REPORTS OF COMMITTEES

[Stage Direction]
Second report of the select standing committee on miscellaneous private bills.-Mr. Stinson.	.
First report of the joint committee of both houses on the printing of parliament.-Mr. Robinson.

[Stage Direction]
Percy G. Davies, Esquire, member for the. electoral district of Athalbaska, introduced by Right Hon. R. B. Bennett and Hon. Hugh Guthrie.

Hon. W. A. GORDON (Minister of Labour) :: I desire to lay on the table of the house orders in council Nos. 892, 893, 894, 895, 896 and 862 passed pursuant to the Unemployment and Farm Relief Act, 1931, and the Unemployment and Farm Relief Continuance Act, 1932. All these orders refer only to the payments of money.



QUESTIONS

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

Mr. MACKENZIE (Vancouver):: 1.	Have any orders in council been passed by the federal government with respect to the Beauharnois power project since August 3, 1931?
2.	If so, what are the dates and numbers of such orders in council?
3.	Have any moneys been advanced to the Beauharnois Power Corporation or Associate Company by the federal government since August, 1930?
4.	Have any advances made by any chartered bank of Canada to such corporation been guaranteed by the federal government, since August 7, 1930?
5.	If so, by which banks were such amounts advanced, and what were the amounts?
6.	What was the nature of the guarantee given?
7.	What was the authority for such guarantee?


Mr. MACKENZIE (Vancouver):: Question No. 1 on the order paper was fully answered the other day by the Prime Minister. I should like to ask a supplementary question regarding the assurance mentioned as having been given to the banks. Were those assurances verbal or in writing?

Questions


Mr. BENNETT:: They were in writing in part, and I think the last two or three have been merely verbal assurances that the same provisions would apply. Without looking at the record, that is my memory.


Mr. SPEAKER:: Answered.


CUBAN POTATO MARKET
Mr. BOULANGER:: 1.	Has the government received a request from a group of farmers of New Brunswick, in connection with a reciprocal trade treaty between Cuba and Canada with a view of creating a market for Canadian potatoes? _
2.	If so, will the government grant said request ?


Mr. CAHAN:: 1.	Yes.
2.	The matter is under consideration.


MANITOBA SAVINGS OFFICE
Mr. BEAUBIEN:: 1.	Did the Manitoba government ask the Dominion government for assistance for the province of Manitoba savings office?
2.	If so, what was the attitude of the Dominion government?


Richard Bedford Bennett: I think that question was answered yesterday.


Mr. BEAUBIEN:: No, the question is not answered. I read the statement of the Prime Minister in yesterday's Hansard, and I can find no answer. My opinion is that the provincial government-


Some hon. MEMBERS:: Order.


Pierre Édouard Blondin: The hon. member is not in order.


Arthur-Lucien Beaubien: Surely I am in order, if the Prime Minister did not answer the question. Speaking to a point of order, if the Prime Minister makes a statement with regard to a question on the order paper I have a right to say whether I agree to the dropping of that question.


Mr. STEVENS:: Bring it up on the orders of the day.


Arthur-Lucien Beaubien: Surely a member of parliament must have some rights in this house. It is a very simple question, and all the Prime Minister has to say is yes or no.


Some hon. MEMBERS:: Order.


Pierre Édouard Blondin: The question was answered yesterday by the Prime Minister.


Arthur-Lucien Beaubien: But, Mr. Speaker, it was not answered.


Some hon. MEMBERS:: Order.


Arthur-Lucien Beaubien: The answer to my question is not contained in the remarks made yesterday by the Prime Minister.


Pierre Édouard Blondin: In my opinion the question was answered. Further, the second section of the question is improper. It reads:
2. If so, what was the attitude of the Dominion government?
That is not a proper question to put to the government.


Arthur-Lucien Beaubien: Mr. Speaker-


Some hon. MEMBERS:: Order.


Arthur-Lucien Beaubien: I have some rights in this house.


Pierre Édouard Blondin: What is the hon. member's point of order?


Arthur-Lucien Beaubien: My point of order is that this question was allowed to go on the order paper, and has been there for several days- probably a week. If the question is out of order, why was it allowed on the order paper?


Pierre Édouard Blondin: That is an unnecessary question, and one I do not propose to answer.


DALHOUSIE-MIGUASHA FERRY SERVICE
Mr. MARCIL:: 1.	On whose recommendation was the subsidy paid for an interprovincial ferry service between Dalhousie, New Brunswick, Miguasha and Carleton, Quebec, discontinued?
2.	Has any recommendation been made to vote this subsidy for this year, by whom and what decision has been arrived at?


Mr. STEVENS:: 1.	No recommendation was received for the discontinuance of this subsidy. It was, together with several other subsidies, discontinued on account of the urgent necessity for economy, and the fact that traffic returns furnished by the contractors indicated that the average amount of traffic carried per trip was so small that it did not justify the continuance of the subsidy.
2.	Yes, by Dr. E. Paquet of Bonaventure and Mr. Max Cormier, M.P. (Restigouche-Madawaska). For reasons stated above it is not proposed to continue this subsidy.


CANADIAN NATIONAL STEAMSHIPS-STEVEDORING AT QUEBEC
Mr. LAVERGNE:: 1. Have tenders been called by the Canadian national steamships for the stevedoring at the port of Quebec?

Questions
2.	If so, who were the tenderers?
3.	Was contract given, and, if so, to whom?
4.	Was lowest tender accepted?
5.	If not, why?
6.	Was said contract awarded without tender?
7.	Was tender accepted submitted after the closing day for the opening of tenders had elapsed ?


Mr. MANION:: 1.	Yes.
2.	Eastern Canada Stevedoring Company, Albert G. Baker Limited.
3.	Yes; Albert G. Baker Limited.
4.	Yes.
5.	See answer to No. 4.
6.	No.
7.	No.


GRAIN SHIPMENTS THROUGH CANADIAN PORTS
Mr. VENIOT:: 1.	What quantity of Canadian grain was shipped through Canadian ports during the calendar year 1931?
2.	What quantity of Canadian grain was shipped through American ports during the calendar year 1931?


Mr. STEVENS:: 1. Canada's domestic exports of grain to overseas countries via Canadian sea or river ports during the calendar year 1931, were:
Bushels
Barley	 17,571,853
Oats	 10,190,460
Rye	 1,675,749
Wheat	123,996,293
2. Canada's domestic exports of grain to overseas countries via the United States during the calendar year 1931, were:
Bushels
Barley	 6,583,652
Oats	 926,571
Rye	 1,997,132
Wheat	 65,879,549


PIG IRON PRODUCTION IN CANADA
Mr. EDWARDS:: 1.	How many tons of pig iron (all grades) were^ produced in Canada in 1929, 1930 and
2.	How many tons of pig iron (all grades)
were imported into Canada from:	(a) the
United States of America; (b) from England; (c) from all other sources, during 1929 1930 and 1931?


Mr. STEVENS:: 1. Canada's production of pig iron by grades for the calendar years 1929, 1930 and 1931, was:
Grades	1929	1930	1931
	(Tons	of 2,240 pounds)	
Basic	770,478	494,231	311,850Foundry	221,644	193,074	80,892Malleable	88,038	59,873	27,296Total	1,080,160	747,178	420,0382. No statistics	available	as to	Canada's
imports of pig iron by grades. During the calendar years 1929, 1930 and 1931, Canada's total imports of pig iron were:
Imports from	1929	1930	1931
	(Tons of 2,000 pounds)		
United States. ,	25,433	11,650	3,851United Kingdom..	9,692	2.725	4.526Other countries. ..	1,329	905	485Total	36,454	15,280	8,862


TOBACCO IMPORTS
Mr. FERLAND:: What were the tobacco imports, to Canada, from all countries during the years 1929, 1930, 1931, and January, February, and March, 1932?


Henry Herbert Stevens: Canada's total imports of tobacco from all, countries during the calendar yeare 1929, 1930 and 1931, and for the months of January,
February and March,	1932, were:	
Years	Pounds	$1929	18,189,938	7,709,4141930	17,862,025	7,048,8931931.. . .	14,645,210	5,102,930January, 1932.. .	823,792	287,274February, 1932	1.024,692	298,331March, 1932.	798,694	338,111


UNEMPLOYMENT RELIEF-PICTOU COUNTY
Mr. DUFF:: 1.	What amounts were granted and spent for highways Jn the county of Pictou, in the province of Nova Scotia, under the Unemployment Relief Act?
2.	Who was the foreman employed in each case?


Mr. GORDON:: 1. By agreement between the Dominion government and the province of Nova Scotia, under the provisions of the Unemployment and Farm Relief Act, 1931, the Dominion government will contribute $12,534.51 to the construction of highways in Pictou county. See schedules 113, 144 and 146, pages 9, 10 and 11

Question as Order for Return
of Report of Dominion Director of Unemployment Relief, tabled March 9, 1932, for details. No accounts have been received from the province yet in respect of these works.
2. The work above referred to is carried out by the province, and the Dominion government has no information regarding the foremen employed.


QUESTION PASSED AS ORDER FOR RETURN
Mr. POULIOT:: 1.	Has the government been asked to authorize an investigation for political partisanship against Jos. Berube, Indian agent, Cacouna agency, Quebec; if so, by whom?
2.	Who mentioned to the minister for the first time in this case the name of the investigator to take charge of the said investigation ?
3.	Where, at what date and before whom was the first application of Alexis Michaud for being appointed Indian agent at Cacouna, Quebec, declared?
4.	Was there another application to that position filed by the said Alexis Michaud?
5.	If so, at what date, where and before whom was said new application by the said Alexis Michaud declared?
6.	At what dates, where and before whom were the applications of Messrs. J. Cleophas Sirois. David Lebel and John Dunnigan, candidates to the position of Indian agent at Cacouna, declared?
7.	Where and at what dates were John Dunnigan, David Lebel, Alexis Michaud and J. Cleophas Sirois interviewed for the first time for the position of Indian agent at Cacouna by a representative or official, of the Department of Indian Affairs?
8.	At what date was Alexis Michaud engaged under the thirty-day clause as Indian agent at Cacouna, Quebec?
9.	At what date was the temporary certificate issued in his favour by the Civil Service Commission, and for how long?
10.	Did that temporary certificate have a retroactive effect?
11.	If so, for how long?
12.	Who recommended Alexis Michaud to the government as Indian agent at Cacouna, and at what date?


UNOPPOSED MOTIONS FOR PAPERS
Mr. DUFF:: For a copy of all letters, telegrams, memorandums, reports, copies of tenders, and other documents relative to and exchanged between the Post Office Department or the minister or any of its officials and any person or persons in Nova Scotia regarding the mail contract which expired in 1931 and which has since been renewed, between Barss' Corner, Nova Scotia

and Newburn rural route division; also a copy of all papers and documents as above in connection with tenders for a mail contract between Baras' Corner and New Germany.


