OFFICIAL REPORT


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$|ou£e of Commons! Debates
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Tuesday, April 26, 1932

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Mr. R. B. HANSON (York-Sunfoury) presented the fourth and fifth reports of the select standing committee on railways and shipping owned, operated and controlled by the government.
Mr. Hanson moved that, with the consent of the house, the fifth report be concurred in.
Motion agreed to.

Hon. W. A. GORDON (Minister of Labour) :: I desire to lay on the table of the house orders in council P.C. 922, 914, 915, 916, 926, 927, 928, 929, 945, 946, 947, 949, 950, 951, 952 and 953 passed pursuant to the provisions of the Unemployment and Farm Relief Continuance Act, 1932. All of these orders in council deal with the payment of moneys.



EXCISE ACT AMENDMENT

Mr. SPEAKER:: The bill standing in the name of the hon. member for Richmond-Wolfe (Mr. Lafleche) will be withdrawn by consent.



ROYAL CANADIAN MOUNTED POLICE

Right Hon. R. B. BENNETT (Prime Minister):: Mr. Speaker on behalf of the Minister of Justice (Mr. Guthrie), who is unavoidably absent, I should like to move, seconded by Mr. Stevens, that the house go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to amend the Royal Canadian Mounted Police Act to provide for the appointment of a deputy commissioner, and the employment of extra constables in emergencies, and to make further provisions respecting the counting of service in the great war and in the civil service and customs-excise preventive service by officers and constables, for the purposes of pension.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.


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Motion agreed to.


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Hon. W. A. GORDON (Minister of Labour) moved that the house go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to bring in a measure to authorize the governor in council to enter into agreements with all or any of the provinces respecting relief measures in such province or provinces; and to pay out of the consolidated revenue fund such sums as in his discretion may be required to meet the obligations created by such agreements; to provide for special requirements in the national parks and in the drought stricken areas of the province of Saskatchewan; to assist in defraying the cost of the sale and distribution of products of field, farm, sea, river and mine; to loan money to any province on such terms as may be agreed upon and to guarantee the repayment of moneys borrowed by such province and to assist any province in any way that may be deemed necessary or advisable to provide for the relief of distress and the support and maintenance of those requiring assistance, and to loan money to and guarantee the payment of money to any public corporation or undertaking.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.
Motion agreed to.


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On the orders of the day:
Pierre Édouard Blondin: Before the orders of the
day are proceeded with, I desire to make a statement. On Thursday, April 21, the hon. member for Quebec East (Mr. Lapointe) raised a point of order, upon which I reserved my decision. At that time the Minister of Finance (Mr. Rhodes) rose in his place and in part said:
Mr. Speaker, one week ago to-day I directed the attention of the house to an observation which had been made in the course of the budget debate by the hon. member for

Sherbrooke (Mr. Howard). What I said upon that occasion will be found at page 2170 of unrevised Hansard. The hon. member was absent for a period of days, but now he is present in his seat I would ask him either to support or withdraw the remarks to which I made reference at that time.
The hon. member for Quebec East, then leading the opposition said:
Before my hon. friend for Sherbrooke rises, I think, Mr. Speaker, that objection to words uttered in the course of a debate must be taken at the time the words are uttered. If I remember well, my hon. friend the Minister of Finance was in the very seat he now occupies when the member for Sherbrooke was delivering his address. The hon. minister did not say a word at the time, he did not take any objection, and I do not think it is in order for him to raise the question to-day.
The Minister of Finance in replying, said in part:
I do not propose to discuss the point of order at all. It is only a question of the general fitness of the character of the remarks and the charges implied in them, and I should think the hon. member for Sherbrooke would be the last person to wish to shield himself behind any point of order.
The hon. member for Quebec East then said:
Behind the rules is always good shelter for a member of parliament.
I then reserved my decision. The statement of the Minister of Finance made on April 14, and which appears at page 2003 of Hansard, was as follows:
I regret that the hon. member for Sherbrooke (Mr. Howard) is not in his seat, but I believe this matter to be of such importance that I should refer to it at the first opportunity, so I would ask the hon. member for Quebec East (Mr. Lapointe), who is leading the opposition at the moment, to be good enough to direct what I have to say to the attention of the hon. member.
It has been brought to my notice, sir, that during the course of his remarks in the budget debate the hon. member for Sherbrooke referred to the conversion loan, and stated that he had advised the people of his district to convert their bonds. Then at page 2157 of unrevised Hansard, he went on to say:
"I told these men, 'If the government want you to convert your bonds I think you should do so.' They converted their bonds. What happened? Insiders of this government did not convert their bonds; the people of Sherbrooke and the eastern townships did."
With respect to that statement I have to observe that the hon. member said either too much or too little, and I must ask him either to withdraw his remarks or to substantiate the facts.
The hon. member for Quebec East may have misapprehended the purport of the remarks of the hon. the Minister of Finance

who did not allege that the words used by the hon. member for Sherbrooke were unparliamentary or that his language in itself was objectionable in the sense that it was unparliamentary. What the minister did suggest was that grave charges were implied in the remarks of the hon. member for Sherbrooke and he invited him either to withdraw the implications or to support them.
My ruling is that though there is no rule whereby the hon. the Minister of Finance may insist upon it, if the hon. member for Sherbrooke wishes to make an explanation of the remarks in question, he is not estopped from doing so by the rules or usages of the house.



PRIVILEGE-MR. SAUVE

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On the orders of the day:
Hon. ARTHUR SAUVE (Postmaster General) (Translation):: I wish to state that
the words which were imputed to me by the newspaper La Patrie, in its report of a meeting held at St. Eustache, on August 9, 1931, and to an extract of which my attention was drawn in the speech of the hon. member for Bellechasse (Mr. Boulanger), at page 2243 of Hansard, 1932, were never made by me neither at that meeting nor elsewhere. I mentioned that fact, at the time, by telephone to Mr. Dufresne, the news editor of La Patrie. I may say that no such statement appears in the reports of other newspapers.



CORRECTION

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On the orders of the day:
Mr. A. W. NEILL (Comox-Alberni):: I
rise, not to a question of privilege, but to ask as meekly as I can that the records of the house be corrected in connection with what occurred yesterday when I did rise to a question of privilege. On page 348 of the votes and proceedings will be found the following two lines and a half:
On the orders of the day being called, Mr. Neill quoted a speech delivered by the hon. member for Cariboo, Mr. Fraser, on March 22nd ultimo, and endeavoured to reply to a part of it as a question of privilege.
In that there are only three errors. In the first place I did not quote a speech delivered by the hon. member for Cariboo; I quoted one statement made by the hon. member for Fraser Valley (Mr. Barber); in the second place, it occurred, not on March 22 ultimo, whatever that may mean, but on April 22, and in the third place I endeavoured, not to reply to a part of it, but to contradict a definite misstatement.

The Budget-Mr. Mackenzie King



SUPPLEMENTARY ESTIMATES, 1932-33 REFERENCE TO SPECIAL COMMITTEE ON RAILWAYS AND SHIPPING

Richard Bedford Bennett: I should like to move that the house revert to the order of motions in order that I may move that certain estimates that were tabled a few days ago may be referred to the select committee on railways and shipping. The motion was in the hands of the Minister of Finance (Mr. Rhodes), but he is confined to the house and it would expedite business if we could revert to the order of motions in order that I may make the motion.


Pierre Édouard Blondin: With the consent of the
house we shall revert to motions.


Richard Bedford Bennett: That the estimates tabled Friday, April 22, 1932, being resolutions Nos. 314, 315, 316 and 317, be referred to the select standing committee on railways and shipping owned, operated and controlled by the government.


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Motion agreed to.

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On the orders of the day:
Alan Webster Neill: May I call the attention of the Minister of Labour to a statement that appears in the western papers to the effect that the province of British Columbia is to collect income tax on relief wages? As this government pays a portion of the money, surely the minister will not be a party to such a ridiculous course.



THE BUDGET


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The house resumed from Monday, April 25, consideration of the motion of Hon. E. N. Rhodes (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, the proposed amendment thereto of Mr. Ralston, and the proposed amendment to the amendment of Mr. Gardiner.
Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: Mr. Speaker, I regret that the Minister of Finance, (Mr. Rhodes), on account of an indisposition which I trust may be brief, is prevented from occupying his seat in the house this afternoon. I should like to join with others who have spoken, in congratulating him upon the method of presentation of the first speech which, as 41761-1495
Minister of Finance, he has delivered in this parliament. We all expected that with his large parliamentary experience, he having filled the position of Speaker of the House of Commons as well as that of Premier of his own province, he would, in the presentation of his budget, give us a statement that at least in form and method would be exemplary. I think in that regard none of us has been disappointed.
I should also like to congratulate very warmly the hon. member for Shelburne-Yarmouth (Mr. Ralston) upon the most effective reply which he made to the address of the Minister of Finance. I doubt whether it would have been possible for anyone to have made a more incisive or penetrating analysis of the speech of the minister, or to reveal in more complete fashion the consequences which have followed in large part from policies of hon. gentlemen opposite, and which have been so greatly deplored by the Minister of Finance himself though attributed by him as being due in greatest measure to world conditions.
The speech delivered by the Minister of Finance has the distinction, if such it may be called, of being the most depressing and gloomiest picture that has ever been given to the House of Commons, of conditions in the Dominion of Canada. I say that regretfully, realizing that this is due in part to a condition which exists throughout the world, but also in part to policies of hon. gentlemen opposite which have been put into force since they have come into office. In almost every particular the facts as presented by the minister were the direct opposite of what all of us, irrespective of the political parties to which we belong, would have wished them to be. Where we should have liked to see increases, there were figures representing decreases and where we should have wished to see decreases, the statistics given represented increases. There were increases in the public debt, bringing the public debt to a point higher than it has reached at any previous time in Canada. There were increases in taxation, making the tax burden heavier than it has been at any former period. The total figures as regards both indirect and direct taxation stand higher than they have been at any time of our history. The figures with regard to increases of borrowings indicated larger borrowings on the part of the administration than has ever before been the case except during the period of the war in reference to war matters, and I should also except those borrowings which have been for purely productive purposes as for example

The Budget-Mr. Mackenzie King
the construction of great railwa3rs throughout the country. I am speaking now of borrowings necessitated to meet actual current conditions. Where we might have hoped for some evidence of decreases in the general cost of government, there has been but little. With regard to trade, where we had hoped the figures would show that our trade was at least holding its own, the decreases were very considerably greater than they have been at any time within the period of a year. Similarly the decreases with regard to revenue have been greater than they have been in previous years, particularly from one source which I shall mention later. And finally, it is generally conceded that the purchasing power of the Canadian people stands to-day at a lower figure than it has been at any former period. Along with all this there are the figures with relation to unemployment. We were told by hon. gentlemen opposite that if their policies were put into force, unemployment would be speedily ended. But the figures this year as given by the Minister of Finance and referred to by him indicate that un-[DOT]employment is worse than it has ever been in the history of the Dominion. Bo I say, Mr. Speaker, that the picture of the country's condition which has been presented by the Minister of Finance is the gloomiest, the most dismal, the most depressing that has ever been depicted by any minister of the crown in this house.
Hon. gentlemen opposite have endeavoured to make it appear that this condition has been due to world conditions. I wish to say that world conditions have had a great deal to do with it, but what there has been of ill effect in world conditions has been greatly intensified by the policies of hon. gentlemen opposite. In speaking of the policies of hon. gentlemen opposite I refer to three in particular. First, the policy of hon. gentlemen opposite with respect to the Imperial conference of 1930. If that conference was a disaster, was a tragedy, was a fiasco, as we all know it was, this was due more than aught else to the method of approach of the Prime Minister and the proposals and policies which he presented to the conference; it was due to the manner in which Canada's position was presented in London in 1930. If great good is to come, as we hope it may, out of the conference of the present year, which is the postponed conference, there will have to be a vast change in the manner of approach by Canada's representatives and in the policies and proposals which are presented in the name of Canada to the conference.

There will have to be many changes, some of which I shall indicate a little later on.
But in addition to the policies with respect to the conference, there are also the policies of hon. gentlemen opposite with respect to the tariff. I submit that those policies have had a very far-reaching influence in bringing about the disastrous effects which are felt so widely at this time. We know that at the special session of parliament the tariff was raised to heights almost inconceivable, and that again at the last session the tariff was raised still higher. In the budget which hon. gentlemen opposite have brought in this year . there is a still further increase in the tariff notwithstanding that such is said not to exist.
I am referring, of course, to the so-called excise tax which has been increased 200 per cent and which in reality is an increase in the tariff. These increases in the tariff have had the effect virtually of prohibiting the entry of goods to any considerable extent into this country. The tariff has ceased to be what we used to speak of as a protective tariff. It has become, as it has been described by some of the journals of hon. gentlemen opposite, a prohibitive tariff. It is a tariff different in kind from anything that Canada has ever had before, and that prohibitive tariff has had a very serious effect upon trade, and having affected trade, it has had a very serious effect upon business generally and upon human well being throughout tjie country.
Then there has been the policy of hon. gentlemen opposite in the administration of the tariff, a policy which time and again has been referred to in the course of this debate as having led to great uncertainty and great instability as respects the tariff. We have often heard in this house of the importance of stability and certainty in regard to all taxes and in particular with respect to the tariff, but I venture to say that even hon. gentlemen opposite will not for one minute deny that the tariff as it has been administered under the present government has been unstable, has been uncertain, has been of a character which has caused the business community to be filled with dread from day to day as to the conditions with which they might be faced on the day following. The instability of the tariff as the result of the way it has been administered, in addition to the prohibitive rates of the tariff itself, have had a far-reaching effect upon the trade of the country, and through trade upon business, upon taxation, upon unemployment, and upon all the other matters which have an economic relation one to the other.

The Budget-Mr. Mackenzie King
Then I might add that had hon. gentlemen opposite been prepared to accept some of the suggestions which were made from this side, that conditions would not have been as bad as they are.


Mr. COTNAM:: We have had you for ten
years.


William Lyon Mackenzie King: If my hon. friend will just endeavour to be polite for the time I am speaking, I will thank him very much. I am going to ask you, Mr. Speaker, from now on kindly to have order kept this afternoon. I have not interrupted an hon. gentleman on the other side speaking in the house this year except to ask a question, and I am entitled in speaking on this great question of the tariff and of the Imperial conference, as I intend to do this afternoon, to have a proper hearing from hon. gentlemen opposite and no interruptions.	_
I was about to say that we on this side had made in the course of the debates in this house several suggestions which had they been accepted by the administration would, I believe, have been of service to the country. But they have not been accepted, and as a consequence expenditures and borrowings have been on a much larger scale than otherwise would have been the case.
I refer, first of all, to the suggestion that was made at the special session, and again at the session of last year, that there should be called immediately a dominion-provincial conference for the purpose of discussing between the dominion and the provinces financial arrangements as they affect both parties; that before the government entered into the policy of making grants in aid, for all kinds .of purposes, and to all sorts of amounts, there should be not merely a one-day conference between the Prime Minister and some of his ministers with the premiers or other ministers of the several provinces, but a gathering that would occupy several days and which would go into the whole question of the relation of the dominion to the provinces in the matter of subsidies, in the matter of grants in aid, in the matter of what particular obligations should be shouldered by the provinces with respect to social services and what particular obligations should be shouldered by the dominion. I say that had a conference of that character been held before the Dominion government began to make these vast loans to the provinces and to enter upon increased grants in aid in one direction or another, and to carry out some of the extravagant schemes on which it has embarked, a large saving would have been effected, and, as a consequence of that saving, there would have been less in the way of borrowing and less in the way of taxation necessary at this particular time. May I again say that I hope that such a conference to consider the financial arrangements between the dominion and the provinces may be held at the earliest possible moment. I do not consider the conference held a few days ago, the one-day interview which took place, as at all the kind of conference that could begin to discuss financial relations as outlined from this side of the house at different times in the course of the debate. I do think that now that we have before us in the very resolution which was introduced this afternoon notice of a bill to give further money to the provinces and to allow the ministry again more or less of a free hand in the expenditure of public moneys for relief purposes and the like, there should be an immediate conference held in which it would be possible to set out definitely the limits on each side with respect to what is to be undertaken by the provinces, on the one hand, and by the dominion on the other, and what is to be expected in the way of grants supplementary to those undertakings.
The other suggestion which was made from this side, and which I think has everything to commend it, was that an unemployment relief commission should be appointed to administer federal relief funds, that there should be some body specially charged with the administration of the vast sums being given to the provinces, and in part paid out directly for relief. Two years have gone by in which a great deal of very valuable material might have been gathered to guide this house in subsequent legislation on unemployment, but we have, as I have said repeatedly nothing to show at the present time for the millions that have been expended on relief except the additions to the public debt, and what appears in the way of statistics in the blue books. We have no report from any body indicating wherein some scheme of unemployment insurance would help to meet the situation more effectively. We have had no opinions of experts dealing with this question, which of all the economic questions of the day necessitates expert opinion.
So I repeat, Mr. Speaker, that while world conditions may be responsible to a very considerable extent for what the country has been suffering, the policies of hon. gentlemen opposite, intensifying as they have the adverse effects of world conditions, have made things infinitely worse than otherwise would have been the case.

The Budget-Mr. Mackenzie King
The effect of these policies has been shown particularly in the matter of trade. It is with respect to trade that we get at fundamental facts in connection with a country's progress. The trade figures which I shall give in a few moments will indicate the extent to which the policies of hon. gentlemen opposite have been directly responsible for the dislocated condition in which things are to-day. Before I quote the figures, however, I wish to read what was said from this side of the house in reference to the policies of hon. gentlemen opposite at the time those policies were introduced and again at the last session. At page 16 of Hansard for the year 1931, will be found reference to the policies then being introduced, and a statement as to their probable effect. At that time I said:
The great question in the course of this session and this parliament is going to be whether the policies of hon. gentlemen opposite will serve to promote or to cripple the trade of the country. I believe it can be shown that the most serious of all the results of the policies of hon. gentlemen opposite will be the very certain contraction in trade that we shall find on all sides, a contraction that will affect all classes; whether they be employers of labour or employees, whether they be the heads of large industries, transportation companies, financiers, wholesale merchants, retail merchants or others, all are going to feel the effects of the contracted trade of this country as a result of the policies hon. gentlemen opposite are putting into force.
I ask if that prophecy has not been fully fulfilled. May I continue with a reference to be found at page 54 of the same volume:
May I state further that already we are beginning to experience-
And this was as a result of policies inaugurated at the special session.
-in a very critical way the effects of the policies of hon. gentlemen opposite as put through at the last special session. Look at the figures on trade and see how trade is diminishing. Look at the figures with respect
Imports	
Exports-
Canadian.. .. Foreign	
Total trade
to national revenue and see how the national revenue from customs dues is shrinking. Wait until the budget comes down and see what the additional taxation will be. Already we can see the effect^ upon the western farmers in loss of purchasing power. The western farmers not being able to sell their grain, and the producers generally not being able to get rid of their surplus products, where are we going to get the purchasing power to stimulate our industries? It may be true that here and there, where a protecting wall has been thrown around an individual industry, there has been created a temporary boom. That undoubtedly happens, and will happen in certain eases where competition from without is suddenly cheeked. But what takes place after the point has been reached where there is no one to purchase the products of the industries thus artificially stimulated? When the demand falls off, what will happen to the transportation companies, the banks, the wholesale and retail businesses of the country? What is to be the lot of every householder in the land when we experience more contraction in the trade of the country?
That was said at the last session of parliament in reference to the policies of the previous session. I repeat it concerning the policies of this session. The effect has been and will again be felt through a reduction of trade, felt in regard to revenues, in regard to taxation, in regard to debt, in regard to unemployment. As to the significance of the balanced budget I shall have a word or two to say in a moment. I will also make a statement as to the significance to be attached to the so-called favourable balance of trade.
So that there may be no gainsaying the exact position, I should like to give the figures with respect to trade for the last three years. These figures are taken from the National Revenue Review for the month of April. First I shall give the figures for the fiscal year 1929-30, then for the fiscal year 1930-31, and then for the fiscal year 1931-32. I shall read only the totals, but with the permission of hon. members I should like to put the figures on record in tabular form.
Fiscal Year
1929-1930 $1,248,000,000
1,120,000,000
24,000,000
Fiscal Year
1930-1931 $ 906,000,000
799,000,000
17,000,000
Fiscal Year
1931-1932 $ 579,000,000
576,000,000
11,000,000
$2,392,000,000	$1,722,000,000	$1,166,000,000
What is the significance of these figures? They show, Mr. Speaker, that since the present administration has been in office during the last two years-and I shall give my reason for confining the statement to the present administration-the trade of Canada has been more than cut in half. That is a tremendous 
cut. I repeat, the trade of Canada has been more than cut in half in that short period of time. I put the whole responsibility on the present government for this reason. It was at the special session that these high tariffs were first imposed. It was at the last session of parliament that further increases were made in

The Budget-Mr. Mackenzie King
the customs tariff and that an excise tax was for the first time imposed, with a minor exception or two, against all goods coming into the country, whether or not they had been previously admitted duty free. It is due to those tariff increases, and to the additional excise imposed at the last session that we have this astonishing decline in the trade of our country. As I have said the trade during the fiscal year 1931-32 has fallen to less than half of the trade in the fiscal year 1929-30. I wish to impress upon hon. members the fact that our trade has been more than cut in half in a two year period.
Speaking of world conditions, undoubtedly there are, in the main, three which have affected the situation in Canada and elsewhere. The first is that of debts and reparations; that is a legacy of the war, and is not a matter with which this parliament can deal effectively to any extent if at all. The second is the mishandling of the gold of the world, and the general disorganization of currency and credit as related to the supplies of gold. The third is the matter of high tariffs which have been imposed against international commerce. High tariffs have been imposed by the governments of other countries as well as that of Canada. It will be noticed that all three conditions are very considerably inter-related. More and more the economists of the day are pointing out the inter-relation between the effect of high tariffs and the inability of other countries to meet war debts and reparations. More and more there has been pointed out the relation between high tariffs and the present condition of credit and currency in international relations. More and more has attention been drawn to the very serious effects of high tariffs upon trade between the different countries. They are^ interrelated. These are problems each of which is international in character. Some of them to a greater extent than others are capable of solution by national effort. Of these conditions, the one arising out of tariffs, is the one with which a single nation can do most on its own account. Every nation is in complete control of the tariff it itself imposes. On the other hand no single nation can deal by itself with any condition of world credit or currency, nor can it deal by itself with the problem of war debts or reparations.
If the Liberal party have at this time in its amendment to the budget drawn attention specifically to the tariff and its effect upon present conditions it is because we believe first of all that the tariff has been the most serious of all factors responsible for the intensification in Canada of adverse world conditions, and in the second place, that it is
one which can be dealt with in the most practical way at this time. We have done so, not because we do not appreciate that the other factors are important, but because we believe this is the most important and the most practical one to be dealt with by this parliament at this time. More than that, we say it is the most immediate one in view of the matters to be considered at the forthcoming Imperial economic conference which is to be held in this city in the course of the next three months. These are some of the reasons which have caused us to emphasize the importance of the tariff at this time.
There is another reason. We believe that the vast increase in taxation which has taken place this year has been necessitated in large part by the loss of revenue which this country has suffered in consequence of the tariff ceasing to be a tariff for revenue and becoming a highly protective, I should say, a prohibitive tariff. I wonder if hon. members realize the extent to which the revenue of this countiy, as collected from customs dues, has fallen. It is a very significant thing that our trade has been more than cut in half. I think it will be found that the revenue of the country from customs duties has been nearly cut in half as well. The Minister of Finance in dealing with this matter said:
Customs receipts fell to $102,800,000 reflecting the drop in the value of imports occasioned by a number of factors, such as the further decline in prices, the unfavourable exchange rate as regards importations from the United States and generally the policy of encouraging production in Canada.
The policy of encouraging production in Canada 1 That ought to have been called, "The policy of discouraging production in Canada." It is the policy that is indicated by protective tariffs-that is what is meant by the phrase-of tariffs raised to a point which has made it next to impossible for producers in the great basic industries to develop those industries as they should be developed in this country. May I give the house the total customs import duties for the last four years:
1928-	29	
$187,000,0001929-	30	
179.000.0001930-	31	
131,000,0001931-32 (estimated).. ..	102,000,000
Now, the total receipts from taxation in these years were as follows:
1928-	29	
$395,000,0001929-	30	
378,000,0001930-	31	
296,000,0001931-	32 (estimated) .. ..	273,000,000
What do these figures dhow? They show that the percentage of customs receipts to total receipts was 47 per cent in 1928-29, 47 per cent again in 1929-30, that it dropped to

