Hon. C. H. CAHAN (Secretary of State):: I beg to lay on the table of the house three copies of a resolution of the legislative assembly of Quebec in regard to lotteries, which has been officially communicated to this government, and also three copies in English and in French of the act of the legislature of the province of Quebec passed last week.



DISCOUNT AND LOAN CORPORATION OF CANADA

[Stage Direction]
Mr. A. U. G. BURY (for Mr. Sullivan) moved the first reading of Bill No. 58, to amend an act to incorporate The Discount and Loan Corporation of Canada.
Some hon. MEMBERS:: Explain.


Mr. BURY:: I am moving this at the request of the hon. member for St. Ann (Mr. Sullivan), and in doing so I wish it to be understood that I am not sufficiently familiar with the provisions of the bill to be willing to be taken as sponsoring them all. But I understand that the bill makes certain amendments to the bill passed by this house last year. The explanatory note reads thus:
The main objects of this bill are to provide that the company shall be known in French under the name of "La Corporation de Prets et d'Escomptes d'u Canada": also that the company be empowered to lend money secured by pledge of movable property; and further to improve _ the wording of section five of the company's act of incorporation.
I understand that there are no very vital or important amendments otherwise.
Motion agreed to and bill read the first time.



QUESTIONS

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

Mr. GOTT:: 1.	How many hogs were slaughtered in the recent hog cholera epidemic in Essex county?
2.	How many departmental officials were engaged during the epidemic?
3.	What was the total amount paid to the farmers for their losses?

Questions
4.	How are losses computed and paid?
5. How many hogs were immunized or treated during the outbreak?


Mr. WEIR (Melfort):: 1.	1,331.
2.	19.
3.	$5,620.76.
4.	Two-third value, permitted by the act.
5.	12,814.


HARROW, ONT., EXPERIMENTAL FARM
Mr. GOTT:: 1. What was the cost of operating the Harrow, Ontario, experimental farm for the fiscal year ending March, 1934?
2.	What returns did the farm make?


Mr. WEIR (Melfort):: 1.	$38,499.96.
2.	$5,874.99.


MANUFACTURE OF MILITARY BOOTS
Mr. MICHAUD:: 1.	Is the press report under date April 10, that the Department of Militia and Defence has awarded a contract or contracts for the manufacturing, in the maritime provinces, of nearly 20,000 pairs of military boots, correct?
2.	If so, what firm or firms received the contract or contracts?
3.	What quantity was allowed to each firm or firms?
4.	Were any tenders asked before contracts were allowed?
5.	If so, when were tenders called, what firms tendered, and what was the amount of each tender ?
6.	What price per pair was paid by the Department of Militia for such army boots, and to what firm or firms?


Mr. SUTHERLAND:: 1,	2, and 3. Contracts as follows were awarded for 20,000 pairs of boots required for issue to men employed on the various relief projects throughout Canada operated by the Department of National Defence:
Pairs
J. A. & M. Cote Ltd., St. Hyacinthe, P. Q	 9,000
A. E. Wry-Standard Ltd., Amherst, N. S	 3,000
Eudore Fournier, Plessisville, P. Q...	2,000
Corbeil Ltd., Montreal P. Q	 2,000
Tetrault Shoe Ltd., Montreal, P. Q... 2,000 Tillsonburg Shoe Co. Ltd., Tillsonburg, Ont	 2,000
4. Yes.
5. Tenders were called on March 1, 1934. The firms who tendered and the amount of each tender were as follows (prices include sales tax, and unless otherwise noted are for delivery at Ottawa):
J. A. & M. Cote Ltd., St.
Hyacinthe, P. Q	 $3-2754 a pair
A. E. Wry-Standard Ltd.,
Amherst, N. S	 3-3708 a pair
Eudore Fournier, Plessisville, P. Q	3-3920, 5,000 prs.
3-4980, 15,000 "
Dufresne & Locke Ltd.,
Montreal, P. Q	 3-4344 a pair
Corbeil Ltd., Montreal, P. Q. 3-5086 a pair
Pair
Tetrault Shoe Ltd., Montreal, P. Q. $3-5404 Tillsonburg Shoe Co. Ltd., Tillsonburg, Ont	 3-5404
LePage Shoe Co., Montreal, P.Q. 3-5510 Williams Shoe Ltd.. Brampton, Ont. 3-5828 MacFarlane & Lafaivre Ltd., Montreal, P. Q	 3-6040
T. Sisman Shoe Co. Ltd., Aurora,
Ont	 3-6570
Tebbutt Shoe & Leather Co. Ltd.,
Three Rivers, P. Q	 3-6994
J. Leckie Co. Ltd., Vancouver, B.C.
(delivered at Esquimalt)	 3-7630
(delivered at Ottawa)	 3-9750
St. Arnaud Biron & Cie Ltee., St.
Genevieve de Batiscan, P. Q	 3-8690
John Ritchie Co. Ltd., Quebec, P.Q. 3-94 Valentine & Martin Ltd., Waterloo,
Ont	 4-00
John Palmer Co. Ltd., Fredericton,
N. B	 4-2188
Palmer-McLellan Shoepack Co.,
Fredericton, N. B	 4-3248
Eagle Shoe Co. Ltd., Montreal, P.Q. 4-4520
The lowest tender received was that of Messrs. J. A. & M. Cote Ltd., of $3-2754 per pair. In order to distribute the work and to expedite delivery, the next six lowest tenderers were asked if they would accept orders for the number of pairs shown at the price of the lowest tenderer:-
Pairs
A. E. Wry-Standard Ltd	 2,000
Eudore Fournier	 2,000
Dufresne & Locke Ltd	 2,000
Corbeil Ltd	 2.000
Tetrault Shoe Ltd	 1,500
Tillsonburg Shoe Co. Ltd	 l'soO
All these firms, with the exception of Messrs. Dufresne & Locke, stated they would accept orders at the price of the lowest tenderer.
6.	$3-2754 per pair (including sales tax and for delivery at Ottawa).


GRANDE-ENTREE CHANNEL
Mr. BRASSET:: Has the official in charge of the buoys at Grande-Entree channel, Magdalen islands, been paid for the work he performed during the season of 1933?
Questions


Mr. DURANLEAU:: Yes. The maintenance of the buoy service at Grand Entry, M.I., is under contract with Mr. Willie Doyle of that place for the sum of $200 per annum. His accounts for the six months ending July 2, 1933, and January 2, 1934, have been paid.


DUNDURN, SASK., UNEMPLOYMENT CAMP
Mr. TOTZKE:: 1.	Have tenders recently been called for the supply of groceries to the unemployment relief camp at Dundurn, Saskatchewan?
2.	Were tenders advertised for or were certain individuals or firms asked to tender?
3.	What are the names of those who tendered and who was the successful tenderer?


Mr. SUTHERLAND:: 1.	Tenders were called on March 12, 1934.
2.	The following firms were asked to tender: Central Wholesale Grocers Ltd., Saskatoon, Sask.; Codville Co. Ltd., Saskatoon, Sask.; Macdonalds Consolidated Ltd., Saskatoon, Sask.; Western Grocers Ltd., Saskatoon, Sask.
3.	Central Wholesale Grocers Ltd.; Codville Co. Ltd.; Macdonalds Consolidated Ltd.
Contract awarded to Macdonalds Consolidated Ltd.


HOUSE OF COMMONS-STONE CARVINGS
Mr. SPENCER:: 1.	Has the attention of the Minister of Public Works been drawn to the fact that much stone carving remains to be completed in the House of Commons, particularly around the main entrance, and in the Hall of Fame?
2.	When was the last work of this nature done on any part of the buildings?
3.	In view of the fact that these buildings are a focus for thousands of tourists and visitors every year, and with a view to providing much needed employment for stone carvers, is it the intention of the minister to further the completion of this work? _
4.	Will the minister consider taking similar action with respect to the Langevin block, similar work on which has remained uncompleted for many years?


Mr. STEWART (Leeds):: 1.	Yes.
2.	The last carving done was in the Memorial Chamber in 1927.
3 and 4. It is not considered advisable to have any further stone carving carried out in connection with the parliament buildings or Langevin block at this time.


QUEBEC SUPERIOR COURT
Mr. TETREAULT:: 1.	What are the names of the judges of the superior court of the province of Quebec residing outside their judicial district?
2.	Does the government require these judges to reside in their district?
3.	Do these judges comply with this requirement?
4.	If not, why do they not?
[Mr. Brasset.l


Mr. GUTHRIE:: 1.	With the exception of St. Francis and Three Rivers the judges of the superior court of the province of Quebec are not appointed to judicial districts.
2.	The judges of St. Francis and Three Rivers reside in their respective districts.
3.	Questions 3 and 4 answered by question 2-


NATIONAL GALLERY OF CANADA
Mr. CASGRAIN:: 1.	Has the government purchased any paintings for the National Gallery of Canada, at Ottawa?
2.	If so, what paintings have been purchased.
3.	From whom were they purchased?
4.	What was the price paid for each one.


Mr. STEWART (Leeds):: 1.	No, all purchases of paintings for the National Gallery of Canada are made by the board of trustees .
2,	3 and 4. Answered by No. 1.


SHUBENACADIE, N.S., RURAL ROUTE
Mr. ILSLEY:: 1.	When was the mail contract last awarded for the rural route from Shubenacadie to North Salem, McPhee's Corner, Indian Road and return, being rural route No. 1, Hants county, Nova Scotia?
2.	To whom was the contract awarded, and at what figure?
3.	Was it awarded to the lowest tenderer?
4.	What were the names of all the tenderers and the amount of each tender?
5.	Who -was the last previous contractor, and what was the amount of his contract?
6.	For what term was the present contract made, and when does it expire?


Mr. SAUVE:: 1.	15th April, 1931.
2.	Gordon Waller at $650 per annum.
3.	Yes.
4.	Gordon Waller, $650 per annum; Alex. Sutherland, $720 per annum; 0. Gardner, $764 per annum.
5.	Alex. Sutherland at $750 per annum.
6.	Four years. Contract will expire on 30th June, 1935.



SHUBENACADIE-MAITLAND, N.S., MAIL CONTRACT

Mr. ILSLEY:: 1.	When was the mail contract last awarded for the carriage of the mail between Shubenacadie and Maitland, Hants county, Nova Scotia ?
2.	To whom was the contract awarded, and at what figure?
3.	Was it awarded to the lowest tenderer?
4.	What were the names of all the tenderers and the amount of each tender?
5.	Who was the last previous contractor, and what was the amount of his contract?
6.	For -what term was the present contract made, and when does it expire?

Motions for Papers


Mr. SAUVE:: 1.	September 19, 1933.
2.	Stuart G. Kirkpatrick at $1,148 per annnum.
3.	Yes, but Mr. George Cook was not considered to be in a position to undertake the performance of that service.
Per
annum
Geo. Cook	
$1,090	00Stuart G. Kirkpatrick	
1,148	00Wendell Densmore	
1,169	00Samuel Cook	
1,173	75R. A. Fleming	
l'l76	00Anson Lively	
1,189	00Alex Sutherland	
1,200	00Leslie R. Ettinger	
1,200	00Elroy C. Mosher	
1,245	745.	Samuel Cook, at $1,565 per annum.6.	Four years. Contract will expire on September 30, 1937.



SHUBENACADIA, N.S., MAIL

Mr. ILSLEY:: 1.	When was the mail contract last awarded for the carrying of mail between the post office and trains at Shubenacadie, Hants county, Nova Scotia?
2.	To whom was the contract awarded, and at what figure?
3.	Was it awarded to the lowest tenderer?
4.	What were the names of all the tenderers and the amount of each tender?
5.	Who was the last previous contractor, and what was the amount of his contract?
6.	For what term was the present contract made, and when does it expire?


Mr. SAUVE:: 1.	January 30, 1934.
2.	and 3. James A. Bell at $380 per annum.
4.	Alex Sutherland, $385; James A. Bell, $468.
Before action was taken Mr. Bell wrote the department asking leave to amend his tender to $380 per annum which was accepted.
5.	Alex Sutherland at $480 per annum.
6.	Four years. Contract will expire on March, 31, 1938.



BUTTER IMPORTS

Mr. TETREAULT:: 1.	How many pounds of butter were imported from New Zealand from July 28, 1930, to October 1, 1930?
2.	Was this butter imported under the terms of the treaty concluded during the preceding administration?


Mr. MATTHEWS:: 1. Imports of butter from New Zealand entered1 for consumption in Canada in the months of August and September, 1930, were 2,681,985 pounds.
2. There are no permanent records of separate monthly collections under the different rates of duty applied, but from figures available approximately 2,603,585 pounds of this butter were entered under the terms of the Australian trade agreement effective October 1, 1925, and extended to New Zealand on the same date.



QUESTION PASSED AS ORDER FOR RETURN


Mr. LAFLEOHE:: What sums have been expended by the Department of Public Works in the counties of Sherbrooke, Shefford, Chateauguay, Huntingdon, Brome, Missisquoi, Stanstead. Compton, Richmond and Wolfe, from 1930 to the present date?



MOTIONS FOR PAPERS


Mr. THAUVETTE:: For a copy of all correspondence, telegrams, letters, petitions, and other documents, respecting the dismissal of Mrs. Marie-Laure Lalonde, postmistress of Pointe Fortune, county of Vaudreuil.



GAP VIEW, SASK., POST OFFICE

Mr. McKENZIE (Assiniboia):: For a copy of all correspondence and other documents passing between the Post Office Department or any official thereof and any other person or persons during the year 1933 in regard to closing of the Gap View post office and changing of the mail contract, Forget, Gap View and Handsworth, to Stoughton and Handsworth.



ISLE AUX COUDRES-LA BALEINE, QUE., MAIL CONTRACT

Mr. CASGRAIN:: For a copy of all documents, letters, telegrams, correspondence, and requests, exchanged between the citizens of Isle aux Coudres, La Baleine district, and the Post Office Department at Ottawa and at Quebec, respecting the contract awarded for the carriage of the mail between Isle aux Coudres and La Baleine, from January 1, 1934, to date.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
Hon. E, N. RHODES (Minister of Finance) moved that the house go into committee at the next sitting, to consider the following proposed resolution:
That it is expedient to bring in a measure respecting the Canadian National Railways, to authorize the provision of moneys to meet expenditures made and indebtedness incurred
The Budget-Mr. Ralston
[Stage Direction]
during the calendar year, 1934, and to provide for the refunding of certain maturing financial obligations.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.
Motion agreed to.


[Stage Direction]
The house resumed, from Wednesday, April 18, consideration of the motion of the Minister of Finance that Mr. Speaker do now leave the chair for the house to resolve itself again into committee of ways and means.
Hon. J. L. RALSTON (Shelburne-Yar-mouth):: Mr. Speaker, this is the third time
that the present Minister of Finance (Mr. Rhodes) has brought down his budget and also the third time that I have had the honour to rise on this side of the house and offer the views of those who sit around me in connection with the matters which he proposes. I again congratulate him, as I have done on previous occasions, on the clearness of the presentation which he has made, and on the moderation of the tone which he has adopted and of the language which has been used in presenting the annual statement of this great dominion. He knows and hon. members generally know that my congratulations cannot go very much further than that in view of the fact that those who sit around me and I myself feel that this budget is born of policies which are diametrically opposed to those which we endorse and which we believe to be for the benefit of Canada. It may be made clear before I get through that I am not particularly enamoured of the budget which my hon. friend has brought down. I do, however, want him to feel-and while it is a commonplace, at the same time even a sincere commonplace may be worth while expressing-this is a criticism not of the Minister of Finance as such or personally, but of those policies to which I have referred.
I could have wished, as a matter of fact, that for his sake the day for bringing down this budget had been a little longer delayed in order that the country might have got out of its mind the British budget which was brought down just the day before he addressed the house. That was a budget wherein the people of Great Britain, a country which has borne the load since the early twenties, were able to show a surplus of

something like $150,000,000 at a time when customs duties were imposed, not gallows high as they are here, but having regard to revenue as well as to industry. That budget was in marked contrast to that which my hon. friend presented and which, when all was said and done, instead of showing a surplus, showed a deficit of something like $24,000,000 on ordinary account. May I say also that my hon. friend's budget showed a mistake predicting customs duties notwithstanding that year after year he has been modestly lowering his estimate in the hope some day to overtake the drop. It showed a mistake in prediction of customs duties of something like $6,000,000; last year he predicted that he would receive at least $72,000,000 in customs duties and he received something like $65,900,000. The year before he had predicted $80,000,000 and he fell below that by $8,000,000. I repeat, that perhaps he was not too fortunate in having to present his budget as he did the day after the British one.
In a phrase his budget, it seems to me, shows that the government are systematically living on the future of this country and the future that they are hoping for fails to arrive. I realize that a budget does not have the piquancy of a best seller and that generally there is nothing of dramatic interest to be found in a budget speech, but as a rule, having regard to the changes in the times, one would have thought my hon. friend, in the long speech which he delivered, would have been able to produce at least some item of liveliness outside the gold tax to which I will refer in a moment. I could not help feeling that the Minister of Trade and Commerce (Mr. Stevens) had evidently not had very much to do with the preparation of this budget, because it did not satisfy the longing of his soul which he expressed in the house the other night when he intimated that the people were clamouring for something new and that governments had been slow to depart from the beaten track. He said, to quote his words in full:
In this country, as in other countries, people have been staggering along under conditions that have been difficult, and have been clamouring for something out of the ordinary. Peoples all over the world have been very restive with governments because governments have been slow to depart from the beaten track.
I read this budget with the thought: Is there not some place here where the Minister of Finance has departed from the beaten track, if for nothing other than to satisfy the ambitions and longings of the Minister of Trade and Commerce? But I

The Budget-Mr. Ralston
find that even silver, which is a favourite subject of my hon. friend, is not mentioned in the budget. That would have been a step aside from the beaten track for him.
Even the turnover tax, which has been mentioned in years gone by, is not to be found in this budget. The Prime Minister (Mr. Bennett), speaking in the house in 1928, at a time when he had not the responsibilities of office, was most urgent that a turnover tax should be imposed in this country. Here was an opportunity for the Minister of Finance to step aside from the beaten track to give the people, as the Minister of Trade and Commerce says, something they are clamouring for and to impose some new form of taxation. The statement made by the Prime Minister in 1928 in Hansard at page1 1252 was:
May I remind the house that last year 1 argued that, in my judgment, the fairest method of taxation in the world was to be found in the turnover tax. I have not changed my mind in that regard; I think there should be a turnover tax collected every month.
A little further on he said, with characteristic modesty:
I pointed out when discussing this question last year that the idea was not original with myself. I do not claim originality for it; it has been submitted to the house before and is endorsed by sound economists and financiers. I urge the Minister of Finance, therefore, to take it into his serious consideration.
That turnover tax is not found in this budget. The Prime Minister in 1931 again advocated it and again indicated his disappointment that it had not been put upon the statute book. He said-I am quoting from Hansard of 1931, at page 3307:
I should like to have seen applied in Canada some new system of taxation, and he is quite right when he says it is not at all probable that I shall ever have a chance to try a new form of taxation, because it is not at all likely that I shall ever again submit ways and means to this house. I am not without hope, however, that some Minister of Finance reviewing the means by which taxes may be raised will realize the values and benefits accruing from a turnover tax. . . .
Sir, it has not been my privilege to introduce any new forms of taxation to this country at this time. ... I do not for a single moment disguise the fact that I would like to have done so. I should like to have written a budget which would have expressed my views with respect to taxation in Canada. That privilege has not been given, and it never will be.
I only want to say to the Prime Minister, who I am sorry is not in his seat, being indisposed I understand, that he ought not to feel too badly about it. He is tender-hearted and if he did bring down a system of taxation of this kind he would be sure to change it before the budget was through. He ought to leave
it to the flinty Minister of Finance to impose taxation.
But if my right hon. friend the Prime Minister is looking for the privilege of having it said of him that he imposed taxation in this country surely his ambition is satisfied in the increase of the sales tax from one to six per cent, in the imposition of an excise tax which did not exist when he came into power but which has been put up to three per cent, in the imposition of a two cent tax on sugar, in taking away exemptions from the sales tax, in the reduction of exemptions in the income tax; in these and in every other field of taxation I think my hon. friends opposite will be given full marks and will be held fully responsible when they come to the people of Canada, for having invented and imposed many new and onerous forms of taxation. My right hon. friend the Prime Minister need not have any regrets, I think. The Minister of Finance has enjoyed and exercised to the full the privilege, as the Prime Minister calls it, of levying and imposing taxation, as the people of this country have good reason to know.
But there might be some other method whereby the beaten track could be avoided and something new put into this budget. I have mentioned this before but in view of the fact that the other night the Prime Minister in the House of Commons dealt with debt conversion, let me remind this house that it was not so long ago that the Prime Minister had a very distinct and definite plan for retiring the national debt by means of a sinking fund which was to be established and a certain amount set aside each year. I quote from Hansard of 1928, page 1249:
Mr. Bennett: The finance minister said that the only way to pay off the debt was out of surplus. I suggest, Mr. Speaker, that there is another way in which we can pay off our national debt, and that is to pass a statute by which we provide that a given sum per annum shall be set aside to pay off the national debt of Canada.
That was in 1928. Of course, Mr. Speaker, you cannot pay off national debts and set up sinking funds unless you have surpluses, and you do not have surpluses with Tory governments in power. So it is all right for my hon. friend the Prime Minister to advocate the setting up of a sinking fund when Liberals are in power and piling up surpluses, but we hear nothing about that plan to-day when deficits are the order of the hour.
Another way in which my hon. friend could have got out of the beaten track and satisfied the Minister of Trade and Commerce was to have abolished the sales tax. That was an "iniquitous" tax according to the Minister of Justice (Mr. Guthrie) in 1928. That was a
The Budget-Mr. Ralston

tax which the Prime Minister in Hansard of 1927 at page 397 called the "poor man's income tax." That is the tax which was referred to by the Minister of Justice in Hansard of 1928 at page 1124, when he pictured the poor man as having to wear woollen underwear in the wintertime and had to pay on that woollen underwear a sales tax of three per cent. He said that the poor man also had to wear a suit of woollen clothes, and asked: Mr. Speaker, do you realize that a man who pays $30 for a suit of woollen clothes has to pay 90 cents in the shape of this "iniquitous sales tax" to the government? He said the sales tax was a war tax and should have been abolished long ago. Well, the war was over ten years at that time, and it is over sixteen years now, and the sales tax is still on, but the man who buys a $30 suit of woollen clothes is not paying only 90 cents to the government to-day; he pays $1.80 under the taxation imposed by my hon. friend the Minister of Finance. Before the King government went out of power the tax had been reduced to one per cent and the tax on the suit of clothes was only 30 cents, but the sales tax is still here, the iniquitous sales tax which my hon. friend the present Secretary of State (Mr. Cahan) proposed to have removed. This iniquitous sales tax and the poor man's income tax is still here and has been multiplied by six under the present government.
The financing of maturing obligations-that was a study which my right hon. friend the Prime Minister had dealt with on successive occasions that might have been introduced into the present budget as something out of the ordinary. The sinking fund he proposed at first, and then later he suggested when he was in opposition over on this side of the house that there should be some way of converting the national debt. Hon. members will recall that he mentioned it when he was speaking in the debate the other night on the motion that the Speaker leave the chair for the house to go into committee of supply. When he was in opposition he advocated that there should be issued four per cent Canadian consols, and that the insurance companies and the banks should be compelled to subscribe for these consols and retire the national debt. This is what he said in 1927 in Hansard at page 407:
If my suggestion were carried out there would be some diminution in interest profits, but in view of the fact that there are such vast profits earned over and above the money necessary to take care of reserves at three and three and a half per cent, no hardship 
would be imposed upon the Canadian people, who would realize that their savings, although the profits of the life insurance companies might be affected-and as my hon. friend knows, life insurance is intended for protection rather than for profit-would be available for the whole of the people, while the trusteeship obligation imposed on the companies would be better discharged by reason of the stability and certainty of the securities.
At that time my right hon. friend did not indicate that there was any difficulty at all about reducing the income of the life insurance companies, but in speaking in this house the other evening, as reported at page 1629 of Hansard, and I have read each passage that makes any reference to the life insurance companies, he studiously avoids altogether the views which he expressed in 1927. The most he says is on page 1629 where he says:
Who are the holders of these securities? They are primarily the insurance companies, primarily those who, for the purpose of meeting contracts maturing in the future, have invested in these securities on the basis of their yielding somewhat a higher rate than three and a half per cent to take care of contingent losses that may arise by reason of fortuitous circumstances. Every hon. member, if he will think for just a moment, will realize, will understand that.
I say, Mr. Speaker, it is remarkable what a difference the responsibilities of office make. My right hon. friend the Prime Minister in 1927, when he was in opposition, thought there was no difficulty at all in forcing the life insurance companies and the banks to subscribe to four per cent securities. But it is a very different thing in 1934, when the suggestion is made that perhaps these insurance companies might head a campaign for the lowering of interest rates in this country and for the converting of the national debt. No, Mr. Speaker, that proposal is not in the budget. The beaten track is not left so far as debt conversion is concerned.
There is another thing. I felt that in the budget this year we might at least have heard of a promise that was made by the Prime Minister in 1930, and I quoted that promise the first time I spoke on the budget after the 1930 election. There were a good many promises made by the Prime Minister. There was one made down in the province of Nova Scotia by the Prime Minister with regard to old age pensions. The promise was contained in a letter which I put on record at that time, and which I shall not quote in full to-day, but from which I will extract a couple of paragraphs:

Bennett's Pledge On Old Age Pensions Conservative Federal Headquarters Victoria Building 140 Wellington Street Redmond Code,
General Secretary.
Ottawa, Canada.
July 12, 1930.
To the people of Nova Scotia:
I leave out the first two paragraphs. The third paragraph reads:
While the old people of your province were unable to benefit by the present act during the last two years, nevertheless through the contribution of one-half of the pension money from the federal treasury you have been contributing your share of the pension money going to the old people in other provinces. This situation cannot continue.
Mr. King says that in order to adopt a national old age pension bill, we will have to amend the British North America Act as it is now unconstitutional for the federal government to pass such a bill. I contend that if the dominion government can contribute 50 per cent as they do at present, they can contribute it all.
If returned to power on the 28th of this month, I pledge my party to pass a national old age pension bill by which the federal treasury will provide all the money required- thus treating all the old people alike, whether they live in the maritimes or in any other part of Canada.
Faithfully yours,
R. B. Bennett,
Leader Liberal-Conservative Party.
I directed the attention of the right hon. Prime Minister to that promise ten months after the Conservative party came into power; I said it seemed to me that the old people of the province of Nova Scotia had a right, after that letter had been sent to them two weeks before the election, to believe that as soon as possible after the Conservative party were in power the 100 per cent old age pension act would be passed, because it is not very much good promising old people an old age pension act and then waiting three or four years to pass it; a good many of those to whom the promise was made would not live to get the benefit of it. At that time the Prime Minister said it was not promised that the act would be passed immediately, and the Minister of Justice (Mr. Guthrie) interrupted and said " It will be done." I would point out to the Minister of Justice that it is now two years and ten months since he made that statement in the house and that it is now three years and nine months since the letter was written, but the promise of a one hundred per cent old age pension act is still unfulfilled. So I ask my hon. friends, and the Minister of Finance (Mr. Rhodes) for the sake of the Minister of Trade and (Commerce (Mr. The Budget-Mr. Ralston
Stevens):	How about just breaking away
from the beaten track for once and fulfilling just one promise? How about just breaking away from the track that seems to have been laid down by the party opposite, of disregarding promises entirely, and fulfilling just this one promise? But that has not been done. Apparently there is only one beaten track for my hon. friends as far as budgets are concerned; that is debt, deficits and taxes. There is nothing else, and so far as any features go which would satisfy the ambitions, the desires and the ardour of my friend the Minister of Trade and Commerce, this budget is just as featureless as the Sahara desert; the only thing in it is this tax on gold, to which I shall refer in a few moments.
_ There is something else to which I should like to refer. My hon. friend the Minister of Finance, as I can understand, has to be guilty of a certain amount of repetition in connection with his budget speeches, but there is one phrase I do hope he will omit if he happens to bring down a budget next year, that is to say if .there has not been an election in the meantime. I find that in 1932 almost the last words in my hon. friend's budget address were:
As a final word, may I say that I do not propose to indulge in prophecy. But I do desire to record my firm conviction that we are not far removed from events which will herald the dawn of better days-
That address was delivered on April 6, 1932, and the results that year showed a deficit of $157,700,000 and an addition to the debt of $148,126,000, together with additional taxes, as will be remembered by hon. members of this house and by the country, so that the better days did not dawn. Then in 1933 my hon. friend used these words in concluding his remarks :
At the same time we have no occasion to despair for the future. On the contrary I am of the firm belief that we can look forward with complete confidence to better and happier days.
In that year, according to the budget which my hon. friend has just brought down, we had a total deficit of $135,200,000, an increase in the debt of $139,244,000 and now we have this tax on gold, to which I am going to refer shortly. The better and happier days are still deferred. Now this year, in 1934, I find my hon. friend still optimistic; he says:
May we with renewed hope, fresh courage and firm step press on towards the goal of better and happier days which lie not far ahead.
I believe my hon. friend spoke better than he knew this time; I really believe the better and happier days are going to come, if there
2426	COMMONS
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is an election. My hon. friend evidently was thinking of Nova Scotia, of British Columbia, of Restigouche-Madawaska, of Yamaska, of South Huron, of Mackenzie and of South Oxford. Judging from the example that has been given by these constituencies my hon. friend, I feel satisfied, can look forward to better and happier days under Liberal government. If there were to be no election and the present government remained in power I would say that I should set these words of his to music, to the tune of "The same old story in the same old way," but if the election comes off, as we hope it will, the tune can more suitably be, " Happy days are here again."
Now, Mr. Speaker, I want to refer to some matters which are in the budget, not matters which are left out but matters included in the budget. The first to which I intend to refer-and it is not new to my hon. friend the Minister of Finance or to this house-is the fact that notwithstanding all that has been said in the past by the right hon. Prime Minister, this is not a budget. The matters which are not in this budget, so far as a list of expenditures is concerned, are rather formidable. We have understood that in the budget there should be brought down a statement of the expenditures made during the last fiscal year, a review of trade conditions, an indication of the government's policy with regard to trade, and a forecast of what conditions were to be expected during the coming year, together with the financial commitments which are to be made. I find fault with this budget on two grounds, first the items which are omitted and secondly the predictions which have proved grossly inaccurate. I cite as my authority for the necessity of compliance with those two principles the right hon. Prime Minister himself, who in 1931 condemned in unmeasured terms the former Minister of Finance for not having predicted a deficit of $75,000,000, indicating that this was:
the basis of responsible government, it is the basis upon which representative institutions have been established, and that responsibility can only attach when there is some estimate as to what is being received by the country from the taxation imposed and as to what expenditures are to be made.
I ask you, Mr. Speaker, in the light of these words, if this is a budget.	,
In this budget is there any estimate for the so called public works program that is supposed to come down some of these days? Is it not proper that this should be included somewhere in the budget? I have looked through it from end to end, and the only statements I can find

with regard to any expenses other than ordinary expenses are simply a reference to relief and a reference to a deficit on the Canadian National Railways. There is no statement here with regard to public works, though we understand that the amount to be spent will be something like $50,000,000. Is there anything here for advances under the relief bill other than the ordinary advances which have been made from year to year and which, unfortunately, we are coming to regard as ordinary though they are most extraordinary because they are made under the authority of a blank cheque. There is nothing whatever in this budget with regard to them. My hon. friend does not even deign to give the amount which will be spent for relief; neither does he deign to give the amount which he thinks will be spent in connection with the Canadian National. Is there anything here to show the amount involved if the wheat obligation should come due this year? Is there anything to indicate the amount which would have to be provided to pay that? Not a dollar. That is not in the accounts at all. All that my hon. friend does is attempt to raise enough money to pay the ordinary expenditures which he knows about, to comfort himself with the idea that there might be $8,000,000 surplus on ordinary account and then let the future take care of itself. I submit that that is not a budget which will meet any test as to the necessities of a budget. It is not a budget which would meet the requirements laid down only two or three years ago in this House of Commons by the Prime Minister.
But further than that, it is not a budget because it shows, as have previous budgets, that there has been an absolutely inaccurate estimate of the necessities of the public service. Let me speak about the item I have just mentioned. In 1933 my hon. friend estimated $35,000,000 for special expenditures and non-active advances. What did he spend? He spent $52,570,000 or $17,570,000_ more. He estimated for the Canadian National Railways $47,941,000 and spent $52,264,000, leaving out entirely the eastern lines deficits. In other words, there is a difference of over $22,000,000 on those two items. My hon. friend may take whichever horn of the dilemma he likes. If his leader was right when he said that the Chancellor of the Exchequer in delivering his budget address in the British parliament is always held to the strictest account as to the extent to which he has been able to realize his expectations and the extent to which his representations agree with the facts of the year in review-if I say his right hon.

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leader was right at that time, then my hon. friend stands condemned out of the mouth of his leader himself.
As the years go by under this government we are getting farther and farther away from the first principles of government. We are getting to the stage where power is being handed over to the sixteen or seventeen men sitting on the treasury benches and this House of Commons is told simply to give a blank cheque, to give them not only the power of parliament but the resources of the treasury as well.
Then, so far as this year's budget is concerned, let me remind my hon. friend of the predictions which have been made in the past, and how far short they have fallen. In 1931 the right hon. Prime Minister, then acting as Minister of Finance, said, speaking about the probable customs duties which he had taken into consideration in estimating his budget:
Taking this into consideration the figures presented' indicate a balancing of the budget by a substantial margin in respect of expenditures properly applicable to 1931-32, after excluding capital.
He said they indicated a balancing of the budget by a substantial margin. When the accounts were cast up and my hon. friend the present Minister of Finance had to present the budget in the following year to the house the so-called balancing of the budget by a substantial margin had faded into insignificance, and my right hon. friend, the Prime Minister's estimate of revenue was $71,652,000 too optimistic, and instead of the budget being balanced there was a deficit of $81,000,000. In 1932 my hon. friend cautiously, as befitted a new Minister of Finance, referring to revenues from customs and excise taxes said:
Without building too greatly on help from these sources in the present year it is the considered view of the government that reductions in expenditure on the one hand, and proposed additions to the taxation revenues on the other, will in the final outcome represent a complete balancing of the budget on the usual governmental services.
Yet we find the result of the year's financing was not the balancing of the budget, but a deficit on ordinary account alone of $53,000,000. Then again in 1933, I shall read the minister's remarks as they appear in Hansard for 1933, page 3223:
Accordingly it is proposed to recommend measures which will, it is anticipated, produce at least $70,000,000 on the basis of present business conditions, leaving a surplus of $2,000,000. Even a slight improvement in price levels and the general volume of business would increase substantially the surplus to be applied against capital and special expenditures.
But when we look at the budget speech which the finance minister has just delivered we find that the $2,000,000 surplus he predicted has turned out to be a $24,000,000 deficit notwithstanding that business has improved' as he says.
I say to you, Mr. Speaker, that those are not budgets in the sense, at least, in which his right hon. leader understands them. I am afraid that predicting in this country is becoming a sort of byword. It is shaking the confidence of the people in their government. I would not mind so much if the Prime Minister had not adopted that holier than thou attitude, had not wrapped a mantle of purity about him and given thanks that he was not as other men were, and indicated that he was the only man who had ever brought down a real budget. But having done that and having plumed himself on his own righteousness then he ought to be held to it. I submit that having boasted of his own rectitude of deportment the Prime Minister and his Minister of Finance stand convicted of the very offence which the right hon. gentleman has charged against others, only in a greater degree, namely that of omitting entirely items which should be in the budget and consequently failing by millions of dollars properly to predict the result of the year's financial operations. For the consideration of the Prime Minister I suggest that instead of giving lectures to other people on budget making he might, it seems to me, having regard to that record, take a correspondence course himself in that subject.
For a moment or two I should like to deal with the matter of public debt. The Minister of Finance has not placed on record any indication of the public debt except that pertaining to the present year. I realize he is not required to do it, but it seems to me that such a table would have been informative. At the risk of detaining this house I shall read into the record figures showing what the public debt has been in each year, beginning with the fiscal year of March 31, 1930:
Year beginning-	Public debt
March	31,	1930	$2,194,746,000March	31,	1931	
2,319,196.000March	31,	1932	
2,501.782,000March	31,	1933	
2.649.908,000March	31,	1934	
2,789,152,000
The following figures will show the increases in public debt:
Year-	Increase
Between 1930 and 1931..$124,450,000 (odd) Between 1931 and 1932.. 182,586,000 (odd) Between 1932 and 1933.. 148,126.000 (odd) Between 1933 and 1934.. 139,244,000 (odd)
These figures show a total increase between March 31, 1930, and March 31, 1934, of

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$594,405,000. That means an increase in the interest payable by the people of this country of practically $25,000,000 per year, or $2.50 per head. That is the interest load which has been put on the people of Canada since this government took office. As will be remembered, under the old Liberal government, between the years 1925 and 1930 there was recorded a total surplus of $257,000,000.
My hon. friend may say that this government's position is due to railway deficits. Let me remind him that during the Liberal administration current deficits on railways were paid out of revenue, and were not added to the public debt. Let me remind him, further, that under the Conservative government between the years 1919 and 1921 the average deficit on railways before paying interest due the public averaged $22,000,000 yearly. From 1922 to 1930 under Liberal government the average surplus available for payment of interest due to the public was $24,000,000, and the deficits began again in 1931 under the present government with $4,100,000 and for the last two years over $3,000,000 each year before paying interest due to the public.
Someone else may say that the debt is due to relief. Well, Mr. Speaker, relief was not contemplated when this government came into office. There was to be no relief. There was to be no necessity for relief. Speaking in this house the Prime Minister realized that conditions were serious in 1930. Before he went down to Moncton and made his promise, the Prime Minister made a statement which appears on page 18 of Hansard of 1930. He said:
What about conditions in this dominion at this moment? What about conditions from east to west? It is true that part of the unemployment is seasonal; but since the beginning of the year I have traversed Canada from Victoria to the far east, and in every city of this dominion, east and west, there is abnormal unemployment, so that men who are accustomed to give, as I have been, to assist those who are unable to earn sufficient to keep body and soul together, have never before seen such distress as I have seen in the communities I have visited'.
Then he went down to Moncton and said that he would give work to every man who was willing to work, or perish in the attempt; that he would give work, not doles. He cannot say he did not know what the conditions were at that time, and he promised that employment would be found. The public debt has been increased by $596,000,000; the increased interest charges amount to $25,000,000 a year or $2.50 for every man, woman and child in the dominion. I should like to put on record the Moncton promise of the Prime Minister because it seems to me that this goes with

the passage I have just read. The promise was:
The Conservative party is going to find work for all who are willing to work, or perish in the attempt. It is going to call parliament at the earliest possible date after July 28, and take such steps as will end this tragic condition of unemployment and bring prosperity to the country as a whole. . . . Mr. King promises consideration of the problems of unemployment. I promise to end unemployment. Which plan do you like best?
In bringing down his budget this year the Minister of Finance strikes rather an optimistic note in the first paragraph or two of his speech. He indicates that statistics show that conditions in this country are improving a little but he does not say anything about the fact that at the end of February there were still receiving relief heads of families totalling 267.853, while the total on relief numbered 1,270,599. I place those figures beside the statement of the Prime Minister at Moncton in 1930. My hon. friend must produce more than statistics furnished by the bureau of statistics to convince the people of Canada that at the present time all is well in the dominion. You do not need to take index figures or adjusted trade returns, all you have to do is to go up and down and across the length and breadth of this country to find that there is still a lot to be done in the way of improving conditions before we get back to the days we had before 1930.
Let me now deal with the matter of debt conversion. The other night the Prime Minister referred to this in the debate which arose on the motion to go into supply. I believe that the development of trade, the balancing of the budget and the conversion of our debt are the three most important questions in this country. The Prime Minister has given the impression that we must all stand still until 1937 has passed as far as the conversion of the debt is concerned. He says that the letter of the bond is there and that it must be observed. The Minister of Finance says that the sole remedy with regard to the conversion of the public debt or the easing of the burden of the public debt is a rise in the price level. I would hardly think that the taxing of gold is a good way to raise the price level, but my hon. friend knows best. The interest burden is now $139,730,000, while this year's deficit will add another $6,000,000 making the total $145,000,000 per year. In his budget speech the Minister of Finance said that the Prime Minister had dealt with the matter of debt conversion. I submit that a matter as important as this one deserves more than an offhand statement from the Prime Minister in a debate on a motion to go into supply; I

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submit that it deserves detailed attention in the budget speech. I do not profess to offer anything new but I would remind the Minister of Finance that in 1928 the Prime Minister, then leader of the opposition, said this:
Is this country to continue to be menaced by this economic evil, by this debt hanging over our heads? Are we to continue, of all countries in the world, to make no provision for the future? Are we to be content to expend our patrimony day by day without putting anything aside to take care of the long days of the future that are before us? I say it is unfair to posterity, and still more, it is unfair to ourselves, it is unfair to the taxpayers of this country to extract from them each year these increasingly large sums of money and make no provision for the retirement of our national obligations. The sum to be set aside is not large. I can only say this, that if we on this side of the house were entrusted with power, we would not hesitate a single moment to make provision for the retirement of the national debt of this country.
He continued on page 1251 as follows:
Then why does not the Minister of Finance devote his energies to converting our national debt upon a large scale, instead of reading us some piffling remarks, written by an economist a hundred years ago? Let me go further. The saving of 20 million dollars a year on the refunding of the debt might be possible if you would say to the holders of the 5J per cent tax exempt securities maturing within the next nine and ten years that there would be freedom from or great deduction of income tax during the next decade. Does it ever occur to hon. members that in addition to the 110 million dollars free money, the exemption from income tax for the next five or ten years might bring about a great expansion of public revenue?
I have just one more extract. All this has to do with the conversion of the public debt and with the things the Prime Minister proposed to do at that time. He was impatient with the Minister of Finance of that day and he said that two billions of securities ought to be converted. He is reported on page 1252 as follows:
With two billions of securities maturing in nine or ten years, and with money at 4 per cent, there is the greatest opportunity that was ever offered to any minister of finance in this country. To seize that opportunity requires courage, skill, ability, knowledge; it requires willingness to devote some time to a study of the problem. It requires more thought about economies and less inclination to extravagance; it requires more consideration of the question as to how the money is to be secured rather than how it may be spent. It requires the consideration of world factors that determine the price at which money can be obtained. Is this government giving the problem that degree of attention? Is there any evidence of such consideration of the question on their part? Let hon. gentlemen opposite ask themselves that question.
That was in 1928, and we now have an offhand statement by the Prime Minister say-
74726- 154J
ing that he has thought about this question a great deal but has come to the conclusion that 1937 is the earliest time at which we can think of any possible conversion of this debt. As a very humble member of this house let me suggest to him that the first thing to be done in connection with the conversion of our national debt or the lowering of the interest burden is a considered and serious drive towards balancing the budget. If he considered that 1928 when money was cheap at 4 or 4^ per cent was a good time to convert, it seems to me that the present cheapness of money should be taken advantage of. The next thing is a planned major refunding operation, preceded by conferences with institutions and carried out in a manner similar to the victory loan campaign.
The Prime Minister says that there are difficulties with regard to foreign holdings. Possibly there are, but this government has not hesitated to tax non-residents with regard to dividends. The government of the United States has not hesitated-you may call it repudiation or whatever you like-to change the letter of their bond as far as payment in gold is concerned. The Minister of Finance has not hesitated to take advantage of the fact that the United States is regarding its dollar as worth only sixty cents in gold and to make our dollar worth the same. Nothing is said about repudiation when we are paying in these sixty-cent dollars. It seems to me that perhaps we are not meeting the situation fairly when we talk about repudiation and hold up that bogey with regard to debt conversion. Let us assume that there are difficulties with regard to foreign holders, let us assume with the Prime Minister that we want to maintain our credit-by the way, I do not quite appreciate what good we hope to do by maintaining our credit so far as foreign investment is concerned as there does not seem to be much under this government in which foreigners want to invest except gold mines. The sale to foreigners of industrials in this country has not been heavy under this present government.
But let us assume that we desire to keep our credit unsullied in every respect. May I offer this suggestion, for which I claim no originality, because I observed that it was put forward in a Canadian journal one or two weeks ago, and I have also heard it discussed by others. I mention it now simply in order that it may be on record, and that the government, if they have not considered it, may keep it in mind in connection with the conversion of our debt. That suggestion is this. If you feel that you cannot carry on a major refunding operation simply by reducing inter-
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est rates and planning a victory loan drive, appealing to the patriotic consciences of Canadian citizens, if you cannot manage it by appealing to the institutions and the citizens of the country, or if you feel that a conversion in this way under present circumstances will not be justified, why not consider the question of compensation for reduction of interest rates by way of increasing capital? I say to the government, consider the matter of amortizing the difference between a 4J per cent bond and a 3J or a 3 per cent bond. Add enough capital to the bond to equal the present worth of'the reduction in interest, covering a period of, say, twenty years. You will then have materially decreased the annual interest charge, and the capital will have been increased by a much smaller sum than the total of the annual interest savings. I note that the estimate was made, in this journal to which I have referred, that refunding $1,500,000,000 on the basis of 2| per cent tax free there would be an increase in capital of $200,000,000, but there would be a decrease in annual charges of $20,000,000. On the other hand, refunding $2,300,000,000, would create a capital addition of about $600,000,000, but at the same time it would mean an annual saving of something like $34,000,000. These are proposals that ought to be considered. The Prime Minister did not mention this plan the other night, and I should like to hear his comment upon it. What I do deplore, however, is the rather dogmatic attitude taken both by the Prime Minister and by the Minister of Finance in assuming that this matter of debt conversion is completely out of the picture and that we are absolutely obliged to continue paying $145,000,000 in interest per annum whether we like it or not.
No one proposes the repudiation of obligations, but we cannot accept the statement of the Prime Minister and of the Minister of Finance as absolutely the last word in the matter. I repeat, I consider debt adjustment, a balanced budget and an increase of our trade the three greatest problems before the dominion to-day.
Now, I have spoken of the direct obligation of Canada, which is $2,789,152,000 to-day apart altogether from guarantees. But there are indirect obligations, as the Minister of Finance says in his speech. There are additional guarantees, listed in his budget speech, totalling $82,905,000. There are guarantees on account of the Canadian National Railways harbour commissions and Canadian National Steamships of $993,000,000, or a total of $1,075,905,000 -guarantees in addition to the direct debt itself. What does that mean? In round 
figures, that means a total of $3,890,057,000, as the total obligation of this dominion in respect of guarantees and direct obligations.
I have included in that something not stated in the budget speech; I have included an obligation of $25,000,000 on account of the wheat guarantees. The Prime Minister indicated in the house the other day that this might amount possibly to $15,000,000. Well, in my opinion, neither the Prime Minister nor Mr. John I. McFarland nor any man in this house or in the country can tell us what it will amount to; it is absolutely impossible for anyone to predict it, when you find that 100 million bushels of wheat or more is being held. No one knows exactly, but a very large quantity of wheat is hanging over the market. Now, wheat may be quoted at a certain price to-day; drop any large amount of it on the market and attempt to realize and you will see the bottom fall out of the market; you will see how quickly millions will mount up in the way of losses. So that we cannot make an estimate as to the amount of the possible loss in connection with the wheat guarantee.
Right here I wish to protest once more against the idea of the Prime Minister writing a letter giving an absolutely blank guarantee to the banks of the dominion to back up and finance the operations of any one individual in respect of any undertaking. The least that the Prime Minister could have done, when he wrote that letter, was to limit the obligation to so much money; he should have stipulated some figure. At the present time however there is no limit; not a dollar is mentioned. This means that Mr. McFarland, as head of the cooperative wheat producers, can buy and sell as he thinks proper. The suggestion was made that there might have been a limit, but there is no record of any limit at all, so that he may buy and sell as he thinks fit. He may go to the banks and get money and when the whole transaction is over, when the thing is all washed up, when the wheat has been realized on five or ten years from now, the government of Canada will foot the bill and the people of this country will pay for it.
I say to you, Mr. Speaker, that this is one of the reasons why I complain of this not being a budget. The Prime Minister, with all due respect to him, is too fond of signing letters in the name of the people of Canada. He signed a letter, in January, 1931, if I remember rightly, guaranteeing the banks with regard to the wheat pool, and passed an order in council the next September, nine months afterwards. That is not good business, having regard to the size of the transaction and the necessity for carrying on government business in a proper way. In the first place, he