BURNT CHURCH WHARF, N.B.
Mr. VENIOT:: For a copy of al'l paysheets, accounts for materials, and other documents, in connection with work on the wharf at Burnt Church, Northumberland county, New Brunswick.


Mr. STEWART (Leeds):: I assume that my hon. friend desires only the expenditures made within the last year. With that amendment I have no objection to the motion.


Peter John Veniot: Yes.
Motion as amended agreed to.


RETURNED SOLDIER LEGISLATION
[Stage Direction]
On the orders of the day:
Mr. CAMERON R. McINTOSH (North Battleford): Mr. Speaker, on Friday, April 15, I directed this question to the Minister of Pensions and National Health (Mr. Mac-Laren):
If after further consideration he is now in a position to inform the house and the country whether the government will bring down this session any new or amending legislation concerning returned men.
The hon. minister said he would reply to me early this week. This is Wednesday, so I think I am within my rights in asking him if he has the answer ready to-day?
Hon. MURRAY MacLAREN (Minister of Pensions and National Health):: My reply
was that I expected to be able to answer the question early next week; that is this present week.


Mr. McINTOSH:: Yes, this week.


Murray MacLaren: I may inform the hon. member that I have not overlooked his question, but there has been some delay in securing some information. That information is expected within a day or two and then the answer will be given at once.


Cameron Ross McIntosh: Thank you.


NEW ZEALAND TREATY
[Stage Direction]
On the orders of the day:
Hon. Ian MACKENZIE	(Vancouver
Centre): May I ask the Minister of Trade and Commerce (Mr. Stevens) if he intends to table the New Zealand treaty during the present session?

Privilege-Mr. Dickie
Henry Herbert Stevens: I shall be able to give my hon. friend a definite answer in a day or two.


Ian Alistair Mackenzie: Thank
you.



PRIVILEGE-MR. BEAUBIEN

[Stage Direction]
On the orders of the day:
Arthur-Lucien Beaubien: I rise to a question of privilege, Mr. Speaker. In view of Your Honour's ruling this afternoon with respect to question No. 6 standing in my name on the order paper, suppose I present a question to the Clerk of the House for him to place on the order paper, where am I to ascertain whether my question is within the rules after it has been accepted by the officials of the house and allowed to remain on the order paper for three or four weeks?


Pierre Édouard Blondin: I would suggest that the hon. member study the rules of the house.


Arthur-Lucien Beaubien: I desire to thank you, Mr. Speaker, for your information.


Pierre Édouard Blondin: That is entirely unnecessary.


Arthur-Lucien Beaubien: May I say that I am not the one who violated the rules; the officers of the house are the offenders, they having allowed the question to remain on the order paper.


Pierre Édouard Blondin: The hon. member is not accused of violating any rules. I gave my ruling in respect to question No. 6 and I do not propose to enter into any discussion with him with respect to it.


Arthur-Lucien Beaubien: Mr. Speaker-


Some hon. MEMBERS:: Order.


Pierre Édouard Blondin: The question is no longer r a the order paper.


Arthur-Lucien Beaubien: Thank you.



MONTREAL POSTAL TERMINAL

[Stage Direction]
On the orders of the day:
Hon. FERNAND RINFRET (St. James):: Mr. Speaker, I should like to renew the question to the Minister of Public Works that I put to him earlier in the session. Has he now any information to give the house concerning the building of the new postal terminal in Montreal? If I am in order, I would urge that the government proceed with the work as soon as possible.


Henry Herbert Stevens: You are not in order.


Hugh Alexander Stewart: I am sorry that I cannot give my hon. friend any more definite information. He has no doubt observed an item in the estimates that would be applicable to this work, but whether we will proceed with it this year or not is still undecided.



PRIVILEGE-MR. DICKIE

[Stage Direction]
On the orders of the day:
Mr. C. H. DICKIE (Nanaimo):: Mr. Speaker, I rise to a question of privilege with respect to some impressions which may have been conves'ed to the house in a speech made by the hon. member for New Westminster (Mr. Reid) yesterday.


Some hon. MEMBERS:: Order.


Charles Herbert Dickie: In dealing with an excerpt which I read from the report of the commission inquiring into unemployment relief matters in British Columbia he said:
The hon. member for Nanaimo (Mr. Dickie) saw fit to read a report wThich purported to emanate from Victoria.


Pierre Édouard Blondin: Order. I do not think the hon. member is in order in treating that as a. question o.f privilege. He is contradicting at speech made by another hon. member, and, as I see it, this is not in any sense a question of privilege.


Charles Herbert Dickie: It is a question of personal privilege, Mr. Speaker, in that he claims I misrepresented matters.


Pierre Édouard Blondin: If the hon. member for Nanaimo wishes to correct something said by himself-


Charles Herbert Dickie: Not at all, Mr. Speaker. I wish to correct something said by the hon. member for New Westminster.


Pierre Édouard Blondin: That is not a question of privilege.


Richard Bedford Bennett: Something said about
himself.


Charles Herbert Dickie: Am I to understand that I may proceed?


Pierre Édouard Blondin: If the hon. member is making a statement to the house that another hon. member said something with which he does not agree-


Mr. CAHAN:: It is something personal with respect to the hon. member for Nanaimo.


Pierre Édouard Blondin: Is it something imputing impropriety to the hon. member?
*219S

The Budget-Mr. Duranleau


Charles Herbert Dickie: If the hon. gentleman made a personal attack upon myself, may I not deal with it upon a question of privilege?


Pierre Édouard Blondin: If the hon. member's personal conduct is impugned, I should say it would be a question of privilege; but if it is merely a difference of opinion on a matter of policy, or as to what occurred in British Columbia, that is certainly not a matter of privilege.


Charles Herbert Dickie: The member for New Westminster left the impression with the house that I had-


Some hon. MEMBERS:: Order.


Charles Herbert Dickie: -read a report purporting to emanate from Victoria, and that I used that document in order to justify an attack on hon. members opposite. I wish for the information of that gentleman to say that the excerpt I read was from a report of the commission which was handed to me at noon on the 14th of this month by a minister of the British Columbia cabinet.


Ian Alistair Mackenzie: It was not the actual report presented to the legislature at Victoria.


Some hon. MEMBERS:: Order.


Charles Herbert Dickie: That has been spread on the journals of the house.


Some hon. MEMBERS:: Order.


Pierre Édouard Blondin: I cannot agree that this is a question of privilege. Contradictions of statements made on the other side cannot be treated as questions of privilege.



THE BUDGET


[Stage Direction]
The house resumed from Tuesday, April 19, 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.
Hon. ALFRED DURANLEAU (Minister of Marine):: Mr. Speaker, at this late stage of a
long debate I must crave the indulgence of the house for the few minutes I propose to take in discussing some of the conclusions which I have reached after perusing the budget presented by my hon. colleague the Minister of Finance (Mr. Rhodes). First, I think this hon. gentleman ought to be con-

gratulated very warmly on his success, since assuming his high office, in handling the finances of the country. I think the Prime Minister could not have made a better choice for the position of Minister of Finance. I gladly join with those who, without consideration of party, have congratulated the Minister of Finance on the frankness and courage, with which he has dealt with the economic situation. It is a good sign for the future when a man like the present minister brings courage and frankness to bear on the political affairs of this country, for they are virtues which should be praised and commended.
Of course, when I say that the minister has been praised from all sides of the house and from all quarters of Canada I do not mean that he has been greatly praised by hon. gentlemen opposite. Some hon. gentlemen, as a matter of fact, have brought forward fair criticism; others criticized not quite fairly, while in some cases there has been criticism of a petty character. One naturally expects, however, in times such as these, that hon. gentlemen will advance their political ideas and parade their wisdom in an effort to serve narrow and selfish party interests. We could not expect anything else from hon. gentlemen opposite after the debate in connection with unemployment which lasted for more than three weeks. That was a stubborn opposition with regard to a measure designed to br;ng relief to the unemployed of this country, including those in the constituencies represented by hon. gentlemen opposite, and that dispute would have lasted more than three weeks if this government had not been forced by public opinion to end it by the use of closure.
Hon. gentlemen apposite seem to forget or to ignore the fact that this country is passing through a world economic crisis. They seem to forget also that this government has endeavoured, since it has been in .power, to cope with difficulties and conditions which are partly the outcome of the economic fallacies, the indifference and the lack of policy of hon. gentlemen opposite. A double remedy has been presented in the budget speech; first it is proposed to raise funds to offset the decline in our national revenue, and then it is proposed to safeguard Canadian industry. I have already said that the present crisis is world-wide and could not have been prevented entirely by any government, but it is true also that hon. gentlemen opposite could have done something to lessen its severity, and perhaps they could have refrained from aggravating the situation as it has been aggravated through their indifference, their lack of foresight and their policies in general.

The Budget-Mr. Duranleau
During this debate, and during the debate on the unemployment question as well, many hon. members opposite have addressed the house. They have stated that the unemployment situation is very acute, and that is quite true. It has been very acute for some time, but I believe hon. gentlemen opposite have been partly responsible for the condition which has existed in this country for the last couple of years. Who in this house does not remember the immigration policy of hon. gentlemen opposite? Who does not remember that in the last two or three years of their regime hundreds of thousands of immigrants poured into this country? Who does not remember that in the fall of 1929 a delegation from the All-Canadian Labour Congress waited on the Prime Minister and the Minister of Labour of the day and begged them to stop the influx of immigrants with its consequent effect on the labour situation here. Every member of the house remembers the answer given by the then government; in substance it was that it was not wise to cry "wolf" when no danger was in sight, that the. unemployment referred to was strictly of a seasonal character, that the same conditions recurred every autumn and that the immigration complained of, far from providing competition for Canadian labour, in fact added to our human capital by increasing the number of consumers and at the same time increasing our producing capacity.
So the immigrants continued to pour into Canada at the rate of over ten thousand per month. If we look at the statistics we see that during the fiscal year ending March 31, 1930, the number of immigrants who came to Canada was 163,286, while during the first eight months of 1930, as many as 80,000 immigrants entered Canada. The doors of the country were kept wide open to foreign labour while Canadians were seeking work and while the 125,000 young Canadians who each year come to maturity were claiming in vain their right to a place in the labour market of their own country. The heads of our families were concerned with the establishment of their sons and daughters, at a time when the money earned by them, by our own people was being spent in the recruiting, the transportation and the establishment of countless foreigners.
My right hon. friend the leader of the opposition (Mr. Mackenzie King) might answer that he stopped immigration. It is true that he did stop immigration, but that was only done because of the pressure of public opinion, and he did not take that step until two or three weeks before polling day. And, if I remember rightly, on the very
same day, the leader of the opposition was announcing to the country, at a meeting in western Ontario that he had stopped immigration there landed at Halifax over one thousand immigrants from southern Europe. These people, said the minister of the day, will be consumers. Yes, they became consumers; but it was not long before the authorities, provincial, federal and municipal, had to supply these consumers with some food to consume. Firmly seated in his place in the Quebec bloc of sixty-one members, who were willingly allowing their province to be sacrificed, what was in the hon. gentleman's mind? Happily, the province of Quebec has reacted; the mother province has found its voice again in this house; for at the election that followed in 1930 the Conservative representation in this parliament was increased sixfold. This change came at a very opportune time; it came at the very moment when the country had decided to abandon theories, to face facts, and to place at the head of its administration a man of courage a man without any fear. The country had come to the conclusion that we had to intensify a fiscal policy which would promote the development of our national industries and prepare the way for the rehabilitation of trade and for renewed prosperity. Let us rejoice, Mr. Speaker, that the old province of Quebec is sharing with the others in the work of renovation imposed by conditions and undertaken by this government. It was indeed the province of Quebec that profited most by the protective policy propounded by this government. You will allow me to mention more particularly the province of Quebec, my native province, because I find there a field for better and more ready observation. And from this observation I can say that we in the province of Quebec have greatly profited by the policy of this government.
In our province, as in the other provinces of the dominion, industry must be considered in a dual aspect. There are what I may call the primary industries and there are the secondary. The province of Quebec is remarkable for the development of a small number of secondary industries such as foodstuffs, clothing and other industries producing goods both for the home and for the foreign market. I am leaving aside the pulp and paper industry and the large power developments, because they belong more to the primary class, inasmuch as their products are the raw materials that are used by other industries. But let us consider some of the secondary industries of the province of Quebec, such as clothing, tobacco, shoes and
The Budget-Mr. Duranleau