The Budget-Mr. Mackenzie King
cerned. Why was that? The reason is that everything depends upon the state of development of a country. If a country is borrowing from abroad for the purpose of development, as was the case in this country when we were constructing our great railways, during the period of Sir Wilfrid Laurier's regime, or the period during which the Canadian Pacific railway was being constructed, one would expect an unfavourable balance. That circumstance, however, did not signify anything adverse with regard to the position and development of the country. It was only the outcome of an investment which was going to bring its return later on. I need not, I believe, go further into that question; I think it is quite clear.
As to the third matter of which I spoke, that is, the excise tax being an increase in the tariff, I think on that score also I have said enough for the moment. May I, however, direct attention to the last point to which I referred, namely, the significance and importance of this budget in regard to the forthcoming Imperial conference. There is nothing that I can see in the budget which, read across the sea or in any portion of the world where there is a British dominion, will bring aught of encouragement to any government of the British Empire. I do not know how we in Canada would have felt if, when Britain introduced her duties, she had put up the tariff against Canada as well as against foreign countries, in the way this government has been doing ever since it came into office. So far as this year is concerned, Canada and all parts of the empire had a right to expect that, in the budget preceding the conference, there would be something that would resemble a gesture of goodwill, something indicative of an attitude of friendship towards the other portions of the British Empire. But I will deal with that further in a moment. May I repeat that it is because of the facts which I have mentioned that the Liberal party brought down this year an amendment limited particularly to the tariff. If the house will permit me, I would here like to put the Liberal amendment on record:
That all the words after the word "that" be struck out and the following substituted therefor:
"this house is of the opinion "that increases made by the present admin-.stration in the customs tariff have been arbitrary, ill-considered and inordinate, and have had the effect of stifling agriculture and other industries, restricting trade and commerce. and increasing unemployment;
"that the fixing of values for duty purposes by orders in council is an interference with the inherent right of parliament to regulate duties and determine taxation, and has had an un-
settling effect on commerce, a depressing effect on business, and has been detrimental to the interests alike of producers, importers, distributors and consumers;
"that a reversal of the present fiscal policy in relation to customs tariffs and an immediate resumption of parliamentary direction and control with respect thereto are essential to a revival of trade, and improvement in business, and to the ultimate return of prosperity in Canada."
That amendment was followed by an amendment moved by hon. members of the Progressive party in the far corner, and, if the house will permit, I should like also to place that amendment on record so that the two will be side by side:
That all the words after the word "that" in the said proposed amendment be deleted, and the following substituted therefor:
Whereas, in Canada there exists an ample supply of natural resources to provide for all primary needs, and
Whereas, we have developed an efficient industrial machine capable of producing more than sufficient of the requirements of our people, and
Whereas, notwithstanding this our external and internal debts are increasing enormously- large numbers of our citizens are in dire need and exist through governmental and charitable relief, and a large proportion are faced with declining purchasing power involving a lowered standard of living, and
Whereas, in our opinion these conditions are attributable to fundamental defects in the present economic system, and
Whereas, it is therefore necessary that parliament, the agency with the widest legislative powers, should take the initiative in the task of reconstructing national production and consumption with a view to the widest possible use of commodities on a basis of human needs, and
Whereas, the control of finance is a basic element in such reconstruction, affecting as it does industrial plant establishment and develp-ment, the distribution of goods and the price level of goods and services.
Therefore be it resolved, that in the opinion of this house, as a first step towards general economic reconstruction, our financial system should be nationalized, and provision be made to issue immediately sufficient money to bring the value of the dollar as speedily as possible to that point at which the major portion of our debts were incurred during the war; stabilize the dollar at this point internally and thereafter manage credit and currency issue to secure and maintain a stable price level within Canada.
With regard to the Progressive amendment may I say that it relates exclusively to the question of currency and credit. It is in the nature of an amendment dealing with financial reform, whereas the amendment moved by the Liberal party might be described as having to do with tariff reform. I want to say quite frankly that I think hon. members who are responsible for this amendment are to be congratulated for the time, the thought and the study they have given to financial questions.

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I think they are right in looking upon questions of credit, particularly the involved problem of the world's supply of gold and its distribution, and matters of currency, as allimportant questions that cannot receive too careful attention. But I do submit that they might have hoped to get more in the way of sympathetic reception for their views had they taken a different means of presenting them to the house. I cannot see why it was necessary to wipe out completely the Liberal amendment in order to bring their amendment before the house; they might have amended the Liberal amendment, if they had wished to do so, by adding something with reference to credit, currency and the like. Their subamendment goes farther than that, it strikes out the whole Liberal amendment; it is equivalent to saying: We do not regard this tariff situation, affecting as it does trade, taxation and all the rest of it, as at all comparable to what we have in our subamendment.
I can hardly believe that the hon. members responsible for the subamendment are sincerely of that view, that they really meant that, but that is the effect of the subamendment in the way in which it is introduced.
I shall now deal with the subamendment. May I say that to what is expressed in the preamble, no exception could possibly be taken. The preamble relates very largely to prevailing industrial conditions and the existing depression. It is a mere statement of fact. However, it goes on to give the reasons why the depressed condition is what it is, and these reasons are set out as follows:
Whereas, in our opinion these conditions are attributable to fundamental defects in the present economic system, and
Whereas, it is therefore necessary that parliament, the agency with the widest legislative powers, should take the initiative in the task of reconstructing national production and consumption with a view to the widest possible use of commodities on a basis of human needs, and
Whereas, the control of finance is a basic element in such reconstruction, affecting as it does industrial plant establishment and development, the distribution of goods and the price level of goods and services.
May I point out that while it is true that some of these conditions are attributable to the present economic system, that system is not a matter for which Canada alone is responsible nor which Canada alone can change. The present economic system is something for which many countries are jointly responsible and if there is to be any alteration, I venture to say it will not be brought about by the action of any one country but by cooperative action on the part of many. It will be probably one of the
most difficult things in the world to bring about. I agree with those in this house who have said that it is impossible for any thinking man or woman to view conditions as they are in this and other countries, conditions of plenty on the one side, with distress and starvation on the other, without realizing that there is something wrong with the existing condition, but I do not agree with those who hold the view that parliament can remedy everything, governments can remedy everything. Governments can do a certain amount, parliaments can do a certain amount, but I believe that the fundamental things which in the long run are going to be of greatest effect in improving and changing social conditions will be the things done outside of parliament by voluntary action of a cooperative character.
In this regard may I refer to what the hon. member for Winnipeg North Centre (Mr. Woodsworth) said the other day as to the necessity of a new motive in dealing with social and industrial problems. I agree that we need a new motive and that industry should be considered as being in the nature of social service. I agree that everyone who has to do with industry', no matter in what form his contribution be given, whether it be the capitalist who contributes his capital, whether it be labour which gives its labour, whether it be managerial ability which gives its skill, or whether it be the community which makes its contribution in a thousand and one forms, all of these who are engaged in making a contribution to industry are doing something in the nature of social service. If we would take that view, I think probably we would be starting on the right road toward a solution, our efforts *would be more effective than by opposing what may be said as to the need of some new motive.
May I direct attention to this fact: After all, the golden rule is the rule which underlies all social service. If parliament could by enactment of the golden rule enforce or bring about its application to any extent, we would not be sitting to-day in this house waiting for something of the kind to be done, it would have been done by public bodies many hundreds if not thousands of years ago. The golden rule will be brought into force only through a process of education, a process which began in its highest form nearly two thousand years ago, and which has been making extensive headway despite what might be said to the contrary. However, it is a process which has a long way to go before it begins to govern and control the actions of men in their financial and business relations. Let us
2372	COMMONS
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hope that the agencies that are seeking to develop that new spirit and that new attitude will be furthered in every direction possible, that the hands of those who direct them will be strengthened and their work enhanced, but we must not deceive ourselves into thinking that any parliament on earth is going to be able to bring about a permanent change in social and economic conditions. Parliaments cannot do everything but because we may have to wait some time for another motive is to my mind no reason why, to the extent of our ability both in and out of parliament, we might not do very much towards helping to bring about better social conditions.
Frankly, my view is that the crux of the whole situation lies not so much in any outward reorganizing of industry according to any particular model but rather in the control of policy by those who make any contribution to industry. As I see it, the present system of industry, the so-called capitalistic system, is a system organized largely on the basis of the single control of industrial policies by capital investors. It is the capitalist who invests his money who has the say in the choice of the board of directors; it is the board of directors that appoints the management; it is the management which in a large part dictates the policies of the industry under the direction of the board, and which has to do with determining rates to be paid to labour and the prices or rates to be paid by the consumer for the commodities produced and the services rendered. Looking broadly at the Changes which are taking place in different parts of the world, it seems to me that what is being attempted in one part is an endeavour to substitute for that single control on the part of capital, single control on the part of some other factor contributing to industrial development. As I see the movement in Russia, the emphasis is laid largely on the single control 'by labour. In Prussia before the war great emphasis was laid on the single control of the community organized as the state, state socialism in a highly developed form. I believe that, a large part of the conflict which arises in these matters comes from the effort of one factor contributing to industry seeking to gain a monopoly of control and failing to realize that the secret of any change which is going to be permanent, enduring and worth while lies not in the substitution of monopoly by some other factor for the one which exists. The secret lies in the doing away altogether with monopoly of control and the substitution in its stead of joint control of industrial policy.

At the risk of being considered indiscreet, may I outline a practical experiment which may help to explain what I mean in a concrete -way. I do not want any part of what I say to be taken too literally, I should like the matter to be considered as being tentative, but I bring it forward with a view to disclosing the kind of thing I have in mind. I spoke of substituting joint-control in all matters pertaining to industrial policy for single control. Consider the railways of this country. So far as the Canadian Pacific Railway is concerned, it is under private management; and for the most part control is in the hands of the directors who are appointed by those who have capital invested. The Canadian National system is a government-owned road. There the control is largely that of the directors who have been appointed by the government of the day which, in its action in that regard, is supposed to represent the people. Whether the directors fairly represent the different classes in the community, one has to examine for oneself; see who they are, and what their previous relations and associations may have been. At any rate, each of these systems is controlled as respects the policies which govern by certain groups of gentlemen who represent very definite interests.
We have, in the railway commission, a body which also has to be considered in connection with the railways of the country. It is in a very real way representative of the community, of consumers and producers. It is a body which has been appointed by parliament to see that rates are subject to control. The extent to w'hich it is truly representative of all groups must again be decided upon examination of those who sit upon the board and who have the controlling influence there. Attention has been given to the representation of labour and also of the farmers on that board, and, to that extent, it comes close to representing the sort of thing I have in mind: when I speak of joint-control by all interested groups as being essential in the determination of policy.
If it be a good thing to have all classes represented in that way on the railway commission, why should such representation not be an equally good thing with respect to the management of the railroads, whether they be under government or private ownership? That is a point I should like to have considered. Why should there not be on the board at Montreal, whether it be of the 'Canadian Pacific or of the Canadian National, representatives of the great brotherhoods, such as the locomotive engineers, firemen, conductors.

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trainmen, maintenance of way men and others, railwaymen who are giving their lives daily in the service of their roads and who have brought into being their large eminently efficient and well managed organizations? Why should their representatives not be seated on the board of directors, having their voice, along with representatives of capital, in the shaping of railway policy? Why should the community generally, taking it broadly, not have directors chosen, not merely by a government exercising its own will in the matter, but by a government having regard for the different elements that go to make up the nation, choosing as its appointees amongst others men who would be representative of the agricultural interests, and of other great interests such, for example, as- the commercial and business interests organized in chambers of commerce, boards of trade and the like?
I venture to say that a joint board fashioned in that way, directing the affairs of the railways of the country and having the determination of policy, would have a very far-reaching effect in reconciling the different interests concerned. I doubt very much whether, under a board so arranged, there would be extravagances in the construction of too elaborate hotels, of palatial ships or what in other directions would be regarded to-day as unnecessary if not wasteful expenditure. I doubt very much whether matters might not be so arranged as to make possible the continuous employment of those who are giving their lives to the railway service. Why should not a great industry like the railways be so organized as to take care, under some system of unemployment insurance with the aid of the state in some way, if you like, of all who enter its employment? If such were the case, we would not have lay-offs such as we have at the present time. What can be more tragic than the condition we are hearing about from day to day in the press and in the house of hundreds, yes of thousands of men who have given their lives to the railway service of the country, being laid off at this time without any remuneration whatever? If the railways were organized in the way I have indicated, I believe in the result matters would be so arranged* that the unemployment situation would be cared for along with the rest. It would become part of the obligation upon the industry to see that it was run in such a way that those who have their labour as well as those who have their capital invested in it would be cared for.
While undoubtedly a step of the kind suggested would have to be a gradual one, while it would have to be effected by a little here and a little there, a tending in that direction,
taking a single industry in a single country at a time, an example I submit would be set to other industries and to other countries and in that way a natural evolution would come about in industrial management and particu-laitly in control of industrial policy which would go a dong way towards improving social and economic conditions. After all, does not each of these parties receive at the present time a certain, recognition for its services? Does not capital receive its remuneration in the form of interest? Does not labour receive its remuneration in the form of wages? Does not the community receive its recognition in the form of services performed at a particular rate? Does not management receive its recognition in the salaries paid to it? If all receive recognition for their services in that way, why should not all also receive recognition in the matter of having a voice in the shaping of policy with respect to conditions generally under which they all have to make their respective contributions.


Mr. MOORE (Chateauguay-Huntingdon):: Why did the right hon. gentleman not do that while he was in office?


William Lyon Mackenzie King: If my hon.
friend will take the trouble to look at some of the things I have put on record, he will find that I advocated a step of this kind long before I came into office. May I also point out to my hon. friend that while we were in office, I helped to carry out part of the program by seeing that labour was given a place on the board of management of the Canadian National Railways. We were moving very distinctly in that direction.


Mr. STEVENS:: The same man is there
now.


William Lyon Mackenzie King: We also saw
that agriculture was given its representation. These things do not all come about in a day, but come about they will in the course of time. I am not surprised that in any effort to deal with social reconstruction opposition comes from hon. gentlemen opposite.
As I was saying, recognition comes in these different forms. I think it should be given equally in the matter of control of industrial policies. If that course is taken in one industry, and in one country it will, I believe, be taken in other industries and in other countries and we shall soon have a condition which will prevent the dislocation of industry whether arising from strikes or lockouts, or from other causes that can be at least partly controlled by those who are concerned in the industry itself. I should like to develop that

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idea a little further, but I feel it is necessary to go on with the other matters already touched upon.
May I come back now to the other part of the subamendment of the Progressive party? It is as follows:
That in the opinion of this house, as a first step towards general economic reconstruction, our financial system should be nationalized, and provision be made to issue immediately sufficient money to bring the value of the dollar as speedily as possible to that point at which the major portion of our debts were incurred during the war; stabilize the dollar at this point internally and thereafter manage credit and currency issue to secure and maintain a stable price level within Canada.
That is the substance of the subamendment. It suggests two things: first, the nationalization of our financial system and, second, the direct adoption of a policy of inflation. May I in the first instance ask this question of those who have moved this subamendment: If our financial system is to be nationalized, whom are you going to entrust with that work? Are you going to entrust the government opposite with it? Are you going to entrust hon. gentlemen opposite, who have dealt with the tariff in. the manner in which they have, under the freedom which has been given them, to nationalize the finances of this country? Yet that is what this amendment is suggesting, because it is addressed to parliament as it exists at the present time. May I ask another question? Were a Liberal administration in office would you entrust a Liberal administration with that task? May I ask still another question? Were you in office yourselves, would you undertake the work of nationalizing the finances of the country? I do not believe that any group of persons who have given thought to these matters would attempt a task of that kind in Canada at this time. And, if we ourselves would not undertake a scheme such as this, what would be thought of Canada by other countries if it were announced to-morrow that this House of Commons had attempted any such task as the one indicated in the subamendment?
With respect to the inflation of currency, may I draw attention to this further fact?
It is a well known circumstance that it is very difficult to discover just what exact amount of inflation is going to serve the purpose that may be in view. Who is going to determine whether there is enough inflation? Inflation has a way of gathering momentum to itself.
It is easy to step on the accelerator, but it is very hard to put on the brakes.
[Mr. Mackenzie King.l


Miss MACPHAIL:: They seem to have put on the brakes now.


William Lyon Mackenzie King: That is fortunate if it is in regard to inflation, because to my mind inflation certainly is one of the last cures that would be helpful in the present situation. Would inflation increase the purchasing power of any one overseas? Would not inflation, if it is carried to the point indicated in the amendment, help very much the holding classes to-day as compared with others? Let me read a statement by Mr. Keynes, whom hon. gentlemen to my left have often quoted:
To restore the value of pre-war holdings by deflation means enhancing at the same time the value of war and post-war holdings, and thereby raising the total claims of the rentier class not only beyond what they are entitled to, but to an intolerable proportion of the total income of the community.
Is that sort of thing what is desired by those who have moved the subamendment? You cannot deflate or inflate currency in such a way that it will help only those who have next to nothing, and not help in some cases those also who may possess something. Each works all around. Inflation like deflation is a two-edged sword when it comes to dealing with financial matters.
Moreover, may I ask if some of these problems are not very much beyond the bounds of a single nation to deal with? Is it not true that apart from these problems, being international in character, other factors enter in a very real way which, even so far as international cooperation is concerned, it is very difficult to control? A very learned address was delivered in this city not very long ago by a great economist who has been quoted many times in the course of this debate, Sir Josiah Stamp. What did he say?
No economic machine can stand against undue optimism or undue pessimism. In getting the world right, there are two separate sets of problems to be faced: (1) national problems to be solved by ourselves, and (2) international problems which cannot be solved by any one nation, but can be solved only by the complete and frank merging of interests which interrelate. Such problems are the gold problem, tariffs and the dislocation of markets.
There is here a reference to the psychological factor as well as the economic, and may I, in speaking of the psychological factor, ask those who are advocating the course set out in this subamendment whether the credit of Canada in the eyes of the world would be improved if to-morrow an announcement were made that this country had decided to inflate its currency? I do not believe it

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would, and I do not believe my hon. friends feel that it would. Then if it would not, why should we pass this particular subamendment at this time?
The question of a managed currency is a very large one. They are experimenting with it to a considerable extent in some countries, in Great Britain, for instance, at the present time. But Great Britain has back of her an experience in international finance that no other country in the world has, and an experience, in the matter of banking and currency which no other country in the world possesses. Can we not afford to wait a little and see how the experiment works out in Great Britain before seeking to oppose our efforts to hers or to rival her efforts by our own? That is the point I wish to bring out at the moment.
May I add this further fact? Great Britain, as the hon. member for Southeast Grey (Miss Macphail) has indicated, is experimenting with managed money. But has she experimented with inflated currency? Has she ever attempted to meet her currency problems in that way? She has not. Well, if Great Britain is to be cited as an example worthy of emulating, I think we might emulate her in that particular as well as in others. I do not, however, wish to dwell unduly on this point. I merely wish to point out that there are strong reasons for hesitating to accept this particular amendment at this time, not by any means with a view to indicating that we are not sympathetic to a study of the problem, or as indicating the absence of a desire to see some measure of reform effected, but just because we have to deal with things in the light of conditions as they are in this country and in this house at the present time.
Furthermore, the method suggested in the subamendment, if put into effect, would, I believe, defeat the very ends which its advocates themselves have in view. What does the subamendment say?
That .	.	. our financial system should be
nationalized, and provision be made to issue immediately sufficient money to bring the value of the dollar as speedily as possible to that point at which the major portion of our debts were incurred during the war.
To do it immediately-to do it speedily- to issue sufficient money to bring the whole thing up to the desired level at once. What would be the effect of that? What about all the wage-earners in this country and those with fixed incomes generally? If this course were followed, every one of them would be affected adversely. Every person on fixed
income or on a wage, if the currency were to be speedily and immediately inflated, would be the loser. I venture to say that those who have framed this amendment would not wish anything of the kind. It may well be that inflation, properly administered, might, in certain circumstances, help to meet a situation, just as the administration of some kind of a drug may help to have a certain effect upon a patient if given in sufficiently small doses over a long enough period of time. But to try to inject the drug all at once and work an immediate cure, might only kill the patient; and, with all due respect to my hon. friends, I am afraid that such would be the effect if the course they here propose were to be put into force as they suggest all at once.
Apart from the reasons I have mentioned, it can hardly be expected that we of the Liberal party, no matter how sympathetic we may be with the desire to see currency problems properly dealt with, questions of credit, gold and the like properly studied, and such action taken as can properly be taken with respect to them-it can hardly be expected that we can support a subamendment which asks us to reject all that we have in our own amendment and to support what is given to us instead. There is no reason why, because each of us cannot get his own pet panacea accepted, we should seek to rule out everything else. We have said nothing in our amendment about a number of other important problems for the simple reason that over and over again, where an amendment has referred to more than one question, we have been told by those who are criticizing us to-day that our amendment would have been very much improved if we had confined it to one question instead of referring to a great number. For that reason, among others, we have drawn our amendment in the form in which we have.
I come now more in detail to the amendment which the Liberal party has presented to the house.


Mr. IRVINE:: I should like to ask a question, although I hesitate to interrupt the right hon. gentleman. Would he not admit that if the subamendment were followed, as he has been outlining it, it would help those in debt? Does he not realize that managed currency does not mean an inflation of the type he describes?


