to 165 marks, and the duty at 50 per cent depreciation would be as follows: 165 marks valued at 111 cents to the mark, $18.98; the duty at 30 per cent amounts to $5.69 which, plus the 55 cents, would mean $6.24 a dozen for this particular kind of knife. Now, then, I admit at this point that it would appear that this figure of 50 per cent depreciation is perhaps high. 1 would suggest to my hon. friend, if that were considered to be so, that he reduce it to, say, 35 per cent- there is no particular objection to that-or do as the Americans are doing, make the market value in Canada the basis on Which to assess the duty.
But let me take the depreciation of 30 per cent, and then you will see the significance. Suppose we enact that the depreciation be put at 30 per cent instead of 50 per cent. Then we find the duty would be $3.45, and the value of this knife per dozen would be $4. The British knife, exactly the same as the German knife, is laid down at $5 a dozen; the American knife is laid down at $4.75 a dozen; the Canadian knife can be laid down and is sold at $4.50 a dozen.

The Budget-Mr. Stevens
Now, this is what I want to emphasize. The Canadian manufacturer to-day is manufacturing at a lower cost and underselling both the British and the American manufacturer of this particular article. Why should we ask him, however, to compete with such utterly unfair competition as that to which I have referred with this depreciated currency? I might give a few interesting figures regarding the importations of this German knife, tout I shall not do so at the moment.
What I wish to point out particularly to the Minister of Finance (Mr. Fielding) is that by the present system of valuation that knife is Shipped into Canada at one-third what it can be produced for in Germany; that is, when you take the depreciated value of the mark as the value upon which the knife is entered, and the value of the mark for domestic purposes in Germany, which is three times its value abroad. That, I submit, is utterly unfair competition to which to subject our Canadian industries.
Now, in case there may be those who question the wisdom of this suggestion, let me show what Great Britain -and Australia are doing. I shall also, if necessary, refer to what the United States is doing. But first let me refer to this point, and I invite the attention of both the Minister of Finance and the Prime Minister to what I am about to say. In the first ultimatum to Germany which was issued from London in March last, and to which Canada is a party, it was agreed that the various powers interested would pass an act imposing upon German goods coming into their respective countries a special duty up to 50 per cent, which special duty would be set aside and credited to the German reparations account. The British Parliament passed that measure. Why should we not do so? There is owing to ius on reparations 4.35 per cent of the 22 per cent due to the British Empire, but apparently we have small chance of ever getting it.
Now, let me bring the House back to the pocket knife and show where the profit is going. As my hon. friend said, the Germans ship that knife to Canada through Great Britain, Holland tand the United States. That is true to a certain extent. But how do they ship it? That knife is shipped to an agent of the manufacturer in London, who receives 5 per cent commission. He is virtually a member of the German firm. It is then reshipped to a firm in Montreal-Durkin, I think, is the name, who also are agents of the manufacturers. That firm enters the knife for duty purposes at the figure which I mentioned, 55 cents. I wish the House would follow me closely in this, because I think it amply justifies the position I am taking. That agent in Montreal, representing the manufacturer in Germany, enters the knife at 55 cents, and pays, of course, a low duty. Do the Canadian public get that knife at 70 cents, or with a small profit added? No. That agent distributes this particular kind of knife to the wholesalers at $3.75. Now, do my hon. friends get the point? In other words, there is a differential between 70 cents, the landing price to the agent, and $3.75, the distribution price to the wholesaler, of $3.05. Where does it go? To the German manufacturer; it does not go to the Canadian people at all. Do my hon. friends, the Minister of Finance and the Prime Minister realize this?
Let me repeat this at the risk of being monotonous. That German manufacturing firm-and this applies to all the goods they ship-ship their goods into New York or Montreal, or wherever it may be, in this case Montreal to a special agent, who in turn distributes those goods at a price just low enough to undersell the Canadian made article, in this particular instance at $3.75. The $3.05, the difference between the cost laid down and the distribution cost, goes to the German manufacturer in Germany.
Now, my point is this. We ought to have that $3.75 in the treasury, it ought to go into the funds of Canada, to be credited, if you like, to German reparations account, but I do not think that is necessary, I think it ought to go into the general revenue of Canada. Even then we are allowing those German goods to enter at a figure of 75 cents under the Canadian manufacturer's price.


Mr. KOBB:: If I may interrupt my hon. friend-does he argue that these pocket knives have been coming in during the past year, or that they can come in under the proposed changes?


Henry Herbert Stevens: I know what my hon.
friend refers to, and I am not seeking to evade any point in this discussion. These knives have been coming in through the mediums mentioned by the hon. Minister of Finance through Great Britain, Holland and the United States. I reiterate what I said a moment ago, that these agents established in England, Holland, New York
The Budget-Mr. Stevens

and elsewhere are agents of the German manufacturers, not bona fide local jobbers. Do not forget that. The British jobber does not make a profit, the United States jobber does not make a profit. Bokers are the greatest cutlery manufacturers in the world. They ship to their agent in New York who in turn distributes the goods in the United States.- I have the figures for the United States: 75,000 dozen pocket knives at 70 cents a dozen; 38,000 dozen razors at 71 cents per dozen; 44,000 shears at 95 cents a dozen-all of which were cleared to the agent of the manufacturer. He paid the duty on the low exchange value of the mark, then he distributed the goods to the American wholesalers at the increased high price, making a tremendous profit of four hundred to six hundred per cent for the German Manufacturer. The Canadian government, the British government, the United States government, in these cases, get nothing, the profit goes into the pocket of Mr. Stinnes, whom I mentioned a moment ago, and the other German manufacturers, who, instead of having those funds remitted to them in Germany keep them in New York for use in invading the Mexican market and other markets in competition with this and other countries. And we are feeding them with the wherewithal to compete with us, without getting for the Canadian purchaser one cent of value.	That is
the point	of the	whole	business.
And now the hon. member for Bonaven-ture (Mr. Marcil) says they are turning round like rats cornered in a trench and saying: Make us a loan of a billion dollars. I hesitate to express any opinion upon that, because it is a complicated question, but as I study the matter I am more and more inclined to think that France is justified in saying to the Germans: It is about time you mended your own internal affairs; it is about time you put yourself on an economic basis comparable with that of other nations, instead of refusing to recognize your obligations in the way of reparations to the Allied powers and instead of building up an artificial credit by issuing new currency and depreciating the value of your own mark accordingly.
Now, let me refer to our sister dominion of Australia. I pause here-I had forgotten to do so hitherto, and my right hon. friend will forgive me-to congratulate him (Mr. Mackenzie King) upon the hon-

our recently bestowed upon him. I would like to hear him use these words uttered by Premier Hughes of Australia:
If you think I will vote in favour of trade with Germany, my life has been lived in vain.
What prompted Premier Hughes to say that? It was brought to his attention that German sewing machines had been offered in Capetown and sold there at 18 shillings, umbrellas at 3 shillings, safety razors at 4 pence, silk neckties at 4i pence, and so on. And what did Australia do? Australia passed an act, which they call the Preservation of Industries Act-under which the value of all goods landed in Australia from Germany was raised to the cost of a similar article made in Australia. What I say to the Minister of Finance and to the Prime Minister is this: Either take the basis of valuing goods for import at the Canadian value of the article imported, or

and this is what we believe is the right thing to do-value them at 50 per cent depreciation, or not less than 35 per cent depreciation. I may say -and I say it advisedly, after a good deal of thought-that I would not object to dropping the depreciation to 35 per cent; I would object, though, to going below that. It is surely unfair competition; it is a competition that does not contribute anything to the public treasury or anything to the saving of the purchaser in Canada. I leave that question, Mr. Speaker, with the Minister of Finance; I hope that when he makes the announcement which is promised he will include in it some change in respect to this matter.
We have heard a great deal in this debate about the alleged unfairness of our taxation system. I want to appeal to those who offer that criticism to consider the figures and to revise this oft-repeated -I do not wish to use a harsh word- fallacy, for I think it is a fallacy, which I believe many begin to look upon as an established fact because it is so often asserted. My hon. friend-I have forgotten his constituency-in speaking on this subject the other night used this same argument. I hold in my hand a pamphlet issued by the Council of Agriculture, an institution that ought to know better, in which they say-the same thing has been heard all over the prairies and has been reiterated here-that we raise only 6 per cent of our taxes by direct taxation. Now, that is a statement which is accepted by countless thousands of people in Canada.

The Budget-Mr. Stevens
If indirect taxation, which chiefly consists of customs duties, accounted for 94 per cent of our revenues, well might my friends be alarmed; well might they sing the doleful dirge that we have heard in this House. But what are the facts?


Mr. HOEY:: Will my hon. friend permit a question?


Henry Herbert Stevens: Certainly.


Robert Alexander Hoey: Could he tell me what is the date of that pamphlet of the Canadian Council of Agriculture? I think it is an old one.


Henry Herbert Stevens: I will tell the hon. member when it was used and where I got it. The hon. member for Medicine Hat (Mr. Gardiner) in hi? election last year had these distributee! all over his riding, and I was extendol the extreme courtesy of having one handed to me.


Robert Alexander Hoey: I think it is only fair that the hon. member should state that that is an old pamphlet.


Henry Herbert Stevens: All I can say is that it has on the face of it: "Issued by the Canadian Council of Agriculture." There is no date on it, so far as 1 am able to see. What I am particularly concerned about, however, is that two references have been made to the matter in this debate, and when I asked my hon. friend where he got his figures he said he got them from the Grain Growers' Guide. Bp that as it may, here are the facts : In 1920 we raised 48 per cent of our revenue by indirect taxation and the balance by direct taxation; in 1921 we raised 374 per cent by indirect taxation and in 1922, for the fiscal year ending March 31, 274 per cent. Let me give some figures of taxation receipts by way of illustration. Last year we received $105,000,000 from customs: $36,000,000 from excise; $73,000,000 from inland revenue-that would be sales tax-$78,000,000 from income tax and $22,000,000 from business profits tax.


Mr. FORKE:: The hon. member will recognize that that $78,000,000 from income tax would not be included in that pamphlet.


Henry Herbert Stevens: All right; my hon. friend wants me to go back to that pamphlet. The pamohlet gives these figures: it says that in 1916-17 the figure for customs was $134,000,000; excise, $24,000,000, business profits tax $12,000,000, and so on; 1917-18, customs, $146,000,000; excise, $27,-
000,000; business profits tax, $21,000,000; others, $4,000,000. Yet they say that $146,000,000 is 94 per cent of $27,000,000 plus $26,000,000, or, $53,000,000. And they did not give the other sources of revenue; they do not give all the revenue. My point is this: my hon. friends base their arguments upon inadequate and unfair figures. The hon. member for Marquette (Mr. Crerar) -I wish he were in his seat-took the time of the House to-day to question the accuracy of figures used. My hon. friend is the leader of a great party.


An hon. MEMBER:: Hear, hear.


Henry Herbert Stevens: They are a great party; some of them are over six feet tall. The leader of that party has for some years posed in this House as an economist; he has based all his arguments on economic principles. They may be sound principles, but there are other considerations in the national life besides economic principles; moral, ethical and many other questions have to be considered You cannot by the use of a two-foot rule set out the bounds of a man's activities: he will be, and has a right to be, moved by this, that and the other influence. Now, the hon. member for Marquette said this during the course of the debate:
As I say, we exported goods to the value of $740,000,000 last year. But where did those exports come from? Last year was a year of trade depression, a very trying year throughout the world. Of this total, vegetable products accounted for $318,000,000, and animal products, $135,000,000; in other words, $453,000,000 of the $740,000,000-	.
Came from where? He does not say from vegetable products or from animal products, but,
-$453,000,000 of the $740,000,000 of exports last year had their origin in the farms of Canada.
I have in my hand the very document from which my hon. friend must have got his figures. Certainly it gives vegetable products as $317,814,000, and animal products $135,000,000, but surely to goodness a man ought to check up what animal and vegetable products are included there. All vegetable products do not belong to the specific business of agriculture. In this blue book I have in my hand you will find every article that was referred to by my hon. friend set forth-whisky, furs, leather and every other conceivable thing. Boots and shoes are an animal product certainly, because the hide is tanned into leather. He includes all these various processes of manufacture and says of all these things:
The Budget-Mr. Stevens

What we quarrel with is that these are a part of the products of the farm, and we exported this huge amount.
I am going to examine the figures. My right hon. friend the leader of the Opposition (Mr. Meighen) says we shall be having the hon. member for Marquette up again on the Orders of the Day to-morrow. Perhaps so, I wish he were here to listen. You will remember when the hon. member for Marquette was speaking the other evening, that he dilated for some time on this alleged iniquitous rubber business in Canada. What need have we of a rubber business? he asked; it was not indigenous to this country, we need not bother with it. But he took good care to include rubber in his products of the farm-something over $3,000,000 worth of rubber tires manufactured in Canada included as a "vegetable product." Of course, it is a vegetable product, and so are boots and shoes an animal product; so is sugar a vegetable product, most of it was cane sugar, some $11,000,000 worth of sugar was included, as well as canned goods, shredded wheat, rolled oats, and all the rest of the cereals; $59,000,000 worth of flour exported and credited direct to the farm! Where is the Agricultural Committee? Where is the chairman of that committee? Does not he and all the members of the committee remember how the followers of the hon. member for Marquette went after the millers before that committee? Why, you would have thought the millers were a sort |of curse jto the country to hear some of the hon. gentlemen. But the hon. member for'Marquette includes this $50,000,000 odd in his figures. Let us look at the figures. First I will give the figures my 'hon, friend used. He said that $453,000,000 worth of goods out of the $740,000,000 of exports were from the farm. That is not correct. There was some $70,000,000 too much, and there Was about $50,00,000 more of manufactured articles credited to the farm which-should have beeni deducted. But that was not the unfairness of his argument at all. The unfairness of his argument rests in this. Agricultural products were roughly $1,400,000,. 000. Imports of agricultural products, animal and vegetable, aggregating $200,000,000, added to that $1,400,000,000 make a total of $1,600,000,000. Deduct from that even his own figures of exportation, which were exorbitant, and you have left some $1,167,000,000 worth of farm or agricultural products that were Consumed in Canada. The point we have been trying to make clear to my hon. friends is this, 
that the great bulk of the products of the farm are consumed in Canada. There is your market. Are these figures not clear? My hon. friends laugh in derision. That is the thing that embarrasses anybody who seeks to get at the facts. You could not penetrate the minds of some hon. gentlemen, no matter what you did. If the Archangel Gabriel himself stood on the table of this House and gave hon. gentlemen these figures they would not believe him.
Here are the percentages for last year. Taking the false figures-the inaccurate figures, I mean; I will use the more moderate term-taking the figures inaccurate by $125,000,000, that my hon. friend from Marquette gave, and you have this result, that 28 per cent of the products of Canada were exported and 72 per cent consumed in Canada. But the correct figures are these: For the year 1919-1920, 79 per cent were consumed in Canada and 21 per cent exported; and in 1920-1921, 80 per cent were consumed in Canada and 20 per cent exported. The figures for last year, if the accurate figures were given, would show approximately the same amount consumed in Canada, if not a little more.


Robert Forke: Does the hon. member
realize that if the figures were reversed we would soon pay off the national debt?


Henry Herbert Stevens: If the figures were reversed we would soon pay off the national debt, the hon. gentleman says. That is what I complain of. What would my hon. friends do? They would take the rubber industry, the boot and shoe industry, the cotton goods industry, the farm implements industry, they would take industry after industry and scrap them because they could not compete with foreign competition. Then where would the local market be?


Mr. GOULD:: No.


Henry Herbert Stevens: That is always the answer when they are cornered. But turn them loose on the broad prairies, and they never say, No. My hon. friend would not say No before his constituents. What I say is mild compared with what my hon. friend said in the Fredericton constituency a year ago. The raging inaccuracies of my hon. friend there were simply appalling. What I want to say is this: I care not what my hon. friends' conclusions may be if they are based upon a sound premise and are reasoned from that premise; but when the figures they accept are

The Budget-Mr. Stevens
wholly inaccurate, and the conclusions they arrive at are so wide of the mark, it is very difficult for us to give credence to their sincerity at times.


Mr. BIRD:: May I ask a question?


Henry Herbert Stevens: My hon. friend is a
dandy questioner, I notice.


Thomas William Bird: Does he attribute that inaccuracy to all the members of the Progressive party?


Henry Herbert Stevens: I was on the point of saying, when I was interrupted, that I believe the great bulk of the hon. members of the Progressive party in this House have been wholly misled by just such literature as I brought before the House a moment ago and which was placed in their hands by men who knew better.


Mr. GOOD:: Is the hon. member not
aware that in the figures he has given, there is included a very large amount of agricultural products consumed on the farm, some of it fed to animals to produce beef and dairy products?


Henry Herbert Stevens: Of course, anybody
would know that.


William Charles Good: If so, is not the hon. member's reasoning entirely erroneous?


Henry Herbert Stevens: It must be erroneous to my hon. friend; there is no other conclusion to be arrived at.
My hon. friends talk about taxation. I have in my hand the statement that was given some months ago to the press of the country. I am not going into details, but I want to say this in regard to it: The statement is frequently made-my hon. friend from Battle River (Mr. Spencer) made it-let us assess capital-why not take more from those who have it? Now, who are paying the taxes to-day? That is a question that ought to be asked and answered in this House. Let me say that I have never been, and am not now, interested in manufacturing or anything of that kind. Why everlastingly picture the manufacturer as some horned rascal who is seeking to take from his fellow-Cana-dians that which does not belong to him? That is the common picture drawn by almost every hon. gentleman who speaks. I have been all over Canada many times and into our cities and towns. I worked when I was a boy in the city of Peterborough, as you know, Mr. Speaker, for a firm that represents three generations. They built up their business by attending
to it, starting with a blacksmith shop and making plough-shares seventy years ago, until to-day they have a moderately large agricultural implement business. How? By working and toiling for seventy years and turning their profits back into the business. Now let me ask my hon. friends, is it wise, is it good economic policy when you see a firm making a profit above 7 per cent to take the excess for the state? Will the state make better use of that money than the individual who has it and puts it back into his business? Go over Ontario and Quebec, go over the older provinces of Canada, and you will find everywhere institutions that have been there for two, three or four generations -they are the very backbone of the industrial life of this country. Do my hon. friends know that the average number of employees in industrial concerns in Canada is only eighteen, and that in the United States the average is fifty? Why, these huge concerns are the exception, just an odd one here and there; the great bulk of the manufacturing industries of Canada are small institutions controlled by some of the best citizens in the country who serve Canada in a very excellent and a very admirable way. Let me give one illustration. In the year 1921, the last year for which we have records and figures, the rural population of Canada, according to the census, was 4,441,000. For villages, towns and cities the urban population was 4,347,000-just about a fifty-fifty break. Now let us take the business profits tax and the income tax. Who paid those taxes? My worthy friends the Agrarians paid $611,736, and the other classes, the urbans, paid $87,222,000. Now, my hon. friends will say, as one of them said last night, that the farmers do not have the income wherewith to pay income tax. True, but the point I am getting ait is simply this: Hon. gentlemen say "We are overtaxed; the people we represent are burdened with taxation." Well, I have given the figures as to one branch of taxation alone. My hon. friends do this: They take the customs revenue and divide it by the population of Canada, and then they say "We are paying so much per capita." My hon. friends are altogether erroneous in that. They must know, if they know anything at all, that the great manufacturing centres of Canada, and the great and the small industries of Canada, certainly pay a higher per capita share of the customs duties than the farmer or the person living in private life does. It is utterly
The Budget-Mr. Stevens

unfair and false to base your economic estimates on simply an average of a general tax collected.
Now let me turn from that feature of the subject. We had a most eloquent speech -I think perhaps the most eloquent of the session from many standpoints,-given in this debate by the hon. member for Springfield (Mr. Hoey), and I want to say I was delighted to hear him address the House in the eloquent wey in which he did. His diction was good, as was his assembly of arguments, and I have no complaint to make of those arguments except one. I will demonstrate what that is. My complaint against his arguments and his purpose is this: The remedy which he mentioned-and the only remedy I could find in reading his speech; I heard his speech as well as read it-was "the complete reversal," I quote his own words, "of the fiscal policy of Canada" and, he said, "increasing the purchasing power of the dollar."


Robert Alexander Hoey: Will my hon. friend permit me to make a correction; I feel persuaded he does not want to misquote me. I said "A complete reversal of policy," and I had in mind our methods of farming in the West, our extravagances there and our entire method of doing things. If the hon. member got the impression which he states I certainly did not intend to convey it.


