Mr. MacKENZIE (Neepawa):: 1.	How many men have been kept, by months, in the Shilo Camp project since November 1, 1935?
2.	How many labourers have been employed monthly other than the $5 a month men during the same period?
3.	How many carpenters and other skilled workers have been employed monthly since November 1, 1935?
4.	How many of these carpenters and other skilled workers were employed from the constituency of Neepawa; who were they and what was their work?
5.	How many came from Brandon?
6.	What officials hired the men employed, and what were bis duties?


Mr. MACKENZIE (Vancouver):: 1.	November, 491; December, 509; January, 519; February, 664; March, 641.
2.	Four (4) men-Two (2) days in November and eight (8) days in December.
3.	The following skilled workers have been employed on a rotational basis of approximately 2 weeks' duration since November 1, 1935:
Nov.	Dec.	Jan.	Feb. Mar.	Carpenters..	. 47	29	34	28	29Bricklayers. .	. 26	15	12	13	14Plumbers. . .	2	6	673	44	48	47	494.	Carpenters, 5: From Carberry-J. Gilmore, W. Armstrong, P. Hannah, George Elliott; from Douglas-P. J. Donohue. Bricklayers, 1: From Carberry, J. Naylor.5.	From Brandon City: Carpenters, 63; bricklayers, 12; plumbers, 5.
The Budget-Mr. Hyndman
6.	All skilled workers were supplied by employment services of Canada, through Brandon and Winnipeg offices.



JAMES BEACOCK

Mr. McGREGOR:: 1.	On what date was James Beacock, postmaster at Myrtle, county of Ontario, dismissed?
2.	What were the reasons for his dismissal?
3.	How long had he held the office?
4.	Had his resignation been received, and, if so, to take effect on what date?
5.	Would any extra pension have been payable to him if he had held office until the date of his resignation?
6.	Was the conduct of this office investigated by the postal inspector?
7.	If so, what was his report?


Mr. ELLIOTT (Middlesex):: 1.	April 16, 1936.
2.	Change of site. Postal inspector reported accommodation for office and service both unsatisfactory.
3.	Appointed 1st September, 1906.
4.	Yes, to take effect from 1st September, 1936.
5.	Not entitled to any pension.
6.	Yes.
7.	See No. 2.



CRIMINAL CODE AND LAW REFORM

Mr. CHURCH:: *
1.	Will any legislation be brought down this session regarding the complete revision of the criminal code of Canada to bring it up-to-date, as a measure of law reform?
2.	Will the government consider the appointment of a committee of both houses of parliament to study and make a survey of the whole problem of law reform in this country during the recess of parliament?


Mr. MACKENZIE KING:: This question is partly argumentative and partly relates to a matter of government policy. In so far as it is argumentative, it is out of order, and in so far as it relates to government policy, that will be made known in due course.



LOSSES IN OATS

[Stage Direction]
On the orders of the day:
Hon. W. D. EULER (Minister of Trade and Commerce):: On Thursday last the hon. member for Qu'Appelle (Mr. Perley) directed certain questions to me with regard to an article that appeared in the Regina Leader Post on May 4, headed:
Who pays $200,000 losses in oats deal? Ottawa inclined to deny all responsibility.
Apparently the matter has reference to the purchasing of seed oats and feed oats by Canadian Cooperative Wheat Producers Limited for the Saskatchewan government. It is alleged that a loss of $200,000 was suffered
through the operation, and there is now some doubt whether the Saskatchewan government or the federal government is responsible for that loss. A similar question in the matter was addressed to the Minister of Finance (Mr. Dunning) on April 2, and a reply was made on April 6. As no negotiations whatever have taken place between the two governments since that time, I can add nothing to what was then stated toy the Minister of Finance.


Mr. PERLEY (Qu'Appelle):: Has the minister seen a reference in the Regina Leader Post of the next day, May 5?


William Daum Euler: I have not seen it.