dairy products. Not only have the textile and clothing industries maintained their level during the two years that we have been in power, but the imports of raw cotton have increased in this country lately, especially during the last six months. According to the statistics, during the month of February last 7,074,000 pounds were brought into this country as against 6,527,000 pounds in the month of January, showing an increase at the beginning of this year indicative of greater activity.
Mr. ST-PERE: Is my hon. friend ready to conclude that this gives more work to employees in the factories?


Alfred Duranleau: I hold that if the cotton industry is so encouraged as to find it necessary to increase these imports of raw cotton, the result will be more work for Canadian labour.
Mr. ST-PERE: There never was a time when things were so slack in the cotton manufacturing industry.


Alfred Duranleau: Surely these imports of raw materials are an indication that in a very short time there will be an increase in labour.
Mr. ST-PERE: They are buying in a cheap market.


Alfred Duranleau: This tendency to increase the imports of raw materials will mean in the very near future more labour for the people of this country.
Mr. ST-PERE: I hope so.


Alfred Duranleau: It does not appear that you do. As to the shoe industry, which is almost entirely in Quebec, it is to-day normal, and I think I can safely say that the industry is showing signs of renewed prosperity. Our importations in that line have become almost insignificant, for they do not represent to-day more than five per cent of our consumption. The same condition prevails in the tobacco industry. Not only has our consumption of the domestic product increased, but Canadian tobacco has become an important export. When last fall I had an opportunity of visiting the harbour of Liverpool, it was my privilege to go through the tobacco warehouses in that great centre of distribution for the empire and particularly for the mother country; and while going through these warehouses I was proud to see among the bundles of tobaccos from various countries, so many bundles of good Canadian tobacco. On inquiry I was told by those in charge that this Canadian tobacco was highly praised and that its use in England was widespread. They told

me that in the near future if we could send more tobacco they would be in a position to distribute and sell it in England. It is also gratifying to know that eighty per cent of the tobacco consumed in Canada has been grown on Canadian soil.
Now I come to another industry which is very important, the dairy industry of Canada. We must not forget that under the regime of our friends opposite Canada imported considerable quantities of butter. Imagine a farming country like this importing, under the administration of hon. gentlemen opposite, and particularly in the year 1930, because of their indifference to the interests of dairying in Canada, butter amounting in value to $41,919,372. Imagine $41,000,000 of Canadian money being sent to other countries to purchase butter for a farming country!


Mr. POULIOT:: Will my hon. friend permit a question? Is he in favour of higher prices for butter-


Pierre Édouard Blondin: Unless the hon. member who is speaking indicates, by taking his seat, his willingness to permit an interruption, the hon. member has no right to interpose a question.


Jean-François Pouliot: I am just asking my hon. friend if he agrees-


Pierre Édouard Blondin: The hon. member has not signified his willingness to permit a question to be asked. That is done by the hon. member taking his seat, and he has not done so.


Alfred Duranleau: I am against the importation of butter into Canada. I am proud to be able to say that under the present regime Canada is again an exporting country as far as butter is concerned.


Jean-François Pouliot: Is my hon. friend unwilling to allow me to ask a question?


Alfred Duranleau: Oh, no.


Jean-François Pouliot: Is the hon. member in
favour of higher prices for butter with importations, or lower prices with no importations?


Alfred Duranleau: I am against the
importation of butter into this country, and I am in favour of higher prices for butter. Once the present crisis has passed, better prices will be received for our butter. There is indication that the present "consumption of butter in Canada is one hundred per cent of the Canadian product.
I do not desire to spend too much time dealing with these questions, but I must direct the attention of the house to the fact that

The Budget-Mr. Duranleau
progress has been made in the general activity of this country. Since this government came into power nearly 150 new industries have been established in the course of a few months, and I am sure that when the present economic crisis has passed, the protecting policies of this government will bring further prosperity to Canada. There are many great enterprises, born of necessity, which must be taken care of. We must consider the reorganization of our national ports, the improvement and completion of our waterways and highways, the continuance of scientific research, the safeguarding of our present markets and the opening up of new ones. These questions cannot be settled over night, as has been suggested by hon. friends opposite who seem to be still under the influence of the dream which they must have had during their long sleep of twelve years while they were in power.
There is one question with which I desire to deal, the St. Lawrence deep waterway. The present indications are that this great undertaking is in danger of being made a political football by hon. friends opposite. Strange voices and strange arguments are heard, particularly in my own province, but I want to say to those hon. members who fear that certain rights may be jeopardized that this government will never relax its vigilance over the safeguarding of Canadian interests and rights, no matter where those interests may be found, in Quebec or Ontario, at Montreal or the head of the lakes. The maintenance of the St. Lawrence river as a national route, the protection of levels during the low-water season, the safeguarding of navigation-which includes the dredging of a thirty-five foot channel between Montreal and the sea-are questions which will be always given consideration by this government. But party struggles and party strife at times will make impossible the discussion of the most important questions strictly on their merits, questions which affect the peace and life of the nation. How can this evil be cured? I believe the best remedy is to bring these matters into the da3dight where they can be properly discussed.
Some time ago the hon. member for Dorchester (Mr. Gagnon) treated with great justice the actions of a former minister of the crown, but I intend to direct the attention of this house to the kind of tactics employed at Three Rivers during the elections of 1931. During last session I referred to the utter failure of these doubtful tactics, especially to the use of the war scare during 1930. Referring to the Prime Minister (Mr. Bennett), La Chronique, a virulent Grit organ,
said that "this potentate" was "the enemy of our language and of our religion." Imagine the Prime Minister of this country being the enemy of French Canadians and of their religion! Another statement by this paper was:
Remember conscription. French Canadians avenge yourselves next Monday. Victory 'is at our door.
Luckily the victory went to another door, the door of the great Conservative party and its great leader. I have read the speeches made by some of our Liberal friends during that campaign, and I find that the hon. member for Hochelaga (Mr. St-Pere) said:
Bennett says that only those workers who are willing to work shall have employment. What does that mean? It will be like the. dole in England. They will send your sons, our French Canadians, to work on the roads of new Ontario at mean wages.
Mr. ST-PERE :	Who is going to bulldoze
me by making me sit down?


Some hon. MEMBERS:: Order.
Mr. ST-PERE:	I am rising to a point
of order.


Pierre Édouard Blondin: What is the point of
order?
Mr. ST-PERE:	I deny completely-


Pierre Édouard Blondin: That is not a point of
order.
Mr. ST-PERE:	A question of privilege ;
call it what you like, Mr. Speaker. During every election campaign in which I have taken part-


Some hon. MEMBERS:: Order.


Pierre Édouard Blondin: There is no question of
privilege when the hon. member refers to what his conduct has been in previous elections.
Mr. ST-PERE:	I deny completely-


Pierre Édouard Blondin: Order.
Mr. ST-PERE:	Words are being put in
my mouth-


Pierre Édouard Blondin: There is a way of dealing with hon. members who do not obey the rule, and I should regret to have to take that course.


Alfred Duranleau: I do not desire to go any further-
Mr. ST-PERE: That is the kind of argument to use.


Alfred Duranleau: [DOT]-in discussing the
methods used in that campaign by hon. mem-

The Budget-Mr. Duranleau
bers opposite. I could cite other speeches which were printed in that organ of the Liberal party but I shall not do so ait this time. It is time to cease those war scares and appeals to prejudice. I hope my hon. friends opposite realize that by such appeals they gained no ground in the election and that they should revert to real discussion regarding the merits of the question and let the best cause win.


Mr. BOUCHARD:: Is the minister setting the example?


Mr. DENIS:: Begin by setting the example.
Mr. ST-PERE: He has been talking conscription ever since he has been in the house.


Alfred Duranleau: We have to correct
the example set by our hon. friends.
Mr. ST-PERE:	Talk politics.


Alfred Duranleau: Mr. Speaker, I trust that now, after the very courteous attention that has been given me, 1 may say a few words in a language with which I am more familiar, the language of France,-


Mr. BARRETTE (Translation):: Hear, hear.


Alfred Duranleau: -and this, for three reasons: first, to call attention, in a practical way, to the official status of the French tongue in our parliamentary debates and in national affairs,-


Mr. GAGNON (Translation):: Hear, hear.


Alfred Duranleau: -next, in order to reply, if time permits, to certain statements of the opposition made in French; and lastly to congratulate the members on both sides of the house who, since the opening of the present session, have given our debates that most interesting bilingual appearance that we have noticed. It is willingly conceded that two essential traits of the French mind are clarity and reserve. It is quite true that in political debates this clearness is sometimes obscured. It may well be that the words I have just spoken in the language of the majority provide a striking illustration of this fact. But always, on every occasion, these two qualities are to be found in the sane judgment of the French population of this country, judgment which stands guard over out ideals and our traditions.
Mr. Speaker, I desire to congratulate particularly the hon. Postmaster General (Mr. Sauve) on the vigorous speech he delivered in this house yesterday,-


Joseph Arthur Barrette: Hear, hear.


Alfred Duranleau: -a
speech that was right to the point, that showed things in their true light, and gave our hon. friends of the opposition to understand that we are quite capable of answering them.


Onésime Gagnon: Hear, hear.


Joseph-Arthur Denis: What a success!