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did it under an act which stipulated no limit whatever, and which he extracted from the members of this house by force of the government majority-an act which makes no provision at all for any limit in amount or purpose, but empowers the government to loan in connection with anything they like. It is primarily a relief measure but it has developed into everything but that. Now, that is one obligation to which I refer. We do not know exactly what the liability is, nor shall we know until Mr. McFarland is all through.
They say that Mr. McFarland is not gambling, not speculating. Let me put the situation to you, Mr. Speaker. Here was the job that was given him. No. 1: You, Mr. McFarland, are to dispose of the 1930 crop. Well, that seems fairly easy; he can go and sell. But, no; Mr. McFarland, while you are to dispose of the 1930 crop you will not depress the market. So that the next step you will take is this. If you find the market going down in connection with the 1931 or the 1932 crop, step in and buy wheat. In other words, instead of selling you are to buy. What is the result? He was charged with the duty of disposing of the 1930 crop, and to-day, after three years, Mr. McFarland, who was supposed to dispose of the crop of 1930, has succeeded to this extent that he has on hand in the shape of futures, millions of bushels more wheat than he started out with. This means that there will have to be rust in the Argentine or a famine somewhere which may provide an outlet for the disposition of that wheat, and in the meantime we will roll up the cost of carrying the wheat each month and each year.
That I say, Mr. Speaker, is not good business. It is not good business for this country that the government should operate in that way. If they wanted to undertake the obligation they should have come to parliament and submitted an estimate of what it would involve, and should have discussed the whole matter thoroughly on the floor of the house before the writing of that letter.
The guarantee in connection with the Canadian Pacific Railway is exactly in the same category in many respects. That transaction was carried out in this way. Discussions were had with the Prime Minister, an intimation having been given that the Canadian Pacific Railway would have difficulty in financing for 1933-34. We are told that no suggestion was made at all that the government should guarantee the loan, but suddenly on May 30 the suggestion came from someone-Mr. Beatty I think-that the government should guarantee the loan. The Prime Minister thinks there may have been a discussion earlier than
that. Parliament prorogued on May 27, 1933, and on May 30 the conference was had between Mr. Beatty and the Prime Minister. The next day, May 31, a letter was given by the Prime Minister that this country would guarantee the obligations of the Canadian Pacific for 1933 and 1934, would guarantee the banks so that they might loan money enough to retire those obligations and carry them for the railway for five years. That amounted to $60,000,000. When was the order in council passed in respect to that? The following November, November 29, 1933. This was a good thing for the Canadian Pacific, so far as financing was concerned; the banks got a good piece of business, but the Prime Minister is too prone to sign his name to letters, to doing things in a big way and using the credit of the Dominion of Canada for that purpose. I am reminded that the money was loaned and the advances made by the banks all through the summer of 1933 long before the order in council was passed. That is the situation. What has happened? We are talking about four and a half per cent or four per cent loans for the Dominion of Canada. What are the banks getting out of the Canadian Pacific guarantees? A guarantee of interest at five per cent with practically a government bond backing it up, because it is a letter of the Prime Minister of Canada backed up by an order in council. What are the banks getting with regard to the wheat pool? The dominion can borrow at four or four and a half per cent, but the banks are getting five and a half per cent for the wheat pool borrowings under a dominion guarantee. I want to be fair to the banks; they are giving four per cent on money left on deposit, but five and a half per cent is the rate paid to the banks by the cooperative wheat producers and that despite the fact that they have a government guarantee behind them.


Mr. HACKETT:: Four and a half per cent.


James Layton Ralston: I was quite satisfied it was five and one-half per cent. I accept my hon. friend's correction if that is so, but as a matter of fact I think it is five and one-half per cent. It is, however, a rate above that which the Dominion of Canada should be paying for guaranteeing the banks or anybody else for money.
Further, with regard to the Canadian Pacific loan, let me say this. The statement is made and is unchallenged that the loan which the Bank of Montreal made to the Canadian Pacific they were willing to carry on the security which they had without any dominion guarantee. In some way or another the Prime Minister felt that the matter was
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important enough for him to intervene and apparently the suggestion came from him just as much as it did from anybody else, that the five-year financing be done now and that the government step in like a great father, take over the whole load of the Canadian Pacific financing for the next two years and give this blanket guarantee. Those are matters which do not appear in the budget speech. The $60,000,000 guarantee is there, but the circumstances under which it is made do not appear in the budget and are not mentioned by the Minister of Finance in his speech. So, if we take the guarantees both direct and indirect and add the $50,000,000 to be spent in public works we find that the national debt is something more like $4,000,000,000 than the $2,700,000,000 which was mentioned by my hon. friend. So much for the blue side of the sheet so far as the book-keeping is concerned.
I feel that the Minister of Finance has not done quite justice to himself or to the country or to the government in the way in which he has presented in his budget the trade figures and the business of the dominion. He does not seem to realize that perhaps the most important thing in this country is trade; that we cannot collect any taxes, that we cannot hope to get rid of our railway debt or our other debts and deficits unless we have trade. But in a budget speech which occupies twenty-seven pages of Hansard, two pages are devoted to trade and the figures in connection with it. A budget should present some study of the trend of trade in this country of the various classes who are doing business here, of the possible avenues of trade and of the possibilities of developing the trade which we have. I find in the budget what I think is most fragmentary information. We have the total trade of Canada for the fiscal year; the comparative total trade from 1930 to 1934; the intra-empire trade for a year; comparisons between empire and United States imports and exports, and the only reference to international trade outside the United Kingdom is the total increase and the balance of trade. That is not enough for a budget speech of the Dominion of Canada; we ought to have a serious attempt to show exactly the condition of trade in this country and the possibilities of its development.
Anything there is in the budget speech with regard to trade seems to be aimed at this object and this only-to try, if possible, to justify the government's policy with respect to the shackling of trade and the imperial conference agreements. That seems to be as far 
as they go. The only reference which is made is this, and I am quoting:
The beneficial effects of the empire trade agreements are shown in the expansion of intra-empire trade.
The minister winds up with this statement:
These developments in our external trade have been distinctly favourable, reflecting the soundness^ of the policies which have been pursued in connection with the trade agreements, and testifying_ to the stability and efficiency of Canadian industry.
Again the trade agreements have been particularly mentioned. What are the facts? In the first place, with regard to the trade agreements and trade with the empire, as I tried to point out before in the house, the tendency is that way anyway; my hon. friends cannot get any credit because of the fact they happen to have these trade agreements signed in 1932, because the tendency of trade since 1930 and before has been for empire trade.


Some hon. MEMBERS:: Oh, oh.


James Layton Ralston: My hon. friends laugh. I have in my hand a publication issued under the authority of the present Minister of Trade and Commerce:	Canada's Foreign Trade,
1933, and at page 15 it states:
The tendency of Canada's trade quite apart from the trade agreements during the past three or four years has been toward a greater exchange of commodities with empire countries.
This was natural. In the last year the tendency has been more marked than ever. Why? Because of the rise in sterling, because of the increased purchasing power of British money; second, because of the prosperity of the British people and their getting back into the purchasing world again.. Yet my hon. friend turns this to his own account and says that the trade agreements have brought about this increase. The fact of the matter is that any increase in trade between Canada and the mother country has been due to natural and economic causes.


Mr. MORAND:: But the hon. member
nevertheless voted against the tendency.


James Layton Ralston: I did not vote against the tendency; I voted against my hon. friends pegging the tariff on 139 different articles in order to prevent trade with the rest of the world.
Let me point out what the statement of the Minister of Finance says with regard to the increase in trade. I take his own figures. I do not know that they are even as enthusiastic as the tendency indicated by the publication issued by the Minister of Trade and Commerce. I find this on page 2274 of Hansard: if we take the proportion of our exports

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which went to the British Empire in the eleven months ended February 28,	1934,
over those of the same period in 1933, they increased by the astounding percentage of -83 per cent. That is exactly what my right hon. friend shows; in 1933 it was 46-83 per cent- I am reading from his own speech-and in 1934 it was 47-66 per cent. Now the proportion of our exports which went to the United States in that same period, according to the same statement-and this is the policy which according to him vindicates the tendency and the soundness of the policies of the government regarding empire agreements-increased by 3-03 per cent; in other words nearly four times as much increase to the United States.
As to imports, the proportion of our imports which came from the British Empire increased by 4-37 per cent; the proportion of our imports which came from the United States decreased by 3-18 per cent. Now let us see where the principle of bargaining comes in.
The basic principle of this government's policy was that you must bargain; you must get a quid for your quo every time. But the result of these figures is this; For the year ending March 31, 1934 we bought 3-7 per cent more of our imports from Britain than in 1933 and we sold them only -83 per cent more of our exports. In other words, we increased our imports from them four times as much as they increased their imports from us. That is the quid pro quo we got as the result of our bargaining.
When my hon. friends opposite talk about bargaining, let us go back to the period from 1921 to 1930. The amount we sold from 1921 to 1930 to Britain and the empire was $4,057,000,000, when we did not have any Ottawa agreements at all to encourage any tendency or vindicate any soundness of policy. We sold them $4,057,000,000, and we bought from them only $1,823,000,000. Yet hon. gentlemen opposite know, and I am sure that some of them are perhaps shivering a bit now, particularly those who represent agricultural counties, that there is going to be an attempt made to revise the British trade agreements in June of this year. My hon. friends are going to find out that the three year schedule on certain agricultural commodities will be running out and that there is going to be an attempt made, as has already been indicated in the newspapers, to revise the schedules particularly with regard to agricultural products.
What about wheat? Wheat was the thing on which we were going to get a preference. The imperial conference agreements were going to be a great help to wheat. I quote Broomhall, March 10, 1934, showing the imports into Great Britain of wheat. The imports from Roumania in the season August 1,
1932,	to January 31, 1933, were 9,000 quarters; the imports from Roumania from August 1,
1933,	to January 31, 1934, were 255,500 quarters. That is Roumania. The figures for other countries are as follows:
Wheat-Quarters of 480 lbs.
Roumania.. Canada. . . Argentina. Australia . Russia. ..
August 1, 1933 to
January 31, 1934 .	255,500
.	4,408,000
.	2,243,000
.	2,539,000
.	1,735,000
August 1,1932 to
January 31,1933 9,000 7,364,500 704,500 2,125,000 495,000
The imports, it will be seen, increased from every country except Canada. Of course, there are many other countries besides those given above, but those are the largest wheat exporting countries, and those are the actual results if hon. gentlemen opposite want to know the tendencies of the empire trade agreements. There is the situation so far as the import by Britain of wheat from this country is concerned.
Now, what else? The Minister of Finance says that whereas in 1831 the imports from Canada represented 3.8 per cent of Britain's total purchases from abroad, her purchases from Canada in 1933 amounted to 6.9 per cent of the total. That is a fair example of the minister's attempt to extract sunshine from cucumbers. The year 1931 is not the one he should take for comparison, but 1932, as the agreements did not come into force till October, 1932. In 1932 my hon. friend's figure of 3.8 per cent for 1931 had gone up to 6.1 per cent, and in 1933 to 6.8 per cent, or an increase of only .7 per cent with all these other factors working that I have indicated. In other words, Canada increased her trade in that market by a little over one-half of one per cent of Britain's total imports.
My hon. friend in his budget speech deals with the percentage increase of our exports to Australia, South Africa and British India. Our increase in exports to Australia, in millions of dollars, represent about six-tenths of one per cent of Canada's total exports. But the Minister of Finance makes a special reference to that, and another reference to our exports to South Africa and British India. Our increased exports to British India, in dollars, amounted to less than one-fifth of one per cent of our total exports, and to British South Africa our exports, which represented an increase, according to the Minister of Finance, of 72 per cent, actually figure out to an increase of less than one-half of one per cent of our total exports.
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But what is rather interesting is that my hon. friend the Minister of Finance mentions an increase of 6 per cent in our exports to New Zealand. He did not look over on the other side of the page and tell us what our imports from New Zealand were. While our exports to New Zealand have increased by 6 per cent, our imports from New Zealand have increased by 148 per cent. I wondered what it could be that we were importing from New Zealand at this time.


Some hon. MEMBERS:: Butter!


James Layton Ralston: Surely not butter! Surely butter did not account for an increase of 148 per cent in our imports from New Zealand under this government. Everybody knows that with this government in power New Zealand butter was not to be mentioned; among Christians, it was not to be spoken of except at low breath. Yes, there was an increase of 148 per cent in our imports from New Zealand, although that is not mentioned in the budget speech at all.
If I may be permitted to go back for a moment, I should like to indicate to my hon. friend from Stanstead (Mr. Hackett) that I was right in regard to the percentage payable under the wheat loan. At page 213 of the committee's report I find this:
Q. I think Mr. Dodds, or somebody else, said the notes are demand notes?
A. Yes, I was not positive.
Q. What is the interest rate?
A. 5J per cent and they get-where they have a specially large deposit-they get credit, rate of interest of 4J per cent.


John Thomas Hackett: The hon. gentleman will recall that he was speaking about the rate of interest allowed on the credit balance, and he said it was four per cent. I was privileged to correct him and tell him that it was four and a half per cent.


James Layton Ralston: I accept my hon. friend's statement. I thought he was correcting me about the five and a half per cent, but he was speaking of the rate which was allowed on account of the deposits.


John Thomas Hackett: At page 136 of the proceedings of the banking and commerce committee.


James Layton Ralston: Let us get it clear. The situation with regard to the wheat guarantee is this:	The Dominion of Canada has guaranteed to the banks an account, which pays five and a half per cent interest to the banks on all borrowings. At times when there is a specially large amount on deposit an allowance is made by the banks of four and a half per cent interest on account of the credit balance.
I have been pointing out, Mr. Speaker, the references in the budget speech to the matter of trade. I do not want to pursue that very much further, except that I want to put on record what is not on record in the budget speech, namely the record of Canada's total trade, because we on this side of the house, regardless of what hon. gentlemen opposite are interested in, still believe in trade not only with the British Empire but with the world at large. The following figures of our total trade are from 1928 to 1934:
year____	Imports
1928		$1,108,000,000
1929	   1,265.000.000
1930..	  1,248,000,000
1931		 906,000,000
1932		 578,000,000
1933		 406,000,000
1934!! ;;	 433,000,000
Exports

1.388.000.	000
1.144.000.	000
817.000.	000
587.000.	000
480.000.	000
585.000.	000
Total

2.654.000.	000
2.393.000.	000
1.723.000.	000
1.166.000.	000 886,000.000
1,018,000,000
So my hon. friend the Minister of Finance puts it rather prominently in his budget speech that there has been an increase in total trade, from 1933 to 1934, of $132,000,000. Well, it is pretty easy to get an increase if you start at the lowest point, which in this case is 1933. That was the lowest point in the trade of Canada since 1912, so it is possible to show some increase, and I am very glad indeed that this increase has come about. It is just the same as a patient with a temperature of 105; if that temperature gets down to 1044 the patient is improving, no doubt, but even under those conditions the patient is not altogether well.

The serious thing, however, according to the Prime Minister's past statements is this: I do not know anybody who talked as much about the Canadian people being hewers of wood and drawers of water and the exporting of our raw materials as the Prime Minister when he sat here as leader of the opposition. Will you believe me, Mr. Speaker, when I say that on looking up the record of this government I find that whereas in 1930 our exports of raw materials totalled 38 per cent of all our exports-and that was when my hon. friend was travelling all over this country criticizing us-in the year covered by this budget raw materials amounted to 45 per cent of our total exports. Hewers of wood; draw-

The Budget-Mr. Ralston
ers of water; giving away our patrimony; selling our inheritance for a mess of pottage- these were the expressions used in 1930 while to-day, under the gentleman who said so much about it in 1930, we have a 20 per cent increase in our exports of raw materials.
Now for a moment I should like to deal with farm products, and. I think it will be agreed that some of these things should be dealt with in connection with the budget. The important feature to the people of this country perhaps is not so much the export of industrial goods or manufactured articles as it is the export of agricultural products, the products of the farm, the forest, the sea, and the mine. I find that notwithstanding the increase of $105,000,000 in exports, in 1931 the exports of agricultural products totalled $209,000,000; in 1932 they totalled $204,000,000 and in 1933 they amounted to only $198,000,000. In other words the increase in exports, which my hon. friend gave as $105,000,000, has not taken place in connection with farm products, but instead there has been a falling off. That brings me directly to this point: We are trying to assist in arriving at some kind of parity between the price level of agricultural and other primary products and the price level of other commodities. How are we getting on? In presenting his budget speech my hon. friend the Minister of Finance congratulated himself, I think, and this country on the fact that while the wholesale price index was rising by 13-4 per cent the index of farm products rose 34-9 per cent. But those are percentages of increase, not actual increases of the index figure; they do not indicate, as one might think, that the index figure rose by 34-9. In the first place the increase is due to the fact that, as in connection with the total trade of Canada, the minister started at the lowest point, which I think was February, 1933. Let me read to you what the position is with regard to the relative position of price levels as between agricultural and primary products and other commodities from 1930 right up to the present; time.
Farm	Manufac-	Differ-products	tured goods	enceJuly, 1930..	.. 79-8	85-8	6-0March, 1931	. 59-4	78-0	19-4March, 1932	. 52-6	71-5	19-6March, 1933	. 44-7	67-9	23-2March, 1934 .	. 56-5	75-0	18-5
In July, 1930, the spread was only 6 points, while in March, 1931, it was 19 points, and it is practically the same to-day. I am afraid my friend the Minister of Finance cannot give much comfort to the farmers by saying there has been an increase in the price level of primary products as compared with the general commodity price level. The point is that there is still that disparity of almost 20 points between those two price levels, and we will not have prosperity in this country until that gap is more nearly closed up.
The Minister of Finance mentioned the balance of trade. Wc have dealt with that on so many occasions that I need only take a moment at this time. My hon. friend rejoices in the fact that there is an excess of exports over imports of $142,000,000, and he says that does not take account of the export of gold, amounting to $90,000,000, thus intimating that there is a total favourable balance of trade of $232,000,000. Here again this publication put out by my hon. friend the Minister of Trade and Commerce does not seem to jibe with the statement of the Minister of Finance. I have in my hand an extract from a publication called Estimated Balance of International Payments of Canada, published by the Hon, H. H. Stevens, M. P., Minister of Trade and Commerce, Ottawa. Here I find a statement of the estimated balance, but it is not $232,000,000. Leaving out the detailed items I give the last two debits and credits. The exports are given as $1,216,200,000; the imports are given as $1,114,200, leaving a difference not of $232,000,000 as the Minister of Finance would suggest but of $102,000,000. Of course that is a difference of only $130,000,000, but what is that between friends? As a matter of fact the bureau of statistics, as the Minister of Trade and Commerce knows, regards this balance of trade as something of a fantasy; they have an idea that trade always balances eventually, that the total international payments balance, and they do rather a remarkable and, so far as the Minister of Finance is concerned, a shocking thing when they come to show the balance of trade at $102,000,000. Do you know what entry they make? They say, "Net errors and omissions, $102,000,000." They do that in order to balance up, because they do not regard this as a real balance at all. Of course, my hon. friend knows that the bureau of statistics, in publishing its statement covering 1926 to 1932, said:
Balance of trade figures are frequently misinterpreted due to the persistence of the doctrine, long ago exploded, that a nation's trade is necessarily in a healthy state when exports exceed imports, necessitating an import of gold to make up the difference.
So we do not get much comfort out of that balance of trade. I have said before and I repeat that if you get a balance of trade by starving yourself, by restricting your imports or by not getting the things you should get in order that you may be comfortable, that you may have the necessities and perhaps even
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some luxuries, then that favourable balance of trade is a bad thing. On the other hand, if the favourable balance is made up by increasing your exports while you are supplying your own necessities, by supplying the world at large and being able, from your abundance, to import, then the favourable balance of trade is a good thing. I submit to you, Mr. Speaker, that a favourable balance of trade which is produced by privation, by having to buy less, is not a good thing; the favourable balance of trade in which we all rejoice is the balance produced by the exhilaration of being able to sell more.
Now let me say a further word; I am still on trade, but I cannot leave this point, because it seems to me this is a state of affairs which even some of my hon. friends opposite do not seem to realize. What has this government done with regard to the increasing of the foreign trade of this country? I have already dealt with the imperial conference agreements amd with the statements of the Minister of Finance in regard thereto. Let us now have a look at my friends' activities as the champion trade agreement makers. These hon. members opposite are the men who are really supposed to know how to make trade agreements and who, according to their own statements, have negotiated several very valuable ones. Of course, they frowned on the agreement with France made by the Liberal government; they said that was a poor agreement, one which worked against Canadian interests, and for that reason they cancelled it. They made agreements-how many do you say? They made three, outside of the imperial conference agreements. One was with Germany, another with Austria and the third with France.
Let us now see how much trade they have developed through their trade treaties. The order in council authorizing the treaty with Germany was passed March 31, 1933. In 1932 the exports to Germany were $7,700,000. In 1933 the exports to that country were $9,900,000, showing an increase in exports of about $2,000,000. If hon. members will take the trouble to look into those figures they will find that the exports making up the difference were largely wheat and metals, commodities which Germany needed. At the same time, however, there was an increase of $2,000,000 in exports to Germany, with imports remaining about the same.
Now, let us turn to France. That, by the way, is the treaty where a great improvement was supposed to have been made. In 1932 our exports to France were $14,000,000, while in 1933 our exports were $12,200,000. That is a falling off, instead of an increase in exports.