William Lyon Mackenzie King: Managed currency may not mean an inflation of the type I have described, but the amendment of the party to which my hon. friend belongs does mean that. It is with that aspect of the

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matter I was dealing. With respect to managed currency I have suggested it would be much wiser, before experimenting ourselves, to wait and see what happens as a result of the experiments now taking place in Great Britain.
In regard to helping those who are in debt, I cannot believe any course that is not fundamentally sound is going to be of lasting benefit to anybody. It is only that thing which is fundamentally sound that, in the long run, will be of any real service to the great body of our people. I think one fundamentally sound step would be to bring high tariffs down to something like a level which would permit trade between this and other countries. That is why the Liberal amendment stresses the present tariff position in Canada. It draws attention to the fact that the tariff is far from what it should be, if trade is to exist on any scale in this country.
I realize our amendment has been criticized on the score that it does not deal with more than one subject. I hope I have already answered that point, sufficiently.
Another objection raised, by hon. gentlemen opposite, and by some people outside this House of Commons, is that we are debating over and over again, the old question of tariffs. We are asked: Are we going to stick to orthodox economies, as they are called, instead of breaking out into new fields? May I point out, in the first place, that the tariff issue in Canada to-day is altogether different from what it has ever been in this country before. Would any of the former leaders of the Conservative party regard the present tariff as a protective tariff, would they not regard it as a prohibitive tariff? You will find, in their utterances which appear over and over again in Hansard, the statement that they see no necessity for a protective tariff being raised to the point where it becomes a prohibitive tariff. The tariff as we have it to-day is different from any tariff that has existed previously in Canada. It is out of all proportion and beyond the bounds of common sense with respect to the requirements of industry and the needs of this country. It has been made what it is deliberately and for a specific purpose. It was made in its present form to enable the Prime Minister to adopt his blasting tactics, as he has termed them, in order, as he believes is possible, to force other nations to change their attitude towards Canada. It is part of the paraphernalia of economic war in which the present administration believes.
It is the method the present government has deliberately chosen to deal with our 
economic problems. We have blasting on the one side, and blockading on the other. I would remind hon. members that blockading is one phase, and blasting the other in economic war. We are blockading our ports. The ports of Canada to-day are blockaded against the entry of goods as effectively as has been many a port during a time of war. The trade coming into this country and going out of it as a result of the increased purchasing power which might come from those who sell their goods abroad are alike affected by the blockade. I say the question is entirely different from the one with which Canada has been faced at any previous time.
To revert to the Liberal amendment more in detail; will hon. members opposite deny that the changes in the tariff have been arbitrary? What about the fixing of the values of gasoline; what about oak flooring; what about electric fixtures; what what about a multitude of other things we have heard discussed in this chamber? Will anybody say those changes have not been made arbitrarily? Will any hon. member in the Progressive party say those changes were not ill-considered? Will members of the government say they have not been ill-considered? If they were not, why in many cases did the government change them the day after they were put in effect, as they did first of all with respect to the prohibitive duties on glass. We know that innumerable changes were made one day and in some form or other were changed by the government either the next day or a short time afterwards.
What about the regulations in regard to the pound sterling? One course must have been right, and the other wrong, or one would not have been changed for the other. We know the government did not take only one course with regard to the pound sterling; it did one thing one day and another another. One of those changes must have been ill-considered ; I leave it to the government to say which one it was. Will hon. members say there have been no inordinate increases in the tariff? Let me mention a very few things. By way of example, there is the duty on silk georgettes, of 85 per cent; on crepe de Chine, of 70 per cent; on cotton backed silk, of 96 per cent; on pongee silk, of 125 per cent; on men's worsteds, 60 per cent; on French serge,
63 per cent, and on men's woollens, from 85 per cent to 140 per cent. I select that list because it affects the clothing of the people in Canada which represents a serious item of expenditure in the cost of all. I might run through other tariff items and show where

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changes have been made of 50 per cent in some cases, 100 per cent in others, 150 per cent in others, 200 per cent in others and 250 per cent in others. If those are not inordinate increases, what could be considered inordinate?
I' do not think I need describe the effect of such tariff increases on industry, because that ground has been well covered by hon. members who have already spoken in this debate. Will anybody say the fixation of the tariff in the manner in which it has been done, namely by order in council, has not had a serious effect upon the business of Canada? Will anybody say it was ever intended by the constitution of this country and those who had to do with the framing of the British North America Act that the making of the tariff should be transferred from this House of Commons to the cabinet in the way it has been transferred by action of the government itself.
I do not at this time wish to debate the constitutional question which arises in this connection, although I think time might be well taken in a discussion of that matter.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: Hon. gentlemen opposite laugh; they laugh at anything which affects the constitution, because nearly everything being done to-day on any large scale by hon. gentlemen opposite is subversive of the constitution. May I point out to them that when they talk about parliament being supreme they forget that parliament is supreme only within certain limits. Whatever supremacy the British parliament may have with regard to matters in general, we in Canada, until we amend the written portion of our constitution-and we are supreme in the sense that we can amend it at any time we wish- until we amend it we are subject to it, and it is only within the limits of the constitution as there set forth that we are free to act. Will hon. gentlemen opposite say that this Dominion parliament, in its supremacy, can make laws with respect to those matters which by the constitution are assigned to the provinces? They will not. There is a limitation to the supremacy of parliament in the constitution. AVhat is the difference between the limitation upon the executive as embodied in the constitution, and the limitation which I have just described. The constitution sets forth certain legislative powers. Those powers are confined to the two houses of parliament and the King's representative. That is the only body which can legislate with respect to anything, and particularly with respect to taxation. Another section of the act deals with
the powers of the executive, and there is not a word which gives the executive power to legislate. Similarly there is another section dealing with the powers of the judiciary. I do not know whether hon. gentlemen will say that under the act, as it now stands, parliament in its supremacy can transfer to the judiciary, legislative powers. They could in Britain, if they wished to do so, under the supremacy of parliament, and nothing intervening to restrict them. We in Canada could do so if we wished, but we would first have to amend the British North America Act. When it comes to the imposition of taxation there is no right eifher constitutionally or legally -which the government has to impose taxation in the form of duties by order in council, I care not under what authority they may claim that right. It is a right that might foe given were the constitution so amended, but it is not a right that at present exists. There is no authority whatever to do anything of the kind. I think that the business houses which are asking the government to give them a fiat to test in the courts whether they are not entitled to compensation from the crown for the hundreds of thousands of dollars of which they have been robbed by the orders in council which have been passed are perfectly right in their contention, and that they should be given such permission.
Bet me read what the president of the Robert Simpson Company has had to say in this regard. I refer to this particularly because the Robert Simpson Company is only one of many large commercial houses scattered throughout the country, whose business interests have suffered by unwarranted action on the part of the government; these commercial houses employ as large numbers of people as do our factories, and they also serve the consuming public in quite as effective a manner. In his last address to the shareholders of his company, the president of the Robert Simpson Company said:
The new tariff changes have penalized us seriously. Especially is this true in respect of those schedules which provided specific duties, revaluations of certain articles, revaluation of depreciated sterling exchange, and other currencies, and the wide application of dumping duties in respect to these valuations, as well as in respect of exchanges covering shipments of American and European purchases, whose currencies continue on the gold basis. The trading loss to us in 1931 ran into several hundred thousand dollars. The drastic contraction in imports-the practical prohibition of operations, which for many years have contributed greatly to the economy of business as a whole-presents a very serious problem.
There, I submit, is one of the strongest reasons why the amendment which we have



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before the house at the moment should receive the support of all who believe in confining legislation on tariff matters to the commons, and in doing away with the practice which has grown up under this administration of egislating on the tariff by orders in council.
Referring again for a moment to what is termed the timeworn discussion of orthodox economics may I say that nearly all the great questions which have occasioned controversy during the years are of that character. What is older than the question of the relative values of socialism and individualism? The whole argument for each will be found in the writings of Plato on the one hand and of Aristotle on the other, and from their time down to today the economic organizations of the world have been debating the relative values of those two opposing forms of social organization. Similarly they have been debating whether or not high or low tariffs or no tariffs at all were the better policy for the country concerned. No apology need be offered for bringing up what although an old question, at this present time arises in a form in which, in Canada, it has never hitherto arisen.
I have already drawn attention to the fact that we have brought forward this amendment because the subject is something we can deal with ourselves in a practical way. We can deal with it in a way that will help relieve the burdensome condition of the taxpayers of Canada and will be of service in many other directions.
A great deal has been said about Canada pointing the way. The Minister of Finance himself in his speech said he hoped that we would point the way at the coming economic conference. While the countries of the world to-day are seeking for a lead, particularly in the matter of the lowering of tariffs, why should we in this country run in the very opposite direction of putting up tariffs to a point higher than they are in any other country of the world at this time? We know moreover that high tariffs are no remedy for industrial ills. We know that in Australia and in the United States-countries that are cited over and over again as being high tariff countries-the condition of unemployment is, if anything, worse than it is in this country. We have our own experience in this matter. To-day we have the highest tariffs that Canada ever had, and we have the largest amount of unemployment we ever had. Moreover, in Australia, the people are rebelling against high tariffs. I have here, although I will not take the time to quote from it, the report of the tariff board of Australia, which was presented to the Australian parliament a short time ago. That report is one 'Mr. Mackenzie King.]
of the strongest condemnations of high tariff evils that has ever been put out by any public body. It condemns high tariffs, shows how they have operated against the interests of the people of Australia, against even in many cases the interests of the very manufacturers themselves in whose behalf they were supposed to have been passed; it outlines the abuses to which high tariffs have lead, and it states, just as a former premier of Australia, Mr. Bruce, stated recently in London, that high tariffs have had their day, and that no good could be expected from them in the way of helping either industry or social conditions.
Moreover, in this country we have had the example of a practical test of the relative value-of high and low tariffs in periods of depression. When the Liberal administration came into office over ten years ago, Canada was in the throes of an industrial depression. Did we put up the tariffs? On the contrary, we lowered the tariffs-lowered them with respect to the duties on the implements of production, lowered them with respect to many things affecting the necessaries of life, lowered them in a way which would help the producers of the great basic industries and consumers generally. And what was the result? In a little time our trade began to increase, it increased, and increased, until it exceeded the bounds of anything that had been known in the way of trade and commerce since confederation. With that example before us there is no necessity of making an experiment in an opposite direction for a longer period than that experiment has already been in operation.
The Prime Minister has referred time and again to using the tariff as an instrument of national policy. He has said that it should be used to afford equality of opportunity, that is should be used for the purpose of fair competition, and in that connection he always cites the manufacturing interests of the country. May I say that I agree with him that regulations should be made to prevent dumping; I also agree that the tariff can be used, and ought to be used, effectively to safeguard the legitimate standards of labour in this country. But my right hon. friend goes further; when he says we should use this instrument as a means of bringing about what he calls "fair competition and equal opportunity," he extends the tariff to unconscionable heights in an effort so to do. I put this question to him: If the tariff can be used as an instrument of national policy by raising duties to help the manufacturing industry of this country, wdiy might it not also be used as an instrument of national policy

The Budget-Mr. Mackenzie King
to help the great primary, basic industries of the country in their production by lowering the duties? If it can be used as an instrument of national policy by increasing duties, it can also be used as an instrument of national policy by decreasing duties. I think the time has about come in this country when what is most needed is a tariff which will help us export commodities, rather than a tariff that will help to prohibit importations. But to be just and effective, a tariff of the kind would require as an auxiliary something in the nature of a tariff board the membership of which would have knowledge of conditions in other parts of the world. Last year we heard a great deal about the necessity for a tariff board. We were held here for days by the government insisting their bill should go through in the form in which it was drafted, assuring the members of the board ten years of office no matter what happened. What has become of the board? We have heard nothing further about it. If there was ever need of a tariff board it was when the currency question was to the fore in Great Britain. If we had had a tariff board at that time we would not have taken the slam we did at Great Britain in the year we are to have her representatives here to meet us and other representatives of the Empire in an economic conference. Our friends opposite treated Great Britain in a way that our neighbours to the south, another great competitor of Great Britain, did not begin to do.
May I stress as a further reason which I think ought to appeal to all this year-the figures which I have given of the effect of the tariff as it is upon revenues. There is no doubt at all that the revenue of this country has suffered tremendously through the customs receipts having fallen to such a low point. Why should we impose additional taxes on the great body of the people, direct taxes in the form of sales tax, income tax and the like, when by a reversion to a moderate tariff, we may have a tariff that will serve all the purposes that are needed in the way of protection of industry, that will also help the great basic industries by permitting something in the way of competition within the country, that will be of service to the great consuming public as well, and will at the same time help to give us much of the revenue which we need at this time. These are the reasons which have actuated us in bringing forward the amendment in its present form.
There is one other matter with which I would like to deal, and it brings me to the final part of what I have to say. I refer now to the forthcoming Imperial conference. That 41761-1501
conference is going to deal with questions of trade, and of tariffs as affecting trade, more than with any other questions. That is the strongest of reasons, if there were no other, why the amendment which has been presented should be brought before the house at this time.
In regard to the Imperial conference, may I say first of all that nothing is going to be gained by exaggerating the significance of that event. It is a great event, a great national event, a great inter-imperial event, and let us hope it will prove to be also a great international event, but nothing will be gained by saying it is the greatest event since the Reformation. Nothing will be gained by saying it 'is going to mark a new dispensation. Nothing will be gained by saying, as the Prime Minister himself said when he landed in Halifax last December, that it will be the greatest event of the kind that ever occurred within the empire. I do not think this exaggeration is going to help things at all. Let us hope the conference will help to increase trade between this country and the other parts of the British Empire. If it does that, it will be a great event; but this object will not be helped along by super-exaggeration.
If it is to be the great event that hon. gentlemen opposite say it is to be, is it not surprising that, up to the present time, though we are within three months of the event itself, and I hope within three weeks of the prorogation of this parliament, we have not thus far had any discussion of the questions that are to come before the conference. The government has not brought forward any statement with regard even to the agenda, and when we have asked for information we have received only curt, and, I might almost say, rude replies. If the event is so important, I submit that this house is entitled to a little more information than we have had up to the present time in reference to it. A day or two ago, I asked the Prime Minister if the agenda had been prepared, and if we could be told anything about it. I also asked whether committees had been formed here in Canada. What was the reply? The reply was that we could not get any particulars with regard to the completed agenda; nothing was said about any other particulars. With regard to the committees, we were told that it was not in the public interest that it should be made known what these committees were. We were told that there were committees, but it was said that it was not in the public interest to disclose who composed the committees or what they were doing. I submit that such information is very much in the public interest.

The Budget-Mr. Mackenzie King
More than that, I say that the moment the Prime Minister made that statement, the government recognized it had been a mistake, and took good care to see that the error was rectified by the leader of the party in the other house. On the day following, the leader of the government in the Senate gave to that chamber, and through it to the country, a fairly complete statement of what he said he understood were the different committees that had to do with the business of the conference.
May I direct attention, Mr. Speaker, to this fact: The treatment of the house this year, with regard to getting information on these matters, is no different from the treatment of the house in other years. Hon. gentlemen opposite I assume would like to have the cooperation of those on this side. I ask how can they possibly expect cooperation, and how can it conceivably be given, if we are told nothing whatever about the subjects on which we are to cooperate, and if we are denied even the views of the administration with respect to what they intend to put forward at the conference? I do submit that it was an indignity to hon. members of this House of Commons that they should be denied information which the government found it necessary to give to the Senate on the following day.
But this conference is only the postponed conference of 1930. In September of that year, I asked a question of the ministry with regard to the agenda of the conference then about to take place. I was told by the Prime Minister that we could not have the agenda, that it was a secret matter and he did not intend to give it to the house. The hon. member for Bow River (Mr. Garland) addressed some other questions to the Prime Minister, as to whether there would be an opportunity to discuss the agenda and whether he might be told certain things about it. He also received a reply which was to the effect that it was none of his business, and none of the business of any of us on this side of the house to discuss matters pertaining to the Imperial conference. Let me show how differently an opposition is treated in the parliament of Great Britain. On July 30, 1930-and remember it was in September that our Prime Minister said that he could give us no information, because it was a secret-Mr. Stanley Baldwin, who was then leader of the opposition, directed a question to the then Prime Minister. I am quoting from English Hansard for July 30. 1930, at page 474:
Mr. Stanley Baldwin asked the Prime Minister whether he is in a position to make any statement as to the agenda for the Imperial conference ?

The Prime Minister (Mr. Ramsay MacDonald) :	The Imperial conference will afford
an opportunity for a general review7 and discussion of all matters, both in the political and economic spheres, of common interest to the members of the British commonwealth under the following heads:
(1)	Inter-Imperial relations.
(2)	Foreign policy and defence.
(3)	Economic questions.
Then are set out the details of what would happen on the political sphere, followed by details with respect to the economic sphere. They are given under headings, and I think I had better read those main headings to the house, because this was the agenda of 1930, and we shall in all probability have exactly the same agenda in 1932 because this is the postponed conference. If the Prime Minister of the country cannot give this information to the house, perhaps, on this occasion, the leader of the opposition may be permitted to do so. Here is the agenda:
On the economic side of the following will be the main headings:
(a)	General question of the trade of the empire, including capital investments and establishment of branch industries, the effect of successive tariff changes and the extent and effect of inter-imperial tariff preferences, and also of other factors such as cartels, etc.;
(b)	bulk purchase and price stabilization;
(c)	development of inter-imperial trade by trade commissioner services, exhibition and general publicity;
(d)	oversea settlement;
(ej the past and future work of the Imperial economic committee, the Empire Marketing Board and the Imperial Institute;
(f)	questions of cooperation in agricultural research (including cotton growing), forestry and minerals;
(g)	special meetings of experts on industrial research and standardization;
(h)	Transport and communications, including review of the work of the Imperial Shipping Committee and the Oversea Mechanical Transport Council, survey of steamship services, development of civil aviation, cable, radio, broadcasting, postal and news services. Under this heading would come also the question of the proposed agreements relating to merchant shipping legislation recommended in the report of the conference on the operation of dominion legislation.
Why could not that agenda have been given to this House of Commons at the beginning of this session as well as at the special session of 1930? It was given to the British House of Commons in July, 1930. They make no secret of the agenda in Britain; they have been discussing it from day to day. But I think I know the reason; it is that hon. gentlemen themselves are not familiar with the agenda and have given little or no study to it.


Some hon. MEMBERS:: Oh. oh.

The Budget-Mr. Mackenzie King


William Lyon Mackenzie King: May I direct
attention to the question I asked the Minister of Immigration (Mr. Gordon) a day or two ago and to the minister's reply. I refer to Hansard for April 22:
Mr. Mackenzie King:	I would like to ask
the minister one question. Could my hon. friend tell us whether the subject of migration and settlement within the British Empire will be one of the matters taken up at the forthcoming Imperial conference?
Hon. W. A. Gordon (Acting Minister of Immigration and Colonization):	That hardly
comes within the scope of this item, but I imagine matters of that character will be discussed, though to what extent or from what angle I am not prepared to indicate at the moment.
Mr. Mackenzie King:	As I understand it,
then, the minister's reply is to the effect that he imagines this may come up but at the present time he cannot say.
That was the position of the minister who deals with the question of settlement. The question of oversea settlement, immigration, in other words, is to be on the agenda for discussion, and all the minister can tell us is that he imagines it will come up. If that is the position of the ministry with respect to one subject on the agenda, what may we think of its present position with respect to the other subjects? I suppose each minister, if asked, would reply that he imagines the matters in which he is interested will come up, but that he cannot say. Yet we are within three months of the opening of the conference. I say to the Prime Minister that from one end of this country to the other, there is indignation being expressed at the lack of preparation on the part of the government for this important event. It is felt in this city more than anywhere else. There are officials who know that, at the last moment, they will be expected to furnish this and that in the way of information, but not until a day or two ago, when this question came up, were they told anything about what they will be expected to have in the way of preparation.


Mr. CAHAN:: Is that statement true?


William Lyon Mackenzie King: That statement is true.


Richard Bedford Bennett: It is absolutely untrue.


Charles Hazlitt Cahan: I do not believe it.


William Lyon Mackenzie King: My hon. friend may not believe it, but I know in a very direct way that there has been a good deal of complaint that very little has been said.


Charles Hazlitt Cahan: I cannot help that, but that statement is utterly untrue.


Richard Bedford Bennett: Absolutely.


William Lyon Mackenzie King: I think I have the right from what I have heard to make a statement of the kind, and I repeat it.


Charles Hazlitt Cahan: Not an untrue statement.


William Lyon Mackenzie King: Officials in the departments of the government are worrying themselves over the question of how at the last moment they are going to get data which they ought to have been asked to prepare not one or two months ago, but a year ago. If such is not the case, why did not the government make a statement about this matter before?


Charles Hazlitt Cahan: The officials have not taken that view.


William Lyon Mackenzie King: My information is that the matter has been left pretty largely in the hands of the Canadian Manufacturers' Association. I have been told that a committee of that association has been meeting with committees from Great Britain, and, between them, they are trying to see how they can divide up the trade in manufactured articles between Great Britain and: this country. I say to hon. gentlemen opposite that the people of Canada are not going to be satisfied with a mere division of interests, so far as the manufacturers are* concerned, between Great Britain and Canada, as a solution -of the trade question as it concerns those parts of the empire. I challenge hon. gentlemen opposite to deny that that is the kind of investigation being held at the present time by officials or agents of the manufacturers' association.


Charles Hazlitt Cahan: I know what the manufacturer's association is, but I know the statement as applied to them is untrue.


William Lyon Mackenzie King: May I repeat
that, if this conference is the important matter which we know it to be, then the House of Commons should have had at the very beginning some intimation from the government as to what its policies were going to be, and that there should have been long before this an opportunity for discussion of the matters relating to the conference. We were told by the Prime Minister that we would have an opportunity bo discuss matters pertaining to the conference when the house in committee was considering the vote for S250,000 to meet the expenses of the conference. One moment is to be left for the discussion of matters relating to the conference, and yet these matters cover the great questions of tariff, trade and migration. We have thus far had no chance whatever to.