Ernest Edward Perley: It states that the committee which was inquiring into the wheat business might make an order of reference; that a royal commission would be set up and to this commission there would be referred the matter of this oats deal.


William Daum Euler: The report to the house of
the committee investigating the wheat situation, as my hon. friend knows, since he is a member of that committee, has not yet been prepared. It is quite within the purview of that committee, if it thinks fit so to do, to refer this question also to the royal commission. I cannot say anything further.


Right Hon. R. B. BENNETT (Leader of the Opposition):: I think I shall be within
my rights in saying to the hon. gentleman that the circumstances in connection with this matter are well known to me. At the instance of the Saskatchewan government, Canadian Cooperative Wheat Producers Limited was used as an agent- to enable the province of Saskatchewan to acquire oats; the -buying and selling of them were directed entirely by the Saskatchewan government and neither the federal government nor the cooperative enterprise had anything to do with it in any way, shape or form.



THE BUDGET


[Stage Direction]
The house resumed from Thursday, May 6, consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the proposed amendment thereto of Mr. Maolnnis.
Mr. A. B. HYNDMAN (Carleton):: Mr. Speaker, as a new member, and one who for the first time is addressing this assembly,

The Budget-Mr. Hyndman
I should like to avail myself of the privilege of congratulating you upon your elevation to the chair as Speaker of this house. I think all hon. members will agree that you are not insensible to the duties of your high office, and I am confident that you will carry out those duties with distinction and honour.
Since some other hon. members have described the constituencies from wihioh they come perhaps it would be well for me to describe my own constituency. I represent one of the oldest constituencies in the dominion, that of Carleton county, which borders on the city of Ottawa. Carleton may not boast the distinction of quintuplets, as the hon. member for Parry Sound (Mr. Slaght) boasted of his constituency, but I venture to say that given time we may have that honour also. I noticed that the hon. member for Peel (Mr. Graydon) said his was one of the best counties in the dominion. I would go one step further and say that my constituency of Carleton is the best constituency in Canada. It has two of the great rivers of the dominion flowing through it, the Ottawa and the Rideau. We have a large hydro-electric power plant, one of the units of the provincial hydro system. We have the central experimental farm; one of the best tubercular hospitals in Ontario is located in this constituency, and last but not least we have the town of Richmond. If the Duke of Richmond had not been bitten by the fox we, as members of this House of Commons, might easily have been meeting in the town of Richmond, as the capital city of the dominion.
My constituency, Mr. Speaker, is made up of urban and rural sections; therefore I am interested in two classes of people, the urban and the rural residents. Those living in the urban sections of the riding are mainly civil servants. Bordering the urban sections there are a number of market gardeners, and then we have the rural sections where the farmers carry on mixed farming. They are not farmers of the type we know in the west; they engage in mixed farming, shipping their milk to the cheese factories and the dairies and buying and selling cattle in the spring and fall of the year. These are the people in whom I am interested, and these are the citizens of whom I wish to speak this afternoon.
First of all, Mr. Speaker, I should like to make a brief reference to the civil servants in my constituency. I want to make the clear statement now that I was absolutely against any cut in the salaries of .civil servants receiving less than S3,000, and I feel that the deduction of five per cent should be restored to civil servants who have been receiving and are now receiving less than that amount. In

connection with salaries of more than $3,000 I believe the cut should continue.
I am not going to make any particular comment with regard to the market gardeners in my constituency. Their position has been described in this house on other occasions, and I do not think it necessary or desirable to make any further comments in that connection. Suffice it to say that I 'believe our markets in the various cities should be retained, to the greatest extent possible, for the market gardeners located in close proximity thereto.
Now we come to the farmers of Carleton county, and what I have to say will apply equally to the farmers of the provinces of Ontario and Quebec and the maritime provinces, those who do not go in for the growing of wheat to any large extent but who really specialize in the raising of dairy cattle and the shipping of milk to cheese factories and dairies. Before proceeding to discuss this matter, however, I should like to compliment the Minister of Finance (Mr. Dunning) on the splendid budget speech he made in the house the other day. I think his speech was very flattering to the late administration; he outlined clearly the finances of the country and told us exactly where we stand as far as the dominion government is concerned. I do not agree with the minister when he says that our national debt amounts to something over three billion dollars; I think it is a great deal more than that, but I shall discuss that point a little later in the course of my remarks.
A moment ago I said that in my opinion the budget speech praised the administration of the Conservative government for the last five years. Several passages from that speech have been quoted during this debate, but I should like to read a few short extracts to support my contention. At page 2362 of Hansard the minister said:
Nevertheless, one cannot view the picture broadly without realizing that improvement