Henry Herbert Stevens: I am very glad to have my hon. friend's statement. I will not quibble over the matter, I will accept his statement absolutely. My hon. friend now says "A complete reversal of policy." That is a statement under which anybody could crawl. I submit to him that it is so broad that no person could pin him down to anything. I do not know what policy he refers to unless he refers to the policy of my right hon. friend the Prime Minister-and that has been scrapped.


Robert Alexander Hoey: I tried to make my argument clear. I said that I was in favour of a low tariff; that in my opinion the reductions in the tariff were wholly inadequate. I think I made that statement.


Henry Herbert Stevens: Well, I am very glad my hon. friend has made his explanation, because it certainly clarifies the atmosphere somewhat. As I said a moment ago he made a very eloquent speech. What did he present to the House? He presented to the House a certain picture, which was a list of the grievances of the farmers of the west. Let me run over some of them

and then view them in the light of the general argument of my hon. friends to my left. He pointed out that "the average yield of wheat in Manitoba has dropped from 19 to 15 bushels per acre"; and he added to this, "that there were only three crops out of four, which reduces the average to 11 bushels per acre." He also made a statement respecting the character of the land. He said that the "nitrogen of the soil had been reduced 20 to 30 per cent"; that the phosphorous content had been reduced by a similar amount; that the organic had been reduced by 20 to 50 tons per acre. He further said that stem rust caused a loss of 5,000,000 bushels in 1916; and the wheat stem saw fly a loss of 3,500,000 bushels in 1921; that "every forty million bushels of wheat took plant food costing $12,000,000 to replace", and that in southern Manitoba lands produce only 10 bushels of wheat per acre; in northern Manitoba 35 bushels per acre. I will admit that every one of these complaints is correct, and I think my hon. friend gave a very clear enunciation of them. But I ask him, is there one of all that list that is affected by the fiscal policy of this country? Are they not all technical agricultural problems? Has not every problem presented there been under the consideration of the Minister of Agriculture of the previous government,-under the consideration of his own leader when he was Minister of Agriculture-under the consideration of the present head of that department? Every one of them is a technical problem. But the trouble is this: My hon. friend presented these grievances to the House as if they were related to the fiscal policy of the government or, if you like, the fiscal policy of the country. He says the policy of the country, the general policy, is to blame. But these are technical questions that can only be dealt With by experts; and I know of no group of men who know more about the remedy for these things than my hon. friends who suffer from them. Yet I do not recall, during this whole debate, or during the entire session, one single concrete suggestion for dealing with these problems was advanced by any hon. member sitting to my left-not one.


Robert Forke: I am very sorry; I thought I had delivered a very good speech explaining them. However, it does not seem to have done any good.


Henry Herbert Stevens: My hon. friend, no
doubt, deilivered an eloquent speech, but I

The Budget-Mr. Stevens
do not recall that he ever dealt with these particular questions.


Robert Forke: My hon. friend will come to a different conclusion if he refers to Hansard.


Henry Herbert Stevens: Now Mr. Speaker, I must hasten to close. There was one thing I wished to refer to before we get away from the manufacturing question and the subject of the tariff. My hon. friends on my left are very fond of declaring economic principles. My hon. friend from Battle River (Mr. Spencer) yesterday made the statement that we ought to assess capital. He said that when the war was on and the manufacturers were prosperous we should have taxed their profits. Well, we did do that; we taxed them pretty heavily. I would ask the hon. member for Marquette (Mr. Crerar), who does not grace the Chamber with his presence just now, this question: Will he move in the House to increase the income tax? Will he move to reinstate the business profits tax? Why has he not done so? If the income tax is too low, why go out through the country and say it is not high enough and then come to the House for one, two, three, four, five years-it is his sixth session now- and never once propose that the income tax should be increased in any particular way and never once move the adoption of the Farmers' platform? But I am speaking of the income tax and the business profits tax and I would like to put a question to my hon. friends to the left collectively. The question is: Is it sound business policy in periods of prosperity for a manufacturing concern to reserve and hold some of its profits against a decline of the market? Is that not sound? Will any hon. member object to that? Let me tell hon. members that the basis of their whole criticism of the business system of to-day is on that point. They infer and insinuate that, if a business concern makes a profit beyond 7 or 8 or 9 per cent, that profit should be sequestered for the good, as one hon. member said yesterday, of the community. I want to tell them that that is a false doctrine and that it never has and never will lend itself to the prosperity of any country. I notice my hon. friends are very careful about not giving expression to their views now. I hold in my hand the last report of the business end of their institution. Here is the political end which you see here before you, and the business end is the United Grain Growers. I have their annual report.	1


Oliver Robert Gould: In the figures you quoted, mentioning the 7 per cent, I suppose you include the watered stock of the companies?


Henry Herbert Stevens: If the time would permit I could give my hon. friend a very interesting talk on that. As. an auditor and accountant, it has been my business, scores of times to liquidate companies and audit their books, but it would take some time to go into that question now. There are comparatively few institutions that have unduly watered stock. That is a stock phrase that my hon. friend and others like him who seek to stir up the passion, and hatred and the envy of persons who are not so well informed as he is. It is about 90 per cent false, and, here and there, about 10 per cent accurate. Here is what the business end of their institution says-


Mr. WARNER:: The hon. member speaks about unduly watered stock. I want to know if he considers that watered stock should be protected, and what he considers "unduly" watered stock?


Henry Herbert Stevens: If hon members must
have an answer, I will say this: hon. members have no right to stand in this House, as individual members of this House, and recklessly acclaim to the public that there is wholesale watering of stock, undue, due or any other kind. I say to them, if you know of any case where a company has unduly watered stock, state the name of the company, give the facts, let the country judge it, and let the hon. Minister of Labour, (Mr. Murdock) who has made some very strong statements on the subject, take up the case. I pay no attention to the argument that companies should not water their stock. I think, speaking generally, it is not a sound position. But what I object to is. the reckless insinuations, made not in mental ignorance but in ignorance of the facts. When my hon. friends talk about watered stock, they always cite one or two cases from the cost of living committee. They were brought to the attention of the committee by myself, as hon. members will see if they read the evidence. The one main stock cry of the leader of the party throughout Ontario was quoted from the evidence extracted from a witness before the Cost of Living Committee by myself. However, I want to read from the Annual Report of the Grain Growers Limited, of Winnipeg, with which is affiliated seven or eight other companies, including the Grain Growers' Export Company, incorporated,
The Budget-Mr. Stevens

of New York, the Grain Growers' Export Company of Canada, and others. I will quote from this report as the very essence of the wisdom of their own leader. This report reads:
We have here a lesson in what would have been the proper course to have taken during the tremendous and rapid increases in prices during the war. All stocks-
That is, stocks on hand.
-should have been marked up as the prices went up, irrespective of what the goods cost and the profits taken and set aside to care for these losses when the prices came down.
That is the doctrine. Are there not dozens of hon. members in this House who have, time after time, declaimed against the companies and the business corporations. And why? Because when there was a buoyancy in the market they took profit, and then when you point out to them that they must absorb their losses, there is an absolute barrenness of sympathy for them. But here is what is said in the last annual report of this institution, signed by their own leader as president of the institution:
We do not consider it wise to secure machinery from any plants that are not established on what may reasonably be considered a secure and permanent basis, as the difficulty of securing repairs in case they should go out of business has already been experienced.
How could they secure themselves? By adopting the wise economic policy mentioned in the previous clause and reaffirmed in this statement. The report further says:
There has been a good deal of agitation during the past few years for the company to either purchase or secure the controlling interests in a machinery manufacturing plant.
How often we have heard that sort of thing-" Oh look at the profits made by these institutions, profits to which they are not entitled". Is not the obvious answer echoed back? Has not the hon. member from Assiniboia (Mr. Gould) uttered in his stentorian tones all over the country the answer, which is given by the locals, " Why do you not go into the business?" That is what the locals are saying all over the country. This report says:
There has been a good deal of agitation during the past few years for the company to either purchase or secure the controlling interest in a machinery manufacturing plant. After a study of the situation which exists in the manufacturing of machinery in United States and Canada over a period of between two and three years, we are of the opinion that it would be a mistake for the company to consider putting any money into a plant for the manufacture of farm machinery.

If I wanted to sum up in one or two paragraphs a complete answer to the economic arguments and dissertations uttered from one end of the country to the other by my hon. friends to my left, I find it in the annual report of their business institution.
I intended to pay my respects to the hon. members opposite, but I shall have to desist at this time. I shall do that by a very vigorous vote against the budget, unless it is adjusted very materially on some points to which I have referred. In closing I simply say to my hon. friend the Minister of Finance (Mr Fielding) that I trust the argument I advanced in connection with the depreciation currency clause will receive very great consideration, because I believe if it is allowed to go as it is at the present time it will wreck many of the manufacturing concerns of Canada and the people of Canada as a whole will receive no benefit, nor will the treasury of Canada receive any benefit.


Hon.   S@: May I be permitted Mr. Speaker to add a few remarks to this very interesting debate which has been going on for several days, and which I feel I cannot allow to close without expressing my views on the fiscal policy of our country-views which, during the last electoral campaign I placed before the electors of my constituency and before the electors of the province of Quebec.
Two questions are before us for our consideration. We have first the proposals submitted by the Minister of Finance (Mr. Fielding) in presenting his budget. Then we have the amendment moved by the ex-Minister of Finance (Sir Henry Drayton), asking that the Government be censured, because, it is claimed, it did not carry out the promises contained in a resolution of the Liberal Convention of 1919 with regard to the fiscal policy of Canada. Many speeches have been made, many very eloquent, every one very interesting, all, in the main, in continuance of a discussion which has been going on in this country for over forty years, on the merits of the respective policies of protection and free trade. The leader of the Opposition (Mr. Meighen), in a speech delivered at Sherbrooke, in September, 1920, stated that the opposition to the Government of that day was composed, in the majority, of free traders.

The Budget-Sir Lomer Gouin
And in another speech delivered at London, when he made public that he had decided to ask for dissolution of Parliament, he stated that the main issue, if not the only issue, of the future campaign was to be the tariff. During that very same campaign, indeed, all through that campaign, I constantly maintained that the issue was not between protection and free trade; that the Liberals of this country, as a party, were not free traders; that they had always been in favour of a tariff. And it is to refute contrary and unjust contentions, too often repeated, that I seek permission to say a few words.


Arthur Meighen: Will the hon. gentleman not be fair enough to make clear that, in my references, at Sherbrooke and subsequently, to the fact that the majority of those opposed to the Government claimed allegiance to the gospel of free trade, I included all, including the present Progressive party?


Sir LOMER GOUIN:: When I speak of the Liberal party, I speak of the Liberal party. At that time it is possible that some of the hon. members of the Progressive party were supposed, by the leader of the Opposition, to be members of the Liberal party; but I have always thought that the Liberal party, as we have it to-day, as we have had it since Confederation, is the Liberal party which sits to your right, Mr. Speaker, and it is for that party that I speak.
As you know, Mr. Speaker, we have had a tariff since the very first days of Confederation. When the Liberal party came into power for the first time in 1873, we had, as our leader, a man who believed in Liberal principles. Under his
5 p.m. administration, the Liberal party, of its own volition, decided to increase the customs duty. The Hop. Mr. Mackenzie declared, not once, but time and time again, that there could not be in Canada any issue between protection and free trade. After him, the Hon. Edward Blake, one of the greatest statesmen that Canada has produced, during the whole of his career, while he was Prime Minister of Ontario, while he was Minister in the Cabinet at Ottawa, while he was leader of the Liberal party, always maintained that the contention of the Conservative party that the tariff was the issue between the two parties was unreasonable and unjustified. To dispel any doubt to which my statements might give rise, and, perhaps, for the good of
the electors of this country, I would ask permission to read some extracts from a speech delivered by the Hon. Mr. Blake, at Malvern in 1886. That speech is, I would say, historical, and it sums up the Liberal programme on the fiscal policy at that time. This is what the Hon. Edward Blake said then:
You know well that I do not approve of needless restrictions on our liberty of exchanging what we have for what we want, and do not see that any substantial application of the restrictive principle has been or can be. made in favour of the great interests of the mechanic, the labourer, the farmer, the lumberman, the ship-builder or the fisherman. But you know also that I have fully recognized the fact that we are obliged to raise yearly a great sum made greater by the obligations imposed on us by this Government; and that we must continue to provide this yearly sum mainly by import duties, laid to a great extent on goods similar to those which can be manufactured here; and that it results as a necessary incident of our settled fiscal system that there must be a large, and, as I believe, in the view of moderate protectionists, an ample advantage to the home manufacturer.
Our adversaries wish to present to you an issue as between the present tariff and absolute free trade. That is not the true issue. Free trade is, as I have repeatedly explained, for us impossible; and- the issue is whether the present tariff is perfect, or defective and unjust	My reference there to the fiscal
and financial limitations of our condition has increased force to-day, for since that time enormous sums have been added to the public debt; enormous sums have been added to the annual charge ; and notwithstanding the great taxation, a larger deficit than we have ever know since Confederation has signalized the last financial year. Therefore the execution even of those measures of readjustment which I suggested in that address, and which had proposed in Parliament in the preceding session, would be found much more difficult to-day by reason of the changed condition of affairs. We have no longer a large surplus to dispose of-we have a large deficit and a greatly increased scale of expenditure to meet. And it is clearer than ever that a very high scale of taxation must be retained, and that manufacturers have nothing to fear.


William Findlay Maclean: Was not that very speech made the issue between Mr. Blake and the Liberal party at that time, practically ending in his withdrawal from the leadership? And was not the Globe newspaper his adversary in connection with that very question as much as the then Conservative party?


Lomer Gouin: In reply to my hon. friend, I may inform him that hon. Mr. Blake continued to be the leader of the Liberal party.


William Findlay Maclean: No, the Liberal party deposed him.
2656	COMMONS
The Budget-Sir Lomer Gouin


Lomer Gouin: At that time, Mr. Speaker, as in 3 896, 1911, 1920 and 1921 the Conservatives, to scare the electors in general and the manufacturers in particular, informed the country that if the Liberal party was returned to power it would lower the tariff to a point which would spell ruin to our manufacturing industries; and Mr. Blake, speaking for all the Liberals of Canada from the Atlantic to the Pacific, then said, with the full authority of his leadership, what I am now going to read:
There remains the duties of customs on other commodities, and the conditions demonstrate the impossibility of diminishing to any large extent this fund. We have no longer a surplus to dispose of; we have a deficit to overcome; and, that done, we have a tremendous yearly charge to overtake. "Oh, but," say some Tories, "you can yet do this and make a free trade or non-protective tariff." The statement is dishonest and absurd. Even in Mr. Mackenzie's time, with his fiscal views, with his moderate expenditure, it would have been absurd. . . .
I invite the most ardent free trader in public to present a plausible solution of this problem ; and I contend that he is bound to do so before he talks of free trade as practicable in Canada. I have not believed it soluble in my day, and any chance of its solubility, if any chance there were, has been destroyed by the vast increase of our yearly charge, and by the other conditions which have been created. The thing is removed from the domain of practical politics. In their discussions the Tories say that Mr. Mackenzie's was a free trade tariff. I will give you high authorities to the contrary. As a fact, substantial duties were laid on almost everything which we could make at home; and Mr. Mackenzie increased those duties beyond the rate at which they stood when he took office. Sir Richard Cartwright has lately stated that he contemplated a still further increase, and he was right. Subsequent experience has demonstrated the fact that the circumstances required that course.
And in this same speech he emphasized that statement, saying:
I have only to repeat in the most emphatic language my declaration that there is, in my judgment, no possibility of a change in that system of taxation which I have described, the necessary effect of which is to give a large and ample advantage to the home manufacturer over his competitor abroad.
He also stated in the course of that speech:
There is nothing there-I could not honestly say anything-as to the removal of the tariff of duties having a protective operation in order to the substitution of free trade. I have shown you that this was not possible before 1S73; that it was not possible during Mr. Mackenzie's time; that it was still less possible in 1882 ; and that it is far, far less possible now even than it was in 1882. That being so, I could not honestly propose to accomplish the impossible.
In the main, Mr. Speaker, those are the principles which have always inspired the Liberal party and its leaders. Those in the

main are the principles which Sir Wilfrid Laurier and the hon. Minister of Finance embodied in the revisions of the tariff of 1897 and 1907-revisions which brought the most prosperous era in our national history. And we shall see a return of that prosperity under the present administration, ably led by the right hon. Prime Minister (Mr. Mackenzie King), aided by the experience, the wisdom, the ability and the high patriotism of the hon. Minister of Finance (Mr. Fielding), to whom have been paid such well-deserved compliments by hon. members of all parties, and I beg leave to associate myself most heartily with them..
Mr. Speaker, the policy of the Liberal party on the fiscal question, in the last electoral campaign, is to be found in the speeches of the right hon. Prime Minister and the Minister of Finance delivered in this House during the budget debate last session. I propose to read a few sentences only of a speech by the hon. Minister of Finance to show his attitude on our fiscal policy. Speaking on the budget last year he said:
I would not have any industry which is at present established in Canada unfairly dealt with; I would not try to strike down any industry that exists to-day, even if it were not wisely established.
And he proceeded:
There is no issue of free trade in Canada today. The Liberal party of Canada has not proposed free trade, did not propose free trade when it was in office, does not propose free trade to-day. And just as we said then to the people that they could trust the Liberal party, if they came into power, to be fair and just while following sound principles, so we say to the people of Canada and the manufacturers of Canada to-day: Do not be misled by the statements made by my right hon. friend about free trade, because it is merely, as I said, a repetition of the old game of 189G; and as it failed in 1896, so it will fail in 1921 or 1922, whenever the election arrives.
The right hon. leader of this House at the same time, in a very eloquent speech, said:
Let me repeat, Mr. Speaker, the issue is not between protection and free trade. If anyone has any doubhts on that score, let him read the second clause of the amendment which is before the House, and which will be supported unanimously, I believe, by hon. members on this side of the House. What is the first sentence of that clause? It is to the effect that existing financial requirements of the Dominion demand the maintenance of the customs tariff.
Again, in an article published in Maclean's Magazine, under his own name, the right bon. Prime Minister wrote:
With the Liberal party, the main concern respecting the tariff is not free trade or protec-

The Budget-Sir Lower Gouin
tion, it is revenue, and the simultaneous development of industry in such manner as is likely to serve best the interests of the Canadian people. There Will be required for purposes of revenue large sums of money which, of necessity, will have to be raised by indirect taxation through a customs tariff.
Are these declarations, Mr. Speaker, a contradiction of the resolution submitted by the hon. Minister of Finance? Whatever may he said by hon. members who sit to your left, how could we do better than what is proposed by the 'hon. Minister of Finance? From 1873 to 1877 the Hon. Mr. Mackenzie told the electors of this country, both friends and opponents, that absolute free trade was impossible in Canada; that we required a tariff to meet our expenditures. The Hon. Mr. Blake, while he was leader of the Liberal party, always contended that the Liberals were not free traders; that free trade was impossible in our country; that we required a tariff for revenue, and that that tariff, while bringing us revenue to meet part of our expenditure, would enable at the same time the manufacturers of our country to compete with those of other lands. He gave as an argument to justify his position the fact that we had a very large debt; that ouir expenses had increased in such large measure that it was impossible to secure the necessary revenue for _ the administration of the public affairs without imposing a tariff for revenue.


Mr. SUTHERLAND:: Did Mr. Blake not change his views when he resigned the leadership of the Liberal party, and did he not, in the letters he wrote to his electors in Durham, give that as t'he reason why he resigned?


Lomer Gouin: He did not resign on the question of the tariff; I do not know that the Hon. Mr. Blake ever changed his views on the fiscal policy of this country. When we consider that in 1882 our national debt amounted to $153,000,000; that our (revenues totalled $35,000,000 and our expenditures $34,600,000; when we consider that our national debt to-day amounts to $2,500,000,000; that it increased by $92,000,000 in 1921 and by $86,000,000 in 1922; that the estimated expenditure for the current year is $466,000,000 and the estimated revenue $332,000,000, a difference of $134,-000,000-when we consider these things, and if the views of the Hon. Mr. Mackenzie and the Hon. Mr. Blake were sound; if the Laurier-Fielding tariff was sound, how can any one pretend that we in this country can do without a customs tariff? Do you know, Mr. Speaker, that to-day the percentage of customs revenues in proportion to the whole is less than 50 per cent of what it was in 1871, in 1881, in 1891, in 1901, and in 1911? In support of that statement let me quote the following figures:



REVENUE.