The Budget-Mr. Mackenzie King
discuss them, nor have we had the slightest intimation from the Prime Minister as to what the policy of the government will be when the time comes.
In support of what I said a moment ago in connection with the artificial division between Great Britain and Canada of the trade in manufactured articles, I contend that this is no new idea, nor is it one devoid of grave objections. I suppose as strong an advocate of British preference as there has been at any time was the late Lord Milner. Speaking in Montreal before the board of trade as long ago as 1908 Lord Milner said:
And as regards the position between Canadian and British manufacturers let me say just this: A good deal of harm was done at one time by the idea that the policy of preference aimed at an artificial division of industries between Canada and the United Kingdom, certain kinds of manufactures being, so to speak, appropriated to Canada, and the United Kingdom being left undisturbed in the exercise of others. I do not believe in such an artificial limitation, but I do believe that, with reasonable tariffs and mutual preference, there will be something like a natural adjustment.
The artificial arrangement which we hear of as being contemplated is something along those lines. In textiles for example, there are certain grades of very high quality which we do not manufacture in this country. Great care may be taken at the conference to see that these are left with British manufacturers. They will be allowed to come in at low rates of duty, and the well-to-do benefited thereby. On the other hand, there are coarser grades which affect the great body of the people, and great care may be taken to see that these are protected from anything in the nature of competition from Great Britain. Other things might be mentioned as well. But this is the kind of thing which is being currently rumoured, and perhaps the Prime Minister will tell us when he speaks, whether or not the rumours are true. I repeat that the people of Canada are not going to be satisfied with any artificial division between this country and Great Britain. What will be expected from the conference will be a greater opportunity to trade with Great Britain in a perfectly free and natural way.
If the conference is to be a success, there are some things that are fairly self evident. There will have to be a change in the way of doing things from the way in which many things were done at the time of the last conference. In the first place, there will have to be a 'better atmosphere created than was created prior to the conference in Great Britain. We all recall, and recall with a great deal of chagrin, the atmosphere which was created prior to the economic conference in

1930, and as a consequence of which the conference, in the words of another former prime minister of a British dominion, was a complete tragedy. That is the way it was described by a representative of another part of the empire; the conference of 1930, viewed from the economic side, was considered to be a tragedy. If that tragedy is not to be repeated, we must not have a repetition of the circumstances which led up to it
First of all there was the raising of the tariff immediately in advance of the conference. Let me say again that I cannot understand the point of view of hon. gentlemen opposite when, just on the eve of the meeting of this conference, on top of all they have already done in the way of raising the tariff, they add a two per cent tax against all goods coming into Canada from Great Britain, and this at the very moment when Great Britain, in imposing her tariff against foreign countries, takes care not to put a single cent of new duty against goods from Canada. When the British House of Commons was discussing the question of tariffs, an hon. member moved that there should be a certain tax levied against the dominions, as well as against other parts of the world. I suppose he had in view somewhat the same idea as our Prime Minister prior to the last conference-that there would be a certain bargaining value in such a step. What did Mr. Thomas, the Secretary of State for the Dominions, say? He rose in his place and stated that such action would be an insult to the dominions. That shows how the British people must feel in regard to the action of hon. gentlemen opposite. They feel that the putting of a tax against goods from other parts of the empire, immediately prior to the conference, is an insulting thing. I do not think the term is too strong to use at a moment when members of the same family are about to meet together to consider how they may best further each others' interests.
In addition to the necessity of a change of atmosphere, there will have to be a very distinct change in the method of approach. We remember the Prime Minister of Canada going to the last conference, and, before any discussion had taken place, stating to all and sundry the basis upon which alone Canada would be prepared to negotiate. I hope the Prime Minister of Canada will remember that this time Canada is the host and that his attitude, whatever it may have been while he was in Great Britain, will be a little different towards those who come to Ottawa from other parts of the empire as guests of the Dominion of Canada. What did the Prime

The Budget-Mr. Mackenzie King
Minister say before the proceedings had started at the last Imperial conference? First of all, he said that he was the leader of the Conservative party in Canada; that the Conservative party stood for protection; that any policy he was prepared to consider must be based on protectionist principles; that the policy of his government was known as "Canada first"; that "Canada first" meant no goods would be permitted to come into Canada from abroad, which could be produced or manufactured in this country; and that the only basis upon which he was prepared to consider any question of trade was that of what he called empire reciprocal tariffs. ;He gave his own definition of reciprocal 'preference, or " empire preference " to give ithe exact term he used. What was this empire preference"? It was a preference to be created, not by reducing in any particular the existing rates of duty, but by adding to them to the extent of a ten per cent increase. He went a step further: He said he would not agree to discuss the matter with any part of the empire until all had adopted the principle of protectionist tariffs which would enable them to bring into being a reciprocal, empire tariff along the lines which he had indicated. Only on those lines could there be any discussion or consideration of the question. He went even further and said:	We will
not consider any alternative; no alternative that can be suggested will be satisfactory to us as compared with what we have proposed. What he had proposed was, in effect-this was exactly the way in which it was received by the British government-that Great Britain must change her fiscal policy, in consideration of which her people would be allowed to send to Canada such goods as could come in over a tariff wall which would keep out anything produced or manufactured in this country. That was what Mr. Thomas designated as "humbug." There must be no more "humbug", so far as the Imperial conference is concerned. If it is to be a success, all such methods of procedure will have very speedily to be dropped. My right hon. friend will not be able to get anywhere with his "Canada first" policy as a basis of negotiation within the empire. The people of Britain have already said, members of parliament of the mother country have already stated very emphatically, that they are not going to be satisfied with any trade agreement that will exclude from Canada all goods which can be produced or manufactured in this country.
I have not time to go into the matter fully, or to make clear the British attitude in that regard. I could quote at considerable length
from statements that have already been given to the public. In this connection however I point out how different the attitude of Britain is from that of Canada. All the public men of the different political parties in Britain who have spoken have stated with one voice that so far as the conference in Canada is concerned, their representatives should come here, not riveted to any particular formula or policy, nor with the desire to get what they wish particularly for themselves, but rather with an open mind to try to discover what may be for the common good. Speaking in the British House of Commons on January 27, Mr. Thomas said:
"We shall go there, not riveted to any creed or dogma but with a single-minded desire to effect a real settlement and I am sure the dominions will not only realize-as they do realize-the advantages of their association in the British Commonwealth, but if they reciprocate in the spirit with which we intend to go there, there ought to be no doubt of the success of the conference.	_
"While it is quite clear," Mr. Thomas said, "you have what is called a conflict of particular interests, frankly I see no reason whatever why this conflict cannot be merged into a common recognition that the interests of all are more important than those of any section.
"In that connection the British government will go to Ottawa quite prepared to depart from certain well known principles that have hitherto existed in this country. In fact there will be no embargo, so far as the British government is concerned, to the points of policy they will be prepared to discuss.
"But having said that from our point of view it is equally necessary to keep clearly in mind that we have a very distinct point of view and interest in the policy of the dominions themselves. No conference will be successful, lasting or beneficial if it is assumed that all the concessions will be on one side."
Later, on February 22, he said:
Don't let us go to Ottawa in a haggling spirit, but let us go and see what we can throw in the common pool for the benefit of all.
I might quote similarly from Mr. Neville Chamberlain, Sir Austen Chamberlain, the Right Hon. Stanley Baldwin and numerous other speakers, including some of the premiers of the other dominions. Let me take, by way of example, Mr. Forbes of New Zealand who, in an interview given to the press on February 25, said:
In accordance with her traditional practice in empire affairs New Zealand will not go to Ottawa with any desire to bargain unduly with Great Britain. Any bickerings over tariff questions will be avoided at all costs.
And so, with respect to every voice that has come from across the water to this side, there has been the note that those who attend the conference are coming not wedded to any

The Budget-Mr. Mackenzie King
particular policy, but with an open mind to see how they can further to the greatest degree possible the well-being of all.
Before this debate is concluded, the Prime Minister should give us the assurance that Canada's attitude will be of like character, that she will enter this conference with a perfectly open mind, and will not hold to the theory that the only goods to be admitted to this country from Great Britain will be those which will come in over a tariff high enough to keep out those things which are produced or manufactured within our own borders.
If this conference is to be a success, the Prime Minister will also have to give up the idea of seeking to make his adjustments with Great Britain on a bargaining basis. I should like to have said a good deal about this idea of bargaining as a means of negotiation between countries. Whatever may be said about bargaining between Canada and foreign countries, the same arguments do not apply to an attempt to bring about agreements between this country and the other British dominions, and, in particular, they do not apply to an attempt to bring about an agreement between the mother country and Canada. An attitude very different from that of bargaining as commonly understood will have to be taken in connection with Great Britain at this Imperial conference if the conference is going to be a success. I hope the Prime Minister, when he speaks, will give to the Canadian people an assurance that, in seeking to arrive at an agreement with Great Britain, he will proceed, not on a bargaining basis, but more in accord with the attitude taken in this country during the last thirty-three years in negotiations with Britain with respect to tariff preferences.
There are two methods of tariff preferences: one, the granting of preferences by voluntary act; the other, a reciprocal preference arrived at as a result of joint agreement. A reciprocal preference leads to what is known as a locked agreement, one which sets out in specific terms the basis of trading, necessarily restricting the matter of trading as regards both time and the number of commodities, and also limiting, to some extent, the freedom of the nations concerned to trade with the other countries of the world. Such agreements will not help to strengthen the ties of the British Empire and they will not help to improve trade relations between this and the mother country. For thirty-three years Canada has granted to Great Britain a voluntary preference. Now that the British government have changed their fiscal policy, they, too, are in a position to grant a voluntary preference to this coun-
*.Mr. Mackenzie King.]
try; and they have done so. That is their attitude as indicated at the present time. I submit that, at the conference, Canada's interests will be more substantially furthered if the results attained are brought about by voluntary concession through concurrent legislation than by means of locked agreements between Great Britain and this country. I believe that is the view held by the Canadian people generally.
The bargaining method is based on the theory that trade is in the nature of war, rather than of exchange. The Minister of Railways and Canals (Mr. Manion), who I see smiling at what I say, just about two years ago remarked that trade was war. I corrected him at the time by pointing out that trade was in the nature of exchange.


Mr. MANION:: The people corrected my right hon. friend.


William Lyon Mackenzie King: He	should
change his theory in that regard. Especially so far as the mother country is concerned, let us seek to negotiate on a basis which will have regard for trade as in the nature of exchange which is mutually beneficial and which were it otherwise would not be engaged in. Similarly may I ask: Why need we seek to further trade by means of limited agreements, these locked agreements that I have indicated, restricting negotiations in other directions, when to the degree to which the countries interested consider such action advisable it is possible to have that free flow of trade which comes from the removal of tariff barriers?
If bargaining is to be the basis of negotiations between Canada and Great Britain, then I ask on which basis is the bargaining to take place? Is it to take place on the Canadian basis, which has been described by the Prime Minister as the protectionist basis? The Prime Minister says:	We will consider no bargain
that is not based on the policy of " Canada first." If we are to negotiate on that basis, it means that Great Britain will have to put up her tariffs against Canada to a point equivalent to that at which Canada has put up her tariffs against Great Britain. That will prove to be a very serious thing for this country. What benefit shall we derive in Canada from an arrangement which will not permit any increase of trade worth having, and which, moreover, will threaten the very important position which we now hold in the British market.
I suppose hon. gentlemen opposite are familiar with the fact, that, while Great Britain has a twenty per cent tariff as against foreign nations, there is a provision that that tariff does not come into effect, so far as

The Budget-Mr. Mackenzie King
the dominions are concerned, until the fifteenth of November next. But on the fifteenth of November, unless in the meantime an arrangement has been made which is satisfactory to Great Britain, that twenty per cent tariff as matters now stand will apply against Canada as well as against foreign countries. In what position will we then be in regard to our markets in Great Britain? Great Britain has kept her bargaining power very much in reserve but it is none the less very real. She has said that nothing will take place, so far as the dominions are concerned, until the fifteenth of November, but, as I understand the provisions of the British import duties, this twenty per cent tariff will then become applicable against Canada and the other dominions, subject to any special arrangements or modifications that may be made at the Imperial conference. That is a very serious thing. Nothing could be more so.
I ask then, if you are not going to negotiate on the protectionist basis which is Canada's present basis are you going to negotiate on the free trade basis which is the basis that Britain by her present attitude is evidently prepared to adopt? The Prime Minister of Canada has already said that he will not consider the free trade basis at all. As a matter of fact, the basis Great Britain has before her at the present moment is the free trade basis, with no duties at all against goods coming in from the dominions. But the Prime Minister at the Imperial conference said:	No, we do not want any free
trade within the empire; that will defeat the very object we have in view. Well, if he is not going to negotiate on a protectionist basis, or on a free trade basis, he will have to negotiate on a basis which is somewhere in between the two; I wonder where the Prime Minister is going to get in the period of time that the conference will sit trying to negotia-tate on some basis somewhere in between the two?
The Prime Minister and the government would be well advised to drop altogether this idea of seeking to bargain with the old country in any arrangements that they make at the conference. They would be well advised to take a generous attitude in the matter of trade which will enable British commodities subject to the provisions of a revenue tariff, to come into this country and be of service to our consumers and to those engaged in the great basic industries, and thus in turn enable our commodities to find a place in the markets of Great Britain and elsewhere throughout the world.
Another thing my right hop. friend will have to forego is this attitude of his that there can be no alternative proposition. The last time Great Britain hinted at a quota as a possibility, Britain was told the proposition could not be entertained. The Prime Minister will have to examine the quota question very carefully, and my advice is that he examine quotas very, very carefully to make perfectly sure that the quota, after all, is going to serve Canada to the extent to which the Prime Minister when he returned from England at the close of last year said that it would.
A further matter my right hon. friend will have to change is legislation with respect to the tariff by order in council. I think he has already received' word from the British government that it is impossible to make any trade arrangements if the government is going to retain in its own hands the right of fixing Specific duties and putting on commodities valuations of its own for duty purposes; in other words, if the government is going to retain in its own hands the power to change the tariff from day to day. That is something the Prime Minister will have to change if any successful arrangement is to be made at the conference.
My right hon. friend will also have to change 'his theory of making Canada a national economic unit-this idea that Canada should be made a self-sufficing unit, producing within its own borders everything that it needs. That conception comes from the time of the ancient Greeks and the Greek city-state, when the state and the city were one and the same. The city-state of the day had to be self-sufficing because of the political and social organization of the age. But in our time the countries of the world are all interdependent, and the economics that are going to suit the present day are those which relate to the interdependence of nations, rather than to the idea of single states as national economic units. But what is the idea back of this theory of Canada as an economic unit? It is entirely a protectionist device to enable the government to keep out as much in the way of trade as it is possible to keep out of this country.
The economic unit idea, so far as Canada is concerned, is linked up with another economic unit idea which the Prime Minister might just as well dismiss as a subject of discussion at the conference, and that is the conception of the creation of an imperial economic unit. That is another theory which imperialists have held for a great many years-the idea of

The Budget-Mr. Mackenzie King
making out of the British Empire some kind of imperial economic unit.
The Prime Minister, when he came back from England last December, talked about an end to the idea of the empire being a political unit. He said we must now seek to make of the empire an economic union; the term "economic union" and "economic unit" are interchangeable. The mere fact that the Prime Minister made that statement, and emphasized so strongly that the empire was no longer a political unit but must now become an economic unit, made me think at the time that, like the lady in Hamlet, he "doth protest too much."
I think what the Prime Minister has in mind is this very conception of the empire as an imperial economic unit. That is the significance, I believe, of the three per cent excise tax imposed by the combined impositions of the last and the present budget. I think what the Prime Minister is aiming at is to bring into being when the conference meets here, with the aid of others with whom no doubt he has already conferred, some kind of an imperial Zpllverein whereby there will be imposed so far as all the dominions and Great Britain are concerned, an innocent looking little tax like this three per cent excise tax in order to unite them all in a manner which will also serve to separate them all from the rest of the world. The effort will be to have a similar tax imposed by Australia, New Zealand, South Africa, Newfoundland, the Irish Free State and Britain, to apply against goods coming in -from foreign countries; so far as trade within the British Empire is concerned the effort will be to have it agreed that this tax will be wiped out ,by each -part against the others. Or as an alternative means to the same end, a corresponding reduction made by each in its existing schedules. The country will then be told that within the empire tariffs have been lowered. If that is his abjective, may I say that that will raise a very, very large question, one of the most serious questions ever raised in this country, because along with that idea is associated the conception of some form of fund-to be jointly and centrally administered; at one time the effort has been to create such a fund for the purpose of imperial defence, at another for the purpose of imperial 'organization, at another for the purpose of imperial marketing; it will be said to be, at this conference, for the purpose of imperial development. Always there has been some little fund to be devoted to imperial purposes. This nme it will be to carry out this idea of making the empire a self sufficing unit. The proceeds of the 3 per cent excise will be the
(Mr. Mackenzie King.]
contribution to be made to the common fund. Once an economic unit is thus established, it is evident that to carry its policies into effect there will have to be something in the nature of a -central organization at headquarters to administer the affairs of an economic empire; and the moment centralized policies are discussed there is an immediate return to the political empire which the Prime Minister says we have now got away from. Well, if we have got away from the political empire, do not let us attempt at the conference, or at any other time to'-bring about an empire that is to be centralized -for economic purposes, because that will work just as much injury to the interests of the empire as the other kind of centralization -will. So far as the empire's interests are concerned they will best be served by allowing each part of the empire to continue to enjoy complete freedom of fiscal control, a fiscal freedom just as complete as each part enjoys at the present time.
May I conclude by stating the positive course which I think ought to be taken by the government at the conference? That course, adopted in Canada thirty-three years ago, of giving a voluntary preference to Great Britain, was introduced in the year 1897 by Sir Wilfrid Laurier and- Mr. Fielding. A preference of 12J per cent was then given to Great Britain. The next year it became 25 per cent, and shortly afterwards 33^ per cent. When the late Liberal government was in office that preference was increased still further by a ten per cent discount on commodities, under the British preference coming into Canada through Canadian ports.
Hon. gentlemen opposite have sought to convey the impression that that preference was something given to Great Britain without benefiting Canada. That, however, is not the case. The preference was given in the form in which it was -because Canada felt she would gain in- trade, that trade itself was in the nature of valuable exchange, and would not exist unless it were beneficial to both parties. Through that arrangement Canada was giving a distinct advantage to her consumers in the cost of living and a distinct advantage to her basic industries in the matter of costs of production. Moreover, Canada was doing something to hold a good customer, a customer who was taking five times as much from her as she was getting from Canada.
As Sir Josiah Stamp said in his address, let us not seek to estimate the value of relations within the British Empire on any purely mercenary basis, but let us look ahead for generations, and realize that the attitude taken to-day may have repercussions in the years

The Budget-Mr. Mackenzie King
to come which may be very serious indeed.
I should like to have called the attitude of voluntary concession, all interests considered, the Canadian attitude. The statement of Sir Josiah Stamp describes the Liberal attitude in the matter of voluntary concession. I think at least I am justified in calling it the Liberal attitude in connection with the British preference, because the Liberal government initiated that policy, and the only increases given under the British preference in Canada have been given by Liberal administrations. I am prepared to concede, and am glad to recognize the fact, that every Conservative government since that measure was introduced, with the sole exception of the present administration, kept the British preference where it was. There was a decrease in the preference on one or two commodities for a short time during the period of the war. The fact remains, however, that the governments of the Right Hon. Sir Robert Borden and of the Right Hon. Arthur Meighen alike recognized that the policy of British preference was one to which in the circumstances as they existed no exception could well be taken, and one which was of great advantage to Canada. They maintained the preference and the method of its application had passed from the realm of partisan discussion and had become what many of us had hoped was a national attitude. I trust on mature consideration the government will feel that that is still the best attitude to take. I am sure, if they treat Great Britain in that spirit, they will get from Great Britain, so far as consideration for Canada is concerned, a much better arrangement and a much better bargain than they will get by sitting down and discussing particular items and restricting trade in one way or another through locked agreements reached as a result of bickering as well as bargaining.
So far as the Liberal party is concerned, we will cordially welcome whatever extension of trade between Great Britain and Canada the government may find it possible to effect. They may go into the conference with the feeling that so far as the opposition is concerned, we believe they will protect Canada's trade to the extent of seeing that no interests which should be carefully considered will be jeopardized, and that they may go as far as they like in the matter of the furtherance of trade among the different portions of the British empire. If they adopt an attitude of the kind I have described they may expect the support of hon. gentlemen on this side of the house. We will not, however, support any narrow, circumscribed view of the question of trade between Great Britain and this country. Our attitude has been made clear, and was made clear in
the last budget of the Liberal party presented preparatory to the conference of 1930. Our attitude to-day remains what it was in 1930. That budget denoted a further lowering of the duties against Great Britain, with a view to increasing the preference and transferring to Great Britain trade which formerly had taken place between Canada and other nations. That change did not affect adversely a single interest in this country, and it would have helped very materially trade among the different parts of the empire.
There is one thing to which we will take exception,

and to which exception should be taken not only in Canada but in every dominion and in Great Britain herself-we will take exception to any tariff arrangement which will shackle the freedom of any selfgoverning dominion, or of Great Britain herself, in the matter of any trade arrangements which we or she or they may wish to make with countries outside of the empire. We will oppose any measure which may shackle and bind subsequent parliaments. No one has been more eloquent than has my right hon. friend in his statements that no one parliament should bind a subsequent one. He should, before the conference, make it clear to the people of Canada that he will see to it that, whatever arrangements are made, subsequent parliaments will not be bound so far as their fiscal freedom is concerned. Short of binding subsequent .parliaments, of restricting or limiting freedom to trade with other parts of the world, of not failing to allow freedom of trade with the world in general to the extent to which we may wish to carry it on, the government may rest assured that it will have the support of the opposition in the furtherance of the largest possible measure of trade between the different parts of the empire that it can bring about.
At this point I should like to answer one representation my right hon. friend has made in other discussions. He said that the Right Hon. Sir Wilfrid Laurier had adopted a bargaining method similar to his own when he was in England in 1902, and the right hon. gentleman referred to a resolution then passed as evidence of the truth of his assertion, Sir Wilfrid Laurier did nothing of the kind. The situation in 1902 was this: Great Britain had placed a duty on foodstuffs coming from all parts of the world in order to raise revenue needed as a consequence of expenditures made during the South African war. It was a temporary measure for revenue purposes only. What Sir Wilfrid Laurier said was that Canada would expect Great Britain to remove the tax, so far as Canada was concerned, because we had given Great Britain a preference in our
2388	COMMONS
The Budget-Mr. Mackenzie King
markets. He urged that, at a time when Great Britain was imposing a tax, she should give us a preference in return for the preference we had given her. That attitude was vastly different from the one taken by my right hon. friend at the last Imperial economic conference, when he urged that Britain must change her fiscal -policy and impose taxes before we would cooperate with her. Sir Wilfrid Laurier always said he felt perfectly sure that any time Great Britain changed her fiscal policy and as a consequence imposed customs duties, she might be depended upon to give Canada a voluntary preference, just as Canada had given her a preference. So I believe she will act, and so I am sure the people of Canada generally believe she will act. If in- that spirit we enter into negotiations with the mother country, I think we may expect of the coming conference a large measure of increase in trade within the empire, together with a strengthening of inter-imperial cooperation and inter-imperial good-will.
So far as the Liberal party is concerned, that is the objective we hope may be realized as a consequence of the forthcoming conference. We trust the conference will serve as an important factor in the increase of trade between different parts of the empire, and particularly between Great Britain and Canada. Along with that we trust it will mark the beginning of a closer cooperation in many directions among all parts of the empire, and will point the way, let us hope, to a reduction in tariffs by the other countries of the world, and to a beginning as well, so far as Canada is concerned, of more in the way of trade with all other nations.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Richard Bedford Bennett: Mr. Speaker, much of the debate to
which we have listened, including the speech this afternoon, would seem to indicate that there is no appreciation by the opposition of the fact that we are in the midst of a world crisis. After listening to the address this afternoon one would think that we were in the ordinary, humdrum existence of fairly good times and that the old story, revamped, was being told again; that Industry and Humanity was once more to be quoted and the four points therein enunciated made known to the public again; that these tales which the people have grown weary of hearing were to be revamped and retold as if we were in the midst of ordinary circumstances, 
and that conditions in this world had not changed from those normal conditions under which parliament meets.
Well, sir, we are in the midst of the greatest crisis the world has ever seen. Most of us have done some reading with respect to these matters, and we have formed definite understandings and convictions as to the situation. I suppose some books make a greater impression upon our minds than others, depending to a large extent upon our appreciation of the opportunity the author may have had to study the problems at first hand and indicate as soundly as might be possible a general summary of conditions. The gentleman who for ten years was economic adviser of the League of Nations, and whose name is known to all within sound of my voice, expressed himself a few months ago with respect to existing conditions, in these words:
_ Then came the depression. In intensity and in range beyond all previous experience, with a duration and with subversive consequences which none can yet with confidence forecast.
Proceeding further, he uses these words:
The first thing that is overwhelmingly clear is that this is a world depression in the fullest sense. It is world wide in the range of its effects; its causes, however originated, are clearly related to defects in the world system; and there is the strongest presumption that such remedial measures as may be possible will require the concerted action of many countries.
That is the firm and considered conviction of one who, having had perhaps greater opportunities than any other through being in the very centre of the world movement, is able to express an opinion of value. But I submit that any stranger coming to this house and sitting in the gallery for the last few weeks, or hearing the address this afternoon, would be wholly unconscious of the fact that the great currents that move the world are out of course, that conditions have changed and we are face to face with the greatest crisis of which there is any record whatever.
To-night I venture to direct attention to the fact that we are dealing with realities and not with theories, and that those who have been charged with responsibility for the administration of government during the last few months have had placed upon them a responsibility greater than has fallen on most governments in this country. I go further and say this, that it is quite apparent that this fact is being understood more and more by the people of this country. When the right hon. gentleman proceeds to give advice in that ponderous fashion which is his own, and when he undertakes to tell us how we should conduct the business of this country, I can

The Budget-Mr. Bennett
only say to him that most people who have business to transact, most people who have a stake in Canada, and most people who are concerned about its future are thankful for the fact that he is not charged with responsibility at this time. More, I tell him that leading supporters of the Liberal party of years gone by gladden my heart from day to day with communications expressing gratitude that we are transacting the affairs of the country.