however gradual-is real and steady, and that the general undertone is one of definite strength.
Again on the next page the minister said:
For the first three months of this calendar year, 1936, manufacturing of all kinds showed an average expansion of 8'5 per cent over the first quarter of 1935.
And again:
The forestry group of industries showed marked expansion in 1935.
And again:
One of the most important signs of a more healthy business condition is that industrial and commercial earnings are continuing to show improvement. An analysis of the record of earnings of 241 leading Canadian corpora-

The Budget-Mr. Hyndman
tions discloses that net earnings are about eight per cent greater for the latest fiscal year than for the previous fiscal period.
In another section he says:
A very interesting feature of our Canadian economy is the remarkable degree of stability in the price level during the last two years.
Then I come to what impressed me as the most striking statement of the minister, the one which interests me most:
Unfortunately, our most important primary industry cannot boast such results. Agriculture has again suffered from climatic hazards, restricted markets and low prices.
Not only are these statements of the Minister of Finance a tribute to the last administration, but I think the minister therein puts his finger on the crux of this whole situation. In other words, agriculture has not progressed as it should in the past five years. We have to do something for the agricultural class in this country. I do not mean the farmers of the west; in my opinion, as I will show later, the farmers of the west have been getting too much. It is true, as the hon. member for Parkdale (Mr. Spence) stated in this house, that the western farmers have been spoon-fed long enough. Go over the budgets of the past, as far back as you like, and if you can show me-one instance in which the farmers of Ontario, Quebec or the maritimes were helped in any shape or form, outside of the small bonus on cheese given last fall by the late Conservative government, I shall be very much surprised. I can take you back over the budgets of the last number of years and show you where millions and millions have been passed out to the western farmer. I have every sympathy with the farmers of the west, but, I say it with all sincerity, the farmers of the west have absolutely no one to blame but themselves. Some twenty years ago I graduated from college, and when I came home the big cry was, "Go west, young man; go west"! I did not go west; I stayed here in the east and practised my profession. For the next few years my friends were coming home from the west spending money like drunken sailors; they were prosperous and chaffed me about staying here in the east. But I stayed in the east and got along without any help, and that is what the farmers of Ontario and Quebec have been doing. They have not been complaining much; they have not asked for much, and they have been getting no help. But in the west it is a different story; the farmers there are continually coming to this government and asking for bonuses on wheat-we have heard so much here about wheat since this house opened that it is disheartening to the members of this house from Ontario
and Quebec and the maritime provinces. True, as I said, I have every sympathy with the farmers in the west, but let them buckle down themselves and suffer a little bit. I fully realize that I am going to be followed this afternoon by a number of members from the west and I know I shall be roasted for that statement. That is quite all right. I want them to go over the budgets and the estimates of the last number of years and if they can show where the eastern farmer has received anything, then I will retract my statement.


Mr. COLDWELL:: What about the eastern manufacturer?


Alonzo Bowen Hyndman: I am not saying anything about the manufacturers; I am talking about farmers. I might say also that in my constituency we have no manufacturing concerns whatever. But I am going to have a little to say about the manufacturers; in fact I might say it right now, and I know this will 'be very agreeable to the western farmer. There has been a great deal of discussion in this house regarding lower tariffs on farm implements. Speaking of that prompts me to branch off a litttle, as I am very highly honoured in having as my deskmate the finest looking man in this house, from the ladies' point of view. I would also like to say that in my opinion the judge of the contest is the finest looking single lady in this house.
However, to return to the subject, the farmers of my county can be divided into three classes. There is the farmer who has a herd of dairy cattle and is shipping 'his milk to the dairies in Ottawa.