[Stage Direction]
Year	Dutiable	Duty Collected	Total Receipts	Per Cent.$	$	$ cts.	1871	60,094,362	11,807,590	19,375,036 79	60-941881	71,620,725	18,492,645	29,635,297 54	62-401891	74,536,036	23,416,266	38,579,310 88	60-791901	105,969,756	29,106,980	52,516,332 76	55-451911	282,723,812	73,312,368	117,884,328 36	621921	47,561,406	174,775,787	436,292,184 41	401922	105,500,000	381,271,000 00	28
The revenue from customs decreased last year by some $57,000,000, as was stated by the hon. Minister of Finance. The minister estimates that the current year will show another decrease of some two millions and a half. The estimated customs revenue for this year is $103,000,000. Compared with the total estimated revenue, and adding to the latter the probable increased revenue which we shall receive from the new taxes, the percentage of customs revenue for this year will be even less than it was last year; in other words, we shall receive this year from customs collections less than 28 per cent of our total revenue, whereas in 1871, 1881 and even as late as 1891 it amounted to 60 per cent of our total revenue. In the United Kingdom, to which reference has been made many times during this debate, and which is cited as a free trade country, we find that the revenue from customs and excise amounts to about 25 per cent of the total revenue. Mr. Speaker, to-day as last year, as in the first days of Confederation, we require the tariff revenue to meet our expenditures.
Same hon. members have contended during this debate that the industrial establishments of the country have not been beneficial1 to Canada but have rather hindered its development. I must say that none of the speeches I have heard or have read have convinced me that such a contention is justified. On the contrary, I believe to-day, as I believed in the past, that the manufacturers have been a strong factor in the development of Canada. With the majority if not with all the members of this House, I am of opinion that the basic industry of Canada is agriculture. But I am of opinion also that without our
2658	COMMONS
The Budget-Sir Lomer Gouin
manufactures our country would not have reached the degree of development that it has attained to-day.
Sir Wilfrid Laurier, whose authority we all like so much to cite in this House and outside, before he was entrusted with the administration of affairs in this country, long before, at the very commencement of his brilliant career declared in 1871 in a speech which he made before the House of Quebec that we should not think of remaining a farming country, and he declared in most emphatic terms that we should create national industries in this country. Here is the language used by Sir Wilfrid Laurier on that occasion:
It is a humiliating confession to make that, after three centuries qf existence this country is still unahle to supply its own wants and that it is stiil obliged to have recourse to foreign markets, though nature has lavished upon it all the gifts necessary to render it a manufacturing country. . . .
It is a duty, especially for us Canadians of French origin, to create. . . .
Thus far it seems to me that the Government has been moving in the wrong direction. The Government has devoted itself to recruiting an exclusively agricultural immigration-its efforts will end in nothing. The agricultural population of this country will never be increased from outside. . . .
We can, however, introduce here with good results, I think, an industrial immigration. I do not mean simple workmen, but master mechanics and small capitalists such as are to be found in all the cities of Europe.
I remember the time when we had in this country very few manufacturing establishments, especially in the province of Quebec. I remember the days when many of our farmers had to abandon their farms, where they could no longer find subsistence for their families, and leave their native parish. The farms of Quebec at that time were just as fertile, just as productive, as they are to-day; our farmers of those days were just as robust, just as hard workers and as thrifty as the farmers of to-day. But they had no market in which to sell their products. They had to abandon their farms and leave their parish to seek work in the neighbouring republic where industry was properous. The same thing was happening in all the old provinces of the Confederation, and so we lost annually thousands and thousands of the best of our citizens, not immigrants who were only passing through Canada, but good Canadians whose families had lived for generations in our Canadian land.
You are no doubt aware, Mr. Speaker, of the many compliments which have been

paid to the province of Quebec during the last four or five years. I think I know the good old province of Quebec as well as any Canadian, and I say without any hesitation that what has contributed in a very large measure to make our province prosperous and our farmers satisfied with their lot is the fact that our manufactures have su'pplied our farmers with a market where they can sell their product, and what I say for Quebec must be true, and it is true, of every province of this Dominion where there are manufacturing establishments. If that industrial development is due in a measure, and I say it is in a measure due, to our fiscal policy, whether we call our tariff a tariff for revenue or designate it by any other name, it seems to me we have no reason to regret it.
Arthur Meighen: Hear, hear. What
is the difference?


Lomer Gouin: I have a table before me which shows the progress of our manufactures in Canada since 1870. I find that in that year the value of our manufactured products was $221,617,773; in 1890, $469,847,886; in 1905, $718,352,603; in 1910, $1,165,975,639; in 1917, $3,015,577,940; in 1918, $3,458,036,975 and in 1919, $3,520,724,039. No one can deny that our manufactures have been great contributors to the growth of our large cities. Through the establishment of industries we have prosperous towns, and villages to-day, where less than thirty years ago we could see but a very few houses.
One hon. member who spoke during the course of this debate said that between 1911 and 1921 we had lost over two million good citizens of this country, and we wonder why so many of our citizens who should have found space and place to build their homes in Canada have left us. I may be wrong, Mr. Speaker, but I am of the opinion that if we had had in this country more industries, we would'have kept with, us many of those who have left us to go elsewhere. Do you not think that those two million citizens we thus lost, if added to our population of nine millions, would have consumed that 27 per cent of exportation of our farm products? Statistics show that England has invested in our country two and a half billions of dollars, and that the United States have invested nearly two billions of dollars. We have, if our statistics are correct, some three billions of dollars invested in industrial establishments.

The Budget-Sir Lomer Gouin
Do you not think Mr. Speaker, that if the tariff were removed it would have a very bad effect on those investments and do you not think that capital, which is easily driven away, would seek in some other country the return ,which it could not find in our land? Listening to the members of the Progressive party I could not but conclude that the inhabitants of the prairie provinces are under the impression that the eastern provinces act selfishly towards them. Do our hon. friends suppose that without our manufacturers Canada would have progressed as it has done, even in their own provinces? We know and we regret to know, that the farmers of the West are going through days of difficulty. But this can Ibe only a temporary crisis, and I would ask them whether they think that by cutting down the revenue of approximately $103,000,000 that we receive from our customs, something like $12 per capita, that by dropping that revenue they would remedy the evils from which they suffer and of which they complain? Would they take upon themselves the responsibility of making radical reductions in our tariff and closing down many, if not the most of our manufactures, and throwing on the street the five or six hundred thousand workers who find in those manufactures a living and subsistence for their families? Moreover, Mr. Speaker, if we have to reduce our tariff to such a figure that we would not receive more than ten, or fifteen, or twenty million dollars, with the obligations we have to face we would necessarily have to find some other sources of revenue, and our friends of the prairie provinces would have to contribute their share of the new taxes. The remedy for the conditions under which we suffer, Mr. Speaker, is the increase of our population and strict economy. Abolish the tariff? ' No government would think of doing it, and no government could do it even if it tried. Strict economy is needed. Drastic economy is easy to preach but very difficult, and at times painful to practice. Nevertheless however painful and difficult the task may be, whatever government is entrusted with responsibilty for the administration of Canada for years to come, it will have to accept and fulfil that task if we look for the salvation of our country.
As to the increase of our population we can have it by a sane immigration
policy. We have already spent very large sums to induce immigrants from the older parts of the world to come and settle in our country. I understand that since 1900 we have spent over $20,000,000 upon immigration. Many of those who have come, invited as they were by our agents, have left our country; but we have kept some of them and I believe that in the future we should look for a good class of immigrants, who would come to our land to help us in Lie development of our natural resources.
With the Minister of Finance I understand the very serious position we are in, as are many countries in the world, as a result of the great conflict which brought mourning, misery, trouble and anxiety in its train, but a conflict which fortunately terminated in ihe triumph of right and justice. I realize the weight that rests upon the shoulders of our good citizens. I sympathize and fully sympathize with our good farmers whose service is so essential to the very life of our people and who are actually not equitably remunerated. I do not forget, I cannot forget, that we have in this country at this hour too many unemployed. Nevertheless when I consider our immense riches, wben I consider our innumerable possibilities, I am confident in the future. I believe that our good people will unite to surmount and to alleviate the sufferings and miseries of the day and that soon, with the help of Providence, we will see in this gojd land of ours the return of that era of prosperity, of unity, of harmony, of contentment and of hope which we enjoyed before 1914.
I have very few words to add in regard to the amendment proposed by the ex-Minister of Finance I am confident that the people, the electors of Canada, will not consider this amendment serious any more than did the Canadian press. No, Mr. Speaker, the electors of Canada were not deceived by the Liberal party during the last electoral campaign. Some of the electors were disappointed, bitterly disappointed, but the majority were perfectly satisfied. The electors of Canada voted in favour of the Libera! party because they had confidence in that party, and they voted against the government because they did not want any more of the National Liberal Conservative regime.


Mr. LAPOINTE:: Cheer now.
Mr. MEIGHEN" I shall wait for the argument.



The Budget-Sir Lomer Gouin


Lomer Gouin: As to our friends of the Progressive party, when I count the number of members who have come from the prairie provinces in support of the Liberal party, I cannot imagine how the electors of those provinces at all events could ever contend that they were deceived by the liberal promises of the last electoral campaign. As to the provinces where the Liberal party secured its majority, the hon. members who support the Government can confidently return to their constituents, rightfully conscious that they have fulfilled their mandate. For, Mr. Speaker, notwithstanding what was said by the hon. members of both oppositions, the budget submitted for our consideration by the hon. Minister of Finance (Mr. Fielding) is in perfect consistency with the promises made to the electors of Canada by the Liberal party during the last election. Speaking for myself, Mr. Speaker, I will go back to my good province of Quebec, to tell the people of Quebec, that they were right and that they were wise when they unanimously on the 6th December last voted confidence in the Liberal party. I will feel proud to tell them that the leader of this House, the right hon. Prime Minister of Canada (Mr. Mackenzie King) has shown by his eloquence, by his broadmindedness, by his courage, by his sincerity and his patriotism, that he is the worthy successor of our great late chief, Sir Wilfrid Laurier.


Mr. T. W. CALDWELL (Victoria and Carleton) :: Mr. Speaker, before proceeding to discuss the question before the House, I wish to join with the hon. members who have preceded me in this debate in extending sincere congratulations to the hon. Minister of Finance (Mr. Fielding) on having achieved the unequalled distinction of having delivered his sixteenth budget to the Parliament of Canada, as well as the contribution he has been able to make to the advancement of Canada in other respects, not the least of which was his effort in 1911 to bring about the reciprocity agreement between Canada and the United States and his recent efforts along that line.
Before proceeding to discuss the budget, I wish to refer to some remarks made by the hon. Minister of Justice (Sir Lomer Gouin). I noticed when he was expounding his tariff belief a very peculiar thing, that the applause came from the official Opposition, and not from his own supporters in the House, and I noticed that, when he began to speak of the result of

the election last fall, his own followers showed the first symptoms of cheering up a bit. Another statement he made was that the manufacturers of Canada had furnished a market for the products of the farm in Canada. I do not like to interrupt an hon. member when he is speaking, although I would have liked to have asked him if he would pretend to tell the House or this country that the wheat, or potatoes, or other farm products grown in Canada, can find a market here, notwithstanding the fact that we have had forty years or upwards of protection. Last year, in my province alone, there were thousands of barrels of potatoes dumped, because there were no markets in Canada for them. The price we could have received for potatoes would not have paid the freight to market. The same condition continues to prevail and the farmers in the present year have received less than 50 per cent of the cost of producing the potato crop in my province, which is the crop we grow for export.


Mr. McQUARRIE:: Will the hon. member tell us if any potatoes came into his district from the United States?


Thomas Wakem Caldwell: No. I want to
digress a moment. I was willing when I came to this House to believe that the farmers and the people of British Columbia generally were as efficient and as able to take care of themselves, possibly, as the people of New Brunswick. I have been compelled, almost against my will, to reverse my judgment, because I find the people of British Columbia bewailing the fact that they cannot hold their own against the residents of the United States immediately opposite them.
In the province from which I come the farmers are very anxious to have a reciprocity agreement enacted between Canada and the United States. I live immediately next to that great potato belt in the state of Maine, with the imaginary line between us, and the people of the state of Maine are afraid of their lives that we will get reciprocity with United States. They are urging that barriers be placed against Canada. So that I cannot help thinking that we must certainly be far more efficient in New Brunswick than our farmer friends in British Columbia, because I do not think the farmers of either New Brunswick or the state of Maine will admit there are more efficient farmers in the United States, especially potato farmers, than can be found in the state of Maine. They are afraid of competition with the farmers of New Bruns-

The Budget-Mr. Caldwell
wick, while the farmer in British Columbia is afraid of the competition of his neighbour on the United States side. I can hardly understand this unless it be that the British Columbia farmers and the people generally are not on a par with the people in New Brunswick. It is the only way I can account for it.
Owing to the fact that a committee of which I am a member was sitting last night I had not the pleasure of hearing the speech of the (hon. member from Lincoln (Mr. Chaplin). However, When I came to read it this morning jl found I had not missed very much, because it was the same speech he delivered two years ago with a few variations. One of these had reference to the duty on potatoes; he said two years ago the farmer had 'benefitted to the extent of $10,000,000 due to the duty on potatoes. In his speech last night it was increased to $15,000,000, although jhe quoted from the same statistics. Another thing he said was that I had demolished the argument he made in this House in 1920, and that he had not had a chance to reply to my criticism. The hon. member for Lincoln sat in this House last session, and I think I am right in saying that you will not find his name in Hansard last year. One member of the Opposition last year was unkind enough to say that the reason he did not speak in favour of his government last year was that he had not received a further contract from them to supply goods in connection with the Roumanian loan. I do not know if that was the reason. But he said he had not had a chance to reply to my statement, although he was in the House all last session. Last night the hon member said:
I might say here that X gave some of these figures once before, and the hon. member for Victoria and Oarleton (Mr. .Caldwell) demolished my whole argument by saying that the member for Lincoln ought to know that there is no duty on potatoes.
This was in 1920, and he still insists there was a duty on potatoes at that time. He does not seem to realize the fact that the duty was removed from potatoes, either going from Canada to United States, or *coming from the United States to Canada during the session of 1918, two years previous to the time he made the statement in this House. He insisted in 1920 that the duty still remained on potatoes. It is just possible he does not know the war is over, although I would think he should know, because he helped supply the goods for the Roumanian loan made by the government, after the war was over.
In coming to a discussion of the budget, I wish first to quote a statement made in this House two days ago by the present Prime Minister (Mr. Mackenzie King). He said:
I submit as I have already intimated, that in the proposals which the Minister of Finance has brought down, he has succeeded in relieving taxation, as it bears upon the great mass of the people, and shifting the burden of taxation to a more considerable extent on to the shoulders of those who are best able to bear it.
I do not agree with that statement of the Prime Minister, and I hardly think he can be sincere in making it, because I am going to quote from his speech in 1920, when this tax was instituted by the party which is now the official Opposition, and I think this quotation will prove that I have a very good right to think that he has not, unlike the hon. member for Lincoln (Mr. Chaplin) given us the	same
speech that he gave us two years ago, nor is he agreeing with the speech which he made two years ago; absolutely the contrary. I contend, as I did in 1920, that the sales tax imposes a burden on people least able to bear it. When that method of taxation was under discussion, I supported the idea of imposing a lpxury tax and also a business or excess profits tax, as did the present Prime Minister. I deplored the fact at that time that the government would put a sales tax on the necessaries of life, which tax, I stated I thought would tend to race suicide in this country. I was ridiculed for making that statement in the House, although I think I proved it very well before I sat down. Let us take the case of the workingman who is working for a small wage. He has a large family and he must find for them the necessaries of life, food, clothing, boots and shoes and so on. They are not all taxable; but many of them are, and I think, when I quote the Prime Minister's speech in 1920, I shall have good proof for the statement that I am making at the present time. I said that this would tend to race suicide because, I asked: How can a poor man provide for a family if this sales tax is imposed on all the necessaries of life? I think the House will agree with me that the tendency is for the poor man to raise the big family; and in the imposition of a sales tax, the revenue is collected, not according to a man's ability to pay, but on the necessities of himself and his family, no matter how poor he may be.
At six o'clock the House took recess.

The Budget-Mr. Caldwell
After Recess
The House resumed at eight o'clock.


Thomas Wakem Caldwell: Mr. Speaker, when
the House rose at six o'clock I was about to quote from a speech made by the right hon. Prime Minister in this House in 1920 in order that I might prove the inconsistency of the statement he made two days ago and of this budget with what he stated at that time. Two days ago he said:
The present budget would shift the burden at taxation to a more considerable extent upon the shoulders of those who are best able to bear it.
To-day he claims that increasing this tax by 50 per cent will shift the burden of taxation to a more considerable extent upon the shoulders of those best able to bear it. Now I am going to quote what the right hon. gentleman said two years ago about the shoulders best able to bear the burden of taxation. While approving the luxury tax, he criticized the government for introducing this sales tax, and he said:
But what have they done? Instead of alleviating the high coat of living as it affects the great mass of consumers they have added to it. They have increased the cost of living and made it more difficult for the people of Canada to live than it has been heretofore. To an invisible tariff they have added a visible tariff on a great multitude of commodities, thereby increasing the coat of living to the vast body of consumers. From one end of Canada to the other, in every home, there has been considerable difficulty in ooping with the situation. Go where you will, you will find this the batfling problem that taxes the ingenuity of the great majority of the people. As I say, Mr. Speaker, instead of meeting the high cost of living as it was obviously the duty of the government to have met it, by reducing the tariff on the necessaries of life, they have added this visible tariff in the nature of an excise to the invisible tariff which already exacts its toll from the people in regard to commodities in general use.
But they have done more than that. They have not been satisfied with merely adding one tax but they have heaped tax upon tax on many of the necessaries of life that enter into daily consumption.
So far as this budget affects luxuries we can heartily endorse all that the government proposes. It is proper that luxuries should be taxed, and taxed just as much as they will stand, but, as has been pointed out by one hon. member after another on this side of the House, there are many articles, such as boots and shoes, Clothing, the different articles required in the daily food of poor people, canned goods for example, which are taxed and overtaxed. Consider this excise tax in relation to the cost of living.
Still the right hon. gentleman says that increasing the sales tax by 50 per cent- the tax that he denounced in such round
fMr. Caldwell. 1
terms two years ago-will ease the cost of living! Well, Mr. Speaker, I am not able to follow his reasoning.
But digressing for the moment from the sales tax, I find a reduction in the duty on clothing, such as ready-made clothing and underwear, of 2i per cent, while the duty on silk goods is reduced 7i per qent. Now, this is evidently in the interests of the poor people, because of course all the poor people wear silk clothes!
I desire to point out a few discrepancies in the statements made by the right hon. Prime Minister, and the absolute failure in the budget of to-day to carry out his ideas of two years ago. Speaking aoout the tax on goods sent out of the country>
the right hon. gentleman on June 1, 1920, used thp fo'lowing language, which will be found at pare 2973 of ILirsctrd for that year:
Instead of caring for and protecting the consumers, the government have left them to their fate. One thing I was surprised to see in regard to this matter was that while a tax is put upon the goods obtained by the consumer, there is no tax upon the goods that are being sent out of the country.
The present budget contains the following provision:
Provided further that the excise taxes specified in this section shall not be payable on goods exported,-
That is in absolute contradiction to the statement made by the right hon. Prime Minister two years ago. And a little further down, in fact in the next paragraph of the budget, we find the following:
A drawback may be granted of ninety-nine per cent of the said taxes paid on the materials used, wrought into or attached to articles exported-
So they not only do not levy this tax that he thought was so necessary two years ago on articles exported, but they give a rebate of ninety-nine per cent of the tax on raw materials that go into the manufacture of those articles so exported. I want to show why he said at that time that the government did not levy taxes on goods exported. I have already quoted his remarks where he expresses surprise that while a tax was put upon the goods obtained by the consumer there was no tax upon the goods that were being sent out of the country. Then he continued:
Why?
With a big question mark after it.
Because in that instance it helps the manufacturer. He, not the consumer, is the chief