Alfred Duranleau: I also
wish to congratulate our friends on this side of the house who delivered their maiden speech within the last few days: the hon. member for Shefford (Mr. Tetreault) whose first oratorical effort was eagerly welcomed by the entire house; and the hon. member for Pontiac (Mr. Belec) who, by the eulogy of his constituency, gave to the house and to the entire country a lesson in patriotism, as he recalled with what courage the citizens of Pontiac are facing the present crisis.


Onésime Gagnon: Hear, hear.


Alfred Duranleau: His
words gave us some comfort after the depressing comments of certain opposition members, in particular of the hon. member for St. Johns-Iberville (Mr. Rheaume) in his speech on the budget.


Joseph Arthur Barrette: He is
sorry now.


Alfred Duranleau: May I be allowed to touch on a question he mentioned concerning certain works undertaken by the federal government in the county of Chambly-Vercheres that I have the honour of representing in this house. The hon. member for St. Johns-Iberville has forgotten certain essential facts which would assuredly have changed his way of thinking in this matter. The hon. member for St. Johns-Iberville seems to think that unemployment relief is something to be distributed equally among the different counties; although it is well known that this relief is to be granted according to the needs of different parts of the country and ;he extent of unemployment there.


Onésime Gagnon: Hear, hear.


Alfred Duranleau: Everybody knows that it is our large population centres and their neighbourhoods which are suffering most from unemployment; it may well be even that conditions are more distressing around the fringe of the big cities because since the crisis became acute all large

The Budget-Mr. Duranleau
cities have banned outsiders from employment within their limits, thus affording protection to their own people. That is precisely what happened in an important part of Chambly-Vercheres that I represent: Longueuil, Montreal South, Grenfield Park, St. Maxime, Springfield, MacKayville, and all small towns built along the south shore of the St. Lawrence, inhabited by people of the working class who earned their living in Montreal proper, and who, since last fall, have been excluded from employment within that city's limits. These people had to be helped; and I think my hon. friend from St. Johns-Iberville was not very generous-minded towards the workers of my riding; I will go further and say that he was unjust towards them when he suggested that the small amount of relief granted them was excessive.
If I cast a glance at our statistics, Mr. Speaker, I find that the constituency of my hon. friend from St. Johns-Iberville did not fare too badly. The house was not told by him that, thanks to the Unemployment Relief Act, his county had benefited from municipal works to the tune of $110,000, 25 per cent of which, or $27,500, has been, or will be, paid by the dominion treasury. Neither during the present debate nor in the course of the debate on unemployment, did our hon. friends of the opposition tell the house anything of what the government has done for the unemployed of this country and of the province of Quebec in particular. On looking up the statistics what do we find? We find that throughout the province relief has been given to those out of work: the government has approved and authorized municipal works costing $14,612,000 and has paid out as its share of the cost the sum of $4,643,000. We find that to this expenditure should be added $686,000 spent for federal undertakings under the Department of Public Works; $125,000 by the Department of Railways and Canals; $25,000 by the Battlefields Commission; $40,000 by the Department of National Defence. Adding all these up we have a total of $15,488,836 expended on works done, or being done, in Quebec territory, thanks to the present government's unemployment policy.
As regards the distribution of their funds our friends of the opposition have no reason to complain, that I can see. Montreal has received, or will receive from the federal government, $1,200,000; Quebec, $304,000; Three Rivers, $125,000; Sorel, $40,000; Thefford Mines, $60,000; Shawinigan Falls, $50,000; Sherbrooke, $80,000; Chicoutimi, $250,000. The constituency of Chicoutimi alone has received $250,000 from the federal government, for purposes of unemployment relief.
To sum up, these relief works were divided among 494 municipalities and 84 provincial counties in Quebec province. And as to those counties where the municipal population is less numerous we find that Beauce got, or will get, $35,000 from the Dominion government; Bonaventure, $15,000; Gaspe, $24,500, Labelle, $13,500, Lotbiniere, $10,000, Portneuf, $4,000 and Temiscouata, $12,250.


Joseph Arthur Barrette: It is worth noting that all these counties are represented by Liberals.
Mr. ST-PERE (Translation): One would think they were showering us with presents.


Alfred Duranleau: I do not wish to take up more time than is necessary in showing what we have done in Quebec to relieve unemployment. Our friends whose counties were favoured, as I have just pointed out, might at least have made some mention of the fact before this house and given credit where credit is due. But no, Mr. Speaker, these gentlemen preferred to attack the leader of the government. But I hope the people of Canada when they read these figures will compare the efforts made by the present administration towards improving conditions and hastening the return of prosperity and the tactics, often unfair, always questionable, employed by our friends on the other side to discredit our leaders and discredit the government in the eyes of our country. Such tactics were not very successful in the past. Three Rivers gave its answer-
Mr. ST-PERE (Translation): After you had promised them public works.


Alfred Duranleau: -and, a few moments ago, we acclaimed the young member for Athabaska (Mr. Davies) whose election was another eloquent answer to the unfair tactics of the hon. members opposite.
Hard times may, on occasion, be bad counsellors, more so when opponents seek to destroy public confidence in the country's government; but fortunately, Mr. Speaker, as I have just shown, the confidence that our Canadian people put in our Prime Minister on July 28, 1930, not only has not been destroyed by the attacks of our hon. friends, nor by the hard times through which we are passing, but it has not been the least bit shaken. To-day more than ever Canada puts her trust in our distinguished leader whose prestige commands the attention not only of Canada and of the whole British Empire, but of the entire world, as the time nears for the Imperial conference soon to be held here.
The Budget-Mr. Rinjret

But if hard times can be evil counsellors they also bring lessons of courage to our Canadian citizens. We have the proof of this in the willingness with which our people gladly accept the hardest tasks, the most rigorous measures, because the interests of the country demand it and because each sacrifice reminds us of the country we must save.
Mr. Speaker, it is a pleasure for me to state on the floor of this house that we will continue as in the past, despite the attacks of our opponents, despite the criticisms, never very appropriate, of our Liberal friends, to do our duty; and I have the firm belief that once this crisis is a thing' of the past, our policies will give back to this country the prosperity it knew under former Conservative administrations.


Louis Édouard Fernand Rinfret: Mr. Speaker, last year, at about this stage of the debate on the budget, I had the privilege of following my hon. friend the Minister of Marine (Mr. Duranleau), and at that time, speaking as a member of the Liberal opposition and following the remarks of the minister as closely as I could, I endeavoured to reply to the stand he had taken concerning many matters. To-day however I do not rise in the same spirit of controversy, my only intention being to exercise my privilege as a member of this house to direct attention to certain economic conditions we in the city of Montreal have to face.
Inasmuch as the minister has brought into this debate rather unexpectedly some ghosts of the late election campaign in the constituency of Three Rivers-St. Maurice, I believe I should be permitted to make reference to that election. I do so diffidently, because I am exceedingly desirous, on account of conditions which are obvious, not to take a stand which might appear to be partisan or actuated by purely political considerations. I was in charge of the activities of the Liberal party during the election campaign in that constituency, and hon. members will recall that the election was won by the very /dose margin of only thirty-eight votes. Despite that fact, I remained silent and a good loser. I could have brought up many matters and subjected them to the test of public opinion; in fact I could have done so more extensively than the Minister of Marine has done to-day. I believe, however, that political parties must organize and do their work before a verdict is rendered, and when a verdict has been rendered there is only one recourse, namely that of contesting the election. I do not believe in post mortem statements, and did not make any. I accepted the defeat, and

although grieved on behalf of the Liberal party I made no comments. Not as a Liberal but merely as a member of this parliament I should like to say that I proved a better loser on that occasion than the Minister of Marine has proved a winner this afternoon,
The hon. gentleman dug up some quotations from local newspapers, and I do not doubt the accuracy of their reports. I must assert, however, that these newspaper comments are but a small part of a very extensively developed campaign; if I were to look up my records I could bring before the house heaps of newspaper clippings concerning the other side of the campaign which would be just as embarrassing as, if not more than, the quotations the minister has given. He has made reference to the hon. member for Hochelaga (Mr. St-Pere). In a spirit of justice, and not in one of partisanship, may I say that I have taken part in campaigns in which the hon. member for Hochelaga was interested, and I doubt if any hon. members in either of the larger political parties make public speeches which are as serious, as full of argument and as devoid of prejudice as those of my good friend from Hochelaga.
I should like to appeal to the sense of fairness of the Minister of Marine. He will no doubt admit that during the heat of an election, campaign speakers on both sides make utterances that are regretted at the close of the election. I will not say that such a condition exists more in one party than in another; I would rather take it for granted that such utterances cannot be prevented. I think, however, it is the duty of leaders on both sides to try to control such appeals, to try to stifle them, to try to stop them before the election, and the best treatment to give them after the election is over is merely to forget about them and not to bring them to the floor of the House of Commons of Canada, there to receive great publicity. I think it has been a mistake on the part of members from our province to bring such statements before the house. I recall that some years ago a member from New Brunswick, Mr. Doucet, spent a whole afternoon trying to convince hon. members that the province of Quebec was not able to stage an election on the same high plane as that on which the other provinces carried on their campaigns. As far as I am concerned, not as a Liberal but as a man from Quebec, I deprecate those statements. I think that the Minister of Marine (Mr. Duranleau), a leader in his party, should be very careful to avoid bringing to the notice of parliament an insignificant quotation-an infinitesimal fraction of what was said during