William Lyon Mackenzie King: Could my right hon. friend tell us who they are? Perhaps among them are the Minister of Justice (Mr. Guthrie) and the Minister of Railways (Mr. Manion).


Richard Bedford Bennett: No, neither. Not a day
goes by without a letter coming to me from some part of this country, gratefully acknowledging the service being rendered to Canada by this government. What is more, very seldom do I see men of the Liberal faith who do not express grateful thanks for the fact that the task of administration is not in the hands of the right hon. gentleman opposite. In fact, there are those who sit behind him now who have told me the same thing.
Let us look for a moment at world conditions in the light of the events of the period from 1914 to 1918. In 1919 there met in Paris representatives of most of the nations of the world, among them representatives of this dominion. They made their voices heard, indicating their views as to the effect of existing conditions upon this country. What were those conditions? First of all there were food shortages on a scale never before known. Raw materials were scarce and unavailable for manufacturing. Communication by sea and land had been disturbed. Shipping was no longer available in the ordinary commercial sense. The transport of the world had broken down because of the dislocation brought about by the war. In addition, all the organization of finance and industry was disturbed. There were staggering debts such as mankind never before had contemplated. There was a change of mental attitude and habits on the part of the people of the world. In some countries there were revolutions, in others real starvation, in others great impoverishment; in others passions were aroused by the results of the war, and national prejudices had been stimulated. Worst of all, the world had lost millions of its very best and finest men.
That was the condition in 1919. I could amplify it, but I think that would be unnecessary. It is within the memory of most members of this house what those conditions were, and yet so courageous are men that
there was shown a grim determination to reform, to reorganize, to readjust and to march forward. It is one of the striking things in history that of all the matters of which we have record to-day there is nothing that equals the recovery of the world in the years from 1919 to 1925. It is one of the most amazing and astounding matters of which we have any record. In the meantime there were the conferences at Locarno and at Genoa; the rehabilitation of Austria, Bulgaria and Greece; the great naval disarmament conference at Washington. Everywhere men were endeavouring to lay the foundations for peace and prosperity.


An hon. MEMBER:: Order and good government.


Richard Bedford Bennett: Order and good government; not in the sense in which hon. gentlemen mutter it under their breath, but in the very broadest sense they were laying the foundations of ordered peace and regulated prosperity.
The League of Nations, which had come into being at the end of the war, was discharging great functions in a manner satisfactory to increasing numbers of people. Everywhere men filled with courage and hope were going forward to their allotted tasks. It is true that conditions in Europe were not as favourable as they were in other parts of the world; among the belligerents of Europe conditions were anything but satisfactory, but there was steady improvement. Figures supplied by the League of Nations show that seven years after the war production had increased by 18 per cent as compared with 1913, while population, because of the great losses of the war, had increased only 6 per cent. That meant better standards of living; that meant that the world was better able to take care of the conditions under which its people lived. Although in 1925 international trade in Europe had fallen, the average man on that continent was better off than he was in 1913.
Then come the next four years, from 1925 to 1929. Without taking up too much time to deal with this matter, I need only bring to the memory of hon. members of this house the fact that almost every country had again based its currency upon gold-Great Britain in 1925 and other countries at varying dates -for the purpose of having a universal standard of values and a universal medium of exchange. Industry had been reorganized, which made possible greater production; trade had been expanded consequent upon the increased production, and crude products, according to
The Budget-Mr. Bennett

the figures of the League of Nations, had increased at the remarkable rate of 4| per cent per annum. The process of manufacturing had, of course, added greatly to their value.
These are the conditions to which I refer; that is, world trade had outrun world population-in 1929 the one had increased by 18 per cent as against an increase in the case of the other of 6 per cent. Europe's increase in production or trade had increased by the enormous figure of 22 per cent over what it was in 1913. It had regained its pre-war position, and it might be said that ten years after the great war, ten years after the representatives of this dominion met the representatives of other nations in Paris, the world had increased its productiveness to a point far beyond what it had been in the years before the war. The business cycle reached its peak in 1929.
Let us look for a moment and see what were the conditions then prevailing. You had a steadily increasing production which had outrun population; you had an expansion of trade; you had conditions vastly improved over those of 1913; you had adjustments rapidly taking place in every part of the globe, starvation had disappeared, impoverishment was not known and the world was getting back to real normal conditions where men buy and sell, make and exchange and trade and do business from one end of Christendom to the other.
What happened in 1929? By that year we had reached the peak of the cycle. Some hon. members may doubt whether or not there are cycles in business, and upon that point you will find that great authorities express divergent opinions. In the very nature of things I think there must be something in business cycles; but, at any rate, in 1929 the business cycle had reached its peak. However, there were other forces at work. You had, for instance, difficulties in connection with the conditions obtaining in Jiurope, brought about, not by reason of what was taking place there but because of what was taking place on this continent. In no part of the world had recovery been equal to what it was on the American continent. The reason was obvious. Because of a late entry into the war the United States had accumulated a vast wealth, estimated by some economists to be as great as forty billions of dollars, as a result of her production and trade prior to her entering into the war. The result was that there was prosperity on this continent such as we had never had before, and during the war years this country shared to some extent in that prosperity. >

It was one of the very strange anomalies of life that along with the destruction of men and materials which took place during the Great war there was a distinct improvement in the prosperity of the countries engaged in the production of the means of destruction. That was so particularly upon the American continent. Then came that feverish expression of mass psychology, so often found upon this continent, and speculation became rampant to a scale never known before. When I say never known before, I am but quoting the words of one who has studied the matter from every angle and standpoint. Men, women and children-when I say children, I mean boys and girls under the age of twenty-one-were all engaged in speculation.
Speculation has a well-defined place in economics. Although I am in no sense an economist, I know the conditions under which speculation sometimes becomes a highly beneficial state, that is, speculation based upon judgment. For instance, there are men who with a rising market think it desirable to make large investments, and then they realize upon those investments and take the benefit of the rise in the market. There are others who speculate upon margins, and the psychology of the people upon this continent being as it is, speculation upon margins reached a scale almost impossible for one to express. I recall, that when I was in the place now occupied by the right hon. gentleman opposite, I expressed to this house the view that unless something was done to curb this reckless speculation, the result would be inevitable and disaster would be certain. Of course, to make a statement like that is like baying to the moon; in the midst of speculation, no one pays any attention to an opinion of that kind. When you found ten and twelve per cent being paid for money in order that speculation might be carried on, when you found what you thought were reasonable men exchanging five per cent bonds for securities which yielded two per cent for speculative purposes, you knew reason was dethroned and men had capitulated their judgment to the speculative craze. The result was apparent in every part of the world but, as I say, particularly apparent upon this continent.
What was the result in Europe? All you have to do is to read the bank returns of Europe and you will find that there was a constant drain upon their resources in order to send money to the great centres of finance upon this continent. That drain became so great that legislation was enacted for the purpose of preventing the further weakening of the resources of European countries. It did

The Budget-Mr. Bennett
not stop; it continued and in the end the boom burst. Do you recall the break in values? Do you realize what it meant? It meant that suddenly the pyramiding of conditions which had been going on in this era of speculation had brought about such a situation that, top-heavy, it broke and prices reached a low level, such as we had not seen before, and equalled only during recent months as a consequence of something to which I shall presently refer.
So we passed into the year 1930. In that year there were evidences of the foundations being more firmly established, the bottom being reached and improvement beginning. If any hon. members have stood in a field and watched a flying machine suddenly just raise its nose from the ground before it takes the air, they will realize exactly what I mean when I say that there were some evidences of a slight improvement. At that moment men were beginning to take fresh hope and they continued to do so. We in this country, owing to conditions to which I have on more than one occasion alluded, namely, the almost sudden diminution in the prices of our principal crop for the purposes of ready new wealth, found ourselves in a more difficult position than some other countries, but we were making a certain progress, very little it is true, but some.
Then there was an event the significance of which I always think hon. members with whom I have spoken do not fully realize. It was the passing of Great Britain from the gold standard. The effect of that upon the world was greater than any other single event which confronts us at this time. The world's banker, so to speak, had become insolvent; that is the way in which it was regarded. Sometimes, when I listen to or read the speeches that have been delivered during the last few days, I feel that very few members seem to realize that practically the greatest part of the world's business was transacted on a basis of sterling. Bills were drawn from Scandinavia and other parts of Europe expressed in terms of pounds, shillings and pence, because this was a stable exchange that had been created, not in five or ten nor yet in a hundred years, but over a period of hundreds of years the basis of trading as it is known on Lombard street had been established. Far off in South America the importer, drawing his bill upon an acceptance house in London, attached to it the insurance policy and the bill of lading. When they reached London they were taken around to the acceptance house which accepted the bill for whatever amount it might be. Then it was sold by the broker and ultimately found its way into
a joint stock bank and finally into the Bank of England. Those were the methods by which England over a period of centuries had established herself as the financial centre of the world. The war had created an interruption, but in the end nothing could take from her that position which had been established by long habit, by centuries of such dealings as I have indicated. So the Lombard street system became known all over the world. Dollars had no significance except in the terms of exchange value for pounds, shillings and pence. If any hon. member had visited Europe in 1921 and 1922 as I did, he would have found that a five-pound Bank of England note was the readiest form of exchange that could be carried with one, because in every country, whether it be France, Germany, Austria, or Switzerland, it was always exchangeable on account of the fact that it had a reputation; there was behind it a history, a fixed value. After 1925, when England went upon a gold basis again, there was never any question of the exchange value of the pound sterling. In our money, it was $4.86; on the exchanges of other countries its value was established by their bankers and known to everybody.
Under those conditions, after credits had been established that it was believed were ample to take care of any demand that might be made, suddenly, without much warning, the bank was unable to meet its obligations in gold; there was no longer a free market in this commodity and England went off the gold standard. The repercussion, the effect of this upon the world we are only beginning fully to realize; in every part of Christendom that is so; in the far east, in the far west, in every part of the world, that is so. Even to-day, notwithstanding the fact that the pound has not been stabilized, although the other day we heard Sir Josiah Stamp say that it must be-and the value may be $4.86, may be $4, may be any other figure so far as we are concerned, but it must be stabilized-bills are still being drawn upon England from Scandinavia, central Europe, every part of the world, and the sterling area is being extended day by day because it still represents the medium of exchange with which men are accustomed to deal, about which they know the most and in which they transact their international trade.
That being so-and I think every hon. gentleman will realize how fully that is true- the disturbance that came about by reason of the happening to which I have just alluded, was felt tremendously in this country. It will be recalled that President Hoover, in an endeavour to meet the situation, had granted a moratorium with respect to debts to last
The Budget-Mr. Bennett


Mr. GRAY:: We did not hear that in the
campaign.


Richard Bedford Bennett: You certainly did not,
because the campaign was over in July, 1930. I have been endeavouring to point out just as clearly as I could that in 1930 there were, according to the evidence of every authority, signs that this country, in common with every other part of the world, was making progress towards ultimate improvement. But if one blinds one's eyes as my hon. friend from West Lambton (Mr. Gray) would; if one will not see because he does not wish to see, or having eyes to see, sees not; if he does not take note of conditions as they are and observe the changes that time has wrought, it is not my. fault.


Ross Wilfred Gray: I heard the right hon. gentleman in Sarnia.


Richard Bedford Bennett: I tried in 1930 to point
out as clearly as any man could, and I believed then as I believe now, that if it had not been for the abnormal conditions to which I have alluded, and the existence of which no man can deny, Canada would have attained that degree of prosperity which it reached during the years when it reflected the changed conditions in the world. When I hear hon. gentlemen opposite talk of the prosperity of Canada and of our great advancement in export trade from 1925 to 1929, I wonder if they have read the figures. Do they realize that that but reflects conditions in the world at large? Canada did not stand differently from other countries except in this, that being a new country rich in raw materials, we did march forward rapidly with respect to exports until we had attained to the position of sixth among the exporting countries of the world. And to-day, notwithstanding the greatest depression that the world has ever seen, we stand fifth among the exporting countries of the world, being exceeded only by Great Britain, France, Germany and the United States of America. There is no record in the economic history of the world of a people so small in numbers, a country so vast in area, having made such progress under present conditions.


Mr. SANDERSON:: Does the Prime Minister take credit for that?


Richard Bedford Bennett: There is one thing he
would not do: he would not accord it to you. I trust the hon. gentleman knows what I am talking about. Let us go a step further. I have been endeavouring to point out that in

The Budget-Mr. Bennett
1930, at the very time that this government came into power, the conditions which had been steadily improving were, for the reasons I have indicated, showing-


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: All you have to do is
to read, and I will tell my hon. friends where they will find it-in Sir Arthur Salter's last book. Those were the conditions. What were we to do?


Mr. BOUCHARD:: What you promised.


Richard Bedford Bennett: Exactly, and that is what we are doing, and what is more, what we propose to do. There are men in this house who will not permit their intelligence to work lest the conclusions might not be favourable to their own party. There are those who will not exercise their reason with respect to these matters. They must endeavour to make political capital out of a situation that is beyond the control of themselves and of their party and of parliament.
There is just one comment I should like to make upon the address which was made this afternoon by the right hon. leader of the opposition (Mr. Mackenzie King). He said: There are some matters which this parliament cannot control. A modest expression of fact, but that is so. Confronted with that situation what would you have had your country do? We did the only thing that a government similarly situated could do, and I am going to point out to you that the authority that was cited in this very seat by the ex-Minister of Justice (Mr. Lapointe), when the League of Nations in 1924 indicated that tariffs were standing in the way of the world's progress, advised Hungary in 1931 that she should use tariffs to lessen her imports. Why? You get back to the old question. Some hon. members here smile or laugh or giggle when you talk about the adverse balance of payments. I wonder if they have paused for a minute to understand the full significance of what is involved in that. Here you have two things to consider, what a country buys and what it sells. The balance of what it sells over what it buys is the visible evidence of its having a balance on the right side. If on the other hand it buys more than it sells, there is a visible balance against that country. Sir Arthur Salter puts it very clearly, and he himself is .a pronounced free trader, as I shall presently point out. Then there are invisible things that go to counterbalance these matters, such as the interest payments that come to Canada from her investments abroad-and we have some investments in every part of the world;
the tourist trade that comes to this country to the amount of 8250,000,000 a year, and which when you deduct the $76,000,000 that Canadians spend as tourists abroad gives us a favourable balance in tourist traffic alone of
8175,000.000, a very large item in making and shaping the commercial credit of this Dominion.
What did we find when we came into power in 1930? It was the proud boast of the late government that Canada of all the countries of the world had been the only one to lower her tariff since the war.
*Some hon. MEMBERS: Hear, hear.


Richard Bedford Bennett: Hon. gentlemen say,
"hear, hear". Well, I will tell you what you did by that: You made it just that much easier for Canada to have an adverse visible trade balance.


Mr. DONNELLY:: That means nothing.


Richard Bedford Bennett: I suspect that that is true in the hon. gentleman's case, but I am presenting my argument to those to whom it means something.
Let us proceed a step further. The house will remember that in 1929 the then Minister of Finance, in introducing his budget, explained that the Dominion of Canada had a favourable trade balance of over $120,000,000. That was a matter of proud boasting on the part of the hon. gentleman. He said that we had a favourable trade balance of $123,000,000, representing the excess of what we had sold over what we had bought. But what had happened by March 31, 1930? The hon. gentleman was still in power then. What happened was this, that in that twelve months the favourable balance of $123,000,000 had been lost and there was an unfavourable or adverse balance of $100,000,000. In other words, the imports were $1,248,000,000 and the exports were $1,144,000,000, or an adverse balance of over $103,000,000. Just think what that meant. From Canada being in a position where she had over $123,000,000 of free credits coming in from the excess of exports over imports, by the end of March, 1930, she found herself in the position where she bought during that year $103,000,000 worth more than she sold.


Mr. YOUNG:: What caused the decline?


Richard Bedford Bennett: The very conditions to which I have alluded, and the fact that during the period following the war the then government had lowered the tariff of this country so that it became a dumping ground for the other nations of the world. But what happened?


An hon. MEMBER:: Nothing.

The Budget-Mr. Bennett


Richard Bedford Bennett: 
William Lyon Mackenzie King: Will the Prime Minister permit a question?


Richard Bedford Bennett: Yes.


William Lyon Mackenzie King: Is it possible for all countries to have a favourable balance of trade at the same time?


Richard Bedford Bennett: I am coming to that. This afternoon the right hon. gentleman was greatly interested, apparently, in other countries. My concern for the moment is for the country I have been elected to govern. When he asks the question which he has just now put-"is it possible for every country to have a favourable trade balance?"-I say that is not a matter about which I am concerned at the moment, so long as I can see that my country is properly attended to. That is my point. That is what Hon. Walter Runciman said when he imposed tariffs against importations ranging from 50 to 100 per cent. That was his position. That is what he is doing for England, and what he is doing for England we are doing for Canada. The only difference is that we did it first.
I ask any hon. member of this house to go and tell his constituents that he is in favour of a policy which will commit Canada to larger obligations abroad, which will have to be paid either in goods or in services, or with gold. When the goods and services fail, as they do, there is only one way payment can be made, and that is with gold. Gold can be got only by borrowing or by fresh capital coming into the country. Go back and tell your constituents that. Go back and tell them that you sat through a session of parliament and voted and worked for the purpose of seeing that your country owed more money abroad, and in the end became insolvent. Go and tell them that.


Frederick George Sanderson: We will tell them what the right hon. gentleman said during the campaign of 1930.


Richard Bedford Bennett: I will admit there are some hon. gentlemen who are incapable of understanding that, but for the moment I am not addressing them.


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: I have now indicated the position of this country in 1930. I have shown the position that other countries have adopted. France accepted that principle and adopted it. Here is the real crux of the problem: if every country imposes tariffs against the other the difficulty to pay obligations that are due abroad becomes increasingly great.
41761-151 j


Some hon. MEMBERS:: Hear, hear.


Richard Bedford Bennett: That is true. But we
have no power to control the tariff of the United States, nor that of France, nor of Spain, nor of Italy, nor of other parts of the world. We know they have imposed tariffs against our goods and that they are competing with our production by making the same goods that we ourselves are making. Now, what happens? If they raise their barriers against our goods going into their country we cannot pay in goods for any goods we buy from them; we have to pay them with the proceeds from the sale of our goods elsewhere.


Frederick George Sanderson: Couldn't you blast your way in?


Richard Bedford Bennett: That is what we are doing. But let me go a step further. If all the countries in the world are unwilling to buy the products of one country, and seek to dump their products in that country, i3 there here a man who would not take the steps necessary to protect his country against them? Is there one who would not?-except the member for South Perth (Mr. Sanderson). Is there any other one who would not?


An hon. MEMBER:: Lots of them.


Richard Bedford Bennett: I do not believe there is an hon. member in this house who, finding other countries without question raising barriers against the products of this country, would say that this country should be an example to all Christendom-take down our tariff barriers and let there be dumped into our markets that which is produced abroad. I do not believe it. But that is what it means.


An hon. MEMBER:: Oh, no.


Richard Bedford Bennett: Just that and nothing
else.


Some hon. MEMBERS:: No.


Richard Bedford Bennett: Hon. gentlemen opposite can shake their heads about it for a week, it will not change the fact that that was the condition that confronted this country. Let me give an illustration. Complaint has been made that we have by orders in council protected this country from that form of economic loss. It is true. Complaint has been made that there were changes in these orders in council from time to time. That is true. It had to be true, because the price at which the foreigner would sell his goods in these markets was anything he could get
The Budget-Mr. Bennett

as long as it was gold. That is the real position. I mentioned the other day that felt hats were brought in from a certain country and offered here at thirty cents apiece- $3.60 a dozen. I will not go into the details of these matters; the hon. Minister of National Revenue (Mr. Ryckman) did so yesterday. Now, are we to let that continue or not?


An hon. MEMBER:: We need hats.


Richard Bedford Bennett: Certainly; and we make
them at home.


Robert James Manion: We need something under them, too.


Richard Bedford Bennett: Is that to continue or
not? Reference has been made to the fact that we changed the value of the pound sterling for duty purposes. Let us look at what we did do. The London Times said we were within our rights in doing what we did. Why? Parliament placed a duty upon imports from Great Britain based on the value of the pound being $4.86. A twenty-five per cent duty on that meant $1.21-we will say $1.22 for the sake of argument. When the pound fell to $3.60 that meant 90 cents duty. Parliament having given a protection of $1.22, had authorized this government by a section in the statute to protect the country when that fell to 90 cents. And we did it. We will do it again to-morrow if necessary. What would have happened if we had not done it? That is all you have to ask yourselves.


An hon. MEMBER:: What would have
happened?


Richard Bedford Bennett: Every industry in this
country engaged in that particular line of activity would have been snuffed out of business unless that action had been taken.


Some hon. MEMBERS:: Oh no.


An hon. MEMBER:: Utter rot.


An hon. MEMBER:: You don't believe
that.


Richard Bedford Bennett: I not only believe it; I
know it, I have seen the cost figures.


An hon. MEMBER:: Nonsense.


Richard Bedford Bennett: Of course there are
within the constituencies of hon. gentlemen opposite industries that will give you the day and the date with respect to it, and the figures as well.


An hon. MEMBER:: Nonsense.


Some hon. MEMBERS:: Order.


Mr. BRADETTE:: The right hon. Prime
Minister knows that many industries are being closed on account of the tariff policies of the present government.