The old treaty expired in June, 1932, and because of that I have compiled the figures for a six months' period. I find that in the last six months operating under the old treaty we exported $8,500,000 of goods to France, while in 1932 when we had no treaty we exported $5,000,000. Then, in 1933, under this brand new, shining treaty of my hon. friends opposite we exported $6,600,000, or in other words $2,000,000 less than was exported under the old treaty.
What is the summary of the treaties and trade agreements negotiated by the present government? The summary is this: They sold $2,000,000 more to Germany than we did the year before the treaty was made, and $2,000,000 less to France. Oh yes, but there is another treaty to be considered-Austria; we have a treaty with Austria. Let us see what our trade with Austria has been. In
1932	exports to Austria were $8,900, and in
1933	under the treaty they were $13,900. In other words, there has been an increase of $5,000. To summarize, there is an increase of $2,000,000 to Germany, a decrease of $2,000,000 to France, and an increase of $5,000 to Austria. That is the contribution which my hon. friends opposite have made to world trade by their trade agreements.
Now, one thing more. Hon. members opposite have always been very keen, and laudably so, to show that Canada is doing better than anybody else. If that were true nothing could give us greater pride. However I feel that we ought to look at the facts, and see if my hon. friends opposite are correct in their assumption, because if Canada is not doing as well as other nations we should know it. I have before me three tables. May I state that I believe we are more deeply interested in exports. I have had a table prepared, taking the year 1928 as a basis, because I thought that was a fair year. The exports of each country for 1928 have been taken at 100 and then a comparison is made with the exports of 1933. With that in mind I have made up the index figure for 1933 representing exports of each country as compared with 1928 which I have taken as 100. They are as follows:
Index figure
of exports for 1933 as compared with 100 for 1928
Belgium	 64.5
Germany	 58.7
Japan	 57.5
Italy	 56.1
The Netherlands	 50.4
France	 49.4
United Kingdom	 47.9
British India	 41.6

The Budget-Mr. Ralston
And then, in ninth position,, comes Canada, with the figure of 39-4. The United States is behind Canada, with the figure of 35-8; Australia 35-8 and New Zealand 35.
So hon. members opposite will have to look to their export trade more than they have been doing if they wish to show that as compared with the figures for 1928 Canada is increasing her export position. As my hon. friends opposite like to take the low points, let us compare the export figures for 1932 as compared with those for 1933. In these foreign trade figures showing increases in exports of 1933 over those of 1932 we find that Canada is sixteenth on the list . Australia is first with a percentage of 35, and Canada sixteenth with the figure 7-6. That is Canada's position in increases in exports as compared with 1932.
We have always boasted that Canada has been fifth in total world trade. She did hold that position in 1930. In 1932 however Canada was seventh and in 1933 she took ninth position. Last year, Canada's export position was fifth, and this year she is sixth. In imports Canada was last year in eighth position and this year she is in ninth.
The point I am trying to drive home, if I can, by the use of these figures is this, that my hon. friends opposite have completely neglected the development of world trade. In the first place, they are shutting themselves in behind a tariff wall, and in the next place they have adopted some sort of economic imperialism which seems to be filling their hearts and minds, a policy which I am afraid is going to prove a delusion. They are neglecting the opportunity-because there is an opportunity-to develop trade with the world at large. The figures show it, and I commend them to the consideration, of my hon. friends the Minister of Finance and the Minister of Trade and Commerce.
I had intended at this point to deal with the matter of revenues, but I do feel that I ought to bring home to the Minister of Finance the point which I have made before but which, like some other points I have made, he does not seem to have caught. I refer to my suggestion of making customs duties a source of greater revenue than they are at present. I have pointed out to my hon. friend that in past years customs duties have been used to good effect in producing revenue which could be used to run the services of the country. The following figures will serve to indicate the percentage of our total revenues made up by customs duties:
Percentage
Year

	Per cent
1928		 45
1929		 49
1930		 49
1931		 46.7
1932	 39.8
1933	 28
And this year, I am sorry to say, only 24 per cent of the total revenues collected was made up of customs duties. Why? Because my hon. friends opposite have put up such high tariffs that they have virtually created an embargo, with the result that goods do not come in and therefore are not subject to duty. He is feeling the effects of the law of diminishing returns. As I pointed out at the beginning of my remarks, he cannot possibly overtake the diminution of customs tariffs. In 1931 the Prime Minister said he was going to secure a certain revenue from customs duties. However he was $22,000,000 short, because at the special session of 1930 he raised the tariffs. In 1932 the present Minister of Finance guessed he was going to get $100,000,000 from customs duties, and received only $80,000,000, because of higher duties imposed. In 1933 my friend guessed again and said that $72,000,000 was the most he could expect from customs duties and, owing to the increases in tariff which had taken place, as I said a while ago, he received not $72,000,000 but $65,900,000. All this is in spite of what my hon. friend calls expanding trade. All this is in spite of the fact that according to hon. members opposite the country is doing better. The fact is that our revenue from customs duties is going down.
Let me give my hon. friend an example of how the duties that they have put on have hurt our exports. This government put on sharp increases of tariff against the United States. The United States put on an import tax of $3 and a duty of $1 against our lumber. The result was an imposition of four dollars against us. We then to find a market for our lumber included it in our treaty with Great Britain. What has occurred in connection with our timber exports to the United States due to the high duties which were put on against that country? In 1930 we exported to the United States $26,000,000 worth of planks and boards; in 1933 we exported only $6,000,000 worth of planks and boards, a drop of $20,000,000. My hon. friends think we got a market in the United Kingdom. In 1930 we exported to the United Kingdom $5,500,000 worth; in 1933 we exported $7,600,000 worth. We had a gain of $2,000,000 to the United Kingdom but we lost $20,000,000 in exports of lumber to the United States. That is what happens in retaliation for our high duties. The same thing has happened in connection with imports. Duties have not been collected because goods have not been coming in. As I have said before, our hon. friends are creating a vicious circle. In the first place they are cutting off the market for our producers' goods; in the next place they are cutting off the revenue from customs duties because no goods are coming in in exchange
The Budget-Mr. Ralston

for those producers' goods; in the next place they are imposing a tax on the man who has lost his trade. These extra taxes have to be imposed to make up the loss.
One cent has been taken off the sugar tax. I should like to read the remarks made by the Prime Minister when the government of which I happened to be a humble member took off the tax on tea. He quoted Mr. Lloyd George's speech, and then in Hansard of 1930, page 1830, he said.:
I commend that to the government opposite: Go and tell the housewife that you are taking the duty off tea now; that last year you took the duty off cheques, parlour and sleeping car tickets; and that this year you are taking the duty off tea on the eve of an election. I cannot without having before me the figures express any opinion with respect to the condition of the revenue generally but I should say that if there is one war tax in all the *world that should have been dealt with as soon as possible it was the tax on tea. Every member of this house will say that. But, as a matter of fact, the government had not seen fit to take the tax off tea until now, on the eve of an election. Who will say, in the words of Lloyd George, that there was no bribery in that? Those were his words, not mine.
At the most there is only one year more before an election and so my hon. friends are getting ready to meet the housewife and say to her, "We have taken off one cent of the tax on your sugar bowl."
I should like to deal with the tax which has been placed on gold. My hon. friend is endeavouring to make up his revenue by imposing a tax which has created a good deal of alarm all over the Dominion of Canada and particularly in certain sections. Let me say to him that I do not think there is an industry in Canada ^rhich has attracted so much United States capital in the last two or three years as the gold mining industry. The Minister of Finance has said that he is anxious to attract United States and English capital. We are proud of this industry. It is one which has created a demand for skilled and unskilled employment; it has created a need for timber, steel, dynamite, chemicals, machinery and many other things in connection with its operations; it has created a need for fuel, food, clothing and other household supplies on the part of those employed in the mines. This industry has supplied a good deal of the freight and a good deal of the passengers carried by our railways. It has supplied an opportunity for development to the power companies and has been the cause of new hydro-electric enterprises being brought to completion. This industry has been one of the most important of any industry we have in the production of wealth. There is no need

of a sales agent to dispose of its product, as there is a ready market. There is no question of price, as the price is fixed. We in this country have been able to pay a good many bills and to buy many of the things we have bought from outside, such as cotton, rubber, fruits and manufactured goods, with the gold produced by our mines. These mines are taxed already. The mines themselves pay a corporation income tax while the shareholders pay the income tax which is imposed upon individuals. My hon. friend now proposes to impose a further tax because of the artificial increase which has occurred in the price of gold.
There is something in the argument which he puts forward. I do not suggest that the tax is wholly bad by any means but I am suggesting that there seems to be a lack of appreciation of the fact that there are other industries in this country which have been able artificially to increase their prices because of government action. These industries have not been placed in the same category with the gold mines. The consumer pays an increased price because of government interference with other industries of this country, but no extra tax is being imposed on them. Outside of the two major points which I shall mention in a moment, there are other features which give difficulty in connection with this tax. First, it is discrimination against a particular industry and, second, it is discrimination against particular sections of Canada. All parts of Canada do not get the benefit of gold mines. The little province which I have the honour to represent has done some gold mining but to a very limited extent. We hope to have further developments. There is gold mining done \n Quebec and there is a great deal in Ontario. Manitoba has some while British Columbia has a good deal. One or two of the western provinces have produced traces of gold, while we all know what has been done in the Yukon. Generally speaking, the bulk of this taxation will fall upon two or three sections of this dominion.
My hon. friend was in this position:	He
had put his duties up so high that he could not get any money. He did not want to continue the two-cent sugar tax, but where needs must, the devil drives. He had to get money from somewhere, and he said, "We will call on the gold industry." Had we been in the comer in which he is, we might have done exactly the same thing but I can assure him that we would not have done it in the same way. We would not have made the same proposal which he made in his budget

The Budget-Mr. Ralston
speech. In the first place, he taxes production and not profits. I say to him that he cannot possibly justify a tax which discriminates between a mine which can produce an ounce of gold from seven or eight tons of ore and another mine which can produce a similar quantity from only three tons. In the case of one mine it may cost $29 to produce *n ounce of gold while with another mine, it may cost $31. Regardless of this my hon. friend is proposing to tax everything received above $30 an ounce up to 10 per cent of the gross price received, I say that that is wrong and it cannot be justified. The low-grade mines will be paying a percentage beyond all reason when compared with other mines producing a higher grade ore.
Let me put an example on the record. Assume that it costs a mine $14 to procure an ounce of gold. They obtain $35 for that gold, giving a profit of $21. The tax will be ten per cent of that $35, or $3.50, which means sixteen per cent of the profit of $21. Another mine producing low grade ore finds that it costs $31 to produce an ounce of gold. That gold is sold for $35, giving a profit of $4. In this case the tax is the same, ten per cent on the $35, which leaves a profit of only fifty cents per ounce. The tax amounts to 87J per cent of the profit. Now can the Minister of Finance justify any such taxation as that? My hon. friend to my left has suggested that in the case of some mines this tax will mean bankruptcy and the closing down of operations. Assume that it costs a mine $32 to produce an ounce of gold; that mine would have a profit of only $3 per ounce while it would be taxed $3.50 per ounce on the gold it produces; it would have a loss of fifty cents on every ounce of gold it produced. That means bankruptcy. And what does that mean? It means that the mines which are giving the most employment, providing an opportunity for supplying the greatest amount of material, the mines which require the handling of the greatest amount of ore, and the mines that are least able to pay are taxed the most-taxed out of existence. It is absolutely unfair and inequitable and cannot possibly be justified.
Secondly, let me point this out-and I appeal to the Minister of Finance, because he and I come from the same province. The hon. gentleman knows that in our own province particularly the mines there are in process of development now, and the little gold that is being produced, while it is being realized upon, is not providing money to be used in profits. Dividends are not being paid but the money is being turned back into the mines
for purposes of development. I submit therefore that they should not be taxed, but they will be taxed under this provision, because 10 per cent of production is taken. My hon. friend ought to have special consideration for these mines. I believe that the tax in its present form is inequitable and indefensible, and will do incalculable injury to the dominion. It was none other than the Prime Minister himself who on March 27, 1033, as reported in Hansard, page 3424, with regard to the gold mining industry, made a statement which I think might very well be quoted on this occasion. He said:
This country at the present moment has reached a margin of borrowing which, under the ordinary rules that govern, according to the books, is almost its maximum borrowing power unless you have a rapidly increasing population or great natural resources that are being rapidly developed. That is the reason that the increase in gold production in this country has added relatively so greatly to confidence in the country. And the reason is obvious.	[DOT]
But my right hon. friend undermines confidence when he taxes the gold mining industry in this inequitable fashion and shuts down the very mines that would do most good in the development of this country. Let me refer to a statement made by the Minister of Mines (Mr. Gordon), a member of this government, at Quebec, at a meeting of the Canadian Institute of Mining and Metallurgy. This is what he said as reported in the Canadian Northern Miner of April 12, 1934:
"I should like to touch on the policy of the dominion government toward taxation of mining profits," the -minister said. "Some hold to the belief we should exact from the industry, particularly from the gold producing companies, a greater share of their profits. But which is the better course? To maintain stable taxation and thereby afford greater development of our gold resources with consequent greater return to the dominion's exchequer or to discourage this development by thinking up ways and means of deriving greater taxation from the industry? As I stated before foreign capital is in large measure supporting the ever-increasing number of prospectors and others investigating our gold possibilities.
It is obvious then any undue stricture placed upon the profits of gold mines would result in Canada, as it has in other countries, in the slowing up of the stream of speculative money needed for gold mining development."
That was what the Minister of Mines had to say, and I suggest that the mining men of this country had a right to take it from that statement that the minister, as a member of the government, was intimating that the industry would not be taxed as it is at the present moment. I am sure that they did draw that inference. It was an assurance from

The Budget

Mr. Ralston
the Minister of Mines which this government would do well to honour.
I wish now to say a word in regard to the provision respecting coal. I can only say that I have endeavoured to find out what effect the change in the regulations in connection with drawbacks will have, but I am afraid the matter will have to be left until we reach the committee stage when we can ascertain exactly how much coal is affected. I understand that the change made with respect to coal under item 1049 is that the drawback, which was previously 99 per cent of the duty, is now altered to 50 per cent, but that the incidence of the drawback, the benefits under it, will now be extended to gas retort plants as well as to by-product coke ovens. That means that you have an increased duty by 50 per cent and at the same time you may have an increase by 50 per cent in the number of those who are entitled to the benefit of the drawback. That will have to be left to the committee stage, when one can make intelligent observations on it. If it means that there is to be a further restriction with regard to competing American coal, then so far as I am concerned, coming as I do from Nova Scotia, I welcome it because if there is to be a policy of protection of natural products, the products of Nova Scotia as well as of other provinces should be protected, particularly in view of the national interests which exist in connection with the preservation of the mines of that province.
Let me now mention only generally the tariff as dealt with in the budget. I am not going into the items; I do not know enough about them, and we shall have an opportunity, in committee on ways and means, to discuss them. Generally speaking, I take it that they are pretty nearly what they appear to be, minor adjustments in the tariff. I am sorry that they do not seem to represent any decided change of heart, any rightabout face on the part of the government with respect to tariff matters. I find that peanut oil, beads, harps and cricket balls are all dealt with, and these articles would indicate the generally frivolous nature of most of the tariff items.
But what I do wish to refer to particularly is a matter which I regard as of much more importance than the individual items in the tariff, a matter of principle, and that is the appointment of the tariff board and the question of the decisions of that board, as well as the way in which this government should honour the findings of the body which it has appointed to deal with tariff matters.
I brought up in committee of supply the other evening the jute twine matter, and I

feel I ought to put the salient points on record in connection with the discussion of this whole subject. Two years ago we appointed a tariff board. The Prime Minister intimated that he wished to secure the best tariff board he could get, and he went afield to find the man best qualified for the position of chairman. I find in Hansard of 1933, page 4836, this statement made by the Prime Minister with regard to Mr. Justice Sedgewielc, the chairman of the board. The Prime Minister said:
When we have to go to the bench for the purpose of securing an appointment, we do not do so because they are judges as such, or because I happen to be a member of the legal profession, but because in the very nature of things we must endeavour to secure for the positions the best talent we can command, with the idea in mind that not only will Canadians be proud of the appointment, but that those from other lands who come before that tribunal will say: Here is a man who discharges his duty in a manner worthy of the great traditions that belong to those who sit in judgment upon matters affecting the interests of the country as a whole. ... If the committee were interested I could give the names of members of the profession who said: You must not take this man from us; he is the most brilliant and the best qualified of the judges we have had for years on our bench in the trial division and in connection with bankruptcy. . . . May I make just one or two other observations with respect to the matter? I knew that in time of stress and strain this house might not think this the most desirable thing to do; yet I say to my colleagues in this House of Commons that canvassing the situation in its entirety and looking over the field in every part of the dominion from the Atlantic to the Pacific I know not where I could secure an appointee who would so fuly measure up to my concep- ' tion of the ability required to perform the tasks imposed upon him under the statute as the gentleman who has been selected.
The Prime Minister was speaking there of the present chairman of the tariff board. In the debate-I have not the reference-the hon. member for Gloucester (Mr. Yeniot) asked the Prime Minister whether he did not think it would be better to have the customs board retain their jurisdiction in the matter of appeals rather than have the appeals go direct from the appraisers to the tariff board. The Prime Minister intimated in the debate that he considered this bill provided the preferable way, namely, that appeals should be made directly from the customs officials, appraisers, to the tariff board.
A case came up before the customs officials and it was this: jute twine was being imported from Great Britain. Jute twine had, with other articles, been subject under our tariff to the provision of section 43 of the Customs Act which permitted the Minister

The Budget-Mr. Ralston
of National Revenue to make an arbitrary valuation for duty purposes of goods coming in. In other words, jute twine was subject to what we call the dumping duty by reason of the fact that the minister was able to put an arbitrary valuation on the invoice. In November, 1932, we passed a statute amending our act and in view of the imperial conference agreements, we excepted from the provisions of section 43, goods coming in from Great Britain, so that after that date the minister was not permitted to make an order fixing a value for duty purposes or, in other words, he was not permitted to impose the dumping duty.
An order of jute twine came in; it was referred to the customs officials and notwithstanding the fact that the act had been amended in 1932, those officials held that the old order the minister had made still applied; they imposed a value for duty purposes on this particular shipment of jute twine and it was subjected to dumping duty. The matter was taken to the tariff board on appeal as was provided for at the time the legislation constituting the board was passed by this house. A decision was given; in fact, there were two decisions. The tariff board on October 30,
1933,	decided that the dumping duty did not apply to goods coming from the United Kingdom because the statute of 1932 expressly exempted British goods from that dumping duty. That decision was made by the tariff board and handed down on October 30, 1933. Did the government accept that decision? They did not. Did the Department of National Revenue accept the decision? They did not. Did they keep on imposing dumping duties? They did; notwithstanding the fact that their own board, headed by the gentleman who is mentioned by the Prime Minister in the passage I have just read, handed down a decision that they should not impose the dumping duty, they kept on doing so and not until after February 10, 1934, did the government accede even sufficiently to say: Well, while this matter is under discussion we will not insist on the dumping duty being paid. I have in my possession, not here, but in my office, a letter written by the Department of National Revenue on February 10,
1934,	telling the shipper that he has still to pay the dumping duty, notwithstanding the fact that the tariff board handed down their decision on October 30, 1933. That was not based on the ground that there was a serious question of law involved; I have been unable to find a single legal officer of any description who has given the opinion that the tariff board were wrong in their decision in that respect. Second, I have been unable to find anybody,
although I have asked the minister pretty persistently, who could suggest there was an appeal from the tariff board to the governor in council, although an appeal was at least pro forma taken in order to hold things up.


Mr. MATTHEWS:: Would my hon. friend read that letter of February 10, 1934?


James Layton Ralston: It is in my office.


Robert Charles Matthews: I am not sure that
he has interpreted it correctly.


James Layton Ralston: I shall be glad to bring
it dotwn. If, when my hon. friend's estimates are up, he will bring down those opinions of the legal officers, I shall be glad to bring down this letter. Has my hon. friend a copy of it before him?


Robert Charles Matthews: Yes.


James Layton Ralston: I would be glad if he
would read it.


Robert Charles Matthews: Let my hon. friend go on with his speech.


James Layton Ralston: I would like my hon. friend to read the letter. I do not want to say anything unfair. It seems as if the letter meant what I thought it did.
As a matter of fact, that is the situation with regard to the decision of the tariff board and the government prior to February 10 declined to accept th t decision. Since then they have issued a circular in which they have intimated that while the matter is on appeal or at least referred to the Supreme Court of Canada, they will not impose the dumping duty, but that importers must be prepared to amend their entries should an adverse decision be handed down. Let me point this out: The appeal to the Supreme Court of Canada is not an appeal in connection with the matter which the tariff board decided. The board decided that the dumping duty could not be applied on a British shipment on account of the statute of November, 1932. What has gone to the Supreme Court of Canada? The reference to it is; did the tariff board have authority to decide that? They leave to one side entirely the question whether the tariff board were right in their decision; they are endeavouring only to test the authority. Does any importer care anything about the question of authority? Who ought to decide the question of the authority of the tariff board? It seems to me it is this parliament. Did we intend to give the tariff board authority to act in place of the customs board? If we did, we should say so by legislation and not by going to the Supreme Court of Canada.
The Budget-Mr. Ralston


Mr. GUTHRIE:: Might I interrupt my hon. friend for a moment? I think he knows full well that the very questions which he is discussing now so ably and eloquently are to be argued to-morrow on behalf of all parties interested on the question submitted to the Supreme Court of Canada, and I would think, if my hon. friend has any criticism to offer in regard to the government or anybody else, it would be well for him to reserve his remarks until the estimates of the Department of National Revenue are before the house, rather than to discuss the matter when this question is pending as it is before the Supreme Court for argument to-morrow.


James Layton Ralston: I am not discussing the legality of the reference; I am discussing the futility of making a reference to the Supreme Court of Canada. I submit with all deference it was simply eyewash to make a reference to the Supreme Court in connection with questions which could have been, decided by parliament. Either the government intended that the tariff board should have authority to decide these questions, or they did not, and there is no need to go to the Supreme Court to have that decided. Let the government come to parliament and propose to have the act amended. The real question which was not submitted to the Supreme Court is: Is there a dumping duty against British jute twine? Did the tariff board decide properly when they made their ruling?


Hugh Guthrie: That question arises out of the question submitted.


James Layton Ralston: I do not know whether my hon. friend had anything to do with framing the question submitted.


Hugh Guthrie: I certainly did.