The Budget-Mr. Rinfret
the by-election in Three Rivers-in an attempt to convince this house and the country generally that on that occasion we did not know how to discuss an economic question. My hon. friend knows quite as well as I do that what decided the issue in Three Rivers was the fact that the people wanted public works-they were hungry and unemployed. I do not blame those who voted for the government, because they were simply trying to secure work in order to provide the necessaries of life for their families. Why dig up a few lines in a newspaper or a misquotation of a speech to convince the house that that by-election campaign was not properly conducted? I regret having to speak in this way, for I did not want to make a political speech to-day, but I know that not only the member for Hochelaga (Mr. St-Pere) but other members of the Liberal party, including myself, were charged with making statements that we never even dreamed of making. For instance, we were charged with making allusions with respect to the personal character of the Prime Minister. I want to give my word of honour that to my knowledge not one Liberal speaker indulged in anything of the kind, and certainly I did not myself make any such attacks on the Prime Minister. I think the leading men of both parties should at least try to leave these things alone and not attempt to use them as weapons when they speak in this house.
Having made this statement, I desire to discuss the budget, not in detail, but with reference to the present conditions of unemployment, especially in the city of Montreal. I congratulate the Minister of Finance (Mr. Rhodes) on his very fine speech. It was clear cut, and although it was not very pleasant in all its features, there was good reason for everything he brought forward, and certainly he made it very clear that we shall have' to practise economy to a very large degree in the coming year. I shall not surprise him when I say that having recently been elected Mayor of Montreal I find that the demand for economy is even stronger there than perhaps it is in the federal field. The difficulty is not that we have to economize, but that at the same time we have to find millions of dollars to house, clothe and feed the unemployed. If that problem was not confronting this country I believe it would be a comparatively easy task for every public body to convince their friends and the public generally of the necessity of retrenchment for a couple of years, and that in this way we would achieve magnificent results. But the difficulty is that at the same time we must find not
only thousands but millions of dollars to look after the ever-growing army of unemployed. I am speaking now of my few weeks' experience in office in Montreal. The situation in that city-and I am afraid it is similar in many of our other cities-is perfectly appalling and is much more disquieting than I thought it could be before my election to the mayoralty. Every day in the city hall we have armies of unemployed coming to us, men in the most destitute condition-men who have not worked for a number of months, men who cannot pay their rent, men who have no money left. The condition has become worse for this reason, that some months ago everybody had a little money left, or a friend or relative who could help them, or some piece of furniture that they could sell. To-day all these small resources have been exhausted, and if the situation does not speedily improve the army of the unemployed will be greater next fall than it has been in the past. At the same time, our reserves and means of looking after these unfortunate people have been greatly diminished. That is why I appeal to the government-perhaps I need not-in a perfectly constructive spirit and without the least partisanship, to continue as far as possible their contribution for the relief of unemployment throughout the country. I know what they have in mind, but I would dispel the impression that may be entertained by any hon. member that because the government have given a lot of money for unemployment relief the problem is solved and no further federal assistance is necessary. This is not so. To the best of our ability we must meet that problem as long as it continues with us. I feel the government has gone very far in the way of taxation in some lines, but as a member of this side of the house I shall not reproach the Minister of Finance or the Prime Minister if by taxing incomes more severely, by taxing purchasers through the sales tax, or by any other forms of taxation which this budget provides for, the main object of the government is to find money to contribute further to the municipalities for the solution of the unemployment problem.
A mistake was made-it certainly was a mistake in our city; it may have been made in other cities-as to the character of the works that were undertaken under the unemployment relief legislation. It should have been the prime object of every public body, municipal or otherwise, to undertake work with respect to which as large a proportion as possible of the money spent would have gone directly to the working men. Un-
The Budget-Mr. Rinjret

fortunately in certain towns the authorities undertook to build beautiful edifices or public works of a kind which in the first place involved a large outlay for land and the purchase of very costly materials and a large profit to the contractor. This left only a very small proportion of the funds available for distribution among the working men. I submit that the best way of dealing with the unemployment problem is to undertake work of such, a character as to leave as much as possible, say seventy-five or eighty per cent, of the money to be paid over to the working men directly.


Some hon. MEMBERS:: Hear, hear.


Louis Édouard Fernand Rinfret: I see now there is a
tendency to abandon unemployment works altogether and to favour direct relief. There is this to be said about direct relief-the whole of the money goes to those who need it. But I am afraid that there are social and moral objections to the system. If we could have the people work for the money that we give them it would appeal much more to my sense of equity and social economy. But, I repeat, the main problem is to look after those unemployed men. We are on the eve of a date which in the large cities is going to be distressful to many people,-the first of May. As hon. members know, in the large cities tenants move on the first of May. I know as a fact that in the city of Montreal hundreds, perhaps thousands, of families will have to vacate their homes because they have been in arrear with their rent for a number of months, and they have not been able to secure other accommodation because they have no form of security to offer to their prospective landlords. That is why, although the relief program of the government was to have terminated by the first of May, I take this occasion to appeal to the government to yield to the requests that will be made to them to extend their contribution a few months longer. Many projects have been suggested to us to relieve that special feature of the unemployment situation-the renting feature. People have gone so far as to propose a moratorium, stopping the payment of rents for a few months. Obviously this would be unfair, because it would simiply improverish this class of people, who certainly have every right to the rents they obtain for their houses. I rather think the public bodies will have to devise some means whereby they can secure some kind of help before May 1, or else they will have to organize a system of shelter for those left without lodging at that time.

If during this debate I take the stand that we must more and more undertake work in which manual labour will be the main factor, I would remind the house that there are some works so urgent that they should not be disregarded by the government. I remember that during the war in some of the European countries, which were hardest hit by that great catastrophe, there was still a spirit of carrying on and maintaining certain activities not only because in themselves they were useful but also in order to show that the country had the proper spirit and was carrying on with a certain degree of confidence even in that grave crisis. I think the large companies, to the extent of their ability, and especially the governments, should show that same spirit. In this particular I have not been in entire agreement with the present government in connection with some of the decisions at which they have arrived with regard to salaries and especially with regard to dismissals. I believe the view I have expressed should be taken with regard to a certain class of public works which do not come within the category I mentioned but which are necessary and urgent and should be carried on.
My hon. friend the Postmaster General (Mr. Sauve) is facing me at the moment; one of the works to which I refer is the Montreal postal terminal. I am afraid there has been some disposition on the part of the ministers concerned to pass that question from one to the other. I tried to find out from my genial friend what was to be done. He sent me to the Minister of Public Works (Mr. Stewart); when I went to him he was rather diffident about the whole matter and although he did not say so I felt that he would have been glad to suggest that perhaps I would have been wise to see the Postmaster General. I know that question has been pending for a number of years. I am in a tolerant spirit this afternoon, and I am willing to fake my share of the blame for not having put it through before now, but it is sadly needed in Montreal, and I feel that it would not only serve a good purpose in the way of public service but would also provide a great deal of work. Following the remarks I made on the orders of the day this afternoon, I would urge the government to start that work as soon as possible. I do not know if my hon. friend the Minister of Public Works will be in public life for very many years. Personally I would have no objection, but I know he would like to leave his name affixed to some special work, and I think if that terminal in some way could be connected

The Budget-Mr. Hackett
with him it would be a sweet thought for his old age.


Mr. SAUVE (Translation):: The hon. exminister has not lost his great imagination.


Louis Édouard Fernand Rinfret: I am sorry the Minister of Railways (Mr. Manion) is not present, because I wish to refer to the very unsatisfactory state of the Canadian National terminal in Montreal. There was an amount of $50,000,000 voted not only for the terminal station but for other works throughout the island of Montreal as well, and these works should have been pushed forward with much greater activity than was shown. I will admit that the railway situation to-day might provide some argument in favour of leaving the work in its present state, but I wish I could take the minister to Montreal and show him the huge, ugly excavation that the stopping of this work has left in the very centre of the city. I think that would appeal, as my hon. friend says, to his sense of imagination and to his practical side as well. Montreal was given an opportunity to benefit through the expenditure of a very large sum of money, but that work has been stopped. Now we have had the appointment of a commission to study the railway situation throughout the country; we have not that report, I understand it is not forthcoming and I am afraid it will not be available during the present session, so I fear that no decision will be arrived at by the government in connection with this matter. But I take the stand, and I take it strongly, that the present situation must be remedied. We cannot leave the city as it is at present. This condition is not altogether chargeable to the present government; it is mainly the result of misrepresentations made by former civic authorities of Montreal. I hope it may be that we will have a union station there; the plan may be changed. I may seem to speak in an uncompromising way, but I do demand for the city of Montreal, and in the interests of the proper operation of the railways, and in order to benefit the unemployed, that this work be resumed as soon as possible and that the former program, or one equivalent to it, be followed by the government.
I have only one further word to say, and that is in reference to the coming Imperial conference. I think I voice the feeling of everyone in this country when I say that notwithstanding the political disadvantages which may follow, we all desire that the Imperial conference shall meet with the utmost success. I would suggest to the government-though perhaps they do not need the suggestion-that they approach that conference in a spirit of exchange rather than the spirit of protection which animated the government during the last campaign. They must understand very well that with the crisis as it exists at present one of the surest means of restoring prosperity is to establish a means of cooperation and exchange. If the government can agree on a certain number of exchanges with the different parts of the empire good results will be brought about. I will not point to the fact that in doing so the government will be following our policy more closely than their own; I am not concerned about that at the moment. I do know, however, that if the government could find some means of disposing of our wheat and other agricultural products, at the same time opening our doors to the products of other parts of the empire, they would achieve something of economic advantage to Canada.
I will add only this word: When they are through trading with the empire let them resume trading with the world, as we did in the ten years we were in office. In my opinion the greatest chance of overcoming the present difficulty does not lie in remaining at home and attempting to solve the problem ourselves, but in resuming our relations with the rest of the world in the spirit of confidence and exchange that always exists in years of prosperity, and which is most needed at a time like this.
Mr. JOHN T. HACKETT (Stanstead): Mr. Speaker, there are many topics which have been brought up during this discussion with which I should like to deal; in the remarks of the hon. member who has just taken his seat there were a number of openings for debate not altogether devoid of interest, but since the railway problem surpasses in peril and perplexity all others which are before the country I feel that I should restrict my remarks to this one question.
When the Minister of Finance (Mr. Rhodes) told the house that the financial operations of the year had resulted in an increase of debt of
8119,000,000, there was a murmur of dismay from different parts of the house, this notwithstanding the fact that the excess of expenditure over revenue was known, almost to a nicety, to every member of the house who was interested in it. The weekly reports of revenue and the frequent reports of disbursements made it a matter of almost universal information that the ordinary revenue of the year would be entirely inadequate to meet the expenditure. This total of $119,000,000 included $55,000,000 of special ex-
The Budget-Mr. Hackett

penditure. In this $55,000,000 are $11,000,000 of a wheat bonus and thirty-eight and a fraction millions which went for unemployment and farm relief. There was $44,000,000 of a difference between revenue and ordinary expenditure. There were $17,000,000 of capital expenditures and about $3,500,000 of inactive advances-that is a euphonious way of describing moneys which are paid out, which are never returned and on which interest is never paid.
I said that there was a murmur of dismay and amazement in some parts of the house when the minister announced that the budget of the year before had failed to balance by
5119.000.	000; but when he told the house that there had been a difference between the earnings and the requirements of the Canadian National Railways of $109,000,000, the house was silent and expressed neither amazement nor dissent. Failure of the government to receive as much as was spent in the financial operations of the year was altogether an extraordinary event; to the same extent it had never happened before, and we all hope it will never happen again. Yet, on the other hand, the requirement by the Canadian National Railways of $109,000,000 from the government was not an extraordinary event. It has become a very ordinary event; it has become so customary that for the past ten or fifteen years we have paid and paid and are continuing to pay, until this has become the major problem of Canada. Yet it seemed to provoke very little interest in the house. I am not sure that all hon. gentleman are aware that in the deficit of $119,000,000 are included, under the maritime freight rates, eleven and a quarter millions which are chargeable to transportation; that there is also chargeable to transportation SI,361,000 which went to the assistance of the Canadian Government Merchant Marine and to the West India service, and a further amount of $6,371,000 capital expenditure, largely on the Hudson Bay railway. Therefore, if the total of these three amounts, $19,000,000, is deducted from the deficit of $119,000,000, there remains a deficit of $100,000,000; and if the $19,000,000 are added to the $109,000,000 shortage in Canadian National accounts, we should find that transportation cost the dominion last year $128,000,000. Or, if one prefers to take the figures of the Minister of Railways, who said the requirements of the Canadian National from the government for the year were one hundred and twelve and a quarter millions, the cost to Canada for transportation last year was $131,000,000. Deduct from the
519.000.	000 the six and a quarter millions