Richard Bedford Bennett: Why, the hon. member
surely with his recently acquired knowledge knows better than that. I mentioned the pound sterling. The same thing happened with respect to other matters as well. Where-ever it was necessary for the purpose of protecting-I use the word deliberately-the industrial life of this country that has been built up during all these years from being destroyed by the dumping upon our markets of the products of any country at any price they could get, we took the proper steps to that end. And what is more, I believe that any government occupying our position would have done the same. Let me go a step further. Do you suppose Hon. Walter Runciman took that step lightly? Do you suppose that the government in which you have as strong free traders as he and Mr. Samuel took that step lightly? Why did they do it? They did it because every other country in the world had protected its industrial life from destruction, and they said, "The time has come for England to do the same."


Edward James Young: Did Mr. Samuel say that?


Richard Bedford Bennett: Mr. Samuel, I said, was
in the government that did it.


Edward James Young: Did he approve?


Richard Bedford Bennett: He did not approve of
the tariff, but he approved the prohibition against importations; he made no protest against it. There is the story. Every country in the world without exception, Mr. Speaker, occupies that position. England was the last; England now is in that position. England has placed a tariff upon her statute books.


William Lyon Mackenzie King: Not against the dominions.


Richard Bedford Bennett: I am coming to the Imperial conference-yes, against the dominions in some cases. She has placed a statute on her books containing those provisions to lessen imports.
Now, may I quote an eminent authority as to the reason why that has been done. It is rather worth reading because he makes it perfectly clear as to the reason-that there is no other method by which it could be done except this method which I have mentioned. I propose to read these words to the house because they are the considered opinion of a very eminent authority, and I do not believe

The Budget-Mr. Bennett
the position can be put any more clearly than it is put by this gentleman. When he says there is no other method, it seems to me it must be clear that he would not say so lightly, because if there is any other method it would at least have been known to all the people in the country. I quote:
Unhappily, nearly all the consequences of this crisis, threatening one country after the other with the dangers that its currency would be forced off gold, or that it would default on its foreign obligations, or both, have been to deepen the economic depression. This is true both while countries are still striving to keep their currencies on gold and when they have ceased to do so. When the strain of an adverse balance is draining the gold reserves, and when new credits cannot be obtained, the situation can be relieved only by a change in the balance of trade; that is, by a reduction of imports and an increase of exports. .The first is attempted by new tariffs and prohibitions which reduce the world market and therefore cause a fall of prices, and evoke retaliatory measures which continue the same process. The second, an increase of exports, can be successfully achieved only-if at all and that with great difficulty-by a desperate selling on any terms, which again forces down world prices and again provokes new tariffs in other countries. These results are illustrated in the course of the creation of Germany's export surplus in 1930-31; a vivid picture of the reactions on neighbouring states -was given by the Swiss delegate at Geneva in September.	...
Yet, disastrous as the general result is, it is extremely difficult to see what other course any single country can adopt in the emergency. We find, for example, even the League of Nations' Financial Committee, which in 1924 had in striking terms advised Hungary to adopt a more liberal trade policy, counselling her in 1931 to restrict her imports in order to ease the strain on her currency resulting from large annual foreign obligations with no corresponding exports surplus.
In addition you will find these words in another part of the same article:
The only way in which the balance could have been adjusted without this result was that countries with a positive balance and a gold surplus should have encouraged imports by a reduction of tariffs and a monetary policy designed to increase their prices. But the first effect of this, however salutary to the world position as a whole and in the end to the creditor countries themselves, would have been to injure home production already suffering from the depression; and this action was not taken. Meantime the process continues. Some countries have declared "moratoria" of their foreign obligations, others are likely to do so; while in yet others a similar declaration will be avoided only because the creditors, acting together, prefer not to claim what would be refused if they did and thus save some remnant of their debtors' credit.
And again these words:
In some way or another the gap in the balance of payments needs to be bridged. But it must certainly be narrowed before it is bridged. Debtors' obligations must be reduced:
and, if possible, their real burden must be lightened by an increase in gold prices. The balance of trade must be changed; debtor countries' exports must, if possible, be increased, and their imports must be reduced (as they are being); creditor countries, on the other hand, should import more and must lose exports (as they are doing). The much narrowed gap, must then be bridged. This can be only to a small extent by further gold movements; for the rest, it must be by new foreign lending. Or perhaps it would be more exact to say that, to the extent to which new lending is not forthcoming, the gap must be narrowed by a change in the balance of trade till it can be bridged.
I commend these next words to this house: There is no other method.
And the word "no" is in italics.
An unbridged gap means, and can only mean, failure of the debtor to pay. And failure of one debtor drives other debtor countries (and creditor countries too, if their assets are frozen and their obligations immediate) along the same path. So long as this process continues we shall be in >an ever widening circle of disaster.
I commend those words to this house.


William Lyon Mackenzie King: Who is the
authority?


Richard Bedford Bennett: Sir Arthur Salter, who ranks as one of the foremost authorities in the world at the moment, having spent ten years with the League of Nations as economic adviser. Sir Arthur Salter says there is no other way; that way we commenced to follow in 1930, and have pursued since.
One word with respect to tariffs. I have said in this chamber so frequently that it must be -within the knowledge of every hon. member that I only look upon tariffs themselves as being the instrument that lies at our hand for the purpose of enabling us to accomplish the end here indicated. Whether it is a high or a low tariff is not the question. Is it a tariff sufficient to enable us to accomplish the end we have in mind? That end is the preservation of the credit and the solvency of your country and mine.
I have referred to these matters for the purpose of indicating that notwithstanding the attacks that have been made and the suggestions that we have gone at this in a haphazard way, it has been a well-considered plan which, so far as I am concerned, was in my mind before I assumed the responsibilities of office. It is a plan that, so far as I am concerned and while those conditions obtain, will be the guiding principle in any policy that we may place upon our statute books. In other words, after sixty-five years of effort, now with lower wage levels, with lower living standards, and with a desire on the part of exporting countries to receive gold at any
The Budget-Mr. Bennett

price, we cannot afford to say, "Here is our market; take it." We cannot do that, and we will not. What is more, I am willing to submit to the people of this country whether, in an emergency and a crisis such as this, we should not have recourse to every lawful means that lies within our power for the purpose of effectuating the solvency and the credit of our country.


William Lyon Mackenzie King: May I ask one question? In that connection does my right hon. friend recognize-


Some hon. MEMBERS:: Sit down.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: I am trying to follow the right hon. gentleman, I hope with due deference. What I wish to ask the Prime Minister is this: In connection with what he was stating a moment ago, does he recognize any distinction to be made between a tariff that is protective and one that is prohibitive, for the purposes he mentions?


Richard Bedford Bennett: Certainly. As pointed out in the extract from which I have read, it may well become highly desirable that it should be prohibitive. It becomes of the utmost importance, because otherwise you only accentuate the evil you are endeavouring to cure. That is the reason it is done, and that gives me opportunity to make some reference to what the right hon. gentleman quoted this afternoon from the address of the president of the Robert Simpson Company, with regard to his inability to import certain goods into this country from continental Europe, except under tariffs that he thinks are prohibitive. The answer to that may be given in one word: p-r-o-f-i-t-s. That is the answer, and no one knows it better than the gentleman who made the statement. When you find, as Mr. Burton was quoted as having said this afternoon, that he wished to get goods from continental Europe at 30 cents on the dollar, paying a normal tariff, you find that he would thereby place in an intolerable position every man or woman in this country who is endeavouring to maintain the economic life of Canada.


William Lyon Mackenzie King: I do not wish to interrupt my right hon. friend,-


Some hon. MEMBERS:: Sit down.


William Lyon Mackenzie King: I hope this will not be regarded as an interruption; I have asked the Prime Minister for permission.


Some hon. MEMBERS:: Sit down.


Pierre Édouard Blondin: If the right hon. Prime Minister wishes to permit an interruption he has a perfect right to do so, and I would ask hon. gentlemen on both sides to leave the debate in the hands of those conducting it.


Richard Bedford Bennett: If the right hon. gentleman wishes to ask a question, I am glad to permit him to do so.


William Lyon Mackenzie King: The point is this: Mr. Burton is not here to speak for himself, and his name has been brought into the discussion-


Richard Bedford Bennett: By the right hon. gentleman.


William Lyon Mackenzie King: -this evening by the Prime Minister with relation to his objection to the duties. My understanding is that the exception taken by Mr. Burton was to the changes made in valuations on orders that had been previously placed, not with regard to orders placed after changes had been made in the tariff.


Richard Bedford Bennett: I was referring to what
was read this afternoon by the right hon. gentleman. He brought Mr. Burton's name into it and read his address to the company's shareholders. He endeavoured to impress upon this country through that statement that Mr. Burton found that business was being circumscribed by reason of the action we took. My response is this: Profits undoubtedly were restricted, and because we denied to him the right to bring from Czechoslovakia and central Europe the goods he mentions at 30 cents on the dollar, and indicated that we do not propose to have our balances destroyed and our country made the dumping place for these products, we are attacked by the leader of the opposition.
Perhaps this would be a fitting place to refer to the statement made as to the favourable balance of trade so far as Great Britain is concerned. I wonder if this house realizes that instead of there being a favourable balance of trade with Great Britain, we have just the opposite. The visible balance is favourable, but we owe large sums of money to Great Britain, estimated by Professor Taylor of McMaster university to be 8148,000,000. We must have an increasing visible balance in order to overcome the invisible balance which is against us. In other words, we owe millions and rpillions of dollars for interest on money borrowed, and that has to be paid; we owe for our public debt, and that has to be paid; we owe for shipping and services, and they have to be paid-we have to sell

The Budget-Mr. Bennett
less than is bought from us in order to overtake and adjust these balances. The old rule, simply stated, is this: Every lending country should have more imports than exports and every borrowing country should ship out more than they buy. Canada, being a borrowing country, should be in the latter position; our great neighbour to the south, being now a lending country, should be in a different position. But she is not, and that is one of the great factors in the dislocation of world commerce. That fact is susceptible to exact proof. The United States loaned many millions of dollars to South America, the United States suddenly became the world's lender without having the great previous experience which belonged to London, and the result was that in a few years she had loaned as much money as England had in half a century or more. All this has brought disastrous results. These things are learned slowly; the mechanics of them do not come easily, and the result was, when the United States maintained high tariffs in order that she might have greater exports than imports although she was a lending country, that the loans turned out to be bad. That is the answer with respect to that.
The situation being as it is, we have taken the steps to which I have referred. I shall not insist on the word "tariffs"; so far as we are concerned you can call them anything you like; I care not what you call them as long as they are instruments in our hands to enable us to accomplish the end I have indicated. That is all there is to it so far as we are concerned. A complaint is made that our tariff is very high, that we pass orders in council to fix values for duty purposes which make it very difficult for the merchant to carry on his business. I have received one letter which indicates a willingness to make a sacrifice. A communication was received, not addressed to me personally but to another, in which a gentleman says: Unfortunately I must see certain sacrifices happen to my own enterprise, but Mr. Bennett is right, and this must be done.


An hon. MEMBER:: Always right.


Richard Bedford Bennett: No. It must be done and we have done it. I am not unmindful of the criticism that may be urged because there have been changes, but how' can these conditions otherwise be dealt with?


An hon. MEMBER:: Try an embargo.


Richard Bedford Bennett: The position is so simple that I believe it commends itself to every hon. member in this house. When you find
an evil and have the means to remedy it, you must remedy it or you are recreant in your duty to this country. Believing as we did that this method afforded a remedy for an admitted evil-I say it is an evil-we took the remedy at our hands to overcome it.
The adverse balance of trade had reached
8103,000,000 when hon. gentlemen opposite left office, and that adverse balance had been changed from a favourable balance of $120,000,000 prevailing only the year before. We did not come into power until the first of August, and the collections of duties for the first six months of the year were substantially the same as for the second six months, indicating that so far as tariff changes were concerned, the effect upon the duties had not been very marked.
I come now to another point mentioned this afternoon by the right hon. gentleman, and I deal with it now because it seems to me to be a convenient place to do so. He said: Look at the way trade has fallen. The League of Nations' figures show that world trade _ has fallen of by one-half, but notwithstanding that fact Canada has moved up to fifth place among the nations of the world. But allowance must be made for the change in values. I wonder if there is any realization in this country at the present time of what these changes in values mean? I looked up some of them the other day just because I desired to be informed, and I found that during the last few years values had so changed that while Canada's exports were substantially the same, the values placed upon them were, in some instances, only 60 per cent of what they had been, and in one case, only 50 per cent. That is a matter of considerable importance to this country at this time. It is pointed out also that our customs revenues have fallen off greatly during the past year; that also is true, but I wonder if hon. gentlemen have taken the trouble to observe that in one item alone, spirituous liquors, there has been a decrease of S6,000,000. If hon. gentlemen had taken the trouble to look up these facts they would have found that the duty paid on this commodity dropped from $20,000,000 in 1931 to $14,000,000 in 1932. For the twelve months ended March 31, 1930, we collected $25,000,000; in the next year we collected $20,000,000 and last year only $14,000,000, and the tariff was not changed. The revenue on that one commodity decreased $6,000,000, which is a very good illustration of the contraction in world trade. The figures of the League of Nations, as I have said, show that the international trade has decreased by one-half.
The Budget-Mr. Bennett


Mr. McINTOSH:: Ours has dropped sixty per cent.


Richard Bedford Bennett: Our what?


Cameron Ross McIntosh: Our trade.


Richard Bedford Bennett: Our trade, as I shall presently show, consisted practically of sales of raw materials or partly fabricated materials, such as lead, copper, zinc, wheat and pulp and paper. While there has been a diminution during the last twelve months of the quantities sold, nevertheless the values represent only about sixty per cent of the figure per unit in preceding years.
Let me go a step further. In the case of agricultural products, we were selling a few pounds of butter-we are now selling large quantities of butter. But the price is a world price that is fixed in London so far as we are concerned.


Mr. VALLANCE:: It was not called that at the last election.


Richard Bedford Bennett: Yes, it was. The hon. 'gentleman himself may not have put it in that way.


John Vallance: At the last election the right hon. gentleman did not put it in that way.


Richard Bedford Bennett: I did say this, that the average-


John Vallance: Be honest, now.


Richard Bedford Bennett: I would ask the hon.
gentleman to take that back. The leader of the opposition said he would not permit any interruptions. I shall not permit an hon. member to say: "Be honest." I ask the hon. member to withdraw that.


John Vallance: All I wish to say is that the right hon. gentleman-


Some hon. MEMBERS:: Withdraw.


John Vallance: -be honest. In the last election-


Some hon. MEMBERS:: Be a man.


Richard Bedford Bennett: I insist that the hon. gentleman withdraw the term "Be honest."


John Vallance: The statements made by those who are sitting behind the Prime Minister to-day-[DOT]


Some hon. MEMBERS:: Order.


Richard Bedford Bennett: That is not the question.


John Vallance: There are members from Saskatchewan and the other western provinces 
who are sitting to-night behind the Prime Minister because of statements he made during the last election. If he says the statements he made are not true, I withdraw the remark.


Richard Bedford Bennett: I still insist that the hon. member withdraw.


John Vallance: If the Prime Minister says the statements he and his followers made are untrue, I withdraw.


Pierre Édouard Blondin: This afternoon, when the leader of the opposition was speaking, on a very slight interruption from the government side he appealed to the house for order while he was speaking. It did not become necessary at any time for the Speaker to intervene. Since the Prime Minister has begun his speech, there have been constant and disorderly interruptions from the opposition. I would ask that they kindly desist.


Richard Bedford Bennett: I was going to point out that as regards the falling prices of agricultural products, the Dow, Jones average index of industrials on January 2, 1931, was S169.84. Their index figure for April 19, 1932, on these same industrials was $58.91, or in other words a depreciation of virtually two-thirds. The Dow, Jones averages for rails during the same period was $98.63 as against $20.05 on or about April 19, 1932, or only about twenty per cent left of the values at the first of the year, 1931. The cash price of No. 1 northern wheat on January 2, 1931, was 53J cents; the cash price of No. 1 northern wheat on April 19, 1932, was 64i cents, showing an increase in value from that time of 11-| cents per bushel, or approximately twenty per cent. I mention that merely for the purpose of indicating that the depression has been world-wide and it has affected not only agricultural but other products as well.
In support of what I have Just been saying,
I have in my hand a report from the Bureau of Statistics showing that in 1929, 177,006,369 bushels of wheat were sold for $215,000,000 and that in the twelve months ending on March 31, of this year 191,315,933 bushels or about 14,000,000 bushels more brought only $115,000,000, or approximately $100,000,000 less. What has happened with respect to wheat and flour has occurred in a greater degree with respect to industrial shares and other securities in this country. Notwithstanding all that may be said, notwithstanding what the leader of the opposition said this afternoon as to the gloomy budget that was presented to the house, the fact remains that so far as we have a record, Canada occupies a

The Budget-Mr. Bennett
better position than that of any other country of the world. Although our position is one of great difficulty, nevertheless this is the situation. Exports for last March are the highest we have had this year, namely, over $41,000,-
000.	March exports of newsprint showed an increase of 580,000 hundredweight over February. It is true the price is low. March imports of raw material, including cotton, have increased by nearly 3,000,000 pounds over the figures for February last year, a gain of 22 per cent. Our exports to Great Britain show remarkable increases in some directions over March of 1931, as follows: fruits from $99,000 to $282,000; barley from $13,000 to $111,000; sugar from $5,000 to $9,000, whiskey from nil to $1,000; cheese from $44,000 to SS6.000; furs from $708,000 to $742,000, unmanufactured leather from $143,000 to $172,000; meats from $143,000 to $358,000; fibres and textile products from $77,000 to $108,000; cotton from $9,000 to $35,000 and so on.
Prices of silver have risen and we have increased our exports of that commodity. Our export of nickel has increased. The production of copper has increased from 19,675,016 pounds in January to 22,428,571 pounds in February; blister capper from 15,971,151 pounds in January to 17,376,689 pounds in February, and lead from 19,048,424 pounds in February, 1931, to 20,154,613 pounds in February, 1932.
We have made corresponding increases in other exports. That indicates only one thing, not that we have yet entered upon that prosperity which is our due, but that we are showing signs of recovery from world conditions and that those signs are even more marked in this country than they are in most countries to which we could refer. The significance of this is found in an article in one of the leading western papers in which three or four stocks were taken and the price lists given showed that they had shrunk even more than had other commodities, if you will, during the same period. I do not propose to say more on that phase of the discussion that has taken place in the house. I have endeavoured to indicate why the actions taken have been taken. They have not been taken by accident; they have been taken deliberately; they have been taken not for the purpose, as has been suggested, of showing how high a tariff may be made, but with one design, and that I have already indicated.
The only other important point to which I think I might direct attention is the observation made by the hon. member for Shel-burne-Yarmouth as to the sale of our conversion securities. I think it is unfair that that matter should remain upon the record without some reference being made to it. He made the statement that the sale of those securities at the high rate that prevailed when the national service loan was carried out this fall was at too high a rate and it was very hard upon those who accepted conversion securities a year ago. A year ago the hon. gentleman made a speech and this is what he said:
It is not a remarkable financing operation, then, for the people of this country to he induced to take the premier securities of this dominion at 4i per cent. We are glad that it has been successful, but I wish to say in all frankness that in my opinion and judging by other public financing the rate which was paid and the terms on which the loan was made were exceedingly generous, if not high, so far as those who got those bonds are concerned.
So that the leading financial critic of the opposition thought the four and a half per cent conversion rate was somewhat too high. The matter is very simple: four and a half per cent for long-term securities is regarded as a reasonable rate and was so regarded. The people made the conversion, the exchange because they believed it was a sound business thing to do. Just as in other countries the same conditions brought about the same results; if they were generous in their response it was because of their courage and faith in their own country. Now we are told, because their securities have shrunk in value as compared with present day values, the government has been guilty of bad faith, because the same hon. member for Shelburne-Yarmouth said:
I think the people have a right to complain of this financing and to say that perhaps too much credit is not due to the Prime Minister in connection therewith. My hon. friends may applaud if they wish but I submit that it would have been .only justice to the people of Canada had the Minister of Finance paid to them the tribute which was due and acknowledged the part which they took when they turned in their bonds for the conversion loan. These people accepted a loss and that loss has continued to grow as the months go on. I know quite well the difference between the prices of long term bonds and short term bonds, and I realize that the national service loan and the conversion loan were two entirely different things. I do not think the right hon. minister can gve too much credit to the investors of Canada for their having put through the conversion loan.
We have given them credit, Mr. Speaker, for so doing; for it of course was the proper thing, and when you find that United States securities have fallen on the market by ten points I think it will be admitted that the maintenance of prices in this country has
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been exceedingly creditable to the people themselves.
But I wonder if the hon. member for Shel-burne-Yarmouth has forgotten that a conversion loan was made by the previous administration, I think in 1922, when $114,000,000 was converted into $29,000,000 maturing in 1927 and $85,000,000 maturing in 1932, a part of which we converted and. have taken care of. The government of that day gave 5J per cent bonds in exchange, and a month's interest as well. I wonder if the hon. member had overlooked that fact. Having converted the 51 bonds into 41 bonds, we believed we had done good business for this country- and more, that we had established a market for long term securities that would be profitable to the investor. Due to the world conditions to which I have referred, our securities have depreciated in value like those of all other countries, but the rise in our securities will, I believe, if I am any judge from what is taking place at the present moment, be equal to that of any other country in the world.
When the hon. gentleman referred to the fact that our revenues have fallen far short of our expectations, he was good enough to note that I prefaced what I said on that occasion with the words "if the present rate of business was maintained." I have pointed out clearly that there has been a shrinkage in business with the result that the revenues anticipated have not been received, and I gave one instance not very long ago in which $6,000,000 less has been received from duties on intoxicating liquors alone, without any change in the tariff at all. That seems to be about the only matter to which I desire to refer in the hon. gentleman's lengthy speech. The Minister of National Revenue dealt yesterday with the hon. gentleman's observations with respect to the increase in duties by order in council through the fixing of values, and I have already indicated clearly to the house the reason why that action was taken.
The amendment that was moved by my hon. friends opposite and to my right involves the consideration of another matter as well. I have very little to add to what was said in that respect this afternoon by the right hon. leader of the opposition. But I would like to read these words from the Macmillan report, because when it is suggested that we should cut our bonds in two, that is that the man who had S200 should have only $100, I feel quite certain that no such radical thought as that implies could have been in the mind of the 
hon. gentleman. About $150,000,000 of these securities change hands annually through the Department of Finance. They are the recognized and standard security of this country, and to say that this country is to repudiate one-half of its obligations, part of which are payable in New York, in gold, part in Canada, in gold, and the balance in our currency, would be to create a condition which is almost unthinkable. I quote these words from Lord Macmillan's report, and if ever words were applicable to the subamendment they are to be found in the language here employed :
It is no doubt true that an essential attribute of a sovereign state is a power at any time to alter the value of its currency for any reasons deemed to be in the national interest, and that legally, therefore, there is nothing to prevent the British government and parliament from taking such a step. The same may be said of a measure writing down all debts, including those owing by the state itself, by a prescribed percentage-an expedient which would in fact over a considerable field have precisely the same effect. But, while all things may be lawful, all things are not expedient, and in our opinion the devaluation by any government of a currency standing at its par value suddenly and without notice fas must be the case to prevent foreign creditors removing their property) is emphatically one of those things which are not expedient. International trade, commerce and finance are based on confidence. One of the foundation stones on which that confidence reposes is the general belief that all countries will seek to maintain so far as lies in their power the value of their national currency as it has been fixed by law, and will only give legal recognition to its depreciation when that depreciation has already come about de facto. It has frequently been the case-we have numerous examples of recent years-that either through the misfortunes of war or mistakes of policy or the collapse of prices, currencies have fallen so far below par that their restoration .would involve either great social injustices or national efforts and sacrifices for which no adequate compensation can be expected. The view may be held that our own case in 1925 was of this character. The British currency has been depreciated for some years. It was obvious to the whole world that it was an open question whether its restoration to par was in the national interest, and there is no doubt in our minds as to our absolute freedom at that time to fix it, if it suited us, at a lower par value corresponding to the then existing exchange. But it would be to adopt an entirely new principle, and one which would undoubtedly be an immense shock to the international financial world, if the government of the greatest creditor nation were deliberately and by an act of positive policy to announce one morning that it had reduced by law the value of its currency from the par at which it was standing to some lower value.
I commend that to my hon. friend (Mr. Gardiner), and I am sure that he will realize that what would be true of a country such as