James Layton Ralston: The question is: Had the tariff board authority to decide? It was a very ingeniously put question. The question that should have been submitted to the Supreme Court was whether the tariff board were right or wrong in their decision, but the government have seen fit to submit not that question, but whether the tariff board have the right to make the decision, thus leaving entirely aside the merit of the decision itself in which, after all, not only are the importers interested but, I would think, the jute twine firms on the other side. Surely in connection with a matter of that kind my hon. friends opposite who are so anxious to promote the imperial conference agreements, would consider it a matter of honour that the provisions of those agreements which propounded that any dumping duty or exchange duty
fMr. Ralston.]
should be done away with as soon as possible should be carried out. Yet I find my hon. friends carrying this thing along, paying no attention to the tariff board decision, charging importers this dumping duty just the same as before and doing everything they can to be just as niggardly as possible in complying with the provisions of the imperial conference agreements, and, secondly, making all the trouble they can for the business people of this country. That, however, is not half as important or serious as that the government of this country should in the face of a decision made by a tribunal appointed by itself, treat it with absolute contempt, indeed, such contempt as could be punished as such if it were committed by an ordinary litigant before a court. They pay no attention to the decision, and thus hold the tariff board up to possible ridicule or at least to the reflections of people generally who say that evidently the board has not much standing; or at any rate the government does not pay any attention to it. I submit that the action of this government in connection with the tariff board in the jute twine case cannot be too strongly condemned by anyone who wants to see any stability in this country in connection with tariff matters.
The other case was the so-called "tin plate" case. Tin plate was being imported into this country. The Ojibway plant had said that they were closing down; in fact, they had closed down. The question was, whether tin plate which was being imported into this country by the canners, was after the Ojibway plant had closed down goods of a class or kind made in Canada. The customs people decided that it was, notwithstanding the fact that they had a letter there stating that the Ojibway plant was closed, and no other plant was operating here. Nevertheless the customs people decided that tin plate was a commodity of a class or kind made in Canada, because they said: There may be some on somebody's shelves, or it may be made some time, or perhaps it has been made. Therefore it imposed the 20 per cent duty and the dumping duty, instead of 15 per cent. That affected the fish canners, the fruit canners, and everybody in this country who used tin plate. The decision was handed down in that case in December, as far as I can remember, after the most strenuous efforts on the part of representatives of this government to keep that case dragging on before the tariff board. The first time they appeared and asked for one month's adjournment-I think that is right although I am not sure how long the first adjournment asked for was-but the second time the representatives of the government

The Budijet-Mr. Ralston
asked for a three months' adjournment. For what? In order that they might look into the question of the imperial conference agreements and find out whether tin plate was being manufactured in Canada. There was only one possible plant and that was at Sarnia where investigation could be made, and could be made promptly. The application was made for a three months'adjournment notwithstanding that in the meantime the importers in Canada would have to pay 20 per cent and the dumping duty. The tariff board did not grant three months' adjournment, but granted one month, and the board on December 12, made an order and said that tin plate was not a commodity of a class or kind made in Canada, and the dumping duty was not applicable. But it took two months before the customs issued an order with regard to that and decided that the tariff board decision had to be accepted at least for the period from June to December.
I cannot understand what the explanation is. But I say it does not speak well for the government, and it constitutes a reflection on the tariff board which they should not be under. It is injurious to the commercial interests of this country and contrary to the idea of the stability of tariff policy, because after all the Minister of Trade and Commerce in days gone by used to talk about the necessity for tariffs and import regulations being stable and being definite and certain. Apparently the government were trying to secure that by the appointment of this tariff board, but now when the}' get decisions they do not like they immediately disregard them. What sort of example is that to this country and to the other litigants appearing before the tariff board?
So I say, Mr. Speaker, that in the first place the government for nearly four months have refused to follow the decision of the tariff board with respect to the jute twine case. They have disregarded the decision of the tariff board of October 30, until very lately. Secondly, they have refused to follow the decision of the board in a similar case with regard to felt hats, which I have not mentioned. Thirdly, they have no opinion that an appeal lies from that decision. They have no opinion that the decision is not correct. Fourthly, in the tin plate case the government refused to accept and flouted the board's decision for two months at least. I say this is wrong because it wears out business people. It is not fair to the commercial community. It is wrong because it is not in keeping with the imperial conference agreements, and I say it is especially wrong because it discredits a 74726-1S5
board appointed by this government itself, and to which the people of Canada look for some stability in connection with tariff matters.
I have not dealt, Mr. Speaker, with all the matters which are contained in the budget but as I intimated to my hon. friend the Minister of Finance, I hope I have demonstrated to him that at least there are some things about the budget of which I do not approve. After all I have said, Mr. Speaker, the most condemnatory criticism to be directed against this budget is that it shows that the government has neither the courage nor the capacity to follow through with their policy of trade restriction which was boasting]}' inaugurated at the special session of 1930. They have sown the wind and they are reaping the whirlwind. They find that Canada is not the only country which can restrict imports. They find, as a result, that Canada's former customers refuse to buy. They went into this trade war with the insane idea that they could give nothing and get everything by virtue of some heaven-sent superiority in commercial intelligence. The result is that the policy of strangling trade has increased costs of production to our farmers, fishermen, miners and lumbermen and, at the same time, the demand for their goods has been curtailed with a consequent drop in the prices of their products.
Having accomplished this tragedy in a country which depends so largely on exports of the farm, the forest, the mine, and the sea for its purchasing power, they-like Mark Twain who, in one of his stories, got his hero into such a fix that he said someone else would have to finish the book-now are forced to fall back on "the automatic working of fundamental economic forces," as they call it, to get them out.
Let there be no mistake, this country is now on the "dole" so far as export trade is concerned.
The problem is to bring about parity between the prices which the farmer and the other primary producers receive for their goods and the prices received for other commodities.
The Finance Minister, last year, deprecated economic nationalism. I remind you, Mr. Speaker, that economic nationalism for Canada began with the advent of the present government into power and they have constructed a "Frankenstein" which threatens to destroy them. At the special session of 1930 the Prime Minister held out shining hopes of the imperial conference which he was to attend in London. The net result was summed up in that descriptive comment "humbug". In

The Budget-Mr. Ralston

1932 my hon. friend the Prime Minister told us to look forward to the imperial economic conference at Ottawa for relief. Relief did not come. In 1933 he hoped that a world economic conference might save us. That conference is dead. They now supinely await for the working out of "present economic trends", surely a curious position for a party which was going to blast Canada into prosperity.
We must face the fact, Mr. Speaker, that the continuance of present policies has made it absolutely necessary to adopt no uncertain methods to bring about a parity between the price level of agricultural and other primary' products and the price level of other commodities and it is quite possible that the government of the day may be driven to drastic action in bringing about such a parity. A further consequence of continuing present policies might well be the necessity for the state to take the primary producer's surplus off his hands at a minimum price and market it abroad in a manner which will serve to increase, rather than to diminish, our total trade. This may be radical and this may appear to be artificial but it is a logical and almost inevitable consequence of a perpetuation of the economic nationalism to which this government has committed Canada.
I still believe, and those around me believe that it may not be too late, even yet, to extricate ourselves by paying attention to fundamentals. This country is in a different position from any other to promote export trade. There ought to be, and I still believe there could be an ordered and sensible readjustment of our fiscal policies, paying attention to the necessity for buying if we want to sell; at the same time giving our producers the purchasing power which comes from being able to dispose of their goods. Then we would have the home market for manufactured goods which has been talked about, but which has never been achieved by the present government. There need be no radical dislocation of business and industry, but there has to be a radical change in outlook and attitude, and whatever hope there may have been that this government would see the error of its ways, is shattered by the confession of helplessness contained in this budget. It is the climax of four years of inaction in which this country has been allowed to take the " shot and shell " of depression without the government attempting a single constructive operation, except counselling the troops to have courage and patience.
The Prime Minister repeatedly intimates that this and that can not be done. The trouble is that the budget is woefully lacking

in proposing anything which can be done, but the back and shoulders of Canada are near the breaking point under the strain of present conditions, and the great currents of business are dammed and stagnant by reason of the policies of this government. Armies on both our flanks have, by active, aggressive measures, succeeded in driving depression back, and just now the government, cautiously peeping over the parapet, suddenly discovers that the enemy is retiring and the Minister of Finance indicates to his apparent surprise that,
... it is now clear-that in several countries it began as early as the summer of 1932, and in the United Kingdom, even earlier.
And so they sit down on the fire step and complacently propose that we wait for the "automatic working of fundamental economic forces" and the effect of "present economic trends," which "are in the direction of further progress."
What is really needed is a persistent, determined, planned drive to clear the field. Can anyone question that Canada's success in that drive depends in no small degree on the development of her export trade? The Minister of Finance despondently tells us that:
International trade remains at a low level. Little, if any, progress has been made in removing the excessive interference with trade, the arbitrary quotas, the exchange controls and the other defensive measures which have been designed to meet the dangers of currency depreciation and unfavourable balances of payments.
I ask him what his government has done to undo the injury caused by its own policy of shackling Canada's trade by these very measures to which he refers. Admittedly, Mr. Speaker, we have gone so far that we cannot retrace our steps all at once, but it is because this budget does not give a sign of even halting, let alone turning right-about face and marching in the other direction, that I regard it as the most hopeless and discouraging budget speech which has been delivered during the four years of this parliament.
The reassuring aspect of the matter is that, judging by the results of five by-elections, climaxed by South Oxford, the country will, at the earliest opportunity, remove this government from power and register unmistakably its opinion that- its policies have proved a disastrous and costly failure for the people of this dominion. The people of Canada realize that the self-complacent, static attitude of mind reflected by this budget has already lost to Canada opportunities and prospects which will take her years to recover. They know

The Budget-Mr. Woodsworth
now that every day under the policies of the present government means so much lost ground which must be later regained, and they look forward eagerly to a general election to return a Liberal government to carry out-as Liberal governments have repeatedly done in the past -the task of recovery and reconstruction. And so I beg to move, Mr. Speaker, seconded by the hon. member for Vancouver Centre (Mr. Mackenzie), that all the words after the word "that" be struck out and the following substituted therefor:
This house regrets that the proposals of the Minister of Finance give no indication of the intention of the government to abandon the policies of economic nationalism which have proved so disastrous to Canada's trade.
It is of the opinion that the immediate substitution therefor of policies which will promote ex-port trade throughout the world is essential to any permanent improvement of conditions in Canada, and to the successful application of other policies respecting credit and employment designed to effect this end.


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: Mr. Speaker, the hon. member for Shelburne-Yarmouth (Mr. Ralston) will not expect me, I am sure, to follow his very lengthy criticism. I must say that although it took a good deal of time for him to make his address I really do not find that I have any very concrete idea of exactly wherein his criticism lies, and I do not know that the amendment has clarified the situation very much. It is in such very general terms that one can make almost anything or nothing out of it.


Some hon. MEMBERS:: Why don't you cross the floor?


James Shaver Woodsworth: Some hon. gentlemen here ask why I do not cross the floor. As a matter of fact some of us have been in this corner while two or three successive governments have crossed the floor.
The budget speech contains a general survey of financial conditions in Canada, and although it also covered a great deal of ground I think there are two or three outstanding points of which the general public ought to be made aware. First of all, and in my judgment very significant, is the increase in net debt during the year, on all accounts, of $135,200,000. I fancy the government is precisely in the position that any private business or individual is in; when you have to borrow money to pay interest on what you owe you are indeed in a bad way. It does not make much difference if the rate at which we are going into debt is a little less this year than it was last year; the fact is that this year's deficit is simply piled on top of last year's deficit.
We are also told that the reduction in controllable expenditures cannot go further. Looking to the future that does not give us a very great deal of hope. The reduction in controllable expenditures cannot go further, and I cannot but think of the hardship that has been caused by the reduction to date and the fact that very essential services have had to be curtailed or cut off entirely. On the other hand we are told that the increase in uncontrollable expenditures is bound to continue; that is, we have a debt which is expanding and on which the interest necessarily must increase also from year to year. So that is the unsatisfactory state of the country as a whole; we have controllable expenditures cut to the limit and uncontrollable expenditures bound to increase in the future.
I think one paragraph in the budget speech ought to be read into Hansard, because it summarizes the situation very well. It appears on page 2283 of Hansard:
In the year which has just closed, such expenditures-
This excludes the amounts required for the railway deficit and unemployment relief.
-totalled $364,000,000. Of this amount, $230,000,000 was required for purposes classed as uncontrollable and $134,000,000 for controllable. In other words, out of every $100 expended $03 went for expenses designated as uncontrollable and $37 for services that are ordinarly regarded as controllable. The main services under uncontrollable are interest on public debt amounting to $139,700,000; war pensions, $41,700,000 and treatment and aftercare of returned soldiers, $9,500,000.
These three items alone account for 83 per cent of the expenditure included' under the category of uncontrollable.
And perhaps it should be added that the cost of administering the public debt is not included in uncontrollable expenditures. The only comfort the Minister of Finance gives us is that the burden of our public debt is not beyond the capacity of our people to pay. That is, he joins with the Prime Minister in asking the common people to tighten their belts.
Now we come to the taxes imposed through which we are to meet the proposed expenditures. I am pleased to find that there is a reduction of one cent per pound on sugar. The stamp tax on postal notes issued in the amount of one dollar and under is reduced by one cent. I suppose small mercies should be thankfully received.


Mr. GARLAND (Bow River):: A one cent budget.


James Shaver Woodsworth: It might very well be called a one cent budget. To make up for these very slight reductions on one or two

The Budget-Mr. TVoodsworth
items we have the tax on gold. Again, that we may have this clearly before us, I should like to read the paragraph dealing with this tax:
To replace, the revenue lost by the reduction in the tax on sugar, it is proposed to levy a tax of ten per cent on gold. In this connection one must keep in mind the fact that since our abandonment of the gold standard the price of gold in Canadian currency has risen from $20.67 an ounce to approximately $35. This is an increase in the selling price of the product of our gold mines of about 70 per cent. Furthermore, the extraordinary increase in the profits which accordingly accrue to gold producers find its origin in circumstances entirely external to this particular industry. That is to say, the reason for this increase in price is to be found in the chaotic conditions of world currencies, the depreciation of our dollar in the foreign exchanges and the devaluation of gold by certain countries.
These gains to the gold miners are classed as "fortuitous gains." I commend the Minister of Finance for so clearly pointing that out-fortuitous gains. One of the least satisfactory portions of the speech to which we have just listened is that dealing with the proposed tax on gold.


Mr. BRADETTE:: Does that apply to all
the gold mines?


James Shaver Woodsworth: The financial critic of the opposition has suggested that this tax means a discrimination against a particular industry. Well, I would point out that that is true of all our indirect taxation. Our whole tariff schedule means that particular industries are singled out for taxation, so there is nothing new in that contention. Further than that, it is suggested that it is discrimination against particular parts of the country. That, too, is true under our present system of taxation. Wheat is grown in one part of the country and furniture is manufactured in another part. Undoubtedly it might be said that any indirect taxation of that kind is a discrimination against some particular section of the country. Further it is suggested that the budget does not take into account the variations in the grades of ore and costs of production. I do not believe it is common that such variation should be taken into account. If we did fully take -them into account it would be a bonusing [DOT]of the marginal mines. Since this enormous -gain in the value of gold is entirely a fortuitous gain-and I think that cannot be gainsaid-my question is: Why take only ten per cent? Why not take the entire fortuitous gain? I can see no reason why that should not be done. Gold is in a different position from any other commodity, since owing to

governmental action it has become the measure of all other commodities. It is in an unique position. And if owing very largely to governmental action we have turned over millions upon millions of dollars to the people who at the present time have control of gold mines, and that action has meant to them an increase from $20.67 an ounce to $35, there seems no reason why the public should not gain the advantage of such increase. Of course, some one will say that would mean that certain mines would not be able to gain as much as they are doing to-day, that certain lower grade mines would be discriminated against, that a certain number of men would be turned out of work, and so on. I know there may be all these objections, but they apply equally in any taxation of this kind, because a good many industries have been put out of business through the very high taxation placed upon them in the purchase of the raw materials required for their products. Personally I think that if gold is as necessary in the carrying on of our trade as everyone seems to imagine, the only permanent solution would be for the government to take over the gold mines. They could then keep the miners at work on a reasonable wage scale; they would then be able to collect this fortuitous gain instead of turning it over to private individuals.
I note that therfe is no change whatever in the income tax. I am glad that it has not been lessened, but it does seem to me that the income tax ought to be a source of much greater revenue than it is at the present time. There is no reason why it should not be more steeply graded. Only a few days ago I noticed a very interesting editorial in the Gazette of March 19 headed, "On the Income Tax," and based on an article in the National Revenue Review. Since this editorial appears in such a highly respected journal, I believe I may read a paragraph or so:
Whilst the Canadian considers his income is too heavily taxed, he may find it intriguing, if not consoling, to compare his payments under this heading with the income tax the citizen of Great Britain pays. In Canada a single person in receipt of an income of $2,000 a year is liable for $30 income tax. A married man receiving a like income is exempt from payment. Single persons whose annual incomes are $5,000 pay $180 income tax and married persons $120. The scale continues as follows:
And then follows a table which I shall not give in detail. It will be noticed however that in case of higher grade incomes the British people are able to collect almost twice as much as we collect from similar grades in Canada, I would suggest that those people

The Budget-Mr. Woodsworth
who are so very anxious to copy British institutions might very well copy some of the British policies with regard to income and inheritance tax.


Mr. RHODES:: Would the hon. member permit a question? In making his last observation has he borne in mind the circumstance that the British people pay only one income tax, while in Canada in many instances we have three?


James Shaver Woodsworth: I recognize that fact, but I do not believe it alters the situation in the slightest. It might mean that the man who pays an income tax would have to pay a little bit more, but the principle is that great wealth ought to carry a very large proportion of the load. That is not being done either in our provincial or federal spheres. That is, the grading is not nearly as steep in this country as it is in Great Britain. With regard to taxation I should like to give to the house the plank in our C.C.F. platform outlining our policy in that connection. It is as follows:
11. Taxation and' public finance!
A new taxation policy designed not only to raise public revenues but also to lessen the glaring inequalities of income and to provide funds for social services and the socialization of industry; the cessation of the debtcreating system of public finance.	[DOT]
The explanatory note reads:
In the type of economy that we envisage the need for taxation, as we now understand it, will have largely disappeared. It will nevertheless be essential, during the transition period, to use the taxing powers, along with the other methods proposed elsewhere, as a means of providing for the socialization of industry, and for extending the benefits of increased social services.
At the present time capitalist governments in Canada raise a large proportion of their revenues from such levies as customs duties and sales taxes, the main portion of which falls upon the masses. In place of such taxes upon articles of general consumption, we propose the drastic extension of income, corporation and inheritance taxes, steeply graduated according to ability to pay. Full publicity must be given to income tax payments and our tax collection system must be brought up to the English standard of efficiency.	.
We also believe in the necessity for an immediate revision of the basis of dominion and provincial sources of revenue, so as to produce a coordinated and equitable system of taxation throughout Canada.
An inevitable defect of the capitalist system is the debtcreating character of public finances. All public debts have enormously increased and the fixed interest charges paid thereon now amount to the largest single item of so-called uncontrollable public expenditures. The C.C.F. proposes that in future no public financing shall be permitted which facilitates the perpetuation of the parasitic interestreceiving
class; that capital shall be provided through the medium of the national investment board and free from perpetual interest charges.
We propose that all public works, as directed by the planning commission, shall be financed by the issuance of credit as suggested, based upon the national wealth of Canada.
I should like to take this opportunity to suggest that there are certain economies which are not dealt with by the Minister of Finance and which I think should be considered by the country as a whole. Having in mind the general Canadian situation, I think first of the possibility of combining some of our provincial administrations. I can see no reason why the expensive arrangement under which we have three maritime provinces and three prairie provinces should be continued. It would seem to me that we might very well combine the maritimes and the prairie provinces, and thus cut down part of the load which is being carried by the people of this country.
As another example I would call attention to the enormous expenditures in connection with the administration of justice. The number of judges in this country is out of all proportion to the population. I cannot see why the speech of the Minister of Finance should not be made the occasion for considering some of these extravagances in the administration of our affairs. There are certain ways in which we could promote efficiency and at the same time cut down expenditure. Why should not our estimates be considered in appropriate committees? The government will have to undertake to initiate such reforms. I am glad to note that the Prime Minister (Mr. Bennett) has suggested that the time is coming when there should be a revision of the British North America Act under which there might be a redistribution of the powers as between the dominion and the provinces. Here again I wonder if I might be permitted to read the proposals of the C.C.F. in this matter. They are:
9. B.N.A. Act:
The amendment of the Canadian constitution, without infringing upon racial or religious minority rights or upon legitimate provincial claims to autonomy, so as to give the dominion government adequate powers to deal effectively with urgent economic problems which are essentially national in scope; the abolition of the Canadian Senate.
Then the explanatory note is as follows:
We propose that the necessary amendments to the British North America Act shall be obtained as speedily as required, safeguards being inserted to ensure that the existing rights of racial and religious minorities shall not be changed without their own consent. What is chiefly needed to-day is the placing in the hands of the national government of more power to

The Budget-Mr. Woodsworth
control national economic development. In a rapidly changing economic environment our political constitution must be reasonably flexible.^ The present division of powers between dominion and provinces reflects the conditions of a pioneer, mainly agricultural, community in 1867. Our constitution must be brought into line with the increasing industrialization of the country and the consequent centralization of economic and financial power which has taken place in the last two generations. The principle laid down in the Quebec resolutions of the Fathers of Confederation, should be applied to the conditions of 1933, that "there be a general government charged with matters of common interest to the whole country and local governments for each of the provinces charged with the control of local matters in their respective sections."
The Canadian Senate, which was originally created to protect provincial rights, but has failed even in this function, has developed into a bulwark of capitalist interest, as is indicated by the large number of company directorships held by its aged members. In its peculiar composition of a fixed number of members appointed for life, it is one of the most reactionary assemblies in the civilized world. It is a standing obstacle to all progressive legislation, and the only permanently satisfactory method of dealing with the constitutional difficulties it creates is to abolish it.
It does seem to me that if the government would make a thorough survey of the situation which exists to-day in Canada, it might reduce considerably the enormous burden which, according to this budget speech, will continue to be borne by the people.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


James Shaver Woodsworth: In this budget, as in most recent budgets, a very considerable proportion of the expenditure is on what is known as uncontrollable expenditures. May I point out that these expenditures are not really uncontrollable; they are uncontrollable only in so far as the government in power is determined to maintain the status quo. The financial critic of the government, who preceded me, called attention to the possibility of converting our national debts. We ought to have impressed upon this house the remarks made by the Prime Minister himself before the committee on monetary, and financial questions at the imperial conference of 1932. I quoted them in my speech on the address, but I think they cannot be too clearly put before the public. The right hon. gentleman said:
Interest charges represent the most important of the fixed or semi-rigid elements in our cost structure. If prices remain on their present

level, such charges will constitute an intolerable or almost intolerable burden in many cases. Even if it can be borne, the fortuitous gain-
May I direct attention to that phrase, which is also used in the budget speech this year. -the fortuitous gain to the creditor of 40 to 48 per cent in general purchasing power above what he contracted for appears to be a grave injustice.
The Prime Minister clearly recognized the injustice of permitting bondholders and others who hold mortgages in this country to receive from 40 to 48 per cent more than they should, but he has done nothing about it. This budget continues that arrangement, and all we are told is that these expenditures are uncontrollable. To continue:
One of the most important effects of the fall in prices is the increased burden of the fixed charges payable on our governmental and private obligations held abroad, chiefly in the United States and the United Kingdom. ... As one dollar to-day will purchase at wholesale 48 per cent more than it did in 1929, the real burden of the service charges on these foreign obligations has increased from $362,000,000 to $535,750,000.
These expenditures are said to be uncontrollable, but there seems to be no reason whatever why we should not deal with our debts, cutting them down at least to the point where they have the same buying power as they had when the debts were contracted. The Prime Minister admits that this would be fair but nothing is done about it. It is suggested by the Minister of Finance that we could not contemplate cutting down the debts, making any change in the bonds held by people outside Canada. I understand however that the great proportion of the bonds are held by people inside Canada, and they at any rate can be dealt with; and as regards those held outside, I might point out that a great many nations including Great Britain have in effect cut down their debts in this way.
The Prime Minister told us the other day that in raising the resources he is not actuated by party considerations. That may be true, but I think that the budget clearly demonstrates that he is actuated by class considerations, because from beginning to end the taxes rest most heavily proportionately upon the poor and least heavily upon the very wealthy; and I think it is fair to say of this budget, as of several preceding budgets, that the effect is to make the rich richer and the poor poorer. We believe that the taxation policy should be used to lessen at least in some degree the glaring inequalities of income. On the contrary, the taxing powers are here being used to increase that glaring injustice and to make