which went to the Hudson Bay railway, and the three or four millions which were paid out to roads other than the Canadian National from the maritime freight rates fund, one will find that the Canadian National Railways last year required government guarantees or cash amounting to $121,000,000.
I have said that there was nothing unusual, nothing extraordinary in this demand. We find in the report of the Minister of Railways that for the year 1929 the increase in the debt to the public of the Canadian National Railways was $144,670,000, and for the year 1930 it was $92,326,000. I have mentioned that last year it was one hundred and twelve and a quarter millions, and the minister has told us that this year it will be at least seventy millions. This demand upon the wealth of the country is so great, and the possibility of putting an end to it seems to be so elusive, that the railway problem is known to be the major problem which Canada has to contend with at the present time.
To solve that problem, a royal commission has been appointed. Men of great experience, men who know the 'business of transportation thoroughly, men in high judicial office, and men fully acquainted with conditions financial and economic throughout the country, have been brought together, quite regardless of any political allegiance any of them may have, and are making a complete survey of transportation in Canada. It was thought that that report would be available for this session but it is now apparent that it will not. When the report is made it will be received by the house; the report may be controversial the legislation based on it may be contested, I think it is fair to assume that a year must go by before any shred of the legislation to be suggested by the commission can be applied to this great problem.
During the past year parliament as a whole has enacted a number of provisional or conservatory measures. We have acknowledged that conditions are very unusual and we have done unusual things in an effort to cope with them. In this category of enactment may be found the suggested reduction in the salaries of civil servants, the reduction in the indemnities of members of the Senate and of the House of Commons and the withdrawal of amounts usually voted to worthy, if not necessary enterprises. Large sums of money have been voted for unemployment, farm and direct relief and we have endeavoured by extraordinary measures of every type to meet a most difficult and trying situation.
On more than one occasion I have stated in this house that I believed it was an error

The Budget-Mr. Hackett
for the government to engage in the ownership and operation of railways. It is not my intention to reiterate that belief or go into the long yesterdays of railway ownership and administration; it is not my intention to state whether or not that operation has been successful, as that aspect of the question is being investigated by a royal commission, nor is it my intention to prescribe any permanent solution of the problem, as that again is a prerogative of the commission and is a function which I believe it is well capable of performing. However, while this commission is investigating the problem and seeking a remedy for our ills, we as a parliament have not discharged our full duty towards the taxpayers and the financial integrity of the country-if we sit by and merely await events. I can imagine only one greater misfortune than the taking over of the Canadian National Railways by the Canadian Pacific Railway, that is the taking over of the Canadian Pacific Railway by the Canadian National Railways. I do not believe it is desirable that there should be a merger of these two railway systems; I think it is to the advantage of Canada that there should be competition. I think the country would be better off if it was served by half a dozen or even a dozen smaller railroads than by one or two big ones. Canada like most other countries has been a victim of the mania which holds that anything is better because it is bigger. We have big banks, big corporations and big universities and institutions of every description which in many instances appear to have outrun our capacity or ability to administer and manage. Notwithstanding the statement of the hon. member for Brome-Mississquoi (Mr. Pickel), which I think was made a little bit in the spirit of levity, I do not wish to see the Canadian National Railways swallowed up by the Canadian Pacific Railway any more than I wish to see the Canadian Pacific Railway swallowed up by the Canadian National Railways.
It is my belief that these two systems are both unsuccessful at the present time because there is not sufficient business in Canada to maintain them in their present state of perfection and efficiency. There never was enough business in Canada and there never will be enough business to maintain these roads until we have another ten million people.
Mr. St-PERE: The hon. member is not so optimistic as the Minister of Marine (Mr. Duranleau).


Mr. HACKETT:: My suggestion is that
the operation of these two roads be pooled 41761-139
for the period which separates us from the day when some better arrangement can be made or when some revival in business takes place. This may seem to be a very unusual statement, to some it may seem to be an impracticable suggestion, but in these days when we are doing so much that is unusual, when we are doing so much that has never been done before to meet a situation, without a precedent, I do not hesitate to advance it. According to its annual report for 1931, the Canadian Pacific Railway had working expenses of $116,000,000, the annual report of the Canadian National Railways including eastern lines shows that its working expenses amounted to $200,000,000. If these two systems would agree to a limitation for a year or two of the wasteful competition which is gnawing at their vitals, if thereby they could cut down their cost of operation by twenty-five per cent, they would offset in entirety the $19,000,000 deficit between net earnings and ordinary charges of the Canadian Pacific Railway and the $60,000,000 deficit of the Canadian National Railways. That, it seems to me is a proposal which should be seriously considered by the government, the Canadian National Railways and the Canadian Pacific Railway Company. The property of either company will remain exactly where it is to-day. An operating board, either entirely independent of both companies or composed of members representative of each company and presided over by an independent chairman, would manage those roads for the benefit of both systems on the basis of last year's operations.
Those of us who live in Montreal know each night at seven o'clock two perfectly appointed trains, equally empty, leave for Ottawa. We know trains from Montreal go to Toronto, trains from Toronto come to Ottawa and trains cross the continent in rivalry with one another, competing for a business which does not exist. They are forced to give a service which is beyond our requirements, to say nothing of our capacity to pay for, simply because neither can, without admitting inferiority, depart from the excellence of the service given by its rival. Last year, according to the Minister of Railways and Canals, the Canadian National Railways incurred a loss of $24,000,000 on its passenger traffic alone. This at least could be eliminated. Then there is the cost of traffic solicitation, which is entered in the books of the Canadian National at between $6,000,000 and $7,000,000 for the year, and I assume that the cost to the Canadian Pacific cannot be much less in proportion to the volume of its

The Budget-Mr. Hackett

business. There is also the cost of maintaining rival ticket offices, stations and like competitive organizations throughout the whole country. There must be ample equipment, without replacement, to run either road or both roads for an extended period of time if they are not called upon to operate in competition. This great saving of $80,000,000 could be effected without seriously impairing the service that is given to different parts of the country. It would not make much difference to people coming from Montreal whether they took a train from Windsor or Bonaven-ture station; the trains leave there at the same time and they arrive here at the same time, but the cost of the second train would be entirely eliminated. The same thing can be said of transcontinental passenger and freight services. I repeat: my idea is that this would be merely temporary, conservatory in its nature and to avail only until a better method can be found or until this tempest to which we have been subjected for two or three years now, has blown itself out.
I know very well the easiest course is to let matters continue as they are, but the cost of railway transport must be paid either by the classes served or by the taxpayer of the time or, with compound interest, by posterity. The rates which prevail on our railroads are undoubtedly low, but at this particular time it would be almost impossible to raise them; the taxpayer is not willing and frequently not able 'to bear much more taxation; yet if some method is not found whereby the annual requirements of the Canadian National Railways can be met otherwise than by mortgaging the future, the financial doom of this country is sealed; it cannot go on paying out $100,000,000 and more every year for the expensive toy which the Canadian National has become. I would therefore suggest, if it is impossible for these two railway systems to come to an understanding whereby they can effect a saving of an amount equal to their deficit of last year, that a tax known as the Canadian National tax be inaugurated in the form of a stamp tax and applied to all retail purchases other than food, so that the Canadian people, by paying that tax for a few months, might know exactly what the Canadian National is costing them and get at least a taste of the burden that we are placing upon future generations. The hon. member for Hocbelaga (Mr. St-Pere) last night Said very truthfully and candidly that Canada had played politics with the Canadian National Railways. A free translation of his utterance as found on page 2182 of Hansard is as follows:

We have played politics with the Canadian National Railways and we are now called upon to pay the price. I shall not say of our folly but of our inordinate ambition to show the rest of the world that Canada had the biggest railway system in the world.
I do not find fault with either the accuracy of that statement or the spirit in which it was made, but I feel, when the people of Canada knew, as they would do were a tax, let us say of one-half of one per cent, placed upon all retail purchases with the exception of food, something of the expense that this game of politics has imposed upon our country, they would not be happy and possibly not again tolerate those who had played the game. But I doubt whether this expedient of taxation is necessary. I know my own reluctance in making this suggestion, because I dislike the element of monopoly which adheres to it. I can well appreciate the hesitancy of a railway executive, whether he be in the employ of the Canadian National or of the Canadian Pacific, of entering into a relationship of the type I have outlined. He might feel that his competitor was learning something of his secrets, if not of his tricks, and that as a result of that relationship his competitor might derive an advantage. I can understand the reluctance of the government to initiate negotiations tending toward such a relationship, but the fact remains however that last year one road suffered a loss of $19,000,000. I cannot believe that the management or shareholders of the Canadian Pacific Railway can rejoice very much in that fact. Last year the Canadian National Railways lost to the Canadian people something over $60,000,000, and I know that we are not very much elated over that. True, the actual loss did not measure up to the total requirements from the government. If we take into consideration the stock and debenture guarantees and scrutinize carefully the cancellation of maturing securities we find that since 1919, Canada has, on the average, provided to the Canadian National Railway, nearly a $100,000,000 per year. When times were good the demand was largely for new capital and when bad it was for money to pay deficits. Whether for deficits or for capital expenditures the money had to be found and guaranteed by Canada. Even when it was not guaranteed Canada was effectually responsible for it because of her interest in the Canadian National Railways. If these railroads are to operate their debts must be paid. We have reached a time when we cannot continue to provide these amounts.
While the royal commission is seeking a way out of this impasse it is possible by the

The Budget-Mr. Coote
joint operation of these two railways to save at least $80,000,000 per year. I for one suggest that the shareholders of the Canadian Pacific Railway and the taxpayers of Canada might well consider this opportunity of relief. I am not one who entertains hope of relief from ingenious short cuts 'back to prosperity. We must economize, and in many instances we must begin again at our beginnings. This takes courage and initiative and will entail the doing of many things which hitherto have not been done. I make bold to suggest that the government will not have acquitted itself of its full duty unless it avail itself of every opportunity of effecting economy, even while the royal commission is carrying out its work. Without slackening energy or sinking heart it must go forward with this difficult task or, in the eyes of at least some, it will have been remiss in its duty. It behooves this parliament to take every means available to stem this gush of the financial life of this country. Unless we take all precautionary measures, unless we act promptly the patient may die while the surgeons consult.