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Great Britain would be doubly true - with respect to a new country like Canada, which invites capital to its shores and gives it the assurance, so far as an implication is concerned, that in this country the investment of capital will be protected and the contractual obligations of the country to pay, whether in gold or otherwise, observed to the last farthing. On that ground I desire to point out to the hon. gentleman that the amendment proposed involves conditions and involves results, by implication as well as directly, which would be ruinous alike to the credit and to the future development of this country.
There is only one other observation that I desire to make with respect to the remarks of the hon. gentleman, and that touches upon his effort to make it appear that the changes in the income taxation have been what he is pleased to call in favour of the rich men. Let us look at that. The correct way to put it is this: A man with an income of $4,000 a year will now pay 80 cents on every S100. It is true that the taxation begins at a lower level than it did before. The man with an income of $10,000 will pay $3.54 on every $100; the man with an income of $20,000 will pay $8.65 on every $100; the man with an income of $50,000 will pay $17.92 on every $100; the man with an income of $100,000 will pay $25.25 on every $100; and the man with an income of $1,000,000 will pay $47.66 on every $100. To say that the man with the $4,000 income has his tax increased one hundred per cent is not putting it fairly. What happens is that by reason of the reduction of the exemption the man with the $4,000 income will pay 80 cents on every $100. It is not fair to put it on a percentage basis. If you increase the tax from one cent to two cents you are increasing it by one hundred per cent, but to put it in that way does not clearly indicate what the actual increase is. In this case I submit that the hon. gentleman has not stated the matter fairly so far as the result is concerned.
There was one striking thing this afternoon, and during the last few days, which must have been interesting to the members of the house. It has been suggested that in these days of distrust and suspicion and unrest we well might have introduced in this country what the right hon. gentleman mentioned as a labour administration. When I saw the novel sight the other day of the right hon. gentleman moving down to the right for the purpose of hearing more accurately the observations of the hon. member for Winnipeg North Centre (Mr. Woodsworth); when I saw the hon. member for Vancouver Centre (Mr. Mackenzie) coming down to the front and moving down to the right that he might not escape a single utterance of that magic eloquence; and when I saw the leader of the Liberal party in Ontario, the hon. member for West Elgin (Mr. Hepburn), moving down to the front to catch those pearly words of wisdom, I could not help but think that they were saying to the hon. member for Winnipeg North Centre, by their actions, if not in words: Remember me when thou comest into thy kingdom. I am sure the hon. member for Winnipeg North Centre was flattered and gratified at this apparent attention to his utterances. But I realize that after all there must be a reason behind this, and so I looked into the matter with some degree of care, I find that during the last few weeks the great Liberal party has suddenly blossomed forth with a new organizer. Mr. Vincent Massey, at one time minister extraordinary and envoy plenipotentiary to the United States of America, has now become collector extraordinary and minister in ordinary of the Liberal party. I do not make that statement in any sense unthinkingly, because if any hon. member is interested and will turn to page 4383 of Hansard of last year he will find an explanation, not in my language but in that of the leader of the opposition himself, describing the qualities of the organizer of a party. These qualities are not in his words alone, but he has quoted from the words of Mr. J. A. Spender in his life of Sir Robert Hudson, who was so many years organizer of the Liberal party in Great Britain. Speaking of Senator Haydon, who was organizer of the Liberal party in those days, the right hon. gentleman said:
And may I say that if I were asked to describe the relationship between us, as I have believed it to be all the time, I would do so in the words which are used here by Mr. Spender in reference to the one who held the office of chief organizer of the Liberal party in Britain. So far as Senator Haydon's relationship and my own are concerned-
And then the following words are quoted: -life behind the scenes was one of cheerful and loyal comradeship between men who honestly believed in the policy and principles of their party, and were convinced that in serving it they were serving their country.
And when one recalls the somewhat acute criticisms of the new organizer, which were made within the memory of those within this house, one wonders how that greater comradeship will manifest itself in years to come. Further he says:
What else is said in this volume by way of appreciation of this man who was chief organizer of his party?
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Then the following is quoted:
The confidence that Hudson at once inspired in men, even rich men, wary of their pockets, was extraordinary. Rich men would give him thousands when they would not have given Prime Ministers a penny piece, and yet Hudson had nothing to offer them in return save his good-will, for the federation possessed neither patronage nor power and never attempted, or would have been allowed, to interfere with the arrangements of the whips' room.
That ends the quotation, and the right hon. gentleman continues:
That is the position in England. The chief organizer of the party had to do with the obtaining of party funds, and he obtained them from different persons.
So we have now described the qualifications of the new organizer, because I think there has been no change in the attitude of mind of the right hon. gentleman of the qualities which are necessary in a great organizer. In the words I have quoted, Mr. Spender properly described Sir Robert Hudson as having the ability to get thousands of dollars from rich men when prime ministers would not get a penny. It is fitting that one possessed of such wealth should find himself in that position, because it will be exceedingly interesting to the farmers in the west to learn the sources of this ancestral fund.
Let us proceed a step farther. Recently the hon. gentleman, Mr. Massey, made a trip across Canada. Ostensibly his trip was made for the purpose of addressing Canadian clubs. He spoke to them of conditions in Manchuria, the situation in Shanghai, and the differences between Japan and China. In the evening he gathered! together a faithful few and unfolded to them the plans for the future.


Mr. STEWART (Edmonton):: Very good.


Richard Bedford Bennett: When I see my hon. friend from Edmonton laughing so heartily I know he has had some report of the meeting in Edmonton. And so, they were gathered together in the evening for the purpose of indicating Just what should be done to dislodge the present administration. It was felt that a direct attack was hardly the most desirable, but the usual oblique attack was the one most to be desired. So plans for the future were reduced to writing, and as a result I hold in my hand a typewritten copy Which was left by Mr. Massey with those whom he had called into conference in western Canada. WThen I am reading it I am sure my hon. friends from Winnipeg North Centre (Mr. Woodsworth) and East Hamilton (Mr. Mitchell) will realize that in it they find a great tribute to their worth. It is not called, "The Policy of the Liberal party."
[Mr. Bennett.)


John Vallance: Is this from Calgary?


Richard Bedford Bennett: He stopped at Calgary- in fact, he had six people with him there. That was in the evening, after the meeting, of course. He had a magnificent gathering at the Canadian club. *


John Vallance: Sixty thousand at the next election.


Richard Bedford Bennett: I would not be so positive. Then, proceeding to Fort William they gathered in a few of the faithful and no one of them took exception and said, "I hardly find it possible to adopt these principles, because they are at variance with my idea of things." He was grateful enough, so it is reported. He himself said: "While there is a good deal of unrest in the world, you can get more votes and more power this way than the other." The document I have before me is not entitled, "The Policy of the Liberal party," but at the head I find the words: "The League for Social Reconstruction." I shall read it:
The league for social reconstruction is an association of men and women who are working for the establishment in Canada of a social order in which the basic principle regulating production, distribution and service will be the common good rather than private profit.
The present capitalist system has shown itself unjust and inhuman, economically wasteful, and a standing threat to peace and democratic government. Over the whole world it has led to a struggle for raw materials and markets and to a consequent international competition in armaments which were among the main causes of the last great war and which constantly threaten to bring on new wars. In the advanced industrial countries it has led to the concentration of wealth in the hands of a small irresponsible minority of bankers and industrialists, whose economic power constantly threatens to nullify our political democracy.
I do not wonder my hon. friend from West Edmonton finds it difficult to maintain his usual sober appearance. It continues:
The result in Canada is a society in which the interest of farmers and of wage and salaried workers

He gets them all.
-the great majority of the population-are habitually sacrificed to those of this small minority. Despite our abundant natural resources the mass of the people have not been freed from poverty and insecurity. Unregulated competitive production condemns them to alternate periods of feverish prosperity, in which the main benefits go to speculators and profiteers, and of catastrophic depression, in which the common man's normal state of insecurity and hardship is accentuated.
"We are convinced that these evils are inherent in any system in which private profit is the main stimulus to economic effort. We

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therefore look to the establishment in Canada of a new social order which will substitute a planned and socialized economy for the existing chaotic individualism and which, by achieving an approximate economic equality among all men in place of the present glaring inequalities, will eliminate the domination of one class by another.


Charles A. Stewart: Is the Prime Minister reading from statements by H. W. Wood of Calgary?


Richard Bedford Bennett: No. This is by Mr. Massey, the new organizer of the Liberal party. This is the parlour socialism of that party. But wait until you hear the rest of it:
As essential first steps towards the realization of this new order we advocate:
(1)	Public ownership and operation of the public utilities connected with transportation, communications, and electric power, and of such other industries as are already approaching conditions of monopolistic control.
(2)	Nationalization of banks and other financial institutions with a view to the regulation of all credit and investment operations.
(3)	The further development of agricultural cooperative institutions for the production and merchandising of agricultural products.
(4)	Social legislation to secure to the worker adequate income and leisure, freedom of association, insurance against illness, accident, old age, and unemployment, and an effective voice in the management of his industry.
(5)	Publicly organized health, hospital, and medical services.
(6)	A taxation policy emphasizing steeply graduated income and inheritance taxes.
I am sure the hon. gentleman from Acadia has heard that.
(7)	The creation of a national planning commission.
(8)	The vesting in Canada of the power to amend and interpret the Canadian constitution so as to give the federal government power to control the national economic development.
I commend that to the members from Quebec. There go your provincial rights, there go your provincial constitution.


Mr. CASGRAIN:: Not at all.
Mr, BENNETT:
(9)	A foreign policy designed to secure international cooperation in regulating trade, industry and finance, and to promote disarmament and world peace.
The league will work for the realization of its ideal by organizing groups to study and report on particular problems, and by issuing to the public in the form of pamphlets, articles, lectures, etc.,

I hope the difficulty will not be so great- as indicated by the right hon. gentleman last year-in getting money to print them.
-the most accurate information obtainable about the nation's affairs in order to create an informed public opinion. It will support
any political party in so far as its program furthers the above principles; and will foster cooperation among all groups and individuals who desire in Canada the kind of social order at which the league aims.
This is not the production of Mr. H. W. Wood, as the hon. member for West Edmonton (Mr. Stewart) said; this is a copy of the document left by the new organizer of the Liberal party.


John Vallance: Who is he?


Some hon. MEMBERS:: Sit down.


Richard Bedford Bennett: Mr. Vincent Massey. I
commend this new declaration to the consideration of the house because it indicates that change for which we have all been waiting, namely, an effort to take advantage of what may be described as the unrest and the distrust incident to the present economic condition and to capitalize it for party advantage through the oblique attack of the establishment of social reconstruction.


Mr. WOODSWORTH:: Will the Prime Minister permit one short statement ? The document which he has read was published in the April issue of the Canadian Forum, and has nothing whatsoever to do with Mr. Massey; it is issued by an organization which is extending across Canada.


Richard Bedford Bennett: All I can say is that the hon. gentleman might speak for himself. This was left by Mr. Massey at one of our western cities.


Some hon. MEMBERS:: Oh, oh.


William Lyon Mackenzie King: May I ask the Prime Minister a question?


Richard Bedford Bennett: Surely.


William Lyon Mackenzie King: What is the Prime Minister's authority for saying Mr. Massey is the new organizer of the Liberal
party?


Richard Bedford Bennett: A current report stating that rooms had been rented in this city by him and that he was about to establish himself there as the head of the organization.


An hon. MEMBER:: About?


Richard Bedford Bennett: Yes.


William Lyon Mackenzie King: May I say to my right hon. friend that there is no thought in the world of Mr. Massey being appointed organizer of the Liberal party, nor do I think he would accept such a position. I hope Mr. Massey will accept the position of president
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of the National Liberal Association, which is quite a different position from that of organizer of any party; but he has not agreed to accept that position as yet, although I repeat, I hope he will.


Richard Bedford Bennett: If he is president of the National Liberal Association I might have known he would hardly accept a position by the name I have indicated. Part of the literature sent out by that association I had the privilege of reading to-day. From a perusal of that document you would not think this country was passing through a crisis or anything else. It is one of those rather amusing documents not intended for serious consumption; and the sudden gathering of a few of the faithful in Halifax not long since was, I presume, for the same purpose.


Mr. RALSTON:: Would the Prime Minister-


Some hon. MEMBERS:: Sit down.


James Layton Ralston: Would the Prime Minister give the house his authority for stating that this document was left by Mr. Massey in the sense of being political propaganda? Because that is the implication he endeavoured to convey.


Richard Bedford Bennett: I certainly endeavoured to leave that impression. At a gathering of a small number of people it was left with them by Mr. Massey. But as the hon. gentleman says, a document similar in terms did, I believe, appear in the Canadian Forum. You see that is the way it is done-never attack directly; do it obliquely.
I wish now to direct my attention for a few moments only to the matter that the right hon. gentleman referred to this afternoon- the Imperial conference to be held in this city this year. It is said by him to be regarded as the adjournment of the former conference. I believe it is not so regarded; at least I am so informed. It may be that the conference of 1930 was a failure. The right hon. gentleman said it has been described by someone as a tragedy.


William Lyon Mackenzie King: By the Prime Minister of Australia.


Richard Bedford Bennett: Yes, Mr. Scullin.


William Lyon Mackenzie King: And the exPrime Minister, Mr. Bruce.


Richard Bedford Bennett: Mr. Bruce was dealing with another phase altogether.


William Lyon Mackenzie King: No.


Richard Bedford Bennett: Just let me proceed.


An hon. MEMBER:: He doesn't like it.


Richard Bedford Bennett: Do not be so anxious to interrupt without being able to offer any contribution of assistance. I am always willing to be interrupted by those who have any suggestions to make that call for an answer, but the suggestions that come from the hon. gentleman who has been making them sotto voce are not calculated either to enhance the debate or to render any contribution to our knowledge. Whether or not the conference was a- failure is a matter of opinion. So far as my position in it is concerned, it seems to afford great satisfaction to a number of gentlemen opposite to endeavour to have it said that I am responsible for what they conceive to be the failure of the conference.


Some hon. MEMBERS:: Hear, hear.


Richard Bedford Bennett: Well, if they are interested in reading Hansard they will find that as long ago as 1928 I had said that if we had power my first effort would be to endeavour to call an economic conference of the British empire in this city. I went to London with a very definite idea in my mind. I gave expression to it, and I believed it would be received exactly as it was received. But I said there was a principle that had to be settled first. Those who will do me the honour of reading what I said will find clearly stated the principle that must first be settled. The electors of Great Britain settled it. As soon as they had settled it I invited the representatives of every part of the British Empire to come to this city to a conference, and the date has been fixed for the 21st day of July. They are coming, so they say. Therefore the purpose which I had in mind in 1928, which I never failed to keep before me, the one ambition that I entertained if we did come to power I hoped to see realized. In that regard may I say that I have under my hand the memorandum left by Sir Wilfrid Laurier in 1902, when he ceased to agree with his colleagues and took a definite stand with respect to Imperial preference. It is true it was not followed by action, it is true it was not followed by any considered effort to achieve it, but when I read it it will be realized that we at least have now seen accomplished that which he said should be accomplished but failed to accomplish, as did his successors in office. Let us look at it. Because of the misstatements that have 'been made from time to time, year after year, I am going to take the trouble to read this into Hansard. It has to do with the conference of 1902 beginning at page 36. The Canadian ministers handed in the following

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memorandum to explain their attitude on this question, that of preference. Listen to these words:
Memorandum by Canadian Ministers
This subject has frequently engaged the attention of the conference. At an early stage Mr. Chamberlain suggested that the question could most conveniently be considered by the representatives of each colony. . . .
They were then called colonies, not dominions.
.	.	. placing themselves in communication
with the president of the Board of Trade, Mr. Gerald Balfour, and the officials of that department. Accordingly the Canadian ministers had several protracted interviews with these gentlemen, and discussed the whole subject very fully. Opportunity was also taken to present the Canadian view to Mr. Chamberlain. Now that the conference is drawing to a close, it is desirable that the course of the discussion, and the conclusions reached by the Canadian ministers, should be outlined and placed on record.
From the beginning of the proceedings the Canadian ministers have claimed that in consideration of the substantial preference given by Canada for some years to the products of the mother country, Canadian food products should be exempted in the United Kingdom, from the duties recently imposed. Representations to this effect previously, made through the High Commissioner for Canada were supplemented by the ministers, both in writing and in the personal interviews with the imperial ministers.
Mr. Chamberlain, on behalf of the Imperial government, was unable to agree to the proposals of the Canadian ministers. He represented that the Imperial government, while highly appreciating the good feeling manifested by Canada in the granting of preferential treatment, did not think the material results to the trade of the United Kingdom were as great as the Canadian ministers claimed. He further said that the change desired by Canada would be an important departure from the established fiscal policy of the kingdom, and that if the proposals could be entertained at all. as to which he was not prepared to commit himself, it would be necessary for Canada to offer some material tariff concessions beyond those which she had already voluntarily given.
I would say that sounds like bargaining.
The Canadian ministers, therefore, submitted a memorandum on the subject of the advantages already received by Great Britain from the Canadian preferential tariff, with a view to showing that these were of much value, and entitled to weight in the consideration of the whole subject.
While urging that the benefits of the preference were such as to entitle Canada to the desired exemption from the duties on food products in the United Kingdom, the Canadian ministers stated that within certain limitations they were prepared to consider the request of Mr. Chamberlain for further concessions in return for the desired preference in the markets of the United Kingdom.
Is that bargaining or is it not?
While it was not deemed necessary to enter into questions as to the wisdom or unwisdom of the policy adopted by all governments in Canada, of raising the revenues chiefly from customs duties, the Canadian ministers pointed out that under that policy large industries had grown up which had to be considered in connection with proposed tariff changes.
I wonder what more than that was said by this government.
Large reductions of duties had been made in recent years, especially on British imports. It was feared that in some lines of importance further reductions might create a disturbance of trade which would not be conducive to the welfare of the country. But the Canadian ministers pointed out that the Canadian tariff was by no means prohibitive, that large quantities of goods were imported, and that a great proportion of these came from foreign countries. In any lines in which it appeared that the goods would be manufactured in Great Britain it might be possible to so readjust some duties as to give an additional advantage to the British manufacturer, and thus turn over to him a volume of trade which at present is held by the manufacturers of foreign countries.
Is that bargaining or is it not?
The Canadian ministers stated that if they could be assured that the Imperial government would accept the principle of preferential trade generally, and particularly grant to the food products of Canada in the United Kingdom exemption from duties now levied, or hereafter imposed, they, the Canadian ministers, would be prepared to go further into the subject and endeavour to give to the British manufacturer some increased advantage over his foreign competitors in the markets of Canada.
Is that bargaining or is it not?
Meanwhile the Canadian ministers determined to present to the conference a resolution affirming the principle of preferential trade, and the desirability of its adoption by the colonies generally, and also expressing the opinion of the prime ministers of the colonies that His Majesty's government should reciprocate by granting preferential terms to the products of the colonies in the markets of the mother country. The Canadian ministers desired to have it understood that they took this course with the strong hope and expectation that the principle of preferential trade would be more widely accepted by the colonies, and that the mother country would at an early day apply the same principle by exempting the products of the colonies from customs duties.
Listen to these words, Mr. Speaker, which constitute the mild threat about which we have heard. Perhaps in this age it was expressed more vigorously, but we gave utterance to exactly the same thoughts here contained.
If, after using every effort to bring about such a readjustment of the fiscal policy of the empire, the Canadian government should find
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that the principle of preferential trade is not acceptable to the colonies generally, or the mother country, then Canada should be free to take such action as might be deemed necessary in the presence of such conditions.
London, August 11, 1902.
I wonder what hon. gentlemen opposite will say now.


James Layton Ralston: Will my hon. friend permit me a question?


Some hon. MEMBERS:: Sit down.


James Layton Ralston: Will my right hon. friend permit me just to remind him that at that time the fiscal policy of Great Britain was the imposition of duties, and all that was being suggested by the Canadian representatives was the hope and the expectation that Great Britain would reduce its tariff as against Canada. My right hon. friend-


Richard Bedford Bennett: I have read it.


James Layton Ralston: But that is what it says.


Some hon. MEMBERS:: Order.


Richard Bedford Bennett: I think the hon. gentleman might take his seat. I do not desire to enter into a discussion with him.


James Layton Ralston: My right hon. friend
offered in exchange-


Richard Bedford Bennett: The hon. gentleman has said that the fiscal policy of Great Britain at that time imposed a duty upon corn, and that Canada desired to secure free entry for her wheat into the markets of the United Kingdom. But I have read the memorandum, and it speaks for itself. It is a bargaining memorandum, and it speaks for itself. It is a bargaining memorandum and it threatened England, saying that unless she did give a preferential tariff Canada would take such steps as might be regarded as necessary.


James Layton Ralston: It speaks of hope and expectation.


Richard Bedford Bennett: Perhaps after the hon. gentleman has read it he will understand it.


James Layton Ralston: I have read it.


Richard Bedford Bennett: That must have been a long time ago.
One more thing, Mr. Speaker. It has been suggested that this government is not making any active preparation with which to meet the conference. This government will discharge its duty to the full in that regard. If the agenda which was read, and which was made public in July of 1930, was prepared by the British government, as I believe it was, at the time it was being prepared the right hon. gentleman was Prime Minister of this country.