The Budget-Mr. Woodsworth
life still more intolerable for the poor, while the poor man passes over through interest charges a very considerable amount of his earnings to those who are already rich.
The Prime Minister the other day defended tax-exempt bonds on the ground that they represent absolute stability and security. I should like to ask him-What about the stability and security of the masses of the people? They have nothing of that stability and security to-day. The great majority of our business men do not know what to do in order to carry their small overhead; they do not know what day they will be faced with bankruptcy; and as for the labour men, they are not secure even in the opportunity of making a living.
It is very delightful indeed to witness a godfather presenting a child with a thousand dollar bond. The Prime Minister would not like in any way to deprive us of the pleasure of enjoying that very pretty picture, but I submit that there are a great many people to-day who are losing their homes and farms. I fancy nearly all of us have received the most pathetic letters from friends throughout the west where at most a few hundred dollars would save them their homes. But they have not that money and so they are losing their farms, essentially, as my hon. friend from Bow River (Mr. Garland) says, in order that we may pay these interest charges and thus maintain the stability and security of certain classes.
The Prime Minister the other day pointed out the danger of impairing the resources of estates in trust, all those estates that were used in caring for the sick, the afflicted or for scientific research. But I would point out that there are a great many sick not provided for in this land. And what about even the children in our public schools who have not an opportunity of carrying forward their education, some of them not having even the chance of an ordinary decent life. In this connection I would read two or three paragraphs from an article in a recent number of The Canadian Forum on economic conditions in rural Saskatchewan by G. E. Britnell. He is summarizing and interpreting the final bulletin No. 19 of the seventh census of Canada. He says that 5,036 out of the 288,0C0 farms of the prairie provinces have water piped in the kitchen; or, reduced to more manageable proportions, that only one out of every 57-2 farms in western Canada enjoys this convenience, while in Ontario the corresponding ratio is one out of every 9-54. He points out that in
the west one out of every 72-8 has water piped in the bathroom-it would be interesting to know how many have a bathroom of any kind-as compared with one out of 15-76 in Ontario. One out of every 34-44 western farm homes is lighted by gas or electricity as compared with one out of 5-95 in Ontario. That shows the entire lack of what in the cities would be regarded as absolute necessities. The article continues:
The average farm home in Saskatchewan showed few signs of extravagance in the small cheaply-built frame house, the inexpensive but uncomfortably primitive heating system, the coal-oil and gasoline lamps, the cheap and inadequate furniture and the almost total lack of domestic conveniences.
And still further:
Fresh fruit was the greatest possible luxury while farm children seldom saw oranges from one Christmas to another. Over wide areas of the province medical facilities were inadequate; after the prairie trails had disappeared, the roads, when once the traveller left the few half-graded dirt highways, must have been among the worst in the world; the cultural life of the farm community tended to continue as barren as that characteristic of all agrarian frontiers.
And again:
Official figures illustrate graphically the extent of the financial collapse. For instance, it is reported "that forty rural municipalities, fifty villages and twenty-seven towns have defaulted in their debenture payments. In addition S28 rural school districts, 225 village school districts and forty-eight town school districts have defaulted in the payment of their debentures. ..." The bank indebtedness of rural municipalities at the end of 1932 was $8,379,548.97; the amount due schools, et cetera, for the requisition of taxes amounted to $8,120,615.71; the uncollected arrears of taxes plus the tax sale holdings (which must be added to get a correct statement of total arrears) amounted to $30,368,345.82.
And so forth. The article goes on to tell of the hardships of the farmers and of the very serious conditions which exist at the present time. My point is simply this: that whilst we talk grandly of maintaining the credit of the country, these deplorable conditions prevail in certain sections. Why is it so important to continue to pay not only one hundred cents but well on to one hundred and fifty cents on the dollar in real purchasing power to maintain those who hold bonds and to take it out of the pockets of people who have to live in conditions such as I have described?
The other day when I looked over this budget it reminded me somewhat of that old biblical story where the taskmasters of Egypt
The Budget-Mr. Woodsworth

required the people of Israel, who were practically their slaves, to make bricks without straw:
And the taskmakers hasted them saying, fulfil your works, your daily tasks, as when there was straw.
To all protests Pharaoh replied:
There shall no straw be given you, yet shall ye deliver the tale of bricks.
I might say that our modern Pharaoh insists on double the tale, as I have just explained. In fact, sometimes in this pressure that is being exerted, this tightening of the belt policy, the present Prime Minister (Mr. Bennett) and his cabinet are something like Rehoboam of the old days who, following the counsel of the young men, declared:
My father made your yoke heavy, and I will add to your yoke.
Tighten your belts. The answer of the people was:
To your tents, 0 Israel.
I may win some applause from my friends the Liberals when I remind them that the people rejected Rehoboam as their king.
The Prime Minister has a curious mentality and I refer to him because it seems to me that this budget incorporates some of the principles he has been giving us from time to time in the house. The other day, speaking in connection with titles, he said:
God has not given equal ability to all men and women. They are not all equipped with the same power of thought or with the same intellectual power.
Therefore it would seem, if I read aright his deductions, that some ought to be given titles and greater wealth, greater privileges of all kinds than others. I wish I could impress upon the government and the Prime Minister the fact that wealth to-day comes very largely through the possession of special privileges. Some few people have got charters and leases and all that kind of thing and in that way the owners of those special privileges have made their money. Withdraw the special privileges and they would be in the same boat as the rest of us.
The other day I was reading an article showing the gradual extension of powers which all governments are now being forced to take to themselves, and how the assumption of new responsibilities meant reorganization. The article to which I refer is called Politics versus Economics and I especially ask my Liberal friends to read it. It is by Gustav Stolper in Foreign Affairs for April, 1934, and reads:
FMr. Woodsworth.]
But once the state comes into possession of the decisive instruments of power in capitalistic economy-money and credit'-it at once finds itself becoming responsible for prosperity and depression.
And again:
Budget policy, tax policy, credit policy, currency policy-all go to make up one indivisible unit. Anything done in any one of those departments has its effect on all the others. As master of taxation, the state is in direct control of a large portion of the national income; as master of railroad and public utility rates the state is in direct control of another large portion of the national income; as master of the credit markets the state has indirect command over investments; this state therefore cannot avoid taking currency under its control.
The article was referring particularly to the necessity of the state taking currency under its control and that, I am glad to say, is being done more or less under the bill introduced in regard to the Bank of Canada Act, although under that legislation currency still remains under private control. I should like to emphasize that we can no longer judge a budget by the same standards as we judged budgets some years ago. The government itself is having to assume very much greater responsibilities for the affairs of the nation and we have a right to expect that the government will be very largely responsible for initiating those policies which will lead to prosperity. The trouble, as I see it, is that the present government has not done anything that would fundamentally alter the existing economic system.
May I close by quoting a passage from an excellent elucidation of the findings of the Bureau of Economic Research. This is contained in the letter of the National City Bank of New York of April, 1934. Mr. Walter Lippmann summarizes the findings in this way, and I think it very well summarizes the budget as well:
From 1929 to 1932 there was a great decline in the total national income. But in the course of this decline salaries and dividend payments fell slowly at first. Interest payments fell very little. Among labour incomes salaried men were favoured as against wage earners, and of course wage earners as against the unemployed. Relatively speaking, property incomes increased. . . .
The figures show that the depression was not like some great accident, say a shipwreck, in which all suffered alike. They show, on the contrary, that the sacrifices were very uneven, and that worst of all, though nearly everybody was poorer, the distribution of wealth became progressively more and more unequal, taking the greatest toll from those who already were the weakest, and far greater toll from the active producers of wealth than from the recipients of fixed or sheltered incomes.

The Budget-Mr. Gobeil
Could any words better describe this budget? It takes the greatest toll from those who already were the weakest, and far greater toll from the active producers of wealth than from the recipients of fixed or sheltered incomes.


Mr. SAMUEL GOBEIL (Compton):: to Moncton because, between Quebec and Moncton, there is already the Intercolonial railway. Sir, the answer which we have to make to this objection is plain, obvious, categorical, peremptory and paramount; the answer is that the Intercolonial never was intended, and never was conceived, and never was built for transcontinental traffic.
The next quotation I am dedicating to the citizens of Canada so that they may consider whether or not the predictions made by Sir Wilfrid Laurier at the time have become realities. It is at page 7676 of Hansard of the same year:
We are told that we are keeping to ourselves the unproductive portion of the road, while we are leaving to a company the productive portion of it. This criticism might have a good deal of force in it if we were ourselves to operate the line which is to be built by the government. But we have made a contract whereby this line is to be operated, not by ourselves, but by that company, which agrees to pay us a rental at the rate of three per cent per annum upon cost of construction. Therefore, let our friends on the other side of the house, and let our friends on this side of the house also, take note of this fact, that with the exception of a few jrears of interest, to which I shall allude later on, we shall have this portion of the railway built by the government from Moncton to Winnipeg without the cost of one dollar to the Canadian people.
Later in the course of the same speech, and following the same line of thought, at page 7688 Sir Wilfrid said:
I need not dwell upon the importance of this covenant on the part of the company. It practically takes away from the guarantee of the government all risk. There is not a dollar to be advanced by the government. We do give our credit and nothing else. And our guarantee of seventy-five per cent of the construction of the road is to be supplemented by the credit and all the backing of the Grand Trunk Railway Company itself.
And again, at page 7690:
Now, sir, what is the liability incurred by the government for the construction of this road from Winnipeg to the Pacific ocean? Assuming that the road across the mountains is 600 miles long, the cost of construction will be $18,000,000 and the total interest for three years will be $3,780,000. This is the whole of the liability which is incurred by the government for the construction of the railway from Winnipeg to the Pacific ocean.
And at page 7691:
The sum total of the money to be paid by the government for the construction of that line of railway from Moncton to the Pacific ocean will be in the neighbourohood of $12,000,000 or $13,000,000, and not a cent more.
And again at page 7695:
Therefore the cash aid which was given to the Canadian Pacific Railway Company was in the neighbourhood of $60,000,000-the cash
Mr. Gobeil.]
subsidy which is promised and which is to be given under this contract to the Grand Trunk Pacific Company will not exceed $13,000,000 or thereabouts.
This is the sort of information the leader of the government of that day broadcast to the citizens of Canada in order to have them endorse the project he was then furthering. Every hon. member of this house remembers that the then Minister of Railways, Hon. Mr. Blair, resigned his position as minister because he could not approve of the project. Let us see what reasons he gave in support of the decision to which he came on that occasion. At page 6739 of Hansard for 1903 it will be found that Mr. Blair said:
I objected to the government constructing another government road from Levis to Moncton. I objected to it because it paralleled the Intercolonial railway. However, I will not enter upon any elaboration of that point; I will merely state my position. 1 object to another government road, even if it does not parallel the Intercolonial railway. We in the province of New Brunswick are not asking for it, unless there are some who want to see the money spent there, and that class of people, I apprehend, are not a class who will influence largely the action of this government or the legislation of this parliament. Another objection was that I thought we were proceeding with undue haste. I have no hesitation in stating that I am as much in favour of the construction of another transcontinental line as any other member of this parliament; but I am not in favour of impetuously rushing into the construction of a transcontinental line from Quebec through an unknown country to Winnipeg and the west, until we know something about it-until we have the fullest information about it. The project is one of very great magnitude, and should be dealt with only after the maturest deliberation.
Now, sir, without having this bill before us, without being able to do more than simply indicate the order of events, I am going to state now to the house what occurred in connection with my resignation. On Saturday, the 4th of July, I became convinced that it was determined to build a line of government railway from Moncton to Quebec, and to proceed at once with the construction, without surveys, from Quebec to Winnipeg; and, sir, feeling convinced, knowing, in fact, that what my right lion, friend has stated to-day was then decided upon, I caused it to be made known that that policy, not to speak of other features which will be elaborated later, was not a policy to which I could commit myself as a member of the government.
Are not these words very significant, after our experience of the last thirty years? I am not going to make any further comments just now, but will quote another short paragraph from Sir Wilfrid Laurier's speech on that occasion. I refer to page 6747:
Allow me, in conclusion, to express to you my extreme sorrow for ail action which I

The Budget-Mr. Gobeil
regard as a great mistake toward yourself, toward your friends, toward your colleagues, and above all towards your country, which, at this juncture, requires a bold and fearless policy of transcontinental development.
At page 6748 Mr. Blair replied:
I do feel that when my right lion, friend says I made a great mistake toward myself, toward my friends, toward my colleagues and toward my country that he is speaking the honest convictions of his mind. But, sir, if I am capable of exercising any judgment on a matter of this kind, I am bound to say that I do not agree with my right hon. friend. I am bound to say that if I had come to this parliament, and, with what little knowledge and experience 1 have had of railway questions deliberately advised this parliament and this country that this was a scheme which merited their acceptance, I do not believe I should have been doing my duty to myself. I should not have been doing my duty to the party with which I am allied. It was my plain and simple course to let them know at the earliest possible moment, and to let the public know also, how strongly I felt, as a responsible minister of the crown with respect to this important question. My strong conviction is that this country cannot wisely adopt and carry into operation the policy which my right hon. friend's government has adopted.
When sending his resignation to Sir Wilfrid Laurier on July 10, 1903, no doubt after he had been asked to reconsider his decision, in order to avoid any misunderstanding and any delay Mr. Blair wrote this letter, which will be found at page 6743 of Hansard:
With the most extreme regret, Sir Wilfrid, I feel compelled to tender you my resignation, which I have to beg you will hand to His Excellency without delay. This resignation you must treat as final. The action which has been taken since Saturday last, in submitting to a caucus of suporters of the government in parliament the transcontinental railway propositions, identically in the form in which they were adopted by council, assures me that the government has fully resolved to take the responsibility of asking parliament to approve them.
In case you may think the action which has been taken is not irrevocable, and to avoid any possible misunderstanding on the question. I feel I ought to repeat to you the conditions upon which I would be disposed, if you so desired, to further consider my action in this matter.
I would require that the government should abandon its present intention:
1st. Of building or authorizing the building of a line of railway to Moncton, which would be paralleling and destroying the Intercolonial; or building or authorizing the building of any other line of railway more remote from the Intercolonial until the need of such latter railway becomes apparent, and proper surveys and an estimate of its cost are first made and thoroughly considered.
2nd. The idea of immediately proceeding with a railway from Quebec to Winnipeg. The government should be content with declaring itself in favour of the policy of building a government line from Quebec to the prairies, and across the prairies to the Pacific coast, as
soon as the need shall arise; and in the meantime that parliament be asked for an amount to enable a thorough exploration of the country to be made, so that it might be possible to judge whether or not a suitable traffic producing route could be found through this district, and its cost and the character and conditions of the country through which it is to pass ascertained.
I would further stipulate:
3rd. That if such a route is found practicable, _ and gave promise of a fair measure of traffic a railway should be built by government through, if the government should so decide, a commission, rather than by the government itself directly, and that a contract for such construction should be let only after open and public competition.
4th. That when built and ready for operation, sueh railway should not be handed over to any one existing railway company under lease; but that the same should be operated either by the government itself, through a commission appointed for the purpose, if so preferred, or by a trust composed of the representatives of the different railways which might intend to use it under direct government supervision and control; and that such form of dealing 'vith the question of operation or management should be decided later after a fuller knowledge of the facts and mature deliberation.
5th, That tile policy of giving a present guarantee or other aid to the company to build a railway in continuation of the' Quebee-Winnipeg line through the fertile prairie district, the most valuable and promising section of the whole system, should not now be entertained. and that the final decision of the matter be deferred until it became reasonably clear that settlement along the probable route of such railway would justify its construction.
These words were uttered in this house thirty years ago. Are they not very illuminating in view of what has taken place in the interval? Can there be any doubt in the mind of any member of this house, or, for that matter, of any citizen of Canada, as to which of the two gentlemen I have quoted was clearer in his conception of what was to happen in the future?
Let us see what the leader of the opposition of that day, Sir Robert Borden, had to say about this project. It is not my intention to quote his speech at length, because the time at my disposal does not permit me to do so. In his capacity as leader of the opposition he opposed the bill on different grounds, the first being the lack of information at the disposal of the government which had launched upon an enterprise of such magnitude. His second ground was because it paralleled the Intercolonial railway, as pointed out by the Minister of Railways, Mr. Blair, and because he believed it would curtail its business. His suggestion was to extend the Intercolonial railway to the great lakes, and from there to the prairies, to improve the existing lines. I shall not give more details,
The Budget-Mr. Gobeil


James Layton Ralston: Mr. Speaker, on a question of
privilege, I wonder if the house will permit me to refer to an incident which occurred this afternoon. I spoke of a letter of the Department of National Revenue dated February 10, 1934, and the Minister of National Revenue (Mr. Matthews) intimated that he thought I was not quoting the letter correctly. I said that I had not the letter and the minister intimated that he had a copy before him. I have since got this letter and I should like to read it in justification of the statement I made. A letter was sent to me by the Commissioner of Customs dated April 23, 1934, in which he stated that he enclosed a copy of representative letters sent by his department to importers dated November 8 and November 22, 1933, and
The Budget-Mr. Bothwell

February 10, 1934. I shall just quote the letter to which I specifically referred, the one dated February 10, 1934, which reads: Gentlemen,-
I have your letter of the 25th ult., relating to the application of fixed values on an importation of jute twine.
The situation is that an appeal has been made to the governor in council from the decision of the tariff board on this question, and until this appeal is heard-and the hearing is expected shortly-the department cannot do otherwise than allow the matter to remain in statu quo and apply the fixed values as heretofore.
Yours truly,
for Commissioner of Customs.
My statement was that the department was insisting on applying the fixed value, disregarding the decision of the tariff board.


Mr. C. E. BOTHWELL (Swift Current):: Mr. Speaker, my first word is one of congratulation to the Minister of Finance (Mr. Rhodes) for the clearness and frankness with which he laid before the house and the country the situation in which our country is to-day. I should possibly qualify that in one or two particulars. In referring to increases in prices, the minister stated, as reported on page 2270 of Hansard:
As an indication of the extent to _ which the maladjustments between various price groups have been corrected in Canada, I may add that while the wholesale price index was rising 13.4 per cent, the index for farm prices rose by no less than 34.9 per cent.
I believe the minister based his figures upon the index of February of last year, which belief is to be gathered from the preceding paragraph, but I think a fairer comparison would have been to take the index figures at a normal time rather than at a time when agricultural prices were at their lowest ebb. If that were done, then the percentages would have been very close to or possibly the same as those given this afternoon by the hon. member for Shelburne-Yarmouth (Mr. Ralston).
I do not intend to follow the arguments of the preceding speaker, the hon. member for Compton (Mr. Gobeil) except as to one remark he made. He stated that the people of Canada would not stand for continued deficits in Canadian National railways account of about one million dollars a week. I have gone through the budget statement of the Minister of Finance pretty carefully, but I do not believe that there is anything in it to help remedy the railway situation. Before our railway situation can improve I believe we shall have to have some traffic for the railways, and so long as our trade is restricted to the extent that it is at the present time then the railways will have

nothing to do, or at any rate will have insufficient work to make them pay.
I have also carefully gone through this budget to see whether there is anything in it that may be of particular interest to the people whom I have the honour to represent. I do not think they will be particularly interested in some of the changes that have been made, for instance, the reduction in the tax on beer, ale and porter. There may be a little benefit from the reduction of the excise tax from 3 to li per cent on goods imported under the British preference, but I hardly think that any of the people I represent will benefit in any way by the reduction from $1.50 to 75 cents on champagne and other sparkling wines. They may derive some benefit from the reduction of two cents on postal notes not exceeding $1, but few of them will benefit by the reduction of four cents per hundred or fraction thereof on cigarette tubes. I gather from the newspapers that in connection with the reduction on cigarette tubes it is the opinion of the tobacconists that it will mean no reduction in the price. Whether the newspapers are correct or whether the opinions of those who have been consulted by newspaper reporters is correct, I am not prepared to say. The people however will welcome the reduction of one cent per pound on sugar; we only regret that the budget this year did not wipe out that tax altogether. We realize the difficulty the minister faces in raising revenue; we realize that when he reduced the excise tax on sugar from two cents to one cent per pound he had to find some other means of raising the same amount of taxation, and this apparently he did by putting a tax on gold. In passing, I believe that the tax on gold is a reasonable kind of tax, but I think it should be applied somewhat differently. In my opinion it should be a graded tax, as explained by the hon. member for Shelburne-Yarmouth (Mr. Ralston) this afternoon. I cannot understand how the hon. member for Winnipeg North Centre (Mr. Woodsworth) can object to a graded tax on gold and be in favour of a graded tax on income; the two seem to me to be very similar ways of raising revenue. However, the hon, gentleman objected to it this afternoon; he thought the tax was all right but not high enough.
Under this budget I find that the duties have been raised on three series of articles that may affect the ordinary individual:	278b,
crude peanut oil, for refining for edible purposes, used as materials in Canadian manufactures; 537a, rovings, yarns and warps, wholly or in part of vegetable fibres; and 375, ferro-alloys of various kinds. The duties have

The Budget-Mr. Bothwell
been lowered on twenty items when imported by manufacturers for use in their own factories, on twenty-seven items or classes of goods imported only for manufacturing or processing purposes, and on five completely manufactured items.
None of the people I represent are particularly interested in any of these changes in the tariff with the exception of completely manufactured goods, and I have looked into the matter to see how far these will benefit any of them. I take the first item, 409e. This item reads:
Fruit and vegetable grading, washing and wiping machines and combination bagging and weighing machines, and complete parts therefor.
Under the old tariff it was free under the preferential, 10 per cent under the intermediate and 10 per cent under the general tariff. Under this budget the rates are the same, but I find that in the old tariff there were items carrying rates of 15 per cent preferential, 27i per cent intermediate and 35 per cent general. So far as the farmer is concerned however, in the purchase of fruit and vegetable grading, washing and wiping machines, as I read the schedules there has been no change in the tariff affecting him; it has been changed more in the wording of the tariff sections, clarifying the tariff to indicate that farmers will get the goods they require under these rates.
The next item is 410d. This item reads:
Well drilling machinery and apparatus, and complete parts thereof, of a class or kind not made in Canada, and seamless iron or steel tubing over eight inches in diameter, for use exclusively in drilling for water, natural gas and oil, and in prospecting for minerals, but not to include motive power; packer rubbers for oil and gas wells.
This item is free under the three tariffs. In the old schedule it was also free, but packer rubbers for oil and gas wells are added, and under the old tariff that particular item bore rates of 15 per cent preferential, 25 per cent intermediate and 27? general, and apparently it came under item 618. Now it is included with well drilling machinery. That does not bring any benefit to the people I represent.
, Mr. STANLEY:	It does to some of the
rest of us.


Charles Edward Bothwell: How much did it cost
my hon. friend or any of his constituents for packer rubbers?


Mr. STANLEY:: It assists some of the people in carrying on their work and in promoting an industry which is of so much importance.