The Budget-Mr. Caldwell
2G63
consideration with the government. Again, the more you export out of the country, the less there is for the consumer. Look it all over and you see all along the line the interests of the privileged classes carefully taken care of while the interests of the great bulk of the people have not been safeguarded.
In this connection, Mr. Speaker, I submit there is-I was going to say absolutely no difference between this budget and the budget he was then discussing; there is, however, this difference: In the budget of 1920 there was a tax on luxuries and on excess profits, while in this budget there is no hint of similar taxes. So if you are to compare the two, this is a more protectionist budget from that point of view.
And this is what the right hon. gentleman stated in regard to the duty on the tools of production in the course of the same speech which I have already quoted from. This will be found at page 2979 of Hansard for 1920:
I can imagine my hon. friend, the Minister of Finance, saying when I suggest that some of the wartime wealth might be taxed, "It is poor policy to tax capital, because capital is the goose that lays the golden eggs." Well, I can appreciate his not wishing to tax capital, but I wonder if it has occurred to hon. gentlemen opposite that if there is one form of capital that is most essentially capital it is the instruments of production that are used for carrying on further production. Instruments of production for the basic industries are the real capital that is necessary, along with labour, to create further wealth; and as long as customs duties are kept on the implements of production of the basic industries so long you are simply taxing the capital that is necessary to produce further wealth.
I will admit, as the member for Brome (Mr. McMaster) so well put it, that they have made a shuffle in the direction of reducing the duty on the implements of production. Some hon. members have called it a short step, I agree with the member for Brome that it is not a step but merely a shuffle, and I think the consumer is getting much the worst of even that shuffle.
In his budget -the Finance Minister estimates that there will be a reduction of revenue on account of the reduction of duties of one and one-half millions; I think that is the figure. He does not tell us what increased revenue he expects to collect by reason of the 50 per cent increase in the sales tax, but anyone who examines the figures as to the revenue derived from the sales tax last year can work that out for himself. Last year the amount collected under this head was $60,000,000; an increase of 50 per cent would result
in the collection of $90,000,000, provided that the same amount of business was done, and I think it is fair to suppose that would be the case. So that in this shuffle we get relief to the extent of $1,500,000 in one direction, and we get $30,000,000 shuffled on in the other, which means an increased burden to the consuming public of $28,500,000. I thoroughly agreed with the Prime Minister's attitude on the matter of sales tax and luxury taxes two years ago; I am very sorry that he does not take the same attitude to-day. If he did- and I am speaking for myself only-I would have no hesitation in supporting a budget such as he advocated at that time. It would mean relief to the consuming public by elimination of the sales tax, and the taxing of luxuries, if you will, to take its place-because we all realize that we must have revenue.
I wish to quote further from the remarks of the right hon. Prime Minister with regard to a matter that has not been referred * to in the present budget, and it is an item which affects most seriously the interests of the constituents whom I represent. Quoting from the Liberal platform, he said, as reported on page 2982 of Hansard, June 1, 1920:
That, In the interests of agriculture, in aid of greater production on the land, and for the conservation of the soil in Canada, it is expedient for the Government to arrange for the distribution of fertilizers at the lowest possible cost.
By the way, in the Liberal platform- and I do not need to read it; I think we all know what it says, though unfortunately we are not going to see any of its terms put into operation this year-in that platform it is proposed to put fertilizer on the free list, yet my hon. friends have not given it the miserable little 2h per cent reduction that they have seen fit to extend to some other items. Before I have finished I shall give to the House some facts as to how the duty on fertilizers affects the producers of eastern Canada- because I believe you do not use them in the West; and as to how very slight the loss of revenue would be if the customs duty on this article were abolished. But before I come to that I wish to deal with the matter of how the duty affects the price of farm implements.
The hon. member for St. John (Mr. Baxter) early in the session censured my honoured leader for stating that the price of machinery and other commodities was enhanced as the result of the imposition
The Budget-Mr. Caldwell


Mr. McMASTER:: Where is it manufactured?


Thomas Wakem Caldwell: I am glad my hon. friend has asked that question. This fertilizer is mixed in New Brunswick. They call themselves manufacturers, but they manufacture nothing. They buy their chemicals and import them, put them into a hopper, stir them up, bag them, and put them out. They are not manufacturers at all. They simply mix the ingredients. Our farmers, for the reasons I am going to give, are now importing their own chemicals in large quantities and I want to give the House the price at which they buy their chemicals and the price at which these manufacturers, as they call themselves, sell the stuff. Last year the difference between the Maine and New Brunswick price for fertilizer from this same factory was $15. Of course, there was the exchange rate in their favour last year; American money was worth so much more. That was legitimate, but I do not think it is legitimate for them to take advantage of the tariff.


Andrew Ross McMaster: That is what it is there for.


Thomas Wakem Caldwell: I stated in this House two years ago that I thought the manufacturers of this country should hail the exchange rate at that time as a godsend, because it furnished them just the same kind of protection that a tariff does.
In 1916 we imported duty free fertilizers into Canada to the amount of $1,622,998. That would amount to 40,824 tons. I have estimated that in the last six years the average difference between the Maine and New Brunswick price of mixed fertilizer is $10. The difference was $9 this year, $15 last year, and it has never been less than $9, I think, in the last six years. So the Canadian manufacturer of fertilizer, as he calls himself, the Canadian mixer, as I call him, was able to exact $10 per ton more from the farmers of Canada on account of this duty, and in 1916 he exacted $408,240 of an extra profit on that 40,824 tons. That same year we imported
dutiable fertilizer to the amount of $586,751, and we collected in duty on that fertilizer $58,675. In other words, the customs tariff enabled the Canadian mixer of fertilizer to put into his pocket $408,240 of an extra profit, while it produced in revenue for the country only $58,675. I shall not weary the House by giving the whole list, but the figures for the five succeeding years correspond with those I have given. In the past six years we imported duty free fertilizers to the amount of $13,520,575, and that gave an extra profit to the manufacturers on account of their taking advantage of the tariff of $3,380,170. We collected in duties in those six years on dutiable fertilizer the sum of $587,134. In other words, in order to collect a little over half a million dollars on dutiable fertilizer brought into Canada, we had a tariff that enabled the Canadian mixer to extract from the pockets of the farmers $3,380,170 in extra profits on the duty free fertilizer chemicals that they brought in. Still they will tell you they do not take advantage of the tariff!
I want to give another illustration, and I shall give last year's prices as I have not the figures on chemicals for this year. Last year the New Brunswick farmer paid $76.03 in cash by the carload for 4-8-6 brand of fertilizer in bags, 4-8-6 representing 4 per cent ammonia, 8 per cent phosphoric acid, and 6 per cent potash. That is the price we had to pay, but our farmers' organizations, knowing that these fertilizer mixers were taking advantage of the tariff, imported their own chemicals, and got them laid down at the station freight paid, the very same materials, mind you, for $50.62, or a difference of $25.41 between the cost of the chemicals brought freight paid to our station, and the cost we had to pay when buying the very same article from the factory freight paid to our station. I will now give the ingredients in that brand:
200 lbs. NitraJte Soda at $81 per ton. .	$ 8 10
100 lbs. Sulphate of Ammonia at $92
per ton	 4 60
200 lbs. Tankage at $62 per ton.. ..	6 20
800 lbs. Acid Phosphate at $46	 18 40
240 lbs. Potash (50%) at $111	 13 32

You will notice that this does not make a ton. The mixer puts in according to the grade of his fertilizer, and the lower the grade the more it takes, sand or road dust to make it dry enough to go through the machine.
The Budget-Mr. Caldwell


Andrew Ross McMaster: These are not native New Brunswickers, surely?


Thomas Wakem Caldwell: I am glad the hon. member asked that question. I spoke of the fact that the Canadian mixer of fertilizer was able to collect that vast extra profit of $3,000,000 from the potato growers, chiefly of New Brunswick, because very little fertilizer is used elsewhere, solely on account of the tariff. These people who mix this stuff are not New Brunswick people, or Canadians, so far as I know. They are a Canadian branch of an American firm that has built a little plant down there where they stir up these ingredients, and collect this extra $10 from the farmers of New Brunswick, and then send it back to their American bank. I said in this House two years ago that if we were making Canadian millionaires by the operation of the tariff it would be bad enough, but in this case we are making American millionaires with Canadian money. That is my contention. I do not wish to weary the House by reading any more figures.
Some one may say: The hon. member for Carleton is just like a lot of other men, pointing out a lot of difficulties and not suggesting any remedy, but before I come to that I just wish to show how many barrels of potatoes are necessary to buy a ton of fertilizer from the fertilizer mixers of New Brunswick at the present time. The hon. member for Saltcoats (Mr. Sales) told us the other evening how many bushels of wheat it cost him to buy a box of apples, and I shall give a like illustration with regard to potatoes and fertilizer. At the present time-and this was given in sworn evidence before the Freight Rates Committee the other day by Mr. Porter, who, by the way, is one of the largest potato exporters we have in eastern Canada, as well as one of its most reliable men-the farmers are getting for a barrel of potatoes less than 50 per cent of the cost of production. For the last two months or the last month and a half, and that is the time when a great many potatoes are sold in our section of the country, our farmers have been getting, not 50 per cent, but only 25 per cent of the cost of production. In New Brunswick last year it cost $2 a barrel to grow potatoes. What price are we getting at the present time? Only 50 cents for a barrel of 165 pounds, and it cost us $2 a barrel to raise those potatoes. That is the sworn evidence of Mr. Porter before the

Freight Rates Committee. Since the 1st of February our potatoes have not been above 80 cents a barrel, and most of our crop has been marketed since then. At the rate we are getting for our potatoes to-day, it will take 135 barrels of potatoes to pay for one ton of fertilizer, for the price the mixers are asking is $67.50. The average yield of potatoes in New Brunswick is 80 barrels to the acre, so you will realize what a position the farmer is in who has to buy fertilizer, and the necessity for granting him some relief, especially as that could be done without any material loss in revenue for in the last six years we have only collected about half a million dollars in duty on fertilizer. Yet this item is not mentioned at all in the present budget; no relief is granted. I am convinced that it was an oversight on the part of the Minister of Finance, and I earnestly hope-I was going to say, I firmly believe, but I am not so ready to believe as I was two years ago that legislation needed will be passed-but I sincerely hope that relief will be granted on this very necessary article to our farmers before the budget resolutions are approved.
I said I was going to make some constructive suggestions, because I do not think that a speech which is entirely destitute of constructive criticism is any help either to the House or to the country. However, before I come to that, I had better deal a little more fully with the decrease in the customs duty on farm machines. I am not feeling quite so blue over the fact that there have not been more reductions made in the customs duty on farm implements as I am at the increase in the sales tax. I do not think the decrease in the duty on farm implements has been at all sufficient, but the little shuffle that was made in that matter was made in the right direction, while the move made in regard to the increase in the sales tax is absolutely in the wrong direction-that is my belief. However, I think after listening to the speech of the Minister of Justice (Sir Lomer Gouin) this afternoon, and the statement made by the Finance Minister two days ago I have not quite as much hope as I had at the beginning of the session that the Liberal party ever meant to put the tariff planks in their platform into execution; and in that regard I just want to quote a statement made by the Minister of Finance two days ago in reply to the leader of the Opposition. He said:

The Budget-Mr. Caldivell
I have never voted for the tariff items of the Liberal platform, and never concealed the fact that I did not approve of the platform in that respect.
I think, Mr. Speaker, possibly it is becoming increasingly clear to the members of this House just where the pressure is coming from that is preventing the Liberal party from putting their platform, or moving in the direction to put their platform, into active legislation. I want to say further, Mr. Speaker, that I am not criticizing the Government in any particular because they have not put into effect at once their platform in regard to the duty on farm machinery. I do not think any sane man in this country would advocate taking the duty off any one article all at once, especially when it is as high as it is on some articles of farm machinery, but I think a substantial step should be taken in that direction and not a shuffle. I also think the manufacturers should be warned that the Government did mean to implement their platform by legislation if they continued in power, and for them to put their house in order and get ready for that eventuality which should come by stages so that they will be able to accommodate themselves to the situation.
I want to say right here, Mr. Speaker, that I deplore the fact that different speakers in this House have attempted to attribute the statement to us that we desire free trade right away, that we want to wipe out the tariff over night, and that we want to get rid of the manufacturers of Canada. That is not the fact. I do not think there is an absolute free trader in any group in this House. But we of the Progressives want freer trade, and we want reductions of duty on the tools of production and the necessaries of life. The reason why I am not so concerned about the duty on farm implements as I am about the increase in the sales tax is, that the reduction in the duty on farm implements would, possibly, only affect 50 per cent of the people of Canada, whereas the increase in the sales tax affects 100 per cent of our people. And no party i.i this House or in this country should take a selfish, or a narrow view even, of the tariff. We must have a tariff for the whole of Canada; we must be willing to give and take; but I do not consider the Government have even taken one short step towards putting their platform into effect. I sincerely hope, therefore, that
the statement the Finance Minister is going to make later in regard to the budget, according to the announcement of the Prime Minister this afternoon, will carry out some of the changes to which I have alluded.
I said that I wanted to make some constructive suggestions. Now, I have made a suggestion on more than one occasion in this House that an export duty should be put on pulp wood and on round logs going out of Canada, and I will tell you why. I see the hon. member for Brome (Mr. McMaster) shaking his head.


Andrew Ross McMaster: A duty is just as unsound one way as the other.


Thomas Wakem Caldwell: We all agree that manufactures are necessary in any country in order to build the nation up. All we ask is that the manufacturer get off our backs and stand on his own feet. However, I want to make a suggestion to the Government in the matter of establishing factories in this country; and I do not need to go outside of Canada to demonstrate the truth of what I am saying as to the necessity of offering some inducement to manufacture pulp and paper in Canada. I want to show why I am advocating an export duty on pulp wood. I hold in my hand a copy of a prospectus issued by the Oxford Paper Company of Rumford Falls, Maine. They are getting out this prospectus in order to sell $300,000 worth of stock to develop a water power and an electric plant at Rumford Falls, and I want tc show you what they are presenting as their assets, the justification they are giving to induce the people to put money into their enterprise in order to develop that industry in the United States. They say in this prospectus:
The Company's available supply of pulp-wood is ample. It holds under lease from the Crown the right to cut and remove pulp-wood and all forest growth from a tract of about 1,015 square miles (approximately 650,000 acres) in Cape Breton, Nova Scotia. This lease runs for a long terms of years in 20 year renewable periods, the last maturity June 19, 1998, at an annual rental of $6,000. This rental is a fixed sum regardless of the amount of wood cut from these lands. The hoUd'ings are virgin forests and contain, according to conservative estimates by experts, at least 6,000,000 cords of high grade pulp-wood, sufficient to supply Oxford Paper Co. for more than 100 years at its present rate of consumption of spruce and fir.
In addition, the company owns the right for 12 years to cut spruce and fir from a tract of 55,000 acres in ^Canada, near the city of Quebec, and also has the right to cut spruce and fir from 125,000 acres additional Crown lands in Canada.

The Budget-Mr. Caldwell
The company has a further large available supply of spruce and fir and pulp through Its one-half ownership of Nashwaak Pulp and Paper Co., Ltd. which owns, in New Brunswick, a pulp mill and owns or controls about 359,000 acres of land containing about 1,000,000 cords of spruce and fir timber.
Besides spruce and fir the company uses a large amount of poplar wood, which It is able to buy at reasonable prices in Maine, New Hampshire and New Brunswick. As poplar growth is very rapid a sufficient supply of this wood will, it is believed, always be available.


Andrew Ross McMaster: May I interject a question here? Would the hon. member consider it wise to have an export duty on potatoes in order that a man who was running a (mill in which potato flour was manufactured might get the potatoes and make them up into flour?


Thomas Wakem Caldwell: We have no such mills. I will qualify that lby saying that we did have one during the war. During the war there was a demand for this product but not at a price that would enable the factory to use table potatoes. So they took the culls, the small potatoes that were not saleable, and they made them into potato flour and sold it at a price that would pay them for the manufacturej However, even at that time of high prices the demand for potato flour would not warrant the use of table potatoes for the purpose; consequently, since the war, that factory has closed down. Even at fifty cents a barrel a profitable industry cannot be carried on to-day by taking table potatoes, converting them into potato flour, and selling the product at the price they could get.
I have here another clipping which states a certain firm in the United States is buying tracts of land in Nova Scotia, tracts of land such as the Nashwaak Pulp and Paper Company own, and by the way it is expected that the Nashwaak Pulp and Paper Company's mills will close down in New Brunswick in the very near future, and that the pulp wood cut on these lands will be shipped to their American mills. This will also result in the closing down of the mills in Nova Scotia because they can import these raw materials into the United States free of duty, while there is at the present time a bill 'before the United States Senate to impose an import duty on manu factured pulp and paper and this will be the means of helping to build up the industry in the country to the south instead of our own.
I want to say further, and I know the hon. member for Brome (Mr. McMaster) will agree with me in this. Some people have attributed the prosperity of the pro-
vince of Quebec to the fact that the sale of liquor is permitted there. I do not agree with that statement. I think it is more attributable to the fact that Quebec has encouraged the manufacture of pulp and paper in that province. I think I am well within the mark, Mr. Speaker, when I say that the province of Quebec to-day manufactures 70 per cent of all the chemical pulp and paper that is manufactured in the Dominion. I think that	is	correct, but	I	am
speaking from memory, and, of course, subject to correction. Due to that fact Quebec has become prosperous; because possibly there is no industry in Canada so profitable, or has been in the last ten years, than the manufacture of raw pulp into paper.
I want to give more reasons why this should be done, not as an act of retaliation against the United States, but as an act of commonsense for Canada. To-day we have a pest called the spruce bud moth, which is killing the forests of Canada quite rapidly-and I am glad to say I believe it is diminishing very much;-due to the fact that United States corporations are allowed to come in and buy large tracts of land. They are not interested in the conservation of our forests, nor in the condition of the country after the forests are cut, as our own citizens are. They are simply stripping the forests of Canada, and reaping the benefit in their manufactures in the United States. The different provinces of Canada a few years ago pretended to take some action in this matter. However, they have not jurisdiction in international trade, but have jurisdiction over their own Crown lands in the eastern provinces, where these forests are located. They passed an act containing a provision such as this:
That no pulpwood cut on Crown lands shall be exported from Canada.


Mr. ARCHAMBAULT:: What is the
difference to the consumer between an import duty and an export duty? Is it not a fact that those duties are paid on the principle of protection?


Thomas Wakem Caldwell: I am glad the hon. member asks the question. An import duty is paid by the party in this country who consumes the article imported. The same applies to an export duty. It applies to the people who consume that product in the United States. The citizens of the United States will pay the export duty. I observe

The Budget-Mr. Caldwell
that the hon. member from Brome (Mr. McMaster) shakes his head.
Mr. MeMASTER: Is my hon. friend not aware that one of the almost inevitable results of the export duty is to decrease the price which the manufacturer will pay to the producer of the raw material, the market of the producer of the raw material being decreased by the fact that he cannot really export what he has to sell.


Thomas Wakem Caldwell: I am glad the hon. member asked that question. I think, possibly, I would have forgotten that point had he not brought it up by his question. What the hon. member for Brome (Mr. McMaster) states is absolutely correct providing there are unlimited supplies of this commodity that the country that wishes to use the commodity can draw on. That is not the case here. Outside of Canada, I think today, the only country in the world which has an exportable surplus of lumber is Russia.
Mr. MeMASTER: Sweden.


Thomas Wakem Caldwell: I think the hon.
member will find that Sweden is considering the conservation of her forests. She is at the present time carrying on reafforestation work, something which Canada must come to in the near future. That is an indication that they realize that the end is in sight, as far as the supply is concerned. We have a monopoly of the supply of pulpwood on this continent. There is no question about that.
Mr. MeMASTER: Newfoundland has a quantity of lumber.