Mr. G. G. COOTE (Macleod):: Mr. Speaker, first may I say that I regret very much Canada should be in such an unfortunate position, financially, at a time when the new and genial Minister of Finance (Mr. Rhodes) presents his first budget to the house. I cannot be expected to follow at length the remarks of the hon. member who has just preceded me (Mr. Hackett). He has dealt entirely with the railways problem, and in passing may I say that there is only one solution for our railway problem in Canada, namely to give the railways traffic to haul. We had very little difficulty with the Canadian National Railways in 1928. In that year they earned enough to pay operating expenses and interest on the bonds held by the public. If we bring business conditions in Canada back to the level of 1928 we may solve our railway problem, and that is the only way it can be solved.
Never in my life time have I seen business conditions in Canada as bad as they are at the present time. Our unemployed and dependents number one-fifth of the population. The purchasing power of another two-fifths has been at least cut in two. Some of our industries have almost ceased to function. Most farmers are producing at a loss, and in many cases credit is almost non-existent. As is evidenced by reduced receipts from taxation, trade is at its lowest level for many years. So far as I can see there is nothing in the budget we are now debating to im-
41761-139J
prove conditions; in fact, I think it will only make matters worse. Certainly through its policy of rigid economy it will add to the number of unemployed. The best example I know of rigid economy-and I should like to apologize to any Scotch members in the house-is a dead Scotchman. Thinking of him, we have no idea of prosperity. Because of the increased rate of taxation placed upon business we must expect more unemployment.
I believe that to balance a budget at a time like this is a mistake. Ever since the world began there have been periods of prosperity and depression. That is so at least as far back as history records. We can still draw a lesson from the way some depressions were handled in the past. The book of Genesis contains the story of a king of Egypt named Pharaoh who, when warned that a [DOT] time of depression was approaching, appointed a very able Minister of Finance named Joseph. Joseph laid up a surplus to take care of the lean years, and I believe we might follow the example set by him. In periods of prosperity the nation should set aside sufficient money to tide us over years of depression. I know that our ministers expect these depressions to oome, because in the last few weeks we have heard at least two of them use the expression "normal depression." It is true that this is an artificial scarcity we are suffering from to-day. There is no real scarcity of goods; it is only a scarcity of credit to move those goods into consumption. But if we are going to be stupid enough to continue under such a system I think we should lay aside surplus revenue in the good years to look after the lean years. There are two ways of increasing revenue: one is to increase the rate of taxation, but that has its limits; the other is to leave the rate of taxation the same, but increase the business of the country. By this budget in order to secure additional revenue the government have increased the rate of taxation, but I warn them that in many cases the limit has been reached, and if taxation is increased much further it will only hamper business. Taxation in the year 1928 produced
8460,000,000, at a rate much lower than the present rate of taxation. Business was prosperous. This was possible because of the relatively high price level that obtained in Canada at that time. If we can get the price level back to that of 1928 we can again balance our budget without increasing the rate of taxation.
As I said a moment ago, the present budget adds to unemployment. If we are to pay our debts and our interest we must have our papulation producing goods of some kind that
The Budget-Mr. Coote

can. be sold. To get our people at work and to pay our way we must have money in circulation and we must raise price levels. Whatever way is adopted to bring this about, we must be prepared to allow our dollar to go to a greater discount in the United States. Our people must get used to seeing it lower. They will grow to like it for they will find it better for Canada. To get back to the condition of 1928 we must have more trade; more trade requires more money; we must increase the amount of money in circulation in Canada. May I point out, Mr. Speaker, that the issue of dominion notes, which is the basis of bank credit, has been restricted, and on December 31st last stood at only $174,000,000 as compared with $327,000,000 in 1918. In September last it was only $141,000,000. If the ratio of increase in the issue of dominion notes in the period from 1900 to 1920 had been maintained up to the .present time, we would have in circulation betwen $400,000,000 and $500,000,000 in dominion notes. If our issue of dominion notes at this time were increased to that point it would relieve the dominion of interest charges on at least $200,000,000, and it would make a saving in the budget this year of $10,000,000, which is considerably more than the government are going to save by cutting the salaries in the public service.
The question naturally arises in the minds of some as to how this money can be gotten out to the public. I will not take very much time over that, but will content myself with suggesting three ways of doing it. One is to bring down to this parliament a program of public works. I remember very well the campaign in my constituency in 1930 was run by the Conservatives very largely on the promise of public works-they would have a great program of public works to give employment to all the unemployed. This year we have the smallest appropriation for public works since I have been a member of this house. We might engage in a housing scheme, such as that which I suggested to the house a few weeks ago. After hearing the Prime Minister's statement the other day in regard to the Beauharnois power project, I think we might very well take over that project and complete it as a public enterprise. It would be a splendid earning asset for the dominion and would amply justify the increase of our issue of dominion notes to pay for the completion of the work.
The budget is, I think, a pretty good indication of the economic condition of a nation. If we realize this fact, then this budget, with an expenditure of $119,000,000 more than revenue gives us a good idea of the financial position of the taxpayers and of the condition

of industry in this country. The difference between receipts and expenditures this year shows the biggest deficit of any year since confederation, except when we were financing the war between 1916 and 1920. For the period from 1921 to 1930 there was a surplus of receipts over expenditures amounting to $463,000,000-an average surplus of $46,000,000. In 1930 this was suddenly turned into a deficit of $78,000,000, and for the past year, 1931, the deficit is $120,000,000.
Now, the reason for that was not a change of government, but the fact that Canada, in company with the rest of the world, has been suffering from the greatest depression of modern times. The depression is due to the collapse of the commodity price level. This collapse of prices was due to a shortage of gold, which was really due to the gold standard. Prices are the ratio of gold to commodities; when gold is scarce the price of gold rises, and commodity prices fall. The gold standard depressed prices to the point where England, the mother of the gold standard, was forced to abandon her child. Canada being on a gold standard has suffered the full force of this world deflation, although it was inaugurated principally in France and the United States. I know it is quite a common thing for governments to assume credit to themselves for any good times which the people may enjoy under their particular administration, but in reality, as a usual thing governments have very little to do with economic conditions, and a change of government usually makes very little material difference to the people because the policies carried out by different governments do not substantially differ in vital economic matters. In fact as far as economic conditions are concerned, you could very seldom tell whether there has been a change of government at all. But I must say that the tariff policy of this government has had some real effect upon the business of Canada, and as a matter of fact it has made conditions worse. It is not often that any government has as good a chance to do anything worth while for the people as easily as this government could have done last September when Great Britain went off the gold standard. The Prime Minister then, missed the chance of a lifetime. He had every reason, every excuse if you like, for saying: We will do exactly the same as England has done, we are forced off the gold standard and we will not attempt to maintain it. He might have done like Mr. Snowden and said: We cannot pay out gold, we will suspend the gold standard, but we will continue to meet our foreign obligations in gold where they are payable in gold. But the

The Budget-Mr. Coote
Prime Minister is reported as saying: We intend to maintain the gold standard. He had two alternatives. Although he could not keep Canada on the gold standard, he could keep as near as possible to that point, maintain our dollar as high as possible in the United States, and by doing so keep the value of Canada's exports down to a low level. He could, on the other hand, have thrown in his lot with Britain and kept the currency of Canada at par with the British pound, and in this way have increased the price of Canada's exports. Canada ever since last September might have been one of what is termed the bloc of sterling countries-Britain, Sweden, Norway, Denmark and a few others in Europe.
I have shown repeatedly in this house that by keeping our dollar at a high level in foreign countries, especially in the United States, we keep down the price level of our exports. I will give one example. Wheat is our greatest item of export. Perhaps it furnishes more employment and puts more money into circulation than any other item produced in this country. The price of wheat is set in Liverpool and we are paid in sterling when we sell our wheat to Great Britain. At the present rate of exchange we receive for each pound $4.18. If our currency were at par with Britain's we would receive $4.87. In other words we are now losing 69 cents on every pound sterling-at one time we were losing as much as $1 on every pound. If our currency were at par with Australia's we would receive $6 for each pound. Our chief competitors in the production of wheat are Argentina and Australia. I leave it to any member of this house, ibut particularly to the Minister of Trade and Commerce (Mr. Stevens), an expert in dealing with depreciated currency-as to how the wheat producers of Canada with the pound stering 'bringing them $4.18 can be expected to compete with the wheat producers of Australia and Argentina when they are receiving the equivalent in their currencies of $6 to the pound. It cannot ibe done. Canada, by keeping up the dollar in New York, has kept down commodity prices and curtailed the purchasing power of the farmers and all those employed in our primary industries; it has curtailed employment; it has depressed business and has curtailed the earning power of our industries, our railways and the majority of our great corporations. It has cut the power of the people to pay taxes and interest. I should like to sum up this matter in a few words. Had the government frankly abandoned the gold standard our money surely would have gone down to the level of the pound, or it
could have been easily kept there. If this had been done there would have been a decided increase in commodity prices, which would have increased the purchasing power of farmers and other classes in our export trade. These people comprise over fifty per cent of our papulation, and there would have been a very definite stimulus to business. The taxes collected by the government are dependent upon the amount of trade carried on. The government would have secured a sufficient increase in taxes to cover the increased expenditure necessary to pay the exchange on their obligations in the United States. I may say that I discussed this matter with a very prominent financier in Montreal, who expressed that opinion. In addition, the government would have been saved a considerable expenditure, because we would have had less unemployed people to care for. Had the government kept our dollar in line with the British pound there would have been no need to place a dumping duty against British goods; there would have been no need to fix the value of the pound for duty purposes at less than par. The government would have saved itself a lot of trouble and a lot of criticism, and I believe many of the problems with which the government has had to deal have resulted from the policy which was adopted in September, when Britain went off the gold standard.
I think a comparison of the policies followed by England and Canada will illustrate the situation. England frankly acknowledged to the world that she could not redeem the pound in gold. Her currency depreciated in gold countries approximately 20 per cent more than Canada's currency depreciated, and as a result England has been able to secure foreign exchange to meet all her liabilities at maturity. A recent press despatch stated that England has paid off $200,000,000 of an obligation which does not mature until next August. Business has improved; unemployment has been lessened, and the bank rate in England has been lowered four times since September, till now, I believe, it is 3j per cent. I would like hon. members of this house and members of the government to compare that with the rate in Canada to-day. I have a press despatch here which says that the British bonds in New York have reached the highest level since September. A $1,000 bond is now selling at 81,007.50.
There is one point I should like to emphasize while I am on this question. If government policy is exercised to artificially improve the rate of exchange, that is, to hold up the dollar, in effect this should be regarded
The Budget-Mr. Coote