Charles Edward Bothwell: I appreciate the reduction even if it is small and affects only one particular industry. The next item is 445j, electric dry shaving machines, of a class or kind not made in Canada, for use in removing human hair, and complete parts thereof. I do not think our people will be very much interested in that. The next item is 511a, cricket bats, balls, gloves and leg guards. I do not know whom this will benefit. In my youth we used to play cricket a little but at that time we had to make our own bats. I can scarcely recall now how we got the ball or whether there was a duty on it or not, but I can say at any rate that among farmers, who are hardest hit at the present time, there are not many who will be interested in that item. The next item is 597b, harps. Is this an election bait for the Irish? It is free under the preferential tariff.
There is in this schedule one item in which I am rather interested, and that is:
267b. Crude petroleum not in its natural state, '7250 specific gravity or heavier at 60 degrees temperature, when imported by oil refiners to be refined in their own factories.
The rates are, per gallon, British preferential tariff, free; intermediate tariff, one and one-half cents; general tariff, one and one-half cents. The old rate was: British preferential tariff, one-half cent; intermediate tariff, one and one-half cents; general tariff, one and one-half cents.
A couple of years ago we had considerable discussion on gasoline in the house or in a committee of it. That did not get very far in the house that session, but we are not satisfied with the gasoline situation yet, and when I noticed that item I wondered just the reason for the change in the duty on crude petroleum not in its natural state. I began looking into the matter to find out whence that particular kind of petroleum was coming, and from the Trade of Canada for the fiscal year ended March 31, 1933, I find the imports were as follows:
From
United Kingdom-
British IVest Indies-	Imports
Date	gallons
1929	 nji
1930	 nij
1931		 nil
1932		 nil
1933		 10,849,658
The Budget-Mr. Bothwell

That was imported under the preferential rate.
From Peru-
1929		 ail
1930	  7,684,088
1931		 7,047,497
1932		 1,351,595
1933		 nil
From Russia

1929	  nil
1930!!	  nil
1931		 nil
1932		 nil
The Trade of Canada shows nothing for 1932, but the fiscal year ended March 31. The fiscal year 1933, includes from March 31, 1932, and as I understand the situation, some time in the early part or in the summer of 1932 some big shipments of this particular grade of gasoline came in from Russia. I find in the Trade of Canada that 9,963,048 gallons of this particular brand of gasoline were imported from Russia. Then in the fall of 1932 the government apparently thought none of this gasoline should come in from Russia, so they raised the duty on this particular brand from three-tenths, four-tenths and one-half cent per gallon under the various tariff classifications to one-half, one and one-half, and one and one-half cent per gallon. In the latter part of 1932, as I understand the situation, this importation of 10,000,000 gallons came in from Trinidad, in the British West Indies. I am sony I was not able to get the figures for the fiscal year ending March 31, 1934, because I expect I would have found that the importations from the British West Indies were still greater in that year. Apparently what happened was this: before the budget came down, I presume the oil companies asked the government for a reduction in the duty. They began to get that particular class of gasoline from the British West Indies and as the gasoline imported under that item is to be imported by oil refiners to be refined in their own factories, nobody else will get the benefit of the reduction. So much for that.
The Minister of Finance in his budget statement realizes the serious position in which many of the people of Canada are to-day. This is shown by his remarks as reported on page 2270 of Hansard where he says:
For certain individual debtors the burden has become unbearable and the government proposes to bring down at an early stage legislation designed to provide machinery whereby farmers who find themselves unable to pay the fixed charges on their outstanding debts will be able by an expeditious and inexpensive process to work out compromises with their creditors and to obtain new working capital. The guiding principle of this legislation will be to

secure for the farmer a simplified debt structure reduced in size to a point where the carrying charges will be within the capacity of the farm enterprise to pay. This will involve some concessions on the part of creditors but these will be more than outweighed by the advantages which will follow as a result of retaining the farmer on the land as a willing and effective producer. The release of economic energy so produced and the substitution of hope and goodwill for despondency and discontent which are now prevalent in certain areas should result in a very real gain to our whole domestic economy.
That shows, I say, an appreciation on the part of the minister that our farmers in particular are in desperate straits. He is also trying to find means of raising revenue, and before I get through I am going to suggest to him one method of doing so which I think he has overlooked. That is, the oil industry should be put on a basis where it will be fair and equitable to all persons in Canada, and then, if the government needs to raise additional taxation, let them do a little taxing there instead of allowing the oil industry to get away with all the profits they are now extorting from the people of Canada. In the first place, dealing with that industry, I want to quote from the Petroleum Products Industry in Canada, 1932, a publication issued by the bureau of statistics under the authority of the Minister of Trade and Commerce (Mr. Stevens). I find there that the refineries in Canada used 930,114,055 gallons of crude oil in 1932. Canada in that year produced only about 36,000,000 gallons, or less than four per cent of the crude oil that was used in the refining industry in this country. If there is a necessity for duties in order to maintain that industry which is producing less than four per cent of the crude petroleum used, I think it would be a more equitable way to deal with the matter to bonus that industry rather than to penalize for the benefit of the major oil companies all the people of Canada who use oil and oil products. The significance of the following figures is rather startling.
Petroleum Products Industry
1930	1932
Number of persons
employed	 5,134	4,116
Salaries and wages.. ..$ 8,190,130	$ 5,980,681
Cost of material	
71,800,429	52,237,387Selling value	
91,787,205	71,697,757Surplus	
11,796,646	13,478,689Those latter figures would not be all profits, but they would include profits. When the prices of raw	material	dropped	as thisschedule shows	I submit	that the	cost	ofother materials	entering	into the	cost	ofgasoline or lubricants would drop	also,	so
The Budget-Mr. Bothwell
that the main difference between those figures of 811,796,000 for 1930 and 813,478,000 for 1932 would be profit. It shows that between 1930 and 1932 there was a wage cut of $2,209,449 or an average wage reduction per man employed of $142.24. The average yearly wage was reduced from 81,595.27 to $1,453.03. But between 1930 and 1932, although the selling value of the product at the works is some 820,000,000 less, the amount left for profit-or profit and other costs-increased by 81,683,043, which to me indicates that the oil industry, taking advantage of the depression, reduced the wages of their employees and used the money to pay additional profit. That is the only conclusion that one can draw.
I clipped from the Financial Post the record of the three major oil companies operating in Canada, and I want to read a few extracts. Here is the statement of the Imperial Oil Company taken from the Financial Post of April 21, 1934:
Lands, buildings, plant and other equipment increased from $112,333,827 to $113,457,235 and floating equipment dropped from $12,252,502. to $12,008,380. Against this, reserve for depreciation went up from $54,702,873 to $60,411,958, a gain of $5,709,085 or more than net profits on all Canadian business. Other reserves on fire, marine, cargo and freight insurance, and annuities, increased from $12,538,862 to $12,761,920.
Then we have the British American Oil Company. Here is the heading:
B. A. Oil Sales Down Somewhat But Earnings
Up.
Company Reduced Bank Loan From $3,000,000 to $1,750,000.
British American Oil Company's consolidated financial statement shows the company to have increased its gross and net profits in 1933 as compared with 1932, to have increased its earnings on the common stock from 99 cents a share in 1932 to $1.01 a share in 1933, to have reduced its bank loan by $1,250,000 to $1,750,000 and to have redeemed $178,572 of fifteen year five per cent convertible sinking fund gold debentures due 1945, leaving $4,462,500 outstanding.
Then there is another statement, income and surplus account. It shows an increase in the surplus carried forward from 86,810,805 to $7,338,510. The working capital is increased from 13,101,142 to 84,375,227.
I submit that the major oil companies in Canada were making profits prior to the change in the tariff in 1930 and do not need the protection given them now. I remember during the boom days in the west when the cities and towns were filled with real estate agents. Coming down the street in the morning a fellow would meet you and say: "The corner of Second avenue and Main street is sold." "Who bought it"? "One of the banking institutions." Next day you 74726-156
heard about another comer. "What bank bought that?" They knew it was the banks coming in and buying the best corners in the towns. But that is all changed now. You can go through any village, town or city, anywhere in Canada I presume, and you find that most of the best corners are occupied by Imperial Oil, Supertest, British American or some other oil company. The investment in oil stations must be tremendous, and the cost of distribution consequently tremendous. I do not know whether they are hiding their profits in that way, trying to spend their surplus so that they will not have to show excess dividends, but the inference is quite clear as to the position that the major oil companies are in.
Then we get letters like this. Here is one from Prince Rupert comparing prices charged in Prince Rupert and in Alaska-
Gasoline	
Distillate	
Mobiloil A lubricating oil	
Prices per Imperial gallon Alaska Prince Rupert 17-4e.	24c.
15*6c.	19-5c.
75-6c.	$1.10
The writers of this letter, the Canadian Halibut Fishing Vessel Owners' Association,
say:
From this you will see there is a great deal more difference than is represented by the duty. This we take it, is brought about from the fact that the duty prevents the bringing in of foreign products, consequently the home product has the field, and they not only add the price of duty but as much more as they can get away with. . . . There is absolutely no reason why the price of these products should be any more here than they are in Alaska, particularly as we understand that the Union Oil Co. supply their Alaska station from Vancouver, the same product, as is delivered to their station here.
I have another letter dealing with full diesel tractors. This is written by the Caterpillar Tractor Company:
One of these tractors sold to Mr. O. B. Lassiter of Chin, Alberta, was able to one-way plough 4,200 acres at a cost of 9 cents per acre for fuel, oil and labour. This result was partly due to Mr. Lassiter's location, as he was able to buy Diesel fuel from the Kevin-Sun-burst oilfield in Montana at a price which enabled him to lay it down on his farm for 61 cents per gallon. Had he bought a similar fuel from any of the larger Canadian oil companies, he would have paid 12 to 15 cents per gallon. Why this condition should prevail is something of a mystery as Mr. Lassiter paid duty on every gallon he imported. Over and above that, he paid duty and excise tax on the tractor itself which represented an increase of about 40 per cent over the cost of a similar tractor to a farmer living just south of the international boundary. In fact, the charges



The Budget-Mr. Botliwell
paid by this farmer over and above the factory price and freight amounts to more than the total fuel cost for 7,000 hours operation on fuel costing 6J cents per gallon.
In addition I have a letter from the Craig-Jensen Company in connection with lubricating oil, in which they talk about the dumping duty which has been added. The writer states:
That you may have at hand convenient information in connection with this matter, by obtaining copies from the department of customs manifest No. 2159, which covers shipment of 4,179 imperial gallons of oil (their invoice RS 8762, Freedom Oil Works). You will note that customs charges total $688.65 and this special duty clause accounts for $300.09 of this amount, or 7.18 cents per gallon.
That letter was written on November 5, 1932, after the sales tax of four cents per gallon had been imposed in the United States and added to our price for import purposes. The situation in connection with oil was explained early in the session by the hon. member for Beauce (Mr. Lacroix), who told us that he could have purchased gasoline from the Standard Oil Company and the PanAmerican Oil Company at 4-89 cents per gallon laid down in Quebec city, without duty or sales tax, while to buy oil from the Imperial Oil Company or the Champlain Oil Company in Montreal would cost 12-50 cents in Montreal plus 2-50 cents for shipping from Montreal to Quebec, or a total of 15 cents per gallon. That price, I presume, would include the sales tax and the duty of 21 cents per gallon, although I doubt if the Imperial Oil or the Champlain Oil paid any duty.
This difference in price has caused the people of the west to seek for means to obtain cheap fuel. They organized independent oil companies, but I understand that these companies have been bought up by one of the major oil companies or there has been some amalgamation, so that the farmers, through their cooperative associations, are now endeavouring to raise money themselves in order to build an independent oil refinery. I would quote the following dispatch from the Regina Leader Post of March 24, 1934:
Further details of the proposal that farmers' cooperatives establish a $150,000 oil and gasoline refinery in the province will be discussed by directors of the Sherwood Cooperative association at a meeting at 10 o'clock next Wednesday morning in the Sherwood rural municipal building, Cornwall street.
C. O. Smith, president of the association, said details of the plan liad been sent to the central cooperative buying association, Saskatoon, for consideration but no reply had been received up to Saturday afternoon.
The plan calls for construction of a refinery at a cost of $75,000 at some central point in the province with an additional $75,000 as operating account.

Then last year the Saskatchewan legislature endeavoured to take some action. A bill was introduced by Hon. A. C. Stewart, Minister of Highways, in an attempt to stop discrimination in regard to gasoline prices as betw-een different sections of the province. I understand that the bill was introduced because, when an independent oil refinery was constructed, the major oil companies were in a position to cut prices in the territory to be served by that small refinery, and so put it out of business. The object of this bill was to prevent the major oil companies from taking that action. Under the provisions of the bill any company found guilty of discriminatory sales was liable to a fine of not less than $1,000 and not more than $10,000, rvhile any person violating this provision of the act was liable on conviction to a fine of not less than $100 and not more than $500, or to imprisonment. That act was not passed, however.
A move now is under way, for the third time, to get at the small refineries by way of freight rates. A year ago the Canadian railways proposed that any refinery in Canada not reshipping at least sixty-five per cent of its finished product by rail should pay a higher freight rate on its crude oil than the refineries that use the railways for their gasoline distribution. The next proposal was that a higher rate should be charged on crude of 40 gravity or over. The independents claimed that as they used a crude of 40 gravity or over, whereas the big refineries were able to use a lower gravity crude, this proposal was another attempt to put them out of business. The latest move, according to information sent the board of railway commissioners, is that the Canadian railways, through the Canadian Freight Association, have given notice that after June 30, 1934, they will not participate in a through rate on oil from the southern field to Saskatchewan. That is very alarming to those small local refineries remaining in the west, and municipal councils are also alarmed. I should like to read one resolution that has come to me:
The following resolution was passed at the regular meeting of the council of the rural municipality of Miry Creek No. 229. and we are forwarding same to you for your consideration.
1.	Whereas there now appears to exist in western Canada a complete monopoly of the oil refining industry as indicated by available statistics and information which show:
(a) That seventy per cent of the stock in the Imperial Oil Company is owned by the Standard Oil of New Jersey.
(hi That prices quoted on all refined oils, whether by the Imperial Oil Company or by

The Budget-Mr. Stitt (Nelson)
any other refining company in western Canada, are the same and do not vary one from the other, pointing to the dictation of such prices by the Imperial Oil Company.
(c)	That all refineries in western Canada are owned or controlled either by the Imperial Oil Company or by some other refinery whose prices appear to be governed by those of the Imperial Oil Company.
(d) That the dividends accruing to the Standard Oil Company of New Jersey on their Imperial stock alone are nearly double the whole Canadian payroll of the oil refining industry of Canada, and independent oil distributor having no other source of supply the consuming public is helpless in the hands of this monopoly.	.
2.	And whereas for these reasons there is
now no competition in the oil refining industry in western Canada.	,
3.	And whereas crude oils come to the said refineries duty free while the refined gasoline used by the consumer is charged with a duty of 21 cents per gallon, 1 cent per gallon additional tax, plus G per cent sales tax and 3 per cent excise tax: such duty ostensibly for the protection of the Canadian labour, but the profits going out of Canada on Imperial oil stock alone are nearly double the whole payroll earned in the oil industry by Canadian workers.
4.	And whereas under the operation of the N.R.A. in the United States the price of crude and refined oils and the cost of labour are controlled so as to practically eliminate the posibility of surpluses of cheap oil products being dumped on the Canadian market.
Therefore be it resolved:
First. That the council of the rural municipality of Miry Creek No. 229 recommend to the government of Canada that all duties be lifted from all refined oil products.
Second. That a copy of this resolution be forwarded to the Department of Trade and Commerce, the Department of National Revenue and the sitting member of this constituency at Ottawa.
I have received a resolution in very much the same terms, passed by the board of trade of Abbey, Saskatchewan.
I trust that the minister and the government will give consideration to this matter and see that justice is done the farming communities which are dependent upon oil and oil products for the successful operation of their industry.


Mr. B. M. STITT (Nelson):: Mr. Speaker, at the outset may I join with the other speakers who have congratulated the Minister of Finance (Mr. Rhodes) on the clear and concise manner in which he presented the budget.
I hope the bon. member who preceded me (Mr. Bothwell) will pardon me if I do not attempt to follow him in his diatribe on gasoline, his pet hobby.
The hon. member for Shelburne-Yarmouth (Mr. Ralston) the official opposition critic, again made a clever legal analysis of the budget, as he usually does, and skilfully skated 74726-156^
around most everything which tended to touch on the basic facts of the whole set-up. To my mind this year's budget is not very contentious. It was framed to meet a difficult situation, not to meet popular demand. At the outset of the hon. member's remarks, with great gusto he brought out the fact that the British government, when, presenting its budget, Iras shown a magnificent surplus. Once again he skated around the basic facte when he omitted to say that in the British budget no provision was made for the payment of war debts or the interest on them; consequently when he attempts to compare that surplus with the deficit shown in the Canadian budget he has not been fair. As hon. members are aware, Canada is paying the interest on war and other debts; she has met her obligations in full. Like a voice crying in the wilderness his whole argument was, as last year, based on the assumption that Canada, is the only country in the world suffering from the depression. His argument will not register to any great extent with the Canadian people; they know differently; they are not as gullible as they used to be. They are beginning to think for themselves. The people of Canada know that with the exception of relief expenditures practically the whole debt structure was left by a Liberal administration on our doorsteps when we took office. The late Liberal administration, when in power, coasted along on the wave of prosperity like a man in a deep well looking up at the stars. Had they exercised even a little vision and made some attempt to provide for a rainy day instead of embarking upon a wild reckless orgy of spending, purely for political purposes, the problems confronting the present government would have been greatly minimized.
The member for Shelburne-Yarmouth spoke vigorously about the promises made by the Prime Minister (Mr. Bennett). We have heard this criticism so often that it is beginning to grow whiskers. I believe any fair-minded Canadian would be quite willing to absolve the Prime Minister from most of those promises, and that even hon. members opposite would be fair enough to admit that in 1930 no one could see what was ahead of Canada. Certainly no one thought the depression would bo so intense. All the childish chatter about election promises does not hold any great appeal for the Canadian people. To-day the people are interested in the problems confronting them, and the remedies this government may effect to meet those problems. They are not interested in what happened in the daj's of William and Mary, at the time of the signing of the Magna

The Budget-Mr. Stitt (Nelson)
Charta, or in a lot of other ancient stuff to which we have been listening. Speaking about trade the hon. member employed the age-worn political trick of using the dollar and cents basis instead of the volume basis for purposes of comparison. He made no allowance for world prices which, every school child knows, fell to almost unheard of levels during the last three years.
There is one portion of his speech, however, with which I find myself in agreement-not wholly, but to some extent-namely that portion in which he referred to the new taxation on the gold mining industry. I have availed myself of every opportunity to oppose this tax. I need not remind hon. members that gold mining in the last three or four years has saved Canada from destruction. I should not have to remind the house that the new gold price has resulted in a great expansion of that industry, not only in that it has attracted fresh capital, but also that it has provided markets for the primary producers and industries of Canada. Old mines which have been closed for years have been revived, shafts dewatered and reopened. Many of these mines were closed down because they could not work at the old price of gold. As a result of the new price there has been intense prospecting. Representing an extensive mining district I am in a position to know that in my constituency hundreds of men are now going into the bush where, in other years, there would not be dozens. This will mean that new finds are going to be made and new mines are going to be brought into being, resulting in added employment.
Then, there is another angle to the situation, namely that even the older mines, and many of the newer ones, are to-day milling ore which only a few years ago they could not afford to handle. My objection to the tax as now constituted is based on the fact that it is a gross tax on the production of gold. I do not think I need remind hon. members that it costs as much to mine and mill a ton of rock with two dollar gold content as it does to mill a ton of rock with fifty dollar gold content. Every dollar which gold expands in price expands industry, and every dollar that the price of gold contracts is bound to contract industry that much. There is no doubt about that. As I said a moment ago, they are now working ore which they could not handle at the old price, and the result has been that thousands of men have been taken out of the relief camps and put back to work.
I am of the opinion that the tax should be graded on a basis somewhat similar to that followed in connection with the income tax,
[Mr. B, M. Btitt.l
where those best able to pay will pay, and those least able to pay, namely the low grade producers or the base metal producers in connection with which gold is simply a byproduct, will not be taxed as heavily.
I have confidence enough in the government to believe that the matter will be given consideration and that the proper adjustments will be made. Possibly the budget may have been drawn in a hurry and all phases of the matter may not have been considered. I sincerely hope the minister and his government will reconsider the whole set-up, and I am quite sure that if they are given proper consideration the miners and prospectors will not hesitate to make further contribution to the well being of Canada.
I was more than pleased to note that the Miinster of Finance intends to bring down legislation in connection with debt adjustment. I do not know what form the legislation will take, but may I say in passing that I believe it is long past due. We know that the western farmers are to-day suffering from loan conditions which are at extreme variance with conditions obtaining when those loans were created. The loans were negotiated with loan companies at abnormally high rates. Loan companies and banks thought the loans were justified and loaned accordingly. Of course, at that time farm prices were good, and through the sale of his products the farmer could take care of his obligations. However, during the past three years the prices of farm products have decreased approximately fifty per cent, and as a result the farmer is carrying on at a loss. Under the circumstances he is not in a position to pay his taxes, interest and so on. Land values are falling and in most cases the amount of the mortgage is in excess of the value of the property involved. Consequently, there is no hope either for the mortgagor or the mortgagee. An adjustment of these conditions is long past due and unless some move is made to wipe out or reduce considerably this burden of interest and accruing interest rates, only chaos can result. The land companies and the banks would be well advised to accept half a loaf and maintain their solvency; otherwise insolvency will result, and any mortgagor or vendor who cannot see this fact is fooling only himself. Had the land companies and the banks taken this action voluntarily months ago, the debt legislation which the western provinces have brought down and which this government is going to bring down would have been unnecessary. The legislation brought down in the west will prevent most mortgagees from obtaining anything like the full amount of their claims.

The Budget-Mr. Stitt (Nelson)
I was pleased to hear the minister state that the government intends to inaugurate a public works program. We have been looking for this for some time and to my mind it is the only way to bring about prosperity. Our people will be put back to work and payrolls will be created to be passed around to everyone.
I was pleased at the move of the government in bringing down a central bank bill. I am sure this legislation was a great shock to our friends on the other side of the house. They have been going through this country from coast to coast telling everybody that this government was the great friend and champion of the banks and financial interests. Anyone who has studied this legislation will know that it is not very popular with the banks. Some of our Liberal friends have gone so far as to say that the Conservative party is going red. If what we are doing is red, then I am glad to be on this side of the house. If anyone had told me that the government would bring in a central bank bill which would take over the entire gold reserves of the banks at the old price, I would have said that they had one more guess coming. But the government has done this, which shows that it is prepared to meet courageously and without fear the situation which confronts it.
From day to day we hear in this house another argument which has grown whiskers, the argument of the usurpation of power and the utter disregard of constitutional rights. May I say that the people of this country are not interested in that sort of childish chatter, and the sooner hon. members opposite get that into their heads, the better it will be for them. Hon. members opposite do not seem to realize that we are facing new conditions. Once the march of progress is started, you can do no more to stop it than you can stop the tide coming in and going out. In my considered opinion the greatest enemies which any political party can have are those orthodox members within its ranks. We are facing changed conditions and we must change accordingly. Any government which refuses to remake and reshape itself to meet those conditions is going to cease to exist; do not make any mistake about that.
If there are any doubting Thomases in this house who do not believe in the intentions of the government, I ask them to withhold their criticism until all the legislation is brought down. If they have any doubts as to the courage of this government to bring down the necessary legislation to bring about the happy conditions for which we are all looking, let them wait.
The marketing bill which the government has brought down has received a great deal of attention. Once again we have met with considerable opposition from the other side. Why this has happened, I do not know. Even the western members are talking against i& and I would like to know how they will talk when they get back to their constituents. I think some of them will back track a little. I noticed they were labouring somewhat when they got up in the house to talk against the bill. This is probably one of the most revolutionary pieces of legislation ever brought before this house.