Thomas Wakem Caldwell: How long would they supply the United States? I have an estimate of it, but I do not wish to weary the House with it. The provincial government of New Brunswick passed an order, providing that pulpwood cut on Crown lands should not be exported. That means pulpwood cut into four foot lengths. Then what happened? At that time the size of the saw log was 10 inches, I think. Immediately after this our provincial government reduced the size of the saw log to 6 inches, and, in fact, I think, you will find lots of them go below that. The United States' pulp manufacturer goes upon Crown lands, cuts logs into 16 foot lengths, puts them on the train, ships them into the United States, cuts them into different lengths and grinds them into pulpwood. So that the provision of the provincial government is a joke. However,
an export duty would control the situation. For fear condemnation will be meted out to members who speak at too great length,
I will leave that point although I would like to elucidate it further.
I have given the House my criticism of the budget and my suggestion as to a good source of revenue, which would also develop the manufacturing industries of Canada, and would be more beneficial than any other method, because it means manufacturing our own raw materials into the finished product by our own people.
I come to the consideration of the amendment offered by the official Opposition. That amendment is rather peculiar, in view of the arguments put forth in support of it. The amendment declares one thing, and the argument in support of it exactly the opposite. In the argument they condemn the Government because they have made a few reductions in the tariff, and in the amendment they condemn them because they have not made more reductions in the tariff, and state that this failure will result in a lowering of the public morality of Canada, because it is the breaking of a promise. I think, as far as that goes, I will have to agree with the official Opposition, that the breaking of promises, in any case, is a lowering of political or personal morality. However, as this amendment is not moved by a party who have never broken any promises, is it not the case of the pot calling the kettle black, and the pot being blacker than the kettle?
Then take the argument in regard to the tariff. In 1919 Sir Thomas White said there should be a revision of the tariff. The government were very careful not to say whether they would revise it up or down, but said it was long overdue. I have no doubt they received some support by making that statement at the time- western as well as eastern support. We are just as anxious in the East for a reduction in the tariff as they are in the West, and I do not want that fact to escape the attention of the House. In 1920 when the present ex-Finance Minister (Sir Henry Drayton) delivered his budget speech, you will find at page 2491 of Hansard of 1920 that he said:
Our policy calls for a thorough revision of the tariff.
And he said further.
The tariff investigation has commenced and public sittings will be held throughout Canada after prorogation.
The investigation was carried on. When the House met in 1921 the Speech

The Budget-Mr. Casgrain
from the Throne stated that this investigation had been held and information had been collected to enable the government to intelligently revise the tariff, and that the result would be put before the House at that session. At least, I take it that the Speech from the Throne indicated that legislation would be put before the House. The Speech used the words "Will be put before you in due time" which, I take it, meant during that session. That was not carried out. Here we have promise after promise in regard to the tariff broken by the last government. Therefore, I do not see how a man is going to make a choice between the two parties. I think both have lowered the public morality of the country by breaking promises.
Further, Mr. Speaker, I do not consider the present official Opposition have added much to their political morality by some of the late additions to that party. I want to explain what I mean and I desire to be fairly definite. The late addition, that I refer to consist of men who were read out of the old Conservative party by Sir Robert Borden, because they secured war contracts under very suspicious circumstances. It also contains men who were the remnants of provincial governments, who were notorious for having received rake-offs on railway contracts, on timber lands, and, even, on patriotic gifts to the mother country in time of war. I do not propose to let an aggregation like that use me as a whip or scourge to scourge anybody. I am speaking for myself when I say this, Mr. Speaker. I presume I can find a way of chastising the Government or of reasoning with them, without being made a tool of by anybody. I will be just as unready to be made a tool of by the present Government to scourge the present Opposition. I take that independent stand which I have always taken in this House to judge every question on its merits.
I do not want anybody to think they can pull the wool over my eyes and make me believe black is white.
Mr. PIERRE F. CASGRAIN (Charle-voix-Montmorency) (Translation) :	Mr. Speaker. Before submitting to this House, the few remarks which I intend to make on the budget, allow me to offer to the Prime Minister who so ably presides, ever since last December, over the destinies of this country, my most sincere congratulations for the great honour which was bestowed on him by His Majesty the King in granting him the title of an Imperial Privy
TMr. Caldwell.]
Councillor and, by that acknowledgment, placing him in the rank of all the great statesmen who have presided over the destinies of this country. I wish to offer him my respects and sincere congratulations, together with those of the people of Charlevoix-Montmorency, whom he has had the pleasure of meeting and whom I have the honour to represent in this House.
Mr Speaker, if the hon. members will grant me a few more minutes, I shall take the liberty of joining those who in the course of the debate on the address, sincerely congratulated you on the occasion of your elevation to the speakership of this House. Well deserved praise was then showered upon you. I should have liked to have raised my voice in such a chorus, but I was not perhaps so well qualified as others to do so. I shall content myself with endorsing all that was said on that occasion and tell you that you deserved them all. For many reasons do I wish to endorse the sentiments expressed by those hon. gentlemen; first, because on certain occasions, you were like a mentor to me in my first political efforts which I made in our province, later I might even add that you acted as sponsor to my political baptism. Another good reason, is that you are somewhat one of us, considering that the people of Charlevoix have the signal honour, the great favour and the pleasure of counting you amongst them during the beautiful summer season, when you come down to Murray Bay and take up your residence at Pointe-au-Pic, in the county of Charlevoix, the most picturesque of the Province of Quebec.
Mr. Speaker, when we examine the budget which was brought down by the hon. Minister of Finance (Mr. Fielding), whom everybody honours and respects and who was the right arm of Sir Wilfrid Laurier and had the overseeing of his fiscal policy during the fifteen years, which gave this country its greatest prosperity, we are well aware that the conditions, under which the hon. minister had to labour, were most abnormal. If we consider the economic state of our country, together with all the causes which brought on this state, I think that all unprejudiced public men must admit that the hon. Minister of Finance accomplished a gigantic task when he prepared his budget, which, I frankly admit without being absolutely perfect, without being very satisfactory to the members who sit nearest to your left, Sir, nor to their neighbours, without pleasing everybody,

The Biidget-Mr. Casgrain
nevertheless solves sufficiently, and very well indeed owing to the circumstances, the complex economic problems of our country. I understand that the minister tried by all possible means to spread in the most equitable manner the obligations which will have to be met by the ratepayers of the country through the great crisis we are undergoing.
The official Opposition, through the former Minister of Finance (Sir Henry Drayton) acting as their mouthpiece, simply contend that the Liberal party has cast aside the principles enunciated at its great convention, in 1919. A good friend of mine whispers to me that there are only fools that never change their mind. I do not wish to say we should apply that sentence or proverb to those who make us such reproaches to-day. Let me only say that if the Government does not carry out immediately all those reforms which we advocated in the great convention of 1919, it is because circumstances do not lend themselves perhaps as much now as they might have done at the time and it is also perhaps on account of the Fordney tariff, a new wall which prevents us from communicating, from trading and from doing business with the United States as easily as we might have been able to do. However, Sir, there is one thing which we must not lose sight of, when the official Opposition reproach us with not putting into practice the platform of the convention of 1919. It is one of the weakest reproaches that I have ever heard for, as the press of the whole country has testified, if we carried out immediately the changes which we are reproached for withholding, these same gentlemen would be the first to tell us that we are going too far and that we are bringing ruin and desolation upon the country. This we must avoid. The amendment moved by the official Opposition must not be taken very seriously It is simply an amendment moved by gentlemen who have no other to bring down and who cannot offer to this House or to the country a progressive policy which might tend to enlighten the Minister of Finance and guide the Government in a better path. I have always heard that the Opposition should not always think of finding fault, but should moreover try to find solutions to all the difficult problems and serious dilemmas in which the country and Government of the day might find themselves. That is what we endeavoured to do while in opposition. We moved, in 1918, thanks to the
hon. member from Brome (Mr. McMaster), certain resolutions; and in the years which followed our convention, in 1920 and in 1921, all the amendments which were prepared by the financial critic of the Opposition of the time, always aimed at giving the best advice which we thought in good faith might help to bring relief to the people of this country. All these subterfuges which the official Opposition is resorting to to-day cannot have any other result but to maintain them in the position they are at present that is to say, in the most unfavourable position which has ever been the lot of a party to occupy in this country. We have taken note, from the outset of the session, of the small number of votes which have been registered in favour of the motions and resolutions of the Opposition, so called official, and I am thoroughly convinced that the amendment of the former Minister of Finance, will have the same fate.
When we examine the budget as it is framed to-day, when we take into account the amendment moved by the official Opposition, and when we consider, on the other hand, the stand which the new Progressive party takes, we are apt to ask ourselves which side we should take.
If we consider the speeches delivered by the leader of the official Opposition and his lieutenants, who were in power but a few months ago; if we consider also the speeches made by the leader of the new party who sits opposite to me (Mr. Crerar), and a number of his lieutenants, we cannot help concluding, that in both cases, the leaders of those two parties as well as their lieutenants, including their supporters, go too far. For my part, I cannot accept all the theories, all the arguments and the whole programme of the hon. members who are directly opposite me. On the other hand, I can no more agree to all that is contained in the programme of the official Opposition, who are to your left, Mr. Speaker. In such a circumstance, what is the wisest and best policy, the one which any person with common sense should adopt? I conclude, Sir, that it is the one which the Liberal party has always followed; the policy found in the golden mean, which was so well defined by the hon. member for Quebec East (Mr. Lapointe), in a famous speech which he made in this House last year. He then said: "In my opinion, the best policy is the one which consists in a moderate protection, a policy which does not lean too
The Budget-Mr. Casgrain

much towards free trade, but which, on the other hand, is not entirely protectionist."


Joseph Archambault: In medio stat virtus.


Mr. CASGRAIN (Translation) :: As my hon. friend, the member for Chambly-Vercheres has just expressed it, " In medio stat virtus." Sir, all these arguments, these subterfuges of the official Opposition, embodied in the amendment which is at present under consideration of this House, must not be taken seriously by an intelligent person. Moreover, if we consider that since 1911 those who moved this amendment, are those same gentlemen who, through their want of foresight and extravagance, have been the cause of the deplorable state of the finances in which our country finds itself at the present time, we might take them more seriously if they endeavoured to propose to this House some means so as to show us how we might possibly reduce the enormous debt which weighs on us and re-establish equilibrium in our finances. If we take into account all the millions which went to fill the pockets of friends of the Unionist-Tory government, it is not astonishing that in order to meet the situation, the hon. Minister of Finance was obliged to somewhat revise the tariff in such a way as to increase the duty on certain articles and to impose certain taxes and that he was unable to cut down the tariff as much as my good friends the Progressives would have desired.
One of the provisions which gives rise especially to criticism by our opponents, is the increase on the sales tax. Well, Sir, I believe it would be preferable if this tax were increased a little more and if the law regulating the income tax were wiped out from our statutes, because it is the one which is the most liable to be transgressed. It is a well known fact that a great number of business men and financiers do not give the state a just proportion of their income and the consequence is that the greatest portion of the burden- if not the whole-is borne by the small wage-earners who are the least able to carry such a load. While on this subject, let me say that, in my humble opinion, the income tax should be modified and revised in such a way as to make it more simple, so that everybody can understand it and can prepare his return yearly, without being obliged to have an accountant or an expert, and thus deposit in the treasury

the money which is due to it or to the country. There is on this subject another point to which I want to draw the Government's attention. It seems to me that it would be an easy thing to alter somewhat the income tax so as to increase the tax of those who are drawing annually an income of ten to fifteen thousand dollars and who have no children, or are bachelors. An hon. member of this House, I believe it is the hon. member for Labelle (Mr. Fortier), asked that the father of eight children or more pay no income tax if his income does not reach $10,000 per year. Many newspapers throughout the country endorsed that part of the speech of the hon. member for Labelle, amongst others Le Bien Public, of Three Rivers.
Good things and good men often come from Three Rivers. For instance, that city gave the King Cabinet one of its most distinguished members in the person of the Minister of Customs (Mr. Bureau). Le Bien Public approves the suggestion, but at the same time offers another which it considers better and which I shall submit to this House: "The suggestion would still be more acceptable if the exemption of the tax applied without any restriction to all the heads of families with children and whose revenue is not over $5,000.	In
reality, this year the hon. Minister of Finance (Mr. Fielding) with his new taxes, especially the collection of 50 per cent on the sales tax, increased in an indirect way the burden of heads of large families; and that amounts to an increase on the income tax, since the exemption of $200 per child shall have a smaller value than in the past; because with this new sales tax, in truth, this amount of $200 will have a purchasing power less than it had in the past.
I believe, Mr. Speaker, that it would be worth while taking into consideration these facts, and when the hon. Minister of Finance comes before the House in Committee of the Whole, we might make some amendments on the income tax so as to alleviate the burden of heads of large families who draw small incomes, have little money to set aside and must pay taxes to the Government. Mr. Speaker, if we examine in details the budget we note that there are certain products exempted from the sales tax, and on this score I congratulate the Minister of Finance. For instance, we find rolled oats, buckwheat flour, pea flour, alfalfa flour, salt, radium, hemp fiber, which is utilized to manufacture ropes which do not exceed li inches in circum-

The Budget-Mr. Casgrain
ference; furthermore, we come across items for the fisheries, fishing boats, supplies and material which enter in the construction of fishing boats for personal use, fiber for binding twine, material used for job-printing, sold to establishments not exceeding in value $3,000; besides substances entering into the manufacture of oleomargarine, we have added the material used in the manufacture of hooks and other fishing accessories.
There is another government tax which is at present much discussed and in regard to which many manufacturers, important financiers and representatives of large business houses have made objections. 1 am speaking of the stamp tax, the two cent stamp which one will be obliged to stick on each cheque for every fifty dollars. Sir, two years ago, I believe, in this House, but under a different administration, when there was question of a very similar tax on promissory notes and Bills of exchanges and the tax was increased, I am not aware that there was then so much objection as we find to-day. I ask, Sir, is it equitable not to require more for a cheque of $1,000 or $2,000 than for a cheque of $50, the amount which is in current use by all the small traders and by all those whose accounts are more or less restricted? It is but just, in my opinion, that the large merchants and financiers who deal in larger transactions, and who earn more money be taxed in proportion to their amount of business and means.
A suggestion which should be made when these resolutions come up for discussion by the committee, is to find an easier way as to how these stamps should be placed on cheques. I might suggest that it would not be a bad idea if the banks did this work, because they are in a better position to do so than are the merchants and traders and no time would be lost. I remember having forgotten, in one instance, to stick the stamp which has become traditional these last years; the bank simply stuck a stamp on and charged it up to my account. We might, if need be, pay the banks a certain amount extra for the work.
An hon. MEMBER (Translation) : Who would pay this amount?


Joseph Philippe Baby Casgrain: It would be the person who made out the cheque. With the present system of collecting this tax, it appears difficult to have it paid by the client and this is what at present the financiers, brokers and merchants
object to. I believe if we adopted my suggestion that it would have for effect to do away with this nuisance.
We have rightly increased the tax on cigarettes and choice cigars for, in mv opinion, although I am a moderate smoker of cigars and cigarettes, I believe it is a luxury and that under these circumstances. the Government must not be blamed for having taxed these articles. We may also congratulate the hon. Minister of Finance for not having taxed leaf tobacco which is used both in the manufacture of domestic cigars and cut tobaccos.
Numerous decreases in the tariff promote the importation of agricultural machinery gasoline tractors worth $1,400 admitted free as well as linen thread used in the manufacture of Holland cloth. There is also a lower duty on wools, cottons, alcohol used in the manufacture of pharmaceutic products, patent medicines and a great number of other articles too numerous to mention. On the other hand articles of luxury, such as foreign manufactured cars are taxed. I believe, Sir, it is a good policy and the Government has acted wisely. I think the Minister of Justice (Sir Lomer oum) had something to say in this matter-he now forms part of the cabinet-because the policy of the Liberal party in Ouebec has always been to spread the taxes justly and to collect them from those who could mostly afford to pay them; now, I note that the Government in increasing the tax on motor cars, reach those who can afford such luxuries, and this is good policy.
Mr. Speaker, without entering into further details in regard to what the budget contains, I consider that, owing to the difficulties which the Government had to overcome so as to restore economic conditions to a more healthy state, I may give my assurance that all the electors who gave me their trust in the last general election by returning me with such a large majority, will approve the budget submitted by the hon Minister of Finance and that they will also approve me, if I vote, as it is my intention to do, to support the Government and its budget. I may conscientiously and sincerely say that all my electors, whoever they may be, will bravely bear up with the consequences and effects, the more so that, as I represent a county to a large extent made up of farmers, navigators and fishermen, my constituents will acknowledge thankfully the few concessions that the Government has granted them. I may therefore, on their behalf, offer the Minister of Finance as well as the Government
The Budget-Mr. Casgrain

sincere congratulations for the ability and good sense shown in solving the complex problem of the reconstruction of our economic system. If our opponents, especially those who form part of the socalled official Opposition, want to examine their conscience-
An hon. MEMBER (Translation) : They have none.


Joseph Philippe Baby Casgrain: They tell me that they have none; I regret it very much-they will perceive that the financial state through which the country is struggling to-day is due to the pillaging of the public funds, the manipulating of the railways which occasioned heavy losses and the depreciation of these ways of communication, which is the cause of the confusion in which the country is thrown to-day. The whole blame can be put down to the very poor policy which the Borden government and the Meighen government inaugurated between the years 1911 and 1921.
While on this subject, Mr. Speaker, let me point out certain things to the Government. When we were in the Opposition, on many occasions your humble servant and all my colleagues, including the hon. member for St. James (Mr. Rinfret) who is now at my side, have fought the railway policy of the then government. Many a time I asked that the board of directors of the Canadian National Railway which was managing these railways and to which I had taken exception when that company was incorporated, I asked that this board of directors be changed and replaced by competent persons and experts who would be able to place our railways on a businesslike, economic basis so as to make it pay or at least to prevent the large deficits which we have had from year to year. I am aware that this year the same persons who were managing our railways then, are still on the board of directors. I am willing to admit that the Government is doing all it possibly can under the circumstances, but I also wish to be faithful to the promise which we gave at that time and the policy which we followed, we that have always believed, especially those who hail from the province of Quebec, that the policy of nationalizing our railways was not the best under the circumstances, and that, if we were obliged to accept the fact as accomplished, we should endeavour to manage these railways very economically and to get rid of them as soon as possible.

I hope, Mr. Speaker, that ,the board of direction will soon change and that at the next session we shall listen to a new policy on the part of the Minister of Railways, a policy which will give us hope and let the country see that we have made some progress and that the enormous deficits which the Government and the country have to bear up with, may be avoided. What I have just said in regard to the management of railways may equally be said of the Government Merchant Marine.
While in the Opposition we took strong exception to this merchant marine. We even kept up the fight for a whole day and night, and up to the present I do not know what is taking place, for we have not yet heard the budget on the merchant marine; but if we listen to the rumours published in the newspapers we can expect deficits as large as those of last year. I trust that the Minister of Finance and the Minister of Railways will bring in a wise policy and put a stop to these deficits and place the country's business on a better footing, so as to alleviate the burden of the ratepayers.
There is a part in the speech on the budget which I agree with, but nevertheless to which I wish to refer. The hon. Minister of Finance and many of those who will approve his budget say that we must absolutely reduce our debts, and that the most strict economy must be practised. I agree. It is exactly what we were told in the past so as to pay off our war debt and re-establish equilibrium in our finances. If we wish to practise economy, it seems to me that we should do so on a larger scale and begin where we can effect the greatest savings. When we were in the Opposition we energetically opposed the creation of the Purchasing Commission which was imposed on the people of this country, not through legislation but by an Order in Council, after prorogation of Parliament, in 1920. This commission costs the country a great deal of money, and it has not yet been shown in this House, that it has given satisfactory results, such as would excuse us in continuing it, I therefore suggest to the Minister of Finance to abolish the commission. The money which might be saved from this source might be usefully expended elsewhere. There is another such commission which I would gladly see disappear, changed or modified. It is the Civil Service Commission, especially in regard to the outside service. The salaries of the commissioners, the secretary, and

The Budgt^-Mr. Casgrain
predecessor did ask for works which the
the other employees of this commission are considerable, and I do not know that this commission, up to the present, has given good results in the administration of the outside service. If it was not that I do not wish to overtax your patience, Mr. Speaker, I could bring out certain details which would satisfy you as well as all the other members of this House, even those on the Opposition side who are the hardest to convince, and I feel certain that everybody would approve of such motion. I certainly believe that those two commissions should be abolished. In my opinion also, we should equally reduce the number of employees in a number of departments. At present, what do we find in certain services? We find two, three, or four lawyers, a fairly large number of architects or engineers, and these branches form really small departments within large ones. In this way, I believe we could economize a sufficient amount to enable us to perform absolutely necessary works which are needed all over the country and which unfortunately cannot be undertaken owing to our present financial condition and because we are not following out the strict economy which is recommended.
Mr. Speaker, ever since I have had the honour to represent, in this House, the county of Charlevoix-Montmorency, I have asked the Government on many occasions, to carry out in that county certain public works which are urgent and very necessary. The answer which I always received was that they had no money for 'such works-and when I was in the opposition, I believe that the reason which was always given me was due to the fact that I criticized too much the government which for that reason was very little disposed to grant my requests. I must state that as long as I occupy a seat in this House, either on the Government side or on the Opposition benches, I shall never cease to ask on behalf of my constituents, for those who have entrusted me with the mandate to represent them here, the necessary work and ameliorations needed in that part of the province.
During past years, I asked for improvements to be carried out in my constituency at places called Baie des Roehers, St. Simeon, .St. Fidele, Murray Bay, St. Irenee, Eboulements, Baie St. Paul, lie aux Coudres, Riviere St. Franqois and St. Anne de Beau-pre. Mr. Speaker, those localities, I know, are familiar to you, since you go there every year to spend your holidays. My
Liberal government had recommended before the overthrow of the Liberal party in 1911. I would like the Government to take into serious consideration every request I placed before the several departments with respect to wharves, post offices, public buildings and other improvements; and I trust those undertakings shall be carried out as soon as possible. We are asked to practice economy. I am willing to do so, provided that the Government follow suit to a certain extent, so that we may do justice to those who have elected us to represent them in this House.
Mr. Speaker, I may have spoken too long and I crave your indulgence in case I have somewhat protracted this discussion.
I have confidence in the new administration. The few remarks I have just made were made in earnest and the Government, no doubt, will take them into serious consideration. I rely upon the ability and wise policy of the leader of the Administration, and his colleagues; I view the future with calm and I am convinced that prosperity shall be restored in Canada, a prosperity similar to that which our country enjoyed during the fifteen years of the Liberal administration from 1896 until 1911, a prosperity which our late lamented leader, Sir Wilfrid Laurier, had known how to bestow on the country; and thus relying upon the leader of the Government, the ministers representing the districts of Quebec and Montreal and their distinguished colleagues, I invite my friends in the House to vote for the budget proposals; that invitation extends not only to good Liberals sitting on the Government side, but also to the other members who were Liberals formerly-who now wish to move too quickly. I ask that they be willing under these circumstances to join hands with us so that the budget may carry with a good majority.