That is clear. All that I know of the agenda with respect to the 1930 conference was what I said I found in the despatches in the office when we took over. The agenda for this conference will be prepared, as we believe it should be, after we have had what consultation it is possible to have by cable, and if those people who are desirous of attacking any effort which they think redounds to the credit of those making it will just bide their peace and await the event, they will discover that this government is ready and prepared to deal with every problem that will be met with by that conference in a manner worthy of this dominion and of the knowledge which is possessed by those who will represent it.
I do not propose to say more in this respect. I do not propose to traverse the ground as to what shall or shall not be discussed at that conference. As to its importance, on the one hand the right hon. gentleman minimizes it, and on the other hand he magnifies it. It is one of the difficulties of the party opposite that they can see no merit in any proposal that does not originate with themselves. This party sat in opposition for long years, in good repute and ill. During that time in the country in which I live it was almost an offence to call oneself a supporter of this party, but during all that time I kept one constant beacon light before me; I had the firm belief and faith that in such a conference lies the best assurance of the development of every part of the British Empire and of my own country as well. I deny the right of any man to say that you do not promote the growth and development of the commonwealth of British nations as you promote the growth and development of that part in which you live. It has been said by reputable statesmen in Great Britain that there must be supreme confidence in our ability to develop our country and start on a new pathway of progress. We believe that this empire consists of an aggregation of units; this commonwealth of nations consists not of one but of many, and the development, the prosperity and the wealth of each makes for the advantage of the whole. To that end we have at least devoted as -much time as we have been able to find under the conditions under which we labour here. Every day brings a new problem; almost every hour brings some difficulty with which we have to deal, and if the opposition decides to take two or three weeks to discuss problems for the purpose of preventing us from being able to go about the country's business, they must accept the responsibility. We should like to be engaged in considering these problems, and the opposition must accept full responsibility for what has transpired, as they said they would.

The Budget-Mr. Neill
But, sir, in conclusion I desire only to say that we met this country at a moment of the greatest difficulty in the world's history. We met it at a time when there was evidence of improvement, but that evidence has been dissipated. We are now confronted with an even greater difficulty, the second effort, as I describe it and as Sir Arthur Salter and others describe it. We are now confronted with the second effort towards world rehabilitation, towards prosperity and towards overcoming the depression. A second effort always is more difficult than a first; when you are beaten back it takes more courage to call up your reserves of strength, vigour and determination than it does in making the first effort. But this government, these gentlemen who sit here, have earnestly and honestly endeavoured to discharge the great responsibilities which rest upon them, with an eye single to the advancement of this country. We have suffered much, we have endured much; this country's people have endured much, our population has suffered much, and those who would endeavour to turn that suffering into narrow party capital are entirely forgetful of their obligations to Canada. However, I have not lost my faith in the people of this country.


Frederick George Sanderson: The people have lost their faith in you.


Richard Bedford Bennett: If the hon. member for South Perth (Mr. Sanderson) would stand in his place to make his statements, it would be much better.
1 am willing to balance the confidence which the people of this country have in the government against the confidence they have in the opposition. I believe that they fairly and clearly appreciate and realize the burden, the difficulties and the responsibilities under which we labour. I believe nothing more clearly expresses the thought which is in the mind of every hon. member who sits to the right of the Speaker than the words of the poet laureate:
Though much is taken, much abides; and though
We are not now that strength, which in old days
Moved earth and heaven; that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.


Alan Webster Neill: Mr. Speaker-


Some hon. MEMBERS:: Question, question.


Alan Webster Neill: I hear the rabble rabbling, I hear the sounding brass and the tinkling cymbals.
I rise with not the least intention of answering in any sense the able speech of the Prime Minister (Mr. Bennett) because I realize that I am entirely not in a class which enables me to do so, more especially without preparation. But even with my mediocre knowledge and ability it seemed to me that on one or two occasions there was some rather astute skating on very thin ice. The Prime Minister made the claim that Canada was seeking to obtain and hold a favourable balance of trade. When the right hon. leader of the opposition (Mr. Mackenzie King) asked him what would happen if every nation adopted that policy and how could every nation have a favourable balance of trade, the Prime Minister evaded the situation by brushing it aside and saying he was not concerned about the other fellows, he was concerned only with Canada. That was the position taken for many years by the United States; as long as they were the principal tariff country and other countries, especially Great Britain, were free trade, they could work that game of playing both ends against the middle, but that has ceased to be any longer possible. I think it was Sir Josiah Stamp who told us the other day that you cannot make tariffs to-day for a few months or even a year or two ahead, you must look ahead for a decade or even two decades.
Following out that principle, I humbly submit that if the nations of the world go on as they are doing and build up tariff walls without considering what will happen when all nations have similar walls, there will be trouble. The result will be that in time every nation will be driven to protection, every nation will have a tariff wall around itself and will be engaged in trying to grab or steal a little trade from its neighbour or some other nation. We will be driven more and more into what I would call exotic internal trade, that is, to give it its final extreme analysis, we will find Canada growing our oranges while tropical countries grow their own wheat. The net result of this stealing and grabbing will not increase the total trade of the world by one iota. The end of all these tariffs wars, if indeed they do not end in physical war as has so often been the result in the past, will be compulsory universal free trade. Every nation will then produce those articles which it is best fitted by climatic or other conditions to produce; it will be able to sell cheap and buy cheap and each individual will have greater purchasing power, each individual will buy not only more necessities but more luxuries

The Budget

Mr. Neill

of life and in that way we will overcome two of the greatest obstacles confronting us to-day, one the lack of markets and the other, overproduction. In that way we would increase markets instead of trying to steal them from each other. I submit that is more like the ultimate solution than building up a favourable trade balance and hoping and praying that the other fellows will not have brains enough to do the same thing.
I was very much impressed by the opening remarks of the Prime Minister when he told us with almost bated breath that we were in the midst of a world crisis, how solemn, how serious the condition was, what a strain it was upon the government, what long hours it entailed and what a serious condition confronted them. Yet, sir, that impression was rather dissipated later on when I found that, in spite of this world crisis, the Prime Minister of all Canada had time to condescend or shall I say, to descend to discuss at considerable length such a petty matter as a supposed organizer of the Liberal party, a matter which surely is one entirely concerning the Liberal party and no one else. I was listening, expecting to hear him reveal next the source from which I buy my milk or to whom I sell my potatoes. There was also an attempt made, somewhat unworthy, I think, to fasten upon the supposed organizer some propaganda that had been picked up somewhere and an effort made to connect it up with the Liberal party, which was exploded by the hon. member for Winnipeg North Centre (Mr. Woodsworth), who announced it had been published months ago and was the propaganda of a society which had no connection with the Liberal party or with Mr. Massey. If those are the matters that engage us in this serious crisis, perhaps it is not so serious, or else it is not being taken in the right spirit. That is all I have the time to discuss in connection with the remarks of the right hon. gentleman.
I was going ,to remark in rising that I was refused three minutes yesterday and I shall take forty minutes to-day. I should like to make just a few remarks-and very few will suffice-to answer the observations made last night by the hon. member for Victoria, B.C. (Mr. Plunkett). The situation as regards the relief condition in British Columbia is very simple. A committee of the house was appointed to investigate it, there being seven Conservatives and four Liberals on that committee. The whole and obvious purpose of the investigation was, as I told the house, when speaking here on March 1, to whitewash
(Mr. Neill.]
the government. That was achieved in abundant measure, pressed down and running over. The whitewash was put on so thick that for a moment it almost concealed the truth and the facts. But whitewash is a powder and it needs to be mixed with some liquid. Instead of the liquid of truth, they used the slime of political exigency. Then when the air and sun of popular opinion got at it, the slime evaporated and the powder blew away and revealed the dark, damning facts as black as ever they were before.
Much comment was made regarding a gentleman called Major H. Brown, in Vancouver, who dared to be a Daniel, who dared to stand, not alone, as he has many friends, but aloof from his party friends and to say that the whole proceeding of the investigation was a farce, which, indeed, is the fact. I may say he is a very reputable citizen, .president of the board of trade and manager iof a big steamship company. This is my icomment on Major Brown:
Major Brown in saying his say, and in standing by his guns when challenged, acted the part of a good citizen. In speaking as he did, he was merely giving voice to the thoughts anil suspicions which have been turning over and over in the minds of scores of thousands of British Columbia people during the past weeks. Mr. Brown was making public opinion articulate, and in censuring him the members of the legislature merely passed a vote of censure on a very large number of their constituents.
I said that those sentiments are mine, and so they are, but I have merely adopted them from an editorial in the Vancouver Province from an extract which I have read word for word. That newspaper is taking a broad and timely stand in this matter. I am not going to say any more on the subject; I am satisfied to leave it to the people of British Columbia, each in his respective district, who, I am aware, know the facts and who, I am equally assured, will remember them.
The hon. member for Victoria dug up a couple of cases of fraud with an insinuation, or suggestion that this was quite common among the idle men. To cite the cases of two out of 30,000, 40,000, or perhaps
50,000	men is not a very conclusive argument; but why did he not tell the house of the waste of thousands and tens of thousands of dollars on the road foremen, and straw bosses, who by reason of their political affiliation were given big wages, men well fixed and comfortably off, some of them employing men at home on their farms and getting wages running from $8 to S10 a day, this meaning simply that so many more destitute men had to go without work on account of the large

The Budget-Mr. Neill
sums of which these politically appointed bosses received the benefit? Why did he not tell the house of the item to which I alluded on the orders of the day, where the British Columbia government-I almost blush to say this since I come from that province myself- announced an income tax on relief wages. Imagine a man receiving maybe three or four days' work a month being taxed on income upon those miserable dollars, collected before payment. Is this conceivable? It is hardly believable if it were not given the authority of a circular issued by the provincial deputy minister of public works. I think that statement ought to be embalmed in history as an example of supreme political stupidity, and the minister who gave instructions for that order to be issued should be embalmed also so that children could look at him in a museum and say: That is the man who performed such an act. That also will the people deal with when the time comes.
I wish to protest against the statement made by the hon. member in connection with the young people of our country and particularly of British Columbia. He was speaking about the university of that province, so I presume he was alluding to the students there. He said:
University students of to-day seem more capable and informed upon communism, atheism and companionate marriage than they are upon political economy or any national virtue. . . .
I consider that to be a gross slander, wholly unjustified, upon our young people. I challenge him to give a single instance of companionate marriage occurring among the male students and the co-eds in the University of British Columbia. My own daughter went to that university and when she came back she was not talking communism, atheism or companionate marriage, which is a euphemistic term for free love. I am satisfied there are thousands of our young people, clean living, clean thinking boys and girls, to whom that statement is equally applicable. I deplore, I deprecate the hon. member's using his privilege in the house to make such an observation as he has done. Even a carrioneating vulture keeps his own nest clean.
Let us pass from the parish politics of the hon. member for Victoria, to the bigger interests of Canada. Might I say in passing, I have no ill-will at all towards the hon. member-just pity! I am addressing myself now to the Canadian situation. We might well say: "Watchman, what of the night?" For surely we are passing through a time of political darkness in the history of this country. My deskmate, the hon. member for Labelle (Mr. Bourassa), at the beginning of the session made the statement that Canada was looking to the government to give us a lead out of our distress. I agreed with him and he and I made a compact that we would not at the beginning of the session vote want of confidence in the government, to give them an opportunity to develop their policies. The session is nearly over and we might well ask ourselves now: What have we got? We started this parliament, it will be remembered, with the echo in our ears of the grandiose pledges on which the party opposite rode into power. We are all familiar with them, and I shall repeat only one:
Find work for all who are willing to work or perish in the attempt.
These are brave words. They have a fine sound, a magnetic ring, one well calculated to appeal to and capture the imagination of the hesitating and waiting nation and they did capture it, and the Prime Minister received his mandate. But alas and alack the conditions were not fulfilled, the goods were not delivered, but the honourable author of them did not perish in the attempt. Rather he has gone on to higher and higher peaks, seeking the goal of unrestricted authority and unlimited power. But, sir, there was perishing although he did not do it. The perishing, unfortunately, was done by the people. The middle class became poor, the poor became destitute, and the destitute became starving.
What have we had in the last two years? Two years of enormous budget deficits. Two years of enormous and almost unparallelled increase in taxation, and to-day in spite of the great increase in taxation we have every reason to believe that there will probably be a further deficit next year and a further increase in taxation.
Now I come to the question of unemployment. There are two phases to that question. There was the pledge to end unemployment, and the pledge to relieve the distress caused by unemployment. We are nearing the end of the session and we have not yet seen either in the speech from the throne or since any word or suggestion of legislation calculated to end unemployment as such. As regards the relieving of distress we have had a conference lasting one day or one day and a half, a conference which the members on this side frequently advocated last year and were howled down and ridiculed every time they made the suggestion, a conference which if it had been held a year ago would have been productive of greater good and more far-reaching effects than can now be the case.
The Budget-Mr. Neill

What else have we got? We have the resolution on the order paper to-day couched in the usual somewhat vague language of resolutions indicating that a measure will be brought in authorizing the government to enter into agreements respecting relief measures with the provinces, and it talks about providing for the relief of distress and the support and maintenance of those requiring assistance. We are entitled to draw from that the conclusion which the words imply, that the only relief granted will be in the form of what is called direct relief. We are strengthened in that belief by the fact that the representatives of the province of British Columbia and one of the other provinces, when they returned home after the conference recently held, announced publicly in the press that this government had decided that there was to be no more relief work but only direct relief. It may be said that that is only conjecture. Well, it is the best that we have to go upon, and reading the language of the resolution, coupled with the statements made by the provincial representatives, and they made their statements separately, it has all the earmarks of being correct. So apparently we are committed to the pittance of a dole, in spite of the decided statements made by the Prime Minister during the election campaign when he said: I will not tolerate the dole; as long as I am Prime Minister of Canada no such system will be inaugurated. But now we are going to get the dole, and the most debasing form of the dole. It has not even the benefits that attach to the dole in Great Britain, where at least some self-respect is left to the recipients, because when they work they contribute towards the fund. But here it is straight charity, and no work. It is lowering to a man's morale and worse than anything that we have yet encountered. If I may judge the future by the past, and I think that is a reasonable thing to do, this dole will be filtered out through the channels of the provincial governments and absolutely through the political party machines.
I .come to another subject. I am beginning to fear that the members of the cabinet are not living u.p to the confidence which the people reposed in them. It is said in scripture that when the leaders lack vision the people perish. I am not speaking of the rank and file. They are all right. The people of Canada do not appreciate how generally decent and honest and hard-working and willing to do the right thing the rank and filf? are. The people only see the government and

the government's policies, but the rank and file are generally decent and honest and all right. The men on the treasury benches may be all right. I hope they are, but they are keeping some pretty strange bedfellows these days. They are worshipping strange gods. We have different kinds of gods from what there were in the old days when people worshipped idols of wood and stone, but still we have strange idols to-day which are just as inimical to the welfare of the nation. When I look over there I think I see them worshipping certain strange gods, the gods of the bankers, the gods of the big railway and transportation business, the gods of the manufacturers' association, the gods of the millionaires, and above all and permeating it all, the god of power. The blood lust for power is like a fatal fever that burns itself up with the heat that it itself engenders, until finally the victim of the lust for power, just like the victim of some drug, finds himself in the position where he calls to high heaven: "Give me power, more power; never mind at what .price, or suffering or sacrifice. Let me ride the juggernaut car of power over the prostrate bodies of the Canadian people and trample under foot the liberties which the Canadian people now enjoy." When I look over there and see the worshipping of these strange gods, I notice that there are some gods missing. I do not find there the god of the workers, the god of the unemployed, the god of the hungry. I do not find there the God of our Christian faith, the great Founder of which in His gentle precepts taught us to aid the sick and the suffering and the oppressed, and when he taught those great principles, he was not afraid of being accused of paternalism or socialism, which is the cry always put up today when we seek to alleviate the lot of people less fortunate than ourselves. All down through the ages there has never been a greater socialist depicted than the Saviour of mankind Himself.
Some days ago the hon. member for Marquette (Mr. Mullins) told us that he wanted to go back to what he called the good old times. I suppose he was alluding to thirty or forty years ago. Following that up, I suggest that these worshippers of strange gods had better go back, not forty or fifty years, but two thousand years, go back to the worshipping of idols of wood and stone. They at least were harmless; they could do no harm even if they did no good. When the British were fighting the Maoris, the native race in New Zealand, the Maoris spent a lot of time putting a taboo on a certain mountain in the

The Budget

Division
belief that the great spirits would prevent any white man trespassing there and would prevent the British soldiers pursuing them. Again, during the Ashanti expedition on the Gold Coast, the British soldiers as they marched to Kumasi, the capital, found the road on each side besprinkled with fetishes, little scraps of tinsel, little bits of coloured paper and cloth, scattered over the bushes in the belief that it would stop the oncoming of the white man. At least the exercise of these beliefs by these benighted people was harmless, but the gods worshipped by my hon. friends opposite are not harmless. They are selfish and greedy and class conscious. It it a worship that debases the good instincts of its devotees. It preys upon humanity; it preys upon those better traits that distinguish us from animals. Biblical history tells us that Aaron the high priest allowed the .children of Israel to set up a golden image and worship it. For that he was forbidden to lead them into the land of Canaan, the .promised land, but was compelled to die in the wilderness. If my hon. friends opposite do not change their gods and worship the gods of the common people of Canada I am afraid the same fate will befall them. I am not afraid of the future of Canada. We are a virile race. There is a saving remnant amounting to millions, who have not bowed the knee to Baal and have not worshipped before the golden calf. In the hands of those people lies the future salvation of Canada. We want another Moses, to lead us out of the wilderness of depression. We want another Elijah to teach us more faith in Providence, more faith in each other and more faith in our own ability and courage. We want another Nehemiah to lead' us back out of the Babylon of poverty. It is my earnest hope and prayer that this rebirth of Canada may come soon.


Mr. GOTT:: I was paired with the hon. member for Kent, Ontario (Mr. Rutherford). Had I voted I would have voted against the amendment to the amendment.


Mr. MERCIER (St. Henri):: I was paired with the hon. member for West Hamilton (Mr. Bell). Had I voted I would have toted against the amendment to the amendment.


James Shaver Woodsworth: Mr. Speaker, you were good enough to defend the Prime Minister against disorder a little while ago; I must ask for the same right.


Pierre Édouard Blondin: Unless the hon. member wishes the vote to go over until to-morrow it will be necessary to have unanimous consent to proceed after eleven o'clock.


William Lyon Mackenzie King: Unanimous
consent.


Some hon. MEMBERS:: Go ahead!


James Shaver Woodsworth: Mr. Speaker, as I happen to be the honorary president of the organization, I feel it incumbent upon me to clear it of some of the aspersions that have been cast upon it by the Prime Minister. I am not certain whether or not Mr. Massey is a member of the society, but I do not imagine he is. However, the Prime Minister sought to make a great deal of political capital out of the fact that apparently. Mr. Massey had left in the city of Calgary a copy of the manifesto issued by this organization. As a matter of fact-


An hon. MEMBER:: Massey's in de cold, cold ground.


Mr. BOULANGER:: I was paired with the hon. member for Lake St. John (Mr. Duguay). Had I voted I would have voted against the amendment to the amendment.


Mr. MERCIER (Laurier-Outremont):: I
was paired with the hon. member for South Toronto (Mr. Geary). Had I voted I would have voted against the amendment to the amendment.


James Shaver Woodsworth: The hon. gentleman does not like it and I have no doubt the Prime Minister does not like it either. I will make my speech, and I will take my time to make it. I have already told the house that I intended to take only a few minutes. If hon. members opposite will do me the courtesy of maintaining order I will be brief. I say the Prime Minister has brought in the name of Mr. Massey-


Mr. McGILLIS:: I was paired with the hon. member for St. Mary (Mr. Deslauriers). Had I voted I would have voted against the amendment to the amendment.


Pierre Édouard Blondin: Is the house ready for the question?


Some hon. MEMBERS:: Question.


Pierre Édouard Blondin: The vote is on the amendment to the main motion.


James Shaver Woodsworth: Mr. Speaker, it is not my intention to delay the house for more than a few minutes, but to-night the Prime Minister brought into the debate the organization known as the League for Social Reconstruction. As I happen to be the honorary president of that league


Some hon. MEMBERS:: Oh, oh.


An hon. MEMBER:: You told us that.


James Shaver Woodsworth: -and linked with it the League for Social Reconstruction. An effort was made apparently to show there was something very curious about this league; that it represented a new political alignment of some kind, that this manifesto was delivered to the faithful after a lecture had been given to the Canadian Club, and all that kind of thing. Now, as a matter of fact, as I attempted to say in a word to the Prime Minister, the organization of this society was publicly announced some time ago. The organization was commented upon and the manifesto published in the April number of the Canadian Forum. The Canadian Forum is quite a reputable journal published in Toronto by J. M. Dent and Sons. It is obvious that the Prime Minister and his immediate associates do not read such journals as the Canadian Forum. I know in some

The Budget-Mr. Woodsworth
quarters it is considered to be somewhat of a high-brow journal; perhaps that is the reason why the Prime Minister does not read it.
I should like to suggest that there are a great many papers being published in this country with which the Prime Minister seems to be out of touch, and there is a very considerable body of public opinion which does not follow the lead of the Prime Minister and some of his colleagues. For this reason I propose to read two or three paragraphs from an editorial which appeared in the April issue of the Canadian Forum. They are:
Canada lags behind most other countries in her political thinking. But the experience of the last two years has produced a growing number of men and women, even in Canada, who have become very sceptical about the ability of our capitalistic system to produce an efficient or a happy society. Most of these sceptics are probably still more sceptical about the ability of our particular Canadian leaders in finance, industry, and politics to give us any guidance in our crisis.


An hon. MEMBER:: Did you write that
editorial?


James Shaver Woodsworth: The question is
asked, did I write that editorial?-I did not. That question emphasizes the remark I made a few minutes ago, that a good many hon. members of this house seem to be quite oblivious to the currents of public opinion which are so strong at the present time. The article continues:
But individual critics are helpless by themselves; and there exists no organization in Canada to which such men and women can attach themselves with much enthusiasm. In the hope of helping to fill this gap a group from Toronto and Montreal held a meeting two months ago and decided to launch the League for Social Reconstruction.
I may say that I was not present at that meeting nor had I anything to do with its being held. However, that is by the way and I shall continue with the editorial:
The founders of the league conceive of it a kind of Canadian Fabian society, although they are quite conscious that it does not include in its present membership any Bernard Shaw or Sidney Webb or Graham Wallas or Beatrice Potter. But they hope that it may form the nucleus around which may gather a good many of those unattached critical spirits who find no haven in either of the two national political parties, and whose circumstances do not make it possible for them to join labour or farmer political movements.
As is indicated by that last paragraph, this is not a political 'but an educational movement. The members of the organization may be Liberals or Conservatives; some may 'be farmers or labour men, but apparently they do not find themselves very much in
sympathy with either the official Liberal party or the official Conservative party as they are constituted to-day. They also confess that as the labour and farmer movements are organized to-day, they do not find a place. I continue reading:
What is most needed in Canada is a clarification of our political and economic ideas. Even if the members of the new society accomplish nothing much more than to work out by discussion among themselves the practical steps in a socialistic program as applied to Canadian conditions, they will have served some purpose.
I know a great many members here are terribly frightened by the words "socialistic program."	[DOT]


An hon. MEMBER:: Louder.


James Shaver Woodsworth: Mr. Speaker, since I cannot obtain order in this house, I would ask you to call it eleven o'clock.


Pierre Édouard Blondin: The hon. member asked for five minutes of the time of the house, but he has exceeded that time limit by over two hundred per cent. If he wishes to bring his remarks to a close within anything like five minutes, I am inclined to think the house would permit him to do so.


James Shaver Woodsworth: I have not been able to obtain order, and I propose to finish my speech at a time when I can make myself heard.


[Stage Direction]
At eleven o'clock the house adjourned without question -put, pursuant to standing order.
Wednesday, April 27, 1932