Mr. NEILL:: Revolutionary is right.


Bernard Munroe Stitt: I am glad to be a member of the government which has brought in this legislation, and I am going to support it with all the force I can. This bill was prepared after a careful three year study of the problems confronting the primary producers, particularly the producers of agricultural products. We cannot do very much with wheat because the ramifications in connection with that commodity are considerable. Because of the conditions prevailing in the world markets, this would be very difficult. Once again let me remind the house that the government has not lacked courage in handling the wheat problem of this country. I think hon. members must admit that, whether or not they agree with the methods adopted. This marketing bill is proposed to regulate production where there is overproduction. We know that production beyond a possible hope of sale or consumption is poor business and can bring only chaos.
Some very prominent men in this country -I do not hesitate to mention one leading Conservative in the west, Mr. Sanford Evans -and other so-called economists condemn all co-operative movements. Being so closely associated with the grain exchange I do not attach importance to the position he has taken. In attacking this act some hon. members opposite have spoken of legitimate business. As far as I am concerned, there is only one business that is legitimate, and that is the one in which the producer receives a fair return for his labour and investment. This bill is framed to permit the marketing of our surplus in an orderly manner, both at hame and abroad. It is framed for one purpose only, to provide a fair price to both producer and consumer. When I drive along Wellington Crescent in Winnipeg, one of the principal streets, and see the mansions which have been built from profits taken from the farmers, I cannot help but think that this legislation is long overdue, I am not one of ttiose who be-
The Budget-Mr. Golding

lieve that prosperity can be restored by raids on the public treasury, but we are facing a new era and we must meet it with advanced ideas in legislation, and that is what this government is doing.
I have spoken at greater length than I had intended. I rose to make a few remarks on the budget, particularly in connection with the mining tax in which I am greatly interested. For several weeks we have been meeting in this chamber but we have not made very much headway. I have been sitting here wondering why, in times like this, we in this house who are all, I think, deeply interested in the welfare of this country, cannot shake off this political leprosy which threatens to destroy us at this time and get away from this holy show of parliament.


Some hon. MEMBERS:: Order.


Bernard Munroe Stitt: We should try to
make this Canada of ours the great country which such eminent statesmen as Sir John A. Macdonald and Sir Wilfrid Laurier thought it would and should be. In brief, I think it is about time this parliament got down to business.


Mr. W. H. GOLDING (South Huron):: In rising to make a few observations on this 1934 budget, I hope that my hon. friend opposite will not consider me discourteous if I do not follow him in his remarks. I need hardly say to the members of this house that this is only the second time I have had the privilege of hearing the Minister of Finance (Mr. Rhodes) deliver his budget address. One year ago it was my privilege to hear the hon. gentleman deliver an address when introducing his 1933 budget which I think, for composition and for delivery, should go down in the records of this house comparing favourably with any address given by any of our previous ministers of finance. I think the present minister deserves our congratulations on the very efficient way in which his budget is prepared and also on the excellent manner in which he delivers his address, and I want to assure my hon. friend that it was a pleasure to me to have had the privilege of listening to his address one year ago, as it also was a pleasure to have the privilege of listening to his address again on Wednesday last.
I shall always look back on that address of last year as one of the outstanding incidents in my first experience as a member of this House of Commons. I remember very well I had a great deal of sympathy with the minister at that time because I did feel that he was introducing in his budget many things which he must have known were going to affect

seriously many citizens in a way in which I am sure he had no desire to see them affected. Indeed, I remember that on one occasion, when we were discussing the items of that budget in committee, the Minister of Finance was visibly affected by some criticism to the effect that he did not care what certain classes of our citizens had to contend with or the hardships they had to endure. I want to be fair to the minister and I may say that I did not share in that criticism, because I believe that he is a very humane person and has an interest in and a great deal of anxiety for all classes of citizens. Naturally therefore I had a good deal of sympathy with him because I felt that circumstances had placed him in a position where he was advocating a policy which was going to have an effect that ordinarily he would have no desire to see brought about.
I recall also one incident when we were discussing the budget in committee last year. The question was asked the minister as to what he expected the saving would be through the reduction in the salaries of civil servants and others. He replied that he estimated that the saving would be approximately $8,000,000. The hon. member for Temiscouata (Mr. Pouliot) immediately rose and asked the minister then the question what he estimated the loss in revenue would be through the reduction on two articles of luxury, namely, cigarettes and liquor. Again the minister's answer was that, with the same volume of business, it would be approximately $8,000,000. In other words, the saving that was effected by the reduction in the salaries of civil servants and others was going to be entirely offset by the reduction in the tax on these two articles of luxury. I think that is certainly reversing the order of things, because I believe it is the duty of governments to see that there is no reduction on any article of luxury if such reduction means an increase on articles which are the very necessities of life.
Now there were in that budget of last year certain things which were bound to create a great deal of criticism throughout the country, and that is particularly true in regard to the tax that was imposed on sugar. I am very glad to see that the government have realized their mistake in placing the tax on that commodity and have reduced it by at least fifty per cent. It did seem to me that the tax was quite unjustifiable in view of the fact, as I have pointed out before, that there was a reduction to a great extent on two articles of luxury. It was manipulation such as this that created a great deal of criticism and discussion all over the country.

The Budget-Mr. Golding
I remember that when discussing the budget last year I made the statement that it was a typical Tory budget, its outstanding features being taxes, tariffs and deficits; and having had an opportunity of conversing with my constituents since that time I have found that I was expressing the opinion of the great majority of them when I made that statement.
There was another thing that received a good deal of discussion last year and about which there were many complaints, and that was the advantage that many had gained at the expense of the government by what was supposed to be a leak in connection with the tax that was intended to be and actually was placed on sugar. From all parts of the country complaints came pouring in with regard to this so-called leak, and I believe the minister did endeavour to locate the source of it. Whether he was successful in that task I do not know, but I do know that the people resented information of that kind being spread abroad before the actual presentation of the budget itself. I am glad to know that nothing of that sort is occurring this year, and I think the minister should be congratulated on that.
If we go back to the last federal election we cannot help remembering the promises and predictions made by members of the government as to what would happen if they were given control of the country's affairs; and bearing those promises and predictions in mind it is certainly interesting to review what has actually taken place in the presentation of the various budgets that have been brought down by this government. If we turn to the 1931 budget, which was the first one introduced by the present government, we find that taxation began immediately to increase. That budget was introduced by the Prime Minister, who was acting as Minister of Finance, and almost his first words were to announce a duty on tea, an increase in the postage stamp tax, a raising of the sales tax from one to four per cent, the levying of a tax on coal, and burdening us with numerous other forms of taxation such as increases in the tariff on many essential articles, all of which placed a burden on the people at a time when they were least able to bear such a burden. There is no doubt that this had a very depressing effect not only on business in Canada but on every citizen. But if I may put the matter in this way, there was a silver lining to the dark cloud that was settling over the Canadian people at that time because the Prime
Minister was then introducing a real budget, something which, according to our hon. friends opposite, had not been done for some time. The silver lining to this dark cloud was the fact that those increased taxes were going to provide the government with a splendid surplus at the end of the fiscal year and with this assurance of course the people took courage and went forward to meet the financial burden which they know lay before them. But what happened at the end of that year? Imagine the consternation of the people when at the end of the year they found not the expected surplus but a very substantial deficit, and, according to the public accounts, an increase in the public debt of some $114,000,000!
Now we come to the 1932 budget which was introduced by the present Minister of Finance and which included further additional burdens of taxation. Indeed, it was conceded, I think, to be one of the most burdensome budgets so far as taxation was concerned, that was ever submitted to the house. But once more the country was led to believe that with the additional taxation imposed at that time it would have a surplus at the end of the fiscal year. In that budget the sales tax was increased from four to six per cent; there was an increase in the excise tax on cheque's, telegrams, railway tickets, long distance telephone calls and almost everything one could imagine. But after all the additional taxes that were imposed by that budget, what did we find at the end of the year? We found not the expected surplus but a very substantial deficit and again, according to the public accounts, an increase in the public debt of some $220,000,000.
That brings as to the 1933 budget and we will remember the additional taxes that were imposed last year. The minister in his address on Wednesday last- had to announce another deficit and another addition to the public debt of some $135,000,000. The point I wish to make is that notwithstanding all the promises, arguments and predictions that were made as to what would happen were the present government returned to power, we have found in each and every budget presented by the government in comparison with the 1930 budget, the last one introduced by the Liberal party, increased taxation, increases in the public debt, increases in tariffs, in fact, an increase all along the line. That is not a new experience for our hon. friends opposite or for the party they represent, because if we review the record of the Conservative party since confederation, we find that only four times have they been able to show a reduction in
The Budget-Mr. Golding

the public debt, as the foil-owing figures will show:
Reduction in
Year	public debt
1871	$ 503,000
1882	 1,734,000
1912		 122,000
1913		 25,617,000
On the other hand we find that the party-represented by those who sit on this side of the house, the Liberal party, have had eleven years in which they have been able to show a very substantial reduction in the public debt, as follows:
Reduction in
Year	public debt
1900	$	779,000
1903		 10.222,000
1904		 730,000
1907	 3,371.000
1924		 35,993,000
1925		 345.000
1920	 27,700,000
1927		 41,896,000
1928		 50,984,000
1929		 71,345,000
1930		 47,740,000
I think we ought also to point out that the Liberal party have controlled the affairs of the country for some twenty-nine years since confederation, while the Conservative party'and union governments have been in control for thirty-eight years. The point I would like to make there is that the Conservative party have had more opportunities to show what they were able to do in a financial way than have the party on this side of the house. That represents a true picture of the financial accomplishments of the two parties.
Much has been said in regard to our trade with the United States. I remember very well during the last federal campaign the amount of discussion that took place as to our unfavourable balance of trade. It was stated in my constituency that if this government were returned to power, that unfavourable balance would be wiped out. What do we find has happened since this government has come into power? Notwithstanding all the trade barriers that have been in effect and notwithstanding the rate of exchange which has existed and which in itself has been a very substantial tariff, we find that for the years 1931, 1932 and 1933 there is still an unfavourable balance of trade of an average of $138,000.000 per annum. There is something significant in that: I think it proves conclusively that our natural market for much of our basic produce lies to the south of us. In view of that I still believe it would be splendid if these two countries could get together and agree on some reciprocal trade arrangement which would be mutually beneficial.
[Mr. Golding.!
I fully appreciate the fact that the present government has done its utmost to control imports by raising tariffs, by imposing the dumping duty and by every other method possible, but apparently it forgets that it is quite impossible to reduce imports without at the same time reducing our exports, and our trade figures are grim reminders of this indisputable fact. I would like to put on Hansard our trade figures just to show how, as the imports were reduced, exports were reduced in almost the same proportion:
Year-	Imports	Exports
1923		$ 802,000.000 $ 945,000.000
1924	
893.000.000	1,058.000.0001925	
796.000,000	1,081,000.0001926	
927.000.000	1.328.000,0001927	
1.030.000.000	1.267,000.0001928	
1.108,000.000	1,250.000.0001929	
1,265,000,000	1,388.000.0001930	
1,248,000.000	1.144.000,0001931	
906.000.000	817.000.0001932	
587.000.000	587.000.0001933	
406,000.000	480.000.0001934	(est.) . . ..	443,000,000	579,000,000
Looking at those figures one sees that as the imports were reduced exports were reduced correspondingly. The figures tell their own story, and demonstrate the point I have been endeavouring to make.
When we remember the bitter and extreme criticism that was directed against the Liberal government in the last federal campaign, how our friends opposite were almost in tears over the alleged neglect of the interests of the farmers, and how they blamed and condemned the Liberal party for not securing more markets and higher prices for their products; and when we see now articles and interviews in the press endeavouring to show the splendid trade that they say is being built up between the United Kingdom and Canada, I think it would be well for us to turn back the pages to recall the volume of trade that existed between Canada and the United Kingdom at the very time to which this criticism relates. I was interested in the campaign in our own constituency, and I took particular notice of the arguments advanced by the supporters of our hon. friends opposite. What do we find was the condition that existed at that time? In 1930 our imports from the United Kingdom amounted to $189,000,000 and exports to $283,000,000. That is the time at which this criticism was aimed against us. In 1933 imports had fallen to $86,000,000 and exports had also fallen to $185,000,000. For the present year, when all this splendid trade is said to have been built up, returns for eleven months indicate that imports amounted to $95,000,000 and exports to $204,000,000, far from approaching the values of 1930.

The Budget-Mr. Golding
There is another feature I wish to touch on. I have noticed that the comparisons of trade figures sent out by the Department of Trade and Commerce are made between the years 1933 and 1932. In view of the arguments made in 1930 I submit that comparison should be between 1933 and 1930. That is the year when the promise was made that the wrongs of the Canadian people would be righted. That is the year when, as I said, our hon. friends were almost in tears-


Mr. McINTOSH:: Crocodile tears.


William Henry Golding: -owing to the terribly low prices that the farmer was receiving for his produce. That is the year the Liberal party was condemned in every way, shape and form for its alleged neglect to secure markets for farm products. And in view of all the arguments at that time I think anyone who is at all fair will agree that all comparisons should now be made between the years 1930 and 1933.
I need hardly say that I do not wish to be too critical of the actions of the government. I fully realize that they are having their difficulties and troubles and have many hard problems to face. I believe that in their way they are endeavouring to give the best service they can. That service, whether we realize it or not, is taking its annual toll. One need only look at the change in the personnel of the federal and provincial cabinets of this country to realize the toll that is being taken from year to year, the price that is being paid by those who are endeavouring to carry the burden and responsibility of government. Therefore I do not want it to appear that I am not- sympathetic with our hon. friends opposite or anyone else who is carrying such a responsibility. I have every sympathy for them. But I believe they are pursuing a wrong course, a wrong policy, and they are making their task all the more difficult by so doing. As a representative of a rural constituency it is my duty to oppose any policy which I believe is not in the best interests of the country. I think I can fully appreciate the position of the government in regard to the expansion of trade; practically every country in the world is engaged in this policy of tariff competition. We have entered the scrap also, and it is this policy which is so seriously affecting not only the trade of Canada but the trade of every country in the world. In the interests of the farming community of this country it is absolutely necessary that the tariff on commodities that the agriculturist uses should come down. I am perfectly satisfied that that has to come about. I have been rather amused since I became a member of
this house by arguments advanced by some hon. members opposite. Some tell us that as far as the two old parties are concerned there is little or no difference in their outlook in regard to tariffs. I have heard hon. members on the government side endeavour to show that the average tariff has increased very little since the present government took office. On the other hand the Prime Minister frankly and honestly tells this house and the country that they saved the situation by imposing tariffs of unprecedented height. Both these arguments cannot be right. I attended many meetings in our constituency during the last federal election, and if I understood the English language at all correctly, those representing the party on the other side tried to make the people believe that they were going to save the situation if they were elected by imposing higher and still higher tariffs.


Joseph Philippe Baby Casgrain: Prohibitive tariffs.


William Henry Golding: I think the Prime Minister tells the truth when he tells the house and the country that that is what he did. That is one promise at any rate that he carried out.


Joseph Philippe Baby Casgrain: The only one.


William Henry Golding: The imperial economic conference provided a splendid opportunity for this country and for the British empire to set an example to the world by reducing tariffs. It is well known that at the opening of that conference the Right Hon. Stanley Baldwin expressed the hope that that would be done. But we all know that the very opposite took place, and I refuse to believe that that has not seriously affected our trade prospects in more ways than one. It is all right to tell us of the splendid trade we are building up between the British empire and ourselves; that is all very fine, but let me say once more that I am satisfied that many markets to which we might have had access have been closed to us to a certain degree at any rate as a result of the action taken at that conference.
There is another point on which I should like to touch for a few moments; that is the problem of our debt. I must confess that last year I was disappointed with the action taken by the government in regard to the loan floated at that time; I did think the interest rates would have been lowered to a much greater extent than was the case. I believe this whole debt problem must be dealt with in a courageous way. Interest rates in this country must come down if we are going to come through, and I stand solidly behind any policy which will bring about a readjustment of our whole debt structure. Australia tackled
The Budget-Mr. Golding

this problem in a manly way; the United Kingdom did likewise, and there is no question but that their position has been very materially improved as a result. I see no reason in the world why we in Canada should not endeavour courageously to deal with this problem also.
The debt of our country, federal, provincial and municipal, is increasing at an alarming rate. This is particularly true in regard to our federal debt. What is the use of the government boasting of how splendidly they have come through the depression when practically everything that has been done has been accomplished with borrowed money? What is the use of boasting of our splendid balance of trade when we are being swallowed by the quicksands of debt? I think the financial critic of the Liberal party, speaking on the budget this afternoon, made the statement that the increase in the national debt since this government came into power amounted to something like 8586,000,000. We can hardly conceive that this amount has been added to our national debt. I believe the hon. member for Vancouver Centre (Mr. Mackenzie) gave the members of this house something to speak about when he pointed out, during the course of an address not so very long ago, that since the war, in interest charges alone, this country has paid the enormous sum of over $1,900,000,000. These are staggering statements, and I think the government should give serious consideration to this whole debt problem.
I would suggest, Mr. Speaker, that there are other problems to which serious consideration should be given in order to give our people a chance to come through. The various governments of this country should take immediate steps to deal with the problem of the cost of government in Canada. This may require changes in the British North America Act; if so, well and good. I am quite satisfied, however, that it is the general opinion among all classes of citizens that we are being governed and legislated to death. It does not matter where you go, whether it is on the street, in the church, on the farm, in the factory or in business places; you hear this matter discussed by everyone, and it is a problem with which the Canadian people will have to deal. In my opinion a committee should be set up by the federal and provincial governments which should be representative of business, industry and the great masses of the people, to investigate and report as to the solution of what I consider to be one of our greatest problems. I do not know that it would not be beneficial to have all politicians excluded from that committee, in
(Mr. Golding.]
the interests of the Canadian people; that is my opinion.
Now I should like to say just a few words in regard to the Liberal policy in connection with external trade. Hon. gentlemen opposite tell us that we have no policy. Let me give the policy behind which we stand, which was announced in this house by our leader:
The Liberal party believes that trade is the basis of industrial and commercial development, and that Canada needs trade.
It will promote trade with all nations and negotiate trade agreements with any countries willing to trade with Canada on a reciprocal basis.
It will abolish the extravagant increases in the tariff made by the present administration, which have had the effect of strangling trade, exploiting consumers and robbing railways of business.
It will abolish all unwarranted extra taxes on imports, such as the exchange and dumping duties, as imposed by the present administration.
It will end the making and altering of tariffs by executive action.
It will substitute stability for uncertainty in the administration of customs laws.
It will continue the Liberal policy of British preference by a percentage reduction in existing tariffs rather than by a percentage increase against foreign countries in existing tariffs.
It will grant to British imports a real preference.
In that connection, Mr. Speaker, while hon. gentlemen opposite may take a great deal of credit for having put through the empire treaties and having practically forced the United Kingdom to adopt the policy of protection, I am satisfied that it will not be very long before they deeply regret having done so. I have been reading and watching the developments in the United Kingdom, and I am sorry to say that in my own mind I am persuaded that we are going to be up against a stone wall before many years have passed so far as the export of our products is concerned.


Mr. F. W. GERSHAW (Medcine Hat):: Mr. Speaker, in rising to continue this debate I should like to say first that we were all delighted to hear the genial Minister of Finance (Mr. Rhodes) say in no uncertain terms that he saw some signs of reviving confidence, of increasing revenues and of business improvement. It will be the prayer and hope of the Canadian people that these signs may materialize and that the trend may continue to be upward until the spectres of want poverty, privation and unemployment are banished from our land.
I do not wish to quote numerous figures on this occasion, but for a few moments I should like to present the human interest

The Budget-Mr. Gershaw
side of the problems and to suggest some of the solutions which might be applied to them. While we are emerging from the depression the time is surely opportune for us to take stock of our assets, to investigate the weak spots in our system, and in the light of the experience gained to make such remedies and so to build for the future that our children will not suffer the economic defeat which is upon us at the present time. In looking backward at what might be called the man-power age we find that in the past the fear of scarcity was ever before the people. It was uppermost in their consideration, and it was the chief guide to the conduct of mankind. For centuries the struggle for existence, the struggle for the necessities of life, required drudgery, hard work and long hours of labour, and the stress and strain of that exertion did much to bring premature old age upon the people. We find that the span of life has been increased from about forty to about fifty-eight years. This to ?ome extent is due to modern health methods, but to no small degree it is due to the fact that it is no longer necessary for people to labour so hard in order to get a bare living. There is no doubt that the hard living certainly caused the breaking down of the arterial system. Of recent years however machines have been invented to do the drudgery and the uninteresting and difficult tasks which in other days were done by hand labour. Men have succeeded in harnessing steam power, water power and electricity, so that in these' days machines have solved the production problem. Professor Soddy has estimated that since the introduction of mechanical power the productive capacity of Great Britain has increased by 4,000 per cent. This, however, has brought its problems. It is regarded as the arch enemy of the unemployed, because as the machines developed so the requirements for labour fell. This is why so many people feel that machines have taken away their means of livelihood.
A few examples might be cited. One man in a glass factory in charge of a bottle making machine displaced fifty-four men, and another man with the aid of a cigarette wrapper has displaced as many as one hundred men. This problem has brought about the paradox of poverty amid plenty. There is very clear evidence of that condition. Ogden L. Mills of the United States made this observation:
The paradox of poverty amid plenty will never be solved by doing aw'ay with plenty.
Economists tell us that our distribution system is at fault, and that production has far outstripped distribution in the race.
Science, behind closed doors in laboratories and research departments, has made it possible to harness machine power, and people were unprepared for such great advances. The advance came upon them so quickly that the distribution was found to be obsolete, although heretofore it had worked satisfactorily. And so we have the paradox of on the one hand hungry stomachs and on the other great stores of food. In a book entitled Looking Forward, President Roosevelt makes this statement:
It is common sense to take a method and try it. If it fails admit it frankly and try another. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.
Those who have suffered most from the depression are the people living in the remote rural parts of the country. They still have to undertake laborious tasks. The men, women and children have to work hard. Machinery has helped them but little, and in many cases has been their undoing. All hon. members recognize that in Canada a greater number of people are engaged in agriculture than are engaged in any other industry. Agriculture is said to be the most important industry, and as a result the slogan has arisen, "If you can save agriculture you can save all." When the present government came into office the prices of farm products were falling. Perhaps they could not help that, but from that day to this the farmers have been greatly handicapped because they have had to sell their products at prices lower than production costs. Wheat which was costing them sixty cents to produce had to be sold for forty or forty-five cents. Cattle which cost five and a half cents per pound to raise were sold at from two cents to three cents, and sometimes as low as one and a half cents. While such a condition exists there can be no hope, because nothing but chaos stands before the primary producers.
When the present government took office they could not control the fall of farm prices, but they should have so planned that the little money the farmer did receive would go farther. They should have planned a reduction in the prices of other commodities so that those prices would harmonize with the prices received for farm produce. The government failed in that respect. On the contrary they increased tariffs on barbed wire and cream separators, commodities which probably since confederation, had entered this country free of duty. A duty of ten per cent was levied against barbed wire and of twenty-five per cent against cream separators. The duties on binders, drills, cultivators and a
The Budget-Mr. Gcrshaw


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Tuesday, April 24, 1934