Mr. H. C. HOCKEN (West Toronto):: Mr. Speaker, we have .the promise of the Prime Minister (Mr. Mackenzie King) this afternoon that there will ibe certain modifications in the budget that has been brought down, and I want to express the opinion that there is plenty of room for such modifications. The practice of this Government has been to bring down measures and then to amend them before they get very far, so that the Minister of Finance (Mr. Fielding) is quite in line with the practice that has prevailed with the Minister of Militia (Mr. Graham) and with

The Budget-Mr. Hoeken

regard to other questions that have been brought before the House. I trust that the Minister of Finance will make these modifications somewhat comprehensive. I think he might, with advantage to the country, modify his stamp tax, because that tax is going to be a very great burden especially upon those who have large financial transactions, and it is going to work very grave injustice Every municipality issuing bonds, collecting taxes, dealing with large financial transactions, is going to be required to pay three or four times on the same money, and I hope the Minister of Finance will be able to modify that provision.
I hope too that he will give some consideration to the complaints of confectioners who have been singled out for a special tax that is not imposed on any other class of merchants or manufacturers. Under modern conditions of living, confectioners play a very large part in the life of the people. At the present time, especially in cities and large towns, there are many living in apartment houses who find the services of men in that business of particular value, and why they should be penalized above all other businesses is something that I do not understand, and something which, I venture to say, the Minister of Finance cannot justify on any reasonable grounds.
I might say the same thing with regard to the prohibitive tax that the Minister of Finance has placed upon imported cigars. I am not speaking for any personal reason because, when I smoke cigars, I smoke domestic ones; but my point of objection to this tax is that he has put such a tax on imported cigars that there will be no revenue at all from that source. The tax is made prohibitive so that, instead of adding anything to the revenue, it will decrease the revenue. In these particulars and in others that might be mentioned, I think modifications are quite in order.
Undoubtedly, this budget is adding very seriously to the burdens of the people of this country. We have been told, for two sessions at least, perhaps longer, about the increasing cost of living; but the 50 per cent increase in the sales tax is going to place upon the people a heavier burden than they have so far borne, and I trust the Minister of Finance will modify that somewhat. The sales tax, as imposed by the ex-Minister of Finance (Sir Henry Drayton) who represented this party, is a very wise measure; but any measure which is wise within reason, can be made very un-

wise when it is exaggerated, and that is what I think the Minister of Finance has done in this case.
I was not surprised that the members of the Agrarian party were dissatisfied with the budget. They listened to speeches that were made in this House last session and the session before; I have no doubt they took those speeches as expressions of sincerity, and they expected and had a right to expect larger reductions, especially on agricultural implements. Mark you, Mr. Speaker, I do not think there should be any reduction on agricultural implements; but this touches the point of the amendment introduced by the ex-Minister of Finance. I think a party that makes pledges when it is in opposition, puts them into its platform, and into its campaign literature, and then brings down such a budget as the one which the Minister of Finance has brought down, is to be condemned in the terms of the amendment presented to the House. I think my hon. friends to the left have very substantial grounds for complaint as regards the tariff proposals contained in the budget. But those members of the Agrarian party who have followed the course of events with regard to the Liberal party and who have had anything like accurate knowledge of their methods and their record, would not have any ground for being astonished at all, because it has been a feature of the Liberal party, ever since the death of George Brown and the deposition of Alexander Mackenzie as leader of that party, to make promises and not to fulfil them, especially with regard to the tariff. As long as the late George Brown was alive, he kept the Liberal party a free-trade party. As long as Hon. Alexander Mackenzie's voice was to be heard in this House, he argued for a 17i per cent tariff which, while not free trade, was approximating that. But when those two honest and sincere statesmen disappeared from the scene, the Liberal party shifted its ground, and from that day to the present time, there has been no sign or evidence of sincerity in its pledges or promises with regard to the tariff. Those of us who know that and who have followed its record, are not surprised that it has not implemented its pledges. Some of my hon. friends to the left have not, perhaps, followed the course of the Liberal party so closely, and to them this may be a matter of astonishment. We used to be told that we were going to get free trade as it is in England.

The Budget-Mr. Hocken
That was the phrase used in the party literature. That is what the late member for Red Deer used to expatiate on so loudly and eloquently in this House; but nobody can expect that; indeed, nobody can expect any particular reductions in the tariff. Personally, I am satisfied that the tariff is not too high. I object to the 2| per cent reduction on agricultural implements, although my attitude may give a shock to my hon. friends to the left.


Some hon. MEMBERS:: No shock at all.


Horatio Clarence Hocken: But I believe in maintaining our industrial concerns, and I believe in the principle of protection. I say that frankly as this party says it. I would invite my hon. friends of the Agrarian party to consider what a remarkable difference there is between this body and that body sitting opposite on the point of sincerity, and if sincerity is of any value in public life, it ought to be considered. Whatever faults may be charged against this party, it has stood since 1878 four-square for the protective principle. We have not tried to hedge on that at all. Every man in Canada knows what the trade policy of the Conservative party is and has been for over forty years; but no man in Canada can tell from one year to another what the policy of the Liberal party is with regard to the tariff. On that side of the House, there is such a hodge-podge of opinion, that I doubt whether anybody now can tell what their policy is on the question of protection or free trade. They have both classes on that side, not only on that, but on many other questions. The Minister of Justice (Sir Lomer Gouin) to-day endeavoured to prove that the Liberal party had been consistent in its trade policy, and he went back to the late Hon. Mr. Blake to quote him. I think the Minister of Justice was somewhat unfortunate in his selection. He quoted the late Hon. Edward Blake in his Malvern speech to prove that the Liberal party had been a reasonably protective party; or that they had a tariff policy which, perhaps, they did not claim to be protective in its character, but which was substantially so. I can tell the House that the Hon. Edward Blake, that great statesman, one of the most brilliant men the Liberal party has produced, if not the most brilliant man in all its history, was deposed from the leadership of the Liberal party because he held those views as quoted by the Minister of Justice. When
170J
he spoke at Malvern, he created a schism in his party, because his party was for unrestricted reciprocity. That was the issue of the election which followed his resignation. It was because he would not adopt that principle and that policy of unrestricted reciprocity that he felt compelled to resign the leadership of the Liberal party and to retire from Canadian politics. In fact, he was driven out of Canadian politics because he announced a policy somewhat similar to that which has since been carried out by this party.
I am going to quote what he said, Mr. Speaker, in this celebrated letter to his electors in West Durham, dated 5th March, 1891. It is a long document and therefore I shall not read it all. Among other things he said:
The issue which the party has thought fit to tender for the judgment of the electorate is that of unrestricted reciprocity or absolute free trade with the States; an issue which has been maintained as the sole party plank ever since it was put forward in 1887.
Being at that time in Europe, I wrote, and after my return fully stated to leading men my views on this head.
It was agreed that unless the conditions should change, it would clearly be my duty, when called on to address the Constituency, to make known those views; but the desire was expressed, in tlie party interest, that they should not be then published.
Having decided to yield to every wish of my friends, compatible with honour, and hoping against hope that some turn of events might ameliorate a situation to me most painful, I yielded to this wish.
Lately, when a provincial convention was summoned, and our fifth session was approaching, 1 though it right to convey to the riding association, as a basis for discussion, some brief intimation of my opinions.
But, on the statement of prominent men thalt its publication would, even then, be detrimental to party interests, my letter was held back for a few days.
Pending discussions on the matter, the dissolution has been precipitated ; we are now in the throes of the election; and I feel bound to limit my confidence to you alone to-day.
The hon. Minister of Justice (Sir Lomer Gouin) quoted the late Hon. Edward Blake to prove that what he said at Malvern was the policy of the Liberal party; but it was exactly contrary to the policy of his party, and because of the statements he made there he had to retire-to him a very painful thing. And he not only retired from the leadership of his party, but he retired for good from Canadian politics.
I am going to read two or three more paragraphs of that historic letter to show what was the policy of the Liberal party at that time. He said in paragraph 16:
The Budget-Mr. Hocken

Since any practicable arrangement does substantially involve, not only differential duties, but a common tariff, unrestricted reciprocity becomes, in these its redeeming features, difficult to distinguish from commercial union.
His interpretation of commercial union is given in paragraph 21:
The tendency in Canada of unrestricted free trade with the States,-
Remember, he was discussing the policy of the Liberal party.
-high duties being maintained against the United Kingdom, would be towards political union; and the more successful the plan the stronger the tendency, both by reason of the community of interests, the intermingling of populations, the more intimate business and social connections, and the trade and fiscal relations, amounting to dependency, which it would create with the States; and of the greater isolation and divergency from Britain which it would produce; and also, and especially, through inconveniences experienced in the maintenance, and apprehensions entertained as to the termination of the treaty.
Let me give you another extract, Mr. Speaker:
Assuming that absolute free trade with the States, best described as commercial union, may and ought to come, I believe that it can and should come only as an incident, or at any rate as a well-understood precursor of political union.
That was the policy of the Liberal party at that time, and that is how the Hon. Edward Blake interpreted it. And he did a most remarkable thing, Mr. Speaker, for a man of his standing and responsibility. Holding such views, so strongly divergent from those held and advocated by his party, he was so loyal to his party and so disloyal to his country that he declined to make his views known until after the election had been held. He did that at the request of certain of his political friends, because he said:
Without being so presumptuous as to imagine that my judgment is entitled to weight when unconfirmed by that of my political friends, I yet recognize the extensive and effective use, too commonly made by the adversary, of the slightest divergent expression of opinion from the humblest member of an opposing organization.
My late relation to the party emphasizes the present application of this remark.
And I have come to the conclusion, confirmed by the judgment of leading men, that the publication of these opinions would inflict much more damage on my friends than the slight injury which may result from my silent withdrawal.
Here was a public man who because of a mistaken sense of loyalty to his party concealed his views on an issue that was dividing the country-something that has

been characteristic of the leaders of that party. I submit that holding the views he did he owed it to the country to state those views before the electors were invited to go to the poll.
But, as I said, that is characteristic of the leaders of the Liberal party, even to the present day, for only this week we have the Minister of Finance (Mr. Fielding) saying:
X have never voted for the tariff items of the Liberal platform, and never concealed the fact that I did not approve of the platform in that respect.
So my hon. friend has run true to form -he did not let anyone know until Monday that he did not believe in the platform of his party. I submit that it is not an act of sincerity for a public man holding views on an important national question to conceal those views. He may justify that concealment, of course, by some method of reasoning which I do not understand, but I do not think his action can be defended upon any high moral ground.
The Globe said at the time the Hon. Edward Blake wrote his letter that they did not know what its effect would be on the party. Well, we have discovered since what the effect was. It led the Liberal party to drop unrestricted reciprocity, commercial union, free trade and that kind of thing, and when returned to power in 1896 to adopt the tariff policy of the late Sir John A. Macdonald, maintaining that policy down to 1911, when by some peculiar aberration of mind the party went back to the old reciprocity idea. Well, the people told the Liberal party what they thought about reciprocity, and I fancy that the second lesson-the first they got in 1891- ought to be sufficient to convince them for all time that reciprocity or free trade, or commercial union or free trade as we have it in England, will not go in the Dominion. As a matter of fact we have the protective policy to-day, and I may say to my hon. friend that I believe we are likely to have it for many years to come. But what could my hon. friends from the prairies expect from a government created by the big interests of this ucontry? I see that causes a smile. It causes a smile, Mr. Speaker, because over the length and breadth of Canada this party of ours has been called the party of the big interests. It is not under the influence of the big interests; the course that the big money power of this country followed in the last election is sufficient proof of that fact. Big business

The Budget-Mr. Hoeken
not only refused to support the leader of this party, but turned all its resources not behind the leader of the other party, but behind the Minister of Justice, whom big business regards as the leader of that party. Do my hon. friends take my word for that?


An hon. MEMBER:: No.


Horatio Clarence Hocken: Well, if they will not, I am going to give them some evidence which perhaps they will take. I have here a copy of the official organ of the U.F.O., and I am sure that the third party will accept that as evidence that is substantial and good. I find this, Sir, on November 26, just before the election:
Meighen beaten to a frazzle, say Montreal magnates. Vested interests in Montreal say Meighen will only get forty or fifty seats.
They had them pretty well counted.
They have left him and have swung in behind Sir Lomer Gouin and the anti-public ownership, high protectionist Liberals of Quebec province. Say King does not count. Vested interests now support Liberals. Montreal's big business men forced Meighen to country in first place, backed him until he became a "forlorn hope," and now give their allegiance to Liberal protectionist group. Want Gouin as premier.
And it goes on in quite an interesting way, Mr. Speaker. The gentleiman w*ho wrote this was at one time a journalistic colleague of my hon. friend the Minister of Finance; he lived in Montreal, and knows the situation there very well. He says:
This week a Sun representative-
Which was himself.
-visited Montreal and is able to state that the big business men of the commercial metropolis regard Premier Meighen as a beaten man. They have turned away from him and have picked Sir Lomer Gouin and the Hon. Walter Mitchell as the only men to whom they can turn in their hour of need. The hon. Mackenzie King is eliminated by the Montreal interests. They expect him to be defeated in North York, but even if he is not defeated, they declare that the real men in the Liberal party consist of the high protectionist anti-public ownership element as represented by Quebec. It is undoubtedly true that big railway corporations, big shipping concerns, wholesale and distributing houses, manufacturing establishments, banks and other kinds of big business, have their fingers pretty close to the pulse of the people.
Aye, they are the doctors in some oases.
They get reports from all parts of the country and it is the summarized viewpoint of all these from the various provinces that have convinced them that Meighen is worse than a forlorn hope. They have put him down at the bottom of the list with not more than forty to fifty seats. In fact some declare that the Conservatives as such will be wiped out at the coming election and that the only hope of the vested interests is
in getting behind Sir Lomer Gouin and his associates. For a variety of reasons, the vested interests of Montreal do not like Mackenzie King. He is disliked because of his Ontario attitude on the tariff, on the railway problem, and in regard to public ownership in general. In addition to all that, Quebec has a friendly spot in its heart for Sir Lomer Gouin, not that he appeals to them as Sir Wilfrid Laurier appealed, but because of what he has done for big business. At a time when Ontario was going in for public ownership, Quebec was offering every possible inducement to private capital to invest in her timber lands, her water-powers, her mines, pulp areas, etc. Sir Lomer himself quit his government, after some fifteen years in office, to become a director of several big corporations. To-day he is a director of the Bank of Montreal, a director of the Royal Trust Company, director of the Laurentide Pulp Company, and of various other concerns. As a director of the Bank of Montreal he is persona grata with the C.P.R.-the two directorates .being almost identical. In the Quebec Legislature, Sir Lomer Gouin was a czar. No dictator or autocrat ever wielded the sceptre with more disregard for his opponents. He brooked no opposition. His will was law, and that will was to give every possible consideration to what is known as big business. In view7 of that fact it is not very surprising to find the vested interests in Montreal swinging in behind the little Napoleon of French Canada. Sir Lomer will be backed up by his former provincial treasurer, Hon. Walter Mitchell, who is a protege of the ex-premier. In fact some go so far as to openly proclaim that .Sir Lomer Gouin will be the next Premier of Canada, and that the Hon. Walter Mitchell will be his Minister of Finance.
I gather that the hon. gentleman may fairly be described as the A.D.C. in waiting for the Minister of Finance.
All practically agree that if the Liberals are returned to power, even with Mackenzie King as their head, he will be head only in name, and that the real power behind the throne will centre in this little group of Quebec Liberals- Liberal in name, but Conservative at heart.
And it sounded very much like that this afternoon. The speech we heard today from the Minister of Justice reminded me in a very striking way of the eloquent addresses we used to hear from Mr. Cockshutt of the Cockshutt Plow Company. The story proceeds:
.Some even go so far as to predict that Sir Lomer and his high protectionist big interests associates will absorb the remnants of the Conservative party-
Well, there are one or two little remnants that I do not think he will absorb.
-but agree that if this is done a section of the French-Canadian low-tariff Liberals, representing rural constituencies, will break away and follow the Hon. T. A. Crerar. These would be led by Ernest Lapointe of Quebec, regarded by many as Laurier's successor. It is openly predicted that after the election on December 6 the Quebec "block" will split right down the middle-
The Budget-Mr. Hocken

Well, they are splitting, a little further each day.
-one section under Sir Lomer Gouin, allying themselves more or less with the remnants of the Conservative party, and the other joining up with the agrarian group under the Hon. T. A. Crerar. The outstanding impression gathered by conversation with Montreal big business men, was that they had given up every hope of Arthur Meighen being a factor in the forthcoming Parliament. He is beaten to a frazzle, and like rats leaving a sinking ship they have turned to Sir Homer Gouin.
As for my right hon. friend the leader of the Opposition not being a factor in this Parliament, they have certainly made a miscalculation there, for the facility with which the Government has changed its policy at his direction has been the outstanding feature of this session.
Now, when my right hon. friend (Mr. Mackenzie King), whom I congratulate upon being elevated to the dig-
10 p.m. nity of a Privy Councillor, found himself after the election, to his surprise, at the head of the largest group, I firmly believe, not only from his actions at the time but from what I know of the character of the man, that he pledged himself to form a real, progressive government. I think that was his desire. In fact, he began immediately to negotiate to that end, and his friend, Mr. Haydon, made some visits to the West. I do not know whether my hon. friends know all that happened there, but the net result was that five of them were to come into a coalition government. That is the way the leader of the Agrarian party understood the negotiations. I regret very much that that coalition was not formed. It is true it might have resulted in some reductions in the tariff-it could not have resulted in many-but other Progressive policies would have had a much better chance of success if five of them had entered the cabinet. I refer particularly to the National Railways. My hon. friends to my left believe in the public ownership of railways, and I believe their view is perfectly sound. I believe that if we have the courage to persevere, the National Railways will be a wonderful asset to this country, but you cannot build from five to ten thousand miles of railway in excess of the country's requirements and expect the system to pay until the country is more densely populated. That was the mistake that was made, not the mistake that we made, but the mistake that bon. gentlemen opposite made who built all these railways.


Andrew Ross McMaster: Both parties.


Horatio Clarence Hocken: Who built the Grand
Trunk Pacific? Was it the Liberal party or this party? Who built the Transcontinental?


Andrew Ross McMaster: What about the
Canadian Northern?


Horatio Clarence Hocken: Hon. gentlemen opposite built thousands of miles of railway that was not required at all, and that is what is causing the deficits on our National railways to-day.


Andrew Ross McMaster: Was not the extension of the Canadian Northern through the West largely brought about under the aegis of the Conservative party?


Horatio Clarence Hocken: The hon. gentleman is entirely mistaken.


Arthur Meighen: Hear, hear.


Horatio Clarence Hocken: The Canadian Northern was financed and bonused by the government under the late Sir Wilfrid Laurier, and guaranteed by the provinces as well.


Andrew Ross McMaster: Also by the late government.


Arthur Meighen: No.


Horatio Clarence Hocken: When the Canadian
Northern was being built and the Grand Trunk Pacific was proposed, what happened in the party opposite? Its minister of railways deserted it. He would not follow the policy that was imposed upon him, and he left the party because he knew they were piling up on this country a burden that it would never be able to carry for many years to come.


Mr. MARTELL:: What did Mr. Bennett, the ex-Minister of Justice, say about the Canadian Northern?