as a sort of forced contribution from those who are producing for export, to governments, municipalities, corporations and individuals for whose benefit the rate of exchange is being artificially held up. I understand that the financial policy of this country has been to hold the dollar at as high a level as possible in New York, 'because of the obligations this country must meet in the United States. I agree with the Prime Minister that it is desirable that these obligations should be met at maturity in the terms in which they are expressed, but I believe that can be best done by allowing our dollar to go down to its natural level, which it would have reached in the natural course of trade. I think if we had followed the course taken by England we would have been better able to buy this foreign exchange, but if it comes to the question whether these obligations are to be paid according to the bonds or whether we are to make good our word to the people of Canada that we will give them employment, I think the claims of our own people come first. I would say to the Prime Minister that many of these people in Canada voted to return this government to power. The New York bankers did not have that privilege, though I suppose they would have voted for this government if they had been allowed to do so.
I do not want to dwell on this phase of the subject too long, but I should like to gum up some of the beneficial results that would have accrued if our currency had been kept on a par with the pound. The price of all exports, farm products, fish, minerals, pulp, paper, lumber and so on, would have been increased. I believe the industries in every province in Canada would have been helped. It would have given the exporters a margin with which to pay taxes and interest; it would have enlarged the market for Canadian coal; it would have given more employment; it would have increased the revenues of the government; it would have reduced the number of unemployed and the expenditures of the various governments in connection with unemployment relief; it would have helped balance budgets; it would have corrected any adverse trade balance; it would have given farmers and other exporters a premium with which to pay the higher prices demanded for Canadian products under our tariff. Through improved business conditions it would have increased the market price of securities held by the banks and other financial institutions so that they would not have needed to write up the value of those securities as authorized by the order in council. It would have led

to lower interest rates and thus reduced the budgets of all our governments.
While I am on the question of interest rates I should like to say that I believe the cause of high interest rates in Canada to-day is a lack of confidence on the part of the people. It might be referred to as hoarding in our savings banks. During times of depression such as those we are going through, savings exceed (investments, and government action should be taken to correct that condition. I believe the government could and should have kept interest rates down by the scheme proposed a few years ago by the present Prime Minister (Mr. Bennett). In 1927, when the right hon. gentleman was a member of the opposition, he suggested that Canada should create a consolidated 4 per cent security of the dominion and provide by legislation that a percentage of the revenue of the insurance companies, which at that time amounted to a net total of over $110,000,000 yearly, and an unstated amount from the savings banks deposits, should be invested in these securities. He suggested that these 4 per cent securities should be issued in renewal of maturing bond issues. The Prime Minister said this would have provided a safe security for the funds invested with our insurance companies and would have enabled the banks, which pay 3 per cent on deposits, to add a measure of stability to their own assets by purchasing a small quantity in addition to the securities already held. If this had been done it would have held interest rates down.
The Prime Minister floated the national service loan at too high a rate of interest. This depressed the price of previous issues, and made it difficult for insurance companies, banks and other institutions holding bonds to show a good financial position. I think this really led to the issuing of the order in council authorizing the banks to write up their securities, because I notice that the order in council was passed because of the depressed prices of good government securities held by the banks.
I feel, Mr. Speaker, that the time has come when we must exercise control over finance in Canada. Municipalities and provinces have been forced to pay impossible rates of interest, rates which will destroy our economic machine. According to a recent press despatch the province of Alberta sold bonds at a price to yield 6.77 per cent interest, and those bonds are free of municipal and provincial taxes and succession duties. I think that is an impossible rate of interest. Interest must be paid out of production. The other night the Minister of Trade of Commerce said that

The Budget-Mr. Coote
interest must be taken out of the productivity of the country. In the province I mention the chief industry is agriculture, and the sheet anchor of agriculture, if I may put it this way, has always been held in this house to be the dairy industry. A farmer in that province recently sent me cream cheques covering six cans of cream averaging sixty pounds each, which brought him an average of $1.97 per can. That works out at about 33 cents per gallon. How can the farming industry pay the present rate of interest with prevailing prices? Attempts to collect taxes enough to pay that rate of interest would bankrupt the farming industry. The fall of commodity prices has doubled the burden of interest. A rate of 6.77 per cent is more difficult to pay now than 13 per cent would have been in 192S. In 1931 it took three times as much wheat to pay a given debt as it took in 1928. A rate of 6.77 per cent on present prices, if it is to be paid with wheat, is as great a burden as 20 per cent would have been in 1928, and the Minister of Trade and Commerce admits that a rate of 8 or 10 per cent is unbearable.
Surely vve cannot leave the matter of finance uncontrolled any longer. We must increase commodity price levels or wipe out in whole or in part the debts now existing. And action cannot be delayed very much longer. When interest cannot be paid out of production that interest becomes usury, and history shows that usurious debts are generally wiped out.
The most important event in the financial world since the war has been the abandonment of ithe gold standard by England. Speaking of this occurrence, the Minister of Finance, in his budget speech, said:
Our policy was therefore directed to accomplishing two results:	First, to ensure the
prompt payment of all obligations due abroad according to contract and, second, to assist in maintaining normal currency and credit conditions within Canada,
Considering the rate of interest which I have just quoted, I am sure it cannot be said that normal conditions have been maintained. The happenings of this year must, I think, convince us that the financial machine is breaking down, and we must exercise control. This, I believe, is the first time in the history of Canada that the federal government has had to assume the role of banker for the provinces-and these are the words used by the Minister of Finance. The collapse of the Manitoba provincial savings bank, the orders in council authorizing insurance companies and banks to write up the value of their securities, and the fact that there is
practically no credit for agriculture, are surely good proof that normal credit conditions have not been maintained. If these are normal conditions, then we certainly are in need of a new credit system.
The real basis of credit has well been described as the ability to produce goods as, when and where required. Does anyone think that we in Canada to-day are making use of our real credit? I believe that our Bureau of Statistics, if called upon, could show that our capacity to produce goods and services is far beyond our actual consumption. I think they might very well present to this house a statement showing our capacity to produce these goods and services, and showing actual consumption; and they might also estimate our possible consumption. If they showed the ratio of production to consumption, there is no doubt as to what the result would be. It would show that we have a surplus of goods and services, that we have the capacity to produce abundantly; and if it did show that we have that capacity then it would be for us to decide whether or not we want our people to have an abundance. If we decide that they should have an abundance, then I think it will be inescapable that we must have a new credit system.
I would urge the Minister of Finance, when he brings down his budget next year, to include in it a statement of goods and services produced in Canada, together with a statement of our actual consumption. It would be very illuminating for parliament and for the government and the people of Canada. If the attention of the Canadian public were centred on this problem, they would soon see that we are suffering poverty in the midst of plenty. Surely we are crazy to keep ourselves in a state of want and privation when we have a surplus of goods all around us, and an industrial machine which is working only part time. Only when we are convinced of these facts shall we begin to take a serious interest in this matter.
Money is our medium of exchange, and the amount issued should depend upon the amount of goods and services we can produce rather than on ithe amount of gold which is in a vault 'somewhere in the east 'block, and which no one ever sees and no one is ever allowed to use. Doctor Coates, of London, is reported to have said:
When central banks want to issue credit, they look in the cupboard to see how much yellow metal they have; they might as well look in the cellar to see how much coal they have.
The root cause of our trouble is the gold standard. The Minister of Trade and Com-
The Budget-Mr. Coote

merce said that prices were expressed in terms of currency, currency was attached to gold, and the hoarding of gold caused a fall in price levels. The gold standard, as I have said, is really at the bottom of our troubles, and after our experience of the last two years, why should anyone want to go back to it? Surely there is a better way. Gold has its use for the settling of international balances, and it should be reserved for that purpose only-that is, monetary gold. There is no need of it in connection with internal currency. This use only ties it up so that it is not available for the purpose for which it should be used.
I find that a great many people are very much afraid that if we have this inflation or reflation, whatever it may be called, when we do increase the amount of credit there will be a great increase in the cost of living. I draw that inference from the remarks of the hon. member for Weyburn (Mr. Young) the other day. What we are asking for is controlled inflation, controlled to accomplish a certain purpose. We want to restore the price level of 1928, and that can be done without unduly increasing the cost of living. If action is taken to prevent undue profits being made, there need be no appreciable rise in the cost of living, and when we do take the necessary action to increase the amount of money circulating in the country, I suggest that we take action, through a business profits tax and a tax on large incomes, and a drastic inheritance tax, as well as the control of capitalization of companies, so as to prevent any undue rise in the price level.
In the true sense of the word, real inflation does not begin until the amount of money in circulation is more than is required to move goods in transit at a normal price level. If you issue more money than is required to move the amount of goods and services produced and available, you have inflation of money and also inflation of prices. But if there is always a sufficient amount of goods to meet the volume of money put out, there will be no inflation of prices.
I wish to refer for a moment to the statement made by the hon. member for Weyburn. He said:
The trouble with the price level is not that it is not stable, but that it is not level. The difficulty is not the price level but the inequalities within the price level. . . . This proposal to correct things by raising or lowering the whole price level will never iron out those inequalities.
The hon. member himself states that these inequalities were present in 1928. If they were

present at that time, then I say they have been multiplied several times by the present price levels. We want to get back to the price levels of 1928, and if there were inequalities in those levels, they can be ironed out without upsetting that level. It is the average level of prices we are attempting to have raised.
It is well known to anyone who has studied political economy that in periods of depression the prices of farm products drop farther and faster than do the prices of manufactured goods, and that when the period of depression is over, the prices of agricultural products will rise faster and farther than retail prices. We want to get back to the levels of 1928. If we can do that, we will then have increased the prices of agricultural products by 50 per cent and retail prices by around 10 to 12 per cent. If there are inequalities in the price levels, all right, let us iron them out. I do not want the hon. member for Weyburn to run away with the idea that because we would increase the amount of money in circulation so as to raise price levels, we intened to increase the inequalities which existed in the price levels of 1928.
For the benefit of the house, I should like to sum up our present position. Because of the action of the government in keeping our dollar at a high level in the United States, this country's economic life and financial stability and the workers of the country have been placed at the mercy of the bankers in the United States and France. These bankers are not guided by any general consideration for our interests, they are guided solely by their own personal interests. Canada to-day might well be described as the thirteenth federal reserve district. I wish the government would exhibit a. little more of that sturdy, robust, red-blooded Canadianism of which it boasted so freely when it was in opposition. I wish the Prime Minister would show a little more of that aggressive attitude in connection with finance which he manifested so clearly to the farmers during the last campaign. He told the farmers that he would make tariffs fight for them, but so far as I can see he has not succeeded. He could make finance fight for the farmers, he could make the rate of exchange fight for them. Keeping our dollar at par with the pound sterling would make it worth 60 or 65 cents more to the farmer; that would be making finance fight for the farmer, and would be appreciated. Instead

Questions
of that, the Prime Minister warns us that the New York money market is the only market open to us and we should be very careful of what we say for fear of offending the New York bankers. It is time we had a national financial policy for Canada.
On motion of Mr. Irvine the debate was adjourned.
On motion of Mr. Rhodes the house adjourned at 5.53 p.m.
Thursday, April 21, 1932