Horatio Clarence Hocken: The late Mr. Blair was Minister of Railways in the Liberal government at that time, and his judgment was that the building of the Transcontinental from Moncton to Winnipeg was a political crime, he left his party rather than consent to it, and in leaving them he said that the only reason the Grand Trunk Pacific was being built was that " Cox could not wait." I do not propose, while I am on my feet, to allow any man to try and persuade me that this party is responsible for the railway tangle in which we find ourselves to-day. If the National Transcontinental and the Grand Trunk Pacific had not been built, not only would there not be any railway deficits to-

The Budget-Mr. Hocken
day, but there would be a very substantial profit, because the Canadian Northern is the only section of the national railways that paid last year. It runs through the best territory in western Canada, as my friends here will admit.
My right hon. friend the Prime Minister would have liked to form a Progressive government, and he knew that Barkis was willing. Barkis, in fact, came down to the city of Ottawa, accompanied, I believe, by some of his colleagues, but between the day he left Winnipeg and the day he arrived in Ottawa something happened, and when he got here that excellent plan had to be called off.


Lewis Herbert Martell: Was that the first
time they came for money for the Canadian Northern?


Henry Herbert Stevens: Three laps behind.


Horatio Clarence Hocken: It would pay the hon. member to keep awake. I go further and say that it would have been gratifying to all citizens of a progressive spirit to have seen my right hon. friend form the kind of government he wanted in the first place, and when I say all people of a progressive spirit, that would include practically all the supporters of the late government because, Sir, Canada was never given such progressive government as it had under this party. More progressive measures were put through by this party in ten or eleven years than by any other government we ever had in Canada. This is the real Progressive party. I do not feel at all aggrieved to find such a large party of Agrarians in this House. I think they may be a decidedly wholesome influence in the politics of Canada if they do one thing, and that is to maintaih the sincerity which they have so far exhibited, so far as I am able to judge. I know that their whole tendency is naturally to support a government which promises free trade. They have been taught to believe that their strongest political opponents are over here, but some day that sincerity which distinguishes them will convince them that they are mistaken in that, and that their natural alliance is with this corner.
An examination of the records of the hon. gentlemen who form the present Government will not disclose many progressive men. It is a government of the old guard, and the cabinet was built by a master mechanic who fitted in every piece of seasoned timber accurately and exactly. I have heard it said in Progressive circles
that there is a progressive faction and a reactionary faction or. the Government side, and I think that is true. Manifestly, also, the reactionary faction is the dominant faction. My right hon. friend, of course, selected as his right bower the chief reci-procitarian of Canada, and he has as his left bower the chief representative of big business and vested interests in this country. The left bower is a stronger man, physically-I shall not go any further- than his right bower, and then to show his sense of humour the right hon. gentleman threw the joker into the Militia Department. That hon. gentleman has been very quiet so far and his filled his place very well, but I am sure that progressive men on the other side of the House must feel disappointment at the selections which the Prime Minister felt compelled to make. Take the portfolio, for instance, of Marine and Fisheries. Tnere is a fine able mariner down at Lunenburg that might have been fitted into that place, and I think it was a disappointment in some circles that he was not fitted in. But, Mr. Speaker, whoever formed the Government, or whoever had the chief influence in forming it, seemed to prefer to follow the British example in filling the office of Minister of Marine and Fisheries. Because, Sir, it is the British principle to select such a man, and we find that principle put into poetry, not only put into poetry but set to music, because:
When he was a lad he served a term As office boy in an attorney's firm He cleaned t'he windows and swept the floor And polished up the handle of the bis front door.
He polished up the handle so carefully That now he's ruler of the King's navy.
So in following up the British principle the Government have given to us just about all that Gilbert and Sullivan embodied in this character in Pinafore.
Now, Mr. Speaker, I suppose there has never been such a strange spectacle in this Parliament as we have before us to-day- as we have before us day in and day out. There are all shades of political opinion gathered into one inharmonious group on the opposite side. Here is my hon. friend from Brome (Mr. McMaster) for free trade "as they have it in England"; and here is my hon. friend the Minister of Justice (Sir Lomer Gouin) as protectionist as Sir John A. Macdonald. Then there is my hon. friend the Solicitor General (Mr. McKenzie), who treated us yesterday to one of those long smooth-bore dissertations which at least, did not show any di*-
268:
The Budget-Mr. Hocken

position to cater to free trade. And it is not only on the question of the tariff that there is a lack of harmony; we also find it on the question of the nationalization of railroads. My hon. friend from St. Antoine (Mr. Mitchell) takes one side; my hon. friend from North Waterloo (Mr. Euler) takes another side. And so it is even when you come to the question of maintaining the militia. The hon. member for Quebec South (Mr. Power) says we can only vote so much for training the militia, and the Minister of Militia (Mr. Graham) says we must have the amount of money that was originally asked for, that it is the smallest amount that can be asked in order to secure the national safety. But the member for Quebec South says "It does not make any difference to the national safety; cut it out", and the Minister of Militia cuts it out. What I want to point out is that there is no harmony of view on the opposite side at all on some of the most important questions that concern this country.
I must say that the speeches made by the hon. member for St. Antoine, by the Minister of Justice, and by other members on that side, in relation to the nationai ownership of railways, must give concern to every man who believes in that principle. I do not know exactly what we will do with them. The Government could not give them away to any private interest that would assume the capital charges; that is a certainty. If we disposed of the National Railways to-day it would be on the understanding that for all time we would assume the capital charges of $33,000,000 a year. Now my view, Sir, is that it will not be very many years, perhaps only two or three years, when the operating deficit on the National Railways will be wiped out; and when we reach that point we will have secured everything that it is possible to get by handing them over to private capital. I do not know, of course, what the intention of the Government is in regard to the management of the road; but I know some of the executive staff and I venture to say there is amongst that executive as great enthusiasm to make the National System a success as there is even among the executive of the Canadian Pacific Railway. Those to whom I allude are fine, capable, experienced young men, and I believe they can repeat next year what they have done this year when they reduced the operating deficit by several millions. They will
[Mr. Hocken.}
reduce that deficit by six or ten million dollars this year, and within a very short time they will have the operating deficit removed entirely. From that time on there will be no talk about scrapping the National Railways or handing them over to private interests.
Sir, I thought that the speech made by the Minister of Justice to-day was about full value for the support which was given to him by the big business interests in Quebec during the last election. What the effect of it will be upon my hon. friend from Brome (Mr. McMaster) I do not know. I am surprised to see my hon. friend in his place to-night. I had thought that the statement of the Minister of Justice would have given my hon. friend such a shock it would have put him to bed.


Andrew Ross McMaster: Liberals are made of sterner stuff.


Horatio Clarence Hocken: My hon. friend seems
to have more vitality and physical strength, than I gave him credit for, because I cannot imagine anything giving him such a tremendous shock as to hear a speech of such a character from that side of the House. What my hon, friend is going to do with the Minister of Justice, or what the Minister of Justice is going to do with him, I really do not know.
Now, Mr. Speaker, I have just a word to say to my hon. friends who do not believe in protection. I suppose that if, for example, we took Prince Edward Island it would perhaps be a little to the advantage of that province, which is purely agricultural, if we had free trade in Canada; but I cannot imagine it being of any real value to any other province in the Dominion, and the point that always occurs to me is this: Are we, as Canadians, prepared to work together to build this into a great country? If we are, then we must work for the establishment and maintenance of diversified industries. It has been shown to-day by my hon. friend from Vancouver (Mr. Stevens) that the products of the farm- which of course are the most important of all products; we all concede that-are enhanced in value after they have gone through the factory by 100 per cent or more. Are we going to have these factories; are we going to be manufacturers as well as farmers; are we going to try to work together and each carry a little of the other's burden in order to make Canada a great and flourishing country? We in this part of the country are hearing our share of this burden for the West. I think my

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Mr. Hocken
hon. friends from the West will agree that a very much greater part of the deficit on the National Railways is borne by the taxpayers of eastern Canada.


An hon. MEMBER:: It comes out of the taxes.


Horatio Clarence Hocken: Well, where do the taxes come from? They come largely from eastern Canada. There is no complaint about that. I am not making any complaint.
I am satisfied that eastern Canada will do what it can to meet the burden to keep these railways in the hands of the people so that we can have a national system publicly owned and operated; and that is a service to the West that I hope will not be forgotten. And, Sir, we must have manufactures in the East if we are going to have resources sufficient to pay our debts; and I can tell my hon. friends that they will never get very much relief from the burdens they carry through tariff reduction. That is not the goal towards which they should direct their efforts in my judgment. Suppose the Government does make a few piffling reductions on agricultural implements, such as the Minister of Finance has introduced what does that amount to? And especially what does it amount to when you take the sales tax into account? While the Minister of Finance made that reduction, the addition to the sales tax left you just about where you were before. I am not complaining about high taxes, because this country has to raise a large revenue. We have to pay our debts, and crawl out of our difficulties the best way we can. I submit that Canadians are men who will and can crawl out of trouble. They have the perseverence, the blood and the breeding to overcome any difficulties and obstacles with which they are faced. We have potentially the greatest country in the world. We can maintain in greater comfort than we are living in to-day over 200,000,000 people. Some day, perhaps by the end of the century, we will have 100,000,000 people in Canada, and they will be a better 100,000,000 than you will find in any other country in the world, because they live and work in a climate that will make them strong mentally, physically and morally. That is the type of people we have to-day. Can we not get together and find some common [DOT]basis, fair and reasonable for both parties, that will bring prosperity to all parts of the country, and devise a policy to bring us into closer harmony than exists at the present time? Nobody can deplore more
than I do that there should be any feeling between the East and the West. I will go as far as I can, as an individual, and as far as I have any influence in removing any friction that may exist, but I appeal to my hon. friends to look over the situation, not with reference to the theoretical views of Cobden and Bright, but with reference to the situation as it stands to-day. We are confronted with a condition. We must not be carried away by theories, but we must meet the situation as it exists.
I want to reply to'an argument put forward by the hon. member from Marquette (Mr. Crerar) the other day. He said the farmers of Ontario were too poor to get married. Mr. Speaker, did any man ever refrain from getting married because he was too poor? That is the last thing a man thinks about when he has the mating instinct. He finds his mate and marries her. It is not poverty that keeps people from (being married, jbut it is an entirely different and less noble instinct. It is the instinct of selfishness that keeps people from marrying, and if that condition exists in any place in Canada to a greater extent than it exists in the rural districts of the province of Ontario, I am sorry for it. The statistics which my hon. friend from Peel (Mr. Charters) gave the other night go to prove that. Therefore, do not let us run away with the idea that the rural depopulation of Ontario is due to decreasing revenues and decreasing earnings by the farmer, because a good farmer in Ontario will do as well to-day as he ever did. Prices vary from one season to another, of course, but if the man is intelligent,-and all farmers are,

and industrious, he can make a better living in Ontario on the farm to-day than in the city. Pity the poor manufacturer. I know that does not sound exactly like what you hear in the school house, but if there is any class of people in the country to-day for whom we should express our pity it is the manufacturers. They are all in the hands of the bank, and do not know whether they will finish out this month, next month or the month after, and any man who makes a success as a manufacturer has worries to sleep with every night that absorb his thoughts in a way that the farmer does not know anything about. I admit there is lots of work on the farm. It has its isolations, but my view of government action is that about all a government can do is to remove
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that isolation by all those modern devices such as good roads, telephones, rural mail delivery and distribution of electric power, as we are having it in our farm houses now. These are things that will make life on the farm better and more profitable, and will tend to draw the people into the rural district. I submit my hon. friends to my left will find, as time goes on, that it is not there their natural alliance is, but here.


Mr. H. J. LOGAN (Cumberland):: I am sure this House enjoyed very much the speech of the hon. member from West Toronto (Mr. Hocken) who has wandered far afield, quoting from the Bible and Edward Blake down to Pinafore, and, finally, ending up with that same old flirtation with the Progressives-the hon. gentlemen across the way. I have been listening with much interest, during this debate, to this flirtation by these gentlemen angularly opposite. Do they think the hon. members are fools? Three-quarters of the speeches are not addressed to you, Mr. Speaker. They turn their backs to the Chair, face the Progressives, say to them, " Now, boys, you must forget your half-brothers across the way, and you must climb over the fence and come with us, although we have nothing in common with you." My hon. friends, the Progressives, are not, in my opinion, to be caught with any such false inducements as these people are trying to hold out to them.
I am more than ever convinced, after hearing the speech of my die-hard friend from West Toronto, that the members of the official Opposition are Bourbons. They can neither learn nor forget. They wonder why they are there. They are not the only people in Canada who wonder why they are there. The wonder is that there are as many of them as there are. The once great Conservative party of Sir John Macdonald, Sir Charles Tupper, Sir Leonard Tilley, and Sir George Etienne Cartier, which at one time filled all one side of the House and overflowed half of the other side, is now represented by a remnant that occupies four rows of seats in one corner, and yet they wonder why they are there. The hon. member has referred to the fact that men of divergent view*-have been taken into this Government. Of course, we have divergent views. Liberalism means independence of individual thought. If we were all of one mind over here, if we all believed exactly the same thing, we would be reactionaries, but we

do not and, therefore, we are Liberals serving under a Liberal Prime Minister.
In this debate, apart from the deceptive love-making of the Progressives that has been indulged in by my hon. friends angularly opposite and a great many excellent sermons on the theory of free trade, by members of the latter party, we have had the Dead March of despair and the mournful cry, " The country has gone to the dogs."- We are told we are hopelessly lost. We have tremendous railway deficits and burdens we cannot bear.
Would it not be better in the language of the Minister of Marine and Fisheries (Mr. Lapointe), to smile and compare our condition with what they might have been? Four years ago, on this day of June, we were anxiously listening at telegraph offices to learn by despatches coming across the Atlantic cable whether or not we were to pay tribute to Germany for the rest of our lives and to learn the goose step. That was only four years ago. Within a few months we won a glorious victory; we have since demobilized our soldiers; we have those men hack with us in this country in different avocations. Although we have a burden of debt, although we have a large taxation, we are by no means the most impoverished country in the world, and we have, what is better than all, the great asset of victory, which might not have been ours.
On this occasion we have an amendment to the budget, moved by the ex-Minister of Finance (Sir Henry Drayton), condemning the Government for not carrying into effect the exact language of a platform adopted in this city three years ago. What were conditions in 1919? Our factories throughout Canada were busy; there was practically no unemployment from the Atlantic to the Pacific; markets were good, and our farmers were happy. We floated a huge victory loan, running into hundreds of millions of dollars, which was over-subscribed, even though the rate of interest was low. Since then, we have spent hundreds of millions of dollars in demobilization; we have taken over a great railway system, known as the Grand Trunk Railway; railway deficits have mounted higher and higher, and a tremendous amount has been added to the public debt of Canada. Is this a time for us to bring down a slashing, radical tariff, when we do not know just what the effect would be upon this country? The Progressives preach free trade; it is a beautiful doctrine; we would all br free

The Budget-Mr. Logan
traders-if the rest of the world were free traders. They sing these theoretical rhapsodies; but unemployment is knocking at the door.
Public promises should be kept; but sometimes they must be varied according to conditions. The Minister of Militia in the late government of the leader of the Opposition put forward a solemn promise in the election campaign of 1917 that farmers' sons would not be conscripted to go to war. He went even further than that; he said that if they were conscripted, he would see that they were returned to their homes from whatever camps they might be. Did the late government keep their promise? No, they did not keep it. They gave the reason that there was such dire need for more men on the other side of the Atlantic, that they could not keep their promise. They did not apologise; they said that conditions had changed. I am not admitting that they were right; but that was the stand which they took at that time. So, we cannot do what, perhaps, we thought we could do in 1919, as conditions now are entirely different.
Personally, I believe the Minister of Finance would have been justified in not touching the customs tariff at all. Why? Because we have not yet had time under present chaotic conditions to know just what effect a reduction in the tariff may bring forth. This Government were only two months in office before Parliament opened. They were busy during those two months preparing for Parliament, and since Parliament has opened, they have been busy carrying on the business of the session. There has been no time for a tariff inquiry. For instance, I can think of factories employing large numbers of men and women in making boots and shoes. In 1919, I would have been in favour of reducing very materially the duty on boots and shoes because the industry was prosperous; but to-day, what are the facts? In the boot and shoe industry in Canada, there is distress. Over 25 leading Canadian boot and shoe manufacturers have gone to the wall; many others are being carried by the banks, and do not know just where to turn. Would it be wise, without any investigation whatever, for the Minister of Finance to come in at this session of Parliament and materially reduce the duty? We know that boots and shoes that come into Canada come principally from the United States of America. I submit he would not be justified in making a change, because we do not know present conditions.


Mr. KENNEDY (Edmonton):: I cannot understand the bon. gentleman's point with regard to the situation in the boot and shoe industry. Is bis point that that industry has not enough protection, or that the protection is of no use to prevent unemployment and hard conditions?


Hance James Logan: The boot and shoe industry in Canada is carried on, in something over 100 different factories, which manufacture principally all the boots and shoes used in Canada. The competition between those concerns regulates the price. If you removed the tariff from that commodity and allowed this country to be overrun, even for a period of three or six months, with cheap American boots and shoes from factories that can make enough in two weeks to supply the whole needs of Canada for a year, what would be the result? You would drive out of existence seventy or eighty factories in this country; in a year's time up would go the price, and you would find yourself at the mercy of the American manufacturers of boots and shoes. The condition, however, of the boot and shoe industry is a matter to be investigated. I merely say that conditions have changed in that industry, and the question whether there should be a change in the duty on boots and shoes or not is a matter for investigation.


Mr. SPENCER:: Do the boot and shoe
manufacturers of Canada export any of their products to the United States?


Hance James Logan: A most negligible quantity. But the boot and shoe manufacturers of Canada supply the Canadian trade, and it is at any rate one industry in which there has never been any proof that there has ever been any combine to fix prices.
We have before us the serious problem of unemployment. In the town where I happen to reside there are hundreds of idle men; but on the other hand we have a number of men at work in the factories there. Could I take the chance of voting to-day to reduce the duty upon goods manufactured in those factories when I would not be in a position to know whether it would mean the adding to the number of unemployed? Is it good policy by precipitate action to have battalions of unemployed in Canada where we now have only platoons?
The amendment of the right hon. leader of the Opposition (Mr. Meighen) condemns us because we do not do something in 1922 which it might be dangerous, to
The Budget-Mr. Logan

say the least, to attempt, because we happen to have had a platform in 1919 promising certain fiscal changes. I do not think this House or the country is going to take that amendment very seriously, because the chief matter of concern to the people to-day is: What are we going to do now?
I pass to the leader of the Progressive party. My hon. friend (Mr. Crerar) condemns the budget in that the proposed reductions are not sweeping; he also condemns the sales tax and the stamp tax. Well, how else are we going to get the money? Does the hon. leader of the Progressive party and his followers think we can get money off the trees or out of the sky? We are confronted with facts, not with theories, and the facts are that we need between $450,000,000 and $500,000,000 to carry on the affairs of this country during this fiscal year, and at least $100,000,000 of that sum is not even in sight. The sales tax is estimated to produce $100,000,000; the stamp tax will, no doubt produce many millions of revenue, although I have not heard any estimate of what it is expected to yield; the customs tariff will produce over $100,000,000. Money must be obtained. How are we going to pay our pensions and continue the re-establishment of soldiers if the treasury is empty? How are we going to pay the interest on our public debt if we have not some source of income to meet it? Provision must also be made for the greatest burden of all-our railway deficits. Even when we talk about the tariff and other matters, we must realize that the one great problem of this country today is transportation.
It is said that the income tax is already too high, and we hear complaints from ail parts of the Dominion that it is more oppressive than in other countries. But the Finance Minister estimates that this fax will produce $40,000,000 less this year than it did last. Again I ask where is the money coming from to meet our obligations? The platform of the party led by my hon. friend from Marquette calls for an inheritance tax and a tax on land. But he now tells us that we should not invade the taxation field of the provinces. Well, the provinces already impose an inheritance tax, and I know that my province has a tax on land as well.
There is no question before the House or the country of free trade or protection. We are confronted to-day with the need of 
money-rather, I might say we are confronted with an emergency. What we require more than ever before is a revenue tariff which, of course, is bound to give incidental protection. A revenue tariff, to produce anything like the amount of money we require, will give substantial protection to our industries. I submit that while some of our tariff rates may be a little high, there are others that are" entirely too low. My hon. friends, the Progressives, condemn protection. Why do they not advocate, then, raising the duty on articles not produced in Canada? My hon. friend, the leader of the Progressives, a few weeks ago said in this House in the course of his speech in the debate on the address:
X recognize Chat it is and wilt be necessary for a considerable time to raise revenue by customs duties:
Of course, he admits it is necessary. Then why is he declaring that he and his party will oppose this budget, which, I submit, is not a protectionist budget such as in generally known, but is absolutely necessary to raise the revenues we require.
But if my hon. friends want to raise revenue without protection I will give them a few suggestions. Last year we imported five million tons of anthracite coal. This was not used by the poor down on the wharves of our seaports, nor by the struggling poverty-stricken denizens of our slums, but by the well-to-do people who can amply afford to pay for it. That coal was brought in free of duty, and its value is given in the customs returns at $40,000,000. A revenue tariff of 20 per cent upon that importation alone would mean an additional revenue of $8,000,000-much more than could be procured from an inheritance tax.
We hear a great deal of talk about the duty on bituminous coal, and it is somewhat annoying to us in the maritime provinces to be continually told that we have always the fear that this duty will be reduced. In fact to hear some people talk you would think there is actually a high protective duty on bituminous coal. But what are the facts? Years ago under the old tariff as fixed by my hon. friend the present Minister of Finance, a specific duty of 53 cents a ton was placed upon American bituminous coal. At that time the price was about $2.60 a ton. That duty of 53 cents a ton was equivalent to about 20 per cent of the value. To-day, when bituminous coal is worth from $5 to $6 a ton, it does not take anyone very long to

The Budget-Mr. Logan
figure out what percentage that specific duty is. The fact of the matter is that according to the customs returns for last year which I have under my hand, even although bituminous coal was valued for customs duty at what is really a very low price, namely about $4 a ton, the duty was less than 12 per cent. Is that a protective tariff? It is not even a revenue tariff.


Robert James Manion: Would my hon. friend
permit me a question? I ask it only as a matter of information, because the expression "revenue tariff" is used continually. Would he mind offering to the House his explanation of where a protective tariff ceases and a revenue tariff begins?


Hance James Logan: I will put it the other
way: a revenue tariff ceases when it is made so high that manufacturers can get in behind it and rob the people by combines, the competition of the manufacturer outside being eliminated. A tariff remains a revenue tariff, though it does give incidental protection, if it does not allow the manufacturers to get behind it and form combines to bleed the people by extravagant prices.
Let me return to this question of coal. I have said that according to the customs returns the duty on coal last year was less than 12 per cent. Now, my good friends the Progressives advocate the development of our natural industries; that is one of the chief things they talk about. They say:	Never mind the exotics; let
us develop the natural resources and industries. Is there any more natural industry in Canada than the coal industry? Do you know, Mr. Speaker, that 150,000 Canadians depend upon the coal industry, either directly or indirectly? Besides, provincial governments depend upon it for a large part of their income which they devote to education, roads and bridges, and the works which they carry on throughout the provinces. Yet last year there were imported into Canada 15,000,000 tons of bituminous coal, while the industry in eastern Canada languishes; coal miners are working two and three days a week, many not working at all. I assume the same condition exists in the West. I advocate for another budget the imposition of a duty of at least 20 per cent upon bituminous coal. Twenty per cent cannot be called protective duty; I estimate that it would not increase the price of coal to the consumer in this country according to the
value placed by the customs more than 27 cents a ton. If we can give employment to thousands of men who to-day are walking the streets of our mining towns; if we can revive this great industry in Canada, we shall be doing one of the most blessed things that can be done, one of the things best calculated to restore prosperity throughout the land.
I	wish to offer some suggestions in reference to the application of the tariff so far as values are concerned. The budget provides that the duty shall be applied on the price of the article at point of purchase, that is, the price at which similar goods are sold at the point of purchase. Let me call attention to the manner in which the tariffs of some other countries are applied. The customs tariff of the United Kingdom provides as follows:
The value of any article for the purpose of ad valorem duty shall be taken to be the price which an importer would give for the article if the article were delivered, freight and insurance paid, in bond at the port of importation, and duty shall be paid on that value as fixed by the commissioners of customs and excise.
In Prance duties are levied in some cases according to the gross or the semi-gross or the net weight of the article. The Australian act provides:
When any duty is imposed according to value, the value shall be taken to be the fair market value of the goods in the principal markets of the country whence the same were exported in the usual and ordinary commercial acceptation of the term and free on board at the date of the invoice relating to such goods, and a further addition of 10 per cent on such market value.
In assessing free on board value of goods subject to ad valorem duty in terms of the above-quoted section of the Customs Act of Australia, 1901, the following ' charges are included:	inland freight
charges, coastal freight, canal dues, insurance, cost of labour and material in packing, royalties, etc. For instance, if the Massey-Harris Company ship goods
from Toronto to Australia the
II	p.m. duty is levied not only upon the
cost of the goods in Toronto, but also upon the freight from Toronto to Vancouver, insurance, etc., plus 10 per cent on the total cost of the goods landed at Vancouver. If the United Kingdom system of taxation were applied in Canada it would be a great benefit not only to Canadian ports but to Canadian railways. British goods bought by a Vancouver importer would pay duty at a port in Canada; naturally to save duty on freight charges the port would be
The Budget-Mr. Logan

on the eastern coast of Canada and the Canadian railways would secure the haulage and the freight upon those goods to the point of destination. Or if goods were imported from the United States the customs duty would apply to the point in Canada at which the goods were brought in, and again the Canadian railways would receive the benefit.
This application of the tariff on the cost of goods, freight, etc., at the port of entry should certainly apply to goods brought into Canada under the British preference. Earlier in the session I devoted some time ir this House to a discussion of the desirability of confining the British preference to goods entering Canada by Canadian sea ports, a policy which I think should have received the unanimous approval of the House. I have looked at the United States tariff within the last few days and I find it in the following provision in reference to the Philippine Islands:
Provided further, that the free admission, herein provided, of such articles, the growth, product or manufacture of the United States, into the Philippine Islands, or of the growth, product or manufacture as hereinbefore defined of the Philippine Islands into the United States, shall he conditioned upon the direct shipment thereof, under a through hill of lading, from the country of origin to the country of destination.
That, Mr. Speaker, is the policy of the United States. I am not going to dwell upon it, but I submit once more that that is the proper policy for this country. The time will come, and I hope it is not far distant, when we will be Canadian enough to look after Canadian interests first, last and all the time.
_ The transportation question, Mr. Speaker, 'is to us in the maritime provinces the greatest of all questions. The leader of the Opposition referred the other day to the maritime provinces in connection with protection. I do not deny-and I say it to my right hon. friend as well as to the Progressives-that it was a sad day for the maritime provinces when protection was adopted. There is no doubt about it, had we been left as we were at Confederation, with the low tariff that we had at that time, we would have been a much more prosperous country than we are to-day. But we are confronted now with a condition under which about the chief markets we have left are the markets which are produced as a result of the operation of the factories in the towns in the maritime provinces and the coal mining centres. As to reducing any duty affecting

those factories which give a market to our farmers and all the people of our country, I want to see a thorough investigation made to decide whether such a reduction would be in the best interests of the country. We are shut out from the United States by a high tariff wall. We are shut out from the rest of Canada to which we were promised access by the fathers of Confederation, by a prohibitive freight tariff. Realizing the conditions that exist, I would hesitate, before voting to reduce seriously the tariff upon goods which are being manufactured in those towns, where as I said before, the farmers in the maritime provinces have lost their best market.
But the question of transportation is, after all, the all-important problem. We knew it at Confederation, and our statesmen told the delegates that came down to Charlottetown: We can never become a part of Confederation because the .markets of Canada are too far away. Our natural market was with the United States of America. Joseph Howe, the greatest tribune of our province, and our greatest orator of his or any other time, said on one occasion: "You could throw a grindstone into the water at any Nova Scotia port, and it would float into Boston harbour." The New England states have been our natural market, but we are shut out from that market to-day, and by reason of the high freight rates we are also shut out from the markets of Quebec and Ontario. Do you realize, Mr. Speaker, that nearly one-eighth of the people of Canada live on the island of Montreal? But we cannot reach that market because the freight rates are prohibitive. Therefore, transportation and the reduction of freight rates are the greatest of all problems in the maritime provinces.
May I just for a moment refer to a provision made in the statutes of South Africa which, it seems to me, might be worked out in this country not only in reference to the maritime provinces but other parts of Canada as well, particularly western Canada, where there might be need from the national standpoint for the operation of a railway, but no reasons from a commercial standpoint. In the Imperial statutes of 1909, Chapter 9, will be found this provision relating to South African railways:
The total earnings of the railways shall be not more than are sufficient to meet the necessary outlays for working, maintenance, etc. and the -payment of interest on capital.

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Section 131, which is the one to which 1 wish to draw particular attention, reads as follows:
If the board shall be required by the Governor General in Council or under any act of Parliament or resolution of both Houses of Plarliament to provide any services or facilities either gratuitously or at a rate of charge which is insufficient to meet the cost involved in the provision of such services or facilities, the board shall at the end of each financial year present to Parliament an account approved by the Comptroller and Auditor General, showing as nearly as can be ascertained, the amount of the loss incurred by reason of the provision of such services and facilities, and such amount shall be paid out of the Consolidated Revenue Fund to the Railway and Harbour Fund.
I read that as it is interesting, I think, in view of the railway question which we shall have to discuss in this country, and to which we ishould give our very best thought and attention,
I do not intend to-night to go over the arguments about the Intercolonial Railway. They are as old as Confederation, but the other day when reading a report of the Supreme Court of Canada I caime across judicial recognition of the fact that the Intercolonial was never built for any commercial purpose. Chief Justice Ritchie, in Regina v. McLeod, Vol. 8 of the Supreme Court of Canada reports, page 23, says:
As to the Intercolonial Railway, it was in no sense in the nature of a private undertaking, constructed for reasons influencing private promoters of similar works, or in the nature of a mercantile speculation. It was constructed as a great public undertaking, essential to the consolidation of the union of British North America, and in fulfillment of a duty imposed on the Government and Parliament of Canada by the British North America Act.
In a few weeks, I hope not more than a few weeks, when the new management will be constituted for the Canadian Government Railways and we shall have to consider once more the question of freight rates, I hope the people of this country will realize the position of the maritime provinces and the difficulties under which we labour owing to the present lack of transportaion facilities at reasonable rates.
I intended when I commenced this address to refer at some length to the sales tax provisions of the budget. I wish to say first, that there is no connection between the sales tax and the customs tax. You hear people say that the Minister of Finance is giving something with one hand and taking it away with the other. The facts are the sales tax would have been here if the tariff had never been touched. The sales tax has nothing whatever to do
with the customs tariff of this country. To some extent there is a change made in the sales tax by the tariff. For instance, there is a change in reference to importation of goods from countries where there is a depreciated currency. I had a statement here illustrating how that would work out, but I cannot lay my hands on it at the moment, so I will have to give it from memory. A few months ago, under the old customs and sales tax regulations, a certain educational institution in this country imported from Germany certain scientific books. They were free of duty, so therefore the question of duty did not enter at all. The price of these books in Germany, if the mark had been at par, would have been something over $6,000. As a matter of fact, in Canadian currency it was $210, but when the institution secured the books they had to pay a sales tax of $274 on these books that only cost them $210. Under the present sales tax proposals the sales tax upon these books would amount to something like $12 only, so a great change has been made in that regard.
The sales tax itself has been broadened very materially. There has been an increase in the rate charged, but at the same time there has been a large increase in the list of exemptions. I do not think we realize just how many exemptions there are from the sales tax. Let me give a few. The sales tax does not apply to sales or importations of:
Bread; flour, oatmeal, rolled oats and corn-meal ; rolled wheat, buckwheat meal and pea meal; animals living; live poultry; meats and poultry, fresh; milk, including buttermilk, margarine, butterine or other substitutes for butter; lard, lard compound and similar substances, made from animal or vegetable stearine or oils; eggs; vegetables, fruits, grains and seeds in their natural state ; bran, shorts, middlings, alfalfa meal; oil cake, oil vake meal; grains mixed or orushed for cattle or poultry feed ; hay ; straw hops ; nursery stock ; chicory, raw or green ; bees ; honey ; sugar ; molasses ; salt; other farm produce sold by the individual farmer of his own production; ice; fish and products thereof not canned or melioated ; ores of metals of all kinds ; fuel of all kinds; gold and silver in ingots, blocks, bans, drops, sheets or plate unmanufactured; logs and round unmanufactured timber; fence posts, railroad ties, pulpwood, tan bark, and other articlesthe product of the forest when produced and sold by the individual settler or farmer; newspapers and quarterly, monthly and semi-monthly magazines and weekly literary papers unbound ; materials for use only in the construction, equipment and repair of ships; ships livensed to engage in the Canadian coasting trade; calcium carbide ; radium ; electricity; gas manufactured from coal, calcium carbide or oil for olluminating or heating purposes; artificial
The Budget-Mr. Logan

limbs and parts thereof; donations of clothing and books for chartiiahle purposes; settlers' effects; War Veterans' badges; memorials or monuments erected in memory of soldiers who fell in the great War; Bibles, prayer-books, psalms and hymn-books, religious tracts, and Sunday school lesson pictures; articles admitted to free entry under Customs Tariff item 682 ; manilla fibre for use only in the manufacture of rope not exceeding one and one-half inches in circumference for the fisheries; boats bona fide purchased by individuas fishermen for their own personal use ini the fisheries; fibre for use only in the manufacture of binder twine ; job printed matter produced and sold by printers or firms, whose seal of job printing do not exceed three thousand dollars per annum, and so on ; and the sales tax shall not be payable on goods exported, or on sales of goods made to theorder of each individual customer by a business which sells exclusively by retail. It is further provided that the Governor in Council has the power to add to the foregoing list of articles exempted, as may be deemed expedient or necessary to execpt from the said sales tax.
To show the importance of the exemptions under Tariff Item 682, let me read that item as it apears in the tariff itself. The section reads as follows:
Fish hooks, for deep-sea or lake fishing, not smaller in size than number 2.0; bank, cod, pollock, and mackerel fish-lines; and mackerel, herring, salmon, seal, seine, mullet, net and trawl twine in hanks or coil, barked or not,- in variety of sizes and threads,-including silling thread In balls, and head ropes for fishing nets; manilla rope, not exceeding one and one-half inches in circumference, for holding traps in the lobster fishery; harked marline, and net norsels of cotton, hemp, or flax; and fishing nets or seines, when used exclusively for the fisheries, not to include hooks, lines or nets commonly used for sportsmen's purposes.
That is a most important exemption to the fishermen of the maritime province, and to fishermen in all parts of Canada whenever they may be engaged in that important occupation.
The sales tax has been attacked here. It is said to be an objectionable tax but, every tax is objectionable. The school tax is objectionable; the poor tax is objectionable; every tax we have to pay is objectionable. It seems to me that the sales tax is about the least objectionable of any tax which we are called upon to pay-for one reason we do not know when we are paying it, which sometimes is a very pleasant condition of affairs.
Now, Mr. Speaker, we, as members of Parliament, should give the people of this country a lead. There is one thing we must have and that is economy; I am afraid we have not got it to-day. Look at the estimates brought down for the Inside and Outside service this year. See the tremendous increase over the estimates of ten

years ago. Note also the increase of expenditure for services throughout the country. Go into your own towns and you will find that where three or four people carried on certain work for the Government ten years ago it now takes often double that number to do that work and the pay roll has been largely increased. We should have economy. Are we giving a right lead in this matter? Let us be honest with ourselves. I beg to suggest, to show we are in earnest in this matter, that we agree to a reduction in our indemnity as members, provided that reductions applies pro rata to every salaried official of the Government of Canada. Let it apply to the big officials as well as the smiall ones with the exception of the small salaried people who only have a living wage. Take the man who is getting probably $100 a month. When you propose to cut his salary or cut his bonus what is his natural reply? He says "It is all very well for those members cf Parliament up on Parliament Hill to reduce the salary that I need for the support of my wife and little children, but what about their indemnity? With them the cost of living is coming down but their salaries are not coming down in proportion."
Take the man who is working on the government railways of this country as a maintenance of way man, on a hot summer day working to protect the lives of travellers. When he is asked to accept a reduction of wages, he fails to see the justice of it, when the head of the system which employs him who is earning more in one day than he is earning in a month is not reduced in salary. What we need in this country is to disabuse the people of the idea that is abroad that everybody is trying to do someone else. Let us try and make the people realize that there is an equality of sacrifice in Canada; and if we wish to be frank in this matter let us be honest with ourselves and let us agree that there shall be a reduction in our own indemnities. I need the money I get as a member of Parliament, but I would like to be able to be consistent with the people of this country, and try to demonstrate that the man engaged upon the lowest possible job is getting an equal show with me. It is our duty, as members of Parliament, to try and remove the chaotic conditions which prevail and, at any rate, to set an example. For my part I think it is important that the proposition I

The Budget-Mr. Logdn
have made should be very seriously considered by this House-not perhaps for the matter of the loss of the dollars that would be involved; that is not the question. It should be a matter of principle to try to bring back the confidence of the man in the street in those in authority.
Now, Mr. Speaker, I am only going to take up your attention for a few moments longer. There are several matters I would like to discuss, but I see we are now approaching the midnight hour, There is an amendment before the House which everybody knows will be voted down; all the votes that amendment will receive will be confined to one corner of this chamber. But we have the declaration of the leaders of the two political parties opposite that they are going to vote against this budget. The leader of the Opposition is going to vote in favour of the amendment of the ex-Mmister of Finance whlich, of course, he has a perfect right to do. He can make an argument in favour of that amendment; but when he says that the tariff we are considering is a protective tariff and that it is only reducing the taxation of the country by a fraction of a fraction, I say to him that he cannot vote against that tariff and be honest with his own convictions. Protection is his gospel, the gospel of his life; it has been so always except for one occasion when he was in opposition and moved a resolution attacking the protection on agricultural implements. If as he claims it is a protective tariff, he is bound in honour to vote for it.


Robert James Manion: What about the German regulations?


Hance James Logan: They can be discussed in committee on the resolution, just as well as here.


Robert James Manion: We have not had any word as to a change.


Hance James Logan: When it comes to the resolution, the hon. member can speak and vote against it. This discussion is on the general principle of the tariff. Why does the leader of the Opposition not vote for it? Is it because it is brought down by one who is not a protectionist? Why, I would almost suspect in that case he would not vote for it if it were brought down by the late member for Portage la Prairie, (Mr. Meighen) who once moved a resolution condemning protection. The position being taken by my hon. friend, is inconsistent. I do not agree that he is
right in his view, and I do not agree that this is a protective tariff.
In conclusion, let me say to my hon. friends opposite me, the Progressives, that we cannot, in this country, get all our own way in reference to tariff legislation, or any other legislation, owing to our geographical position. Canada must be a country of continuous compromise. There are many things in the maritime provinces which we firmly believe we are entitled to, but we know we cannot get all we would like to have, because other parts of Canada have difficulties of their own. In 1911 there was a great problem in this country in reference to the tariff. It was a matter of reciprocity, which was proposed for the particular benefit of our friends, the Progressives. I ran an election in a county that was largely industrial. I went down to defeat at that time fighting to assist these gentlemen, and to place western Canada in a better position. The last opportunity the farmers had to vote in favour of the Minister of Finance (Mr. Fielding) was in 1911, when he was fighting their battles, and he went down to defeat. Am I to understand that the Progressive, or Farmers party, is going to forget the men who tried to save them in 1911, join forces with the men who tried to injure them in that same year, and yield to the blandishments of the party across the way. I do not believe, when it comes to a vote, that these gentlemen will assume such an attitude.
We, on this side of the House, have made a start in the right direction, as was said last night by the Prime Minister (Mr. Mackenzie King). We are travelling the right road. This Government has been in power only a few months, and has not had time to investigate the affairs of the country. There is danger in touching the tariff when unemployment stalks abroad, and surely, the Government should be given time and opportunity to look into the condition of affairs so that, when it comes to another session of Parliament, we may be able to deal with this matter with more experience, knowing better than we know now the real and actual conditions of the country.
We cannot have a divided Canada. We must have a united Canada or no Canada at all. We have interests ir eastern Canada which are distinct from the interests of the prairie provinces. They have difficulties there which we have not in the East. Let us realize what those

The Budget-Mr. Logan

difficulties mean, and those of us who have lived in that country, or travelled through it, know something of the difficulties in the vast prairie for the men who are trying to make a living there. But they must remember there is an East as well as a West. All we ask them at this time is to adopt the sentiment of that old poem written by an obscure poet in New Brunswick, who said:
Though we're strangers,
We'll be brothers
Having naught, but duty's call.
Bear in mind what'er betides us,
We're Canadians one and all.
On motion of Mr. Brethen the debate was adjourned.
On the motion of Mr. Fielding the House adjourned at 11.30 p.m.
Friday, June 9, 1922