An hon. MEMBER:: What does he do with the cow's milk?


Alonzo Bowen Hyndman: That is right; we have the farmer who is shipping the cow's milk to the cheese factory. We also have the farmer who has no dairy cattle but who buys cattle in the spring and sells them in the fall or buys in the fall and sells in the spring, using in that way the feed he grows on his farm. I want to point out to hon. members, if they do not know already, although they ought to know-there are members here representing rural constituencies who have never said anything on behalf of the farmers in their constituencies-I want to point out what these farmers have been going through. First I shall take the dairy farmer shipping milk to the dairies, and I want it clearly understood that I have not picked out the worst case I could find. This farmer is one of what I would call the most prosperous farmers in Carleton county. He is one of the biggest shippers of milk to the dairies in



The Budget-Mr. Hyndman
camps? He says they will be absorbed on the Canadian National railway and the Canadian Pacific railway. I noticed an item in the press the other day to the effect that the Canadian Pacific Railway Company expects to start to pay a dividend soon, and so I imagine that railway will be able to absorb some of these workers who are on relief, but I cannot see how the Canadian National can absorb them, because it is going behind every year. As I said a moment ago, Mr. Speaker, I think those who have been struggling on by their own efforts and have never gone on relief should receive first consideration.
Another thing I should like to see done to relieve the unemployment situation is the introduction of a shorter working day and a shorter working week. If we shorten both the day and the week, we should be able to absorb more of those who are on relief.
Fair wages is another thing that I should like to see firmly established. I have already mentioned the restoration of the five per cent cut for civil servants receiving up to $3,000 a year.
There is one bill which, if it is ever brought before the house, I shall certainly support. We know of course that a number of bills that are placed on the order paper are withdrawn, perhaps because pressure is brought to bear; but one bill which I hope will come before the house, and which I shall support, is that providing for pensions for those over sixty years of age.
I do not want, sir, to get in wrong with the ladies, but it seems to me we should employ the heads of families, the man power of the country, instead of women who have no dependents. We have men holding diown good positions in the government, drawing large salaries, whose daughters are also employed in the government as stenographers or in other capacities. That is not fair; it is not giving a fair chance to others. I would like to see a little discrimination shown in that regard; employment such as that of a stenographer should be given to those who are responsible for the support of dependents at home.
I have already mentioned the condition of the farmers, the plight they are in, and hon. gentlemen have a perfect right to ask me: What do you suggest should be done? As I said before, the eastern farmer has received no help whatsoever other than the bonus on cheese last fall. I regret very much that the Minister of Agriculture (Mr. Gardiner) could not see his way clear to continuing that bonus, because it was a boon to the dairy in-

dustry in the province of Ontario. I should like to see that bonus of at least one and a half cents a pound on cheese restored, and continued not only for this year but for a period of from three to five years, in order to give the dairy farmer a chance to get on his feet again.
I should also like to see a moratorium for the next five years on all government farm loan mortgages, federal and provincial. We might as well come to that situation first as last. The farmers of Ontario and Quebec, and of the maritimes too, so far as I know, cannot possibly pay the mortgages on their farms at the present time. You may increase your trade as much as you like, but the farmers are not going to be able to pay off their mortgages. They are not trying, I know farmers in my district who have government loan mortgages on their farms, and they are sitting back in their seats and saying that they are not going to pay anyway; that you cannot collect anything; that it is a government mortgage. They run up a store bill and won't pay it; they run up a doctor's bill and won't pay the doctor, and the consequence is that we are all suffering. But if we could tell the farmer that he is free for the next three or five years from any payment of interest or principal on his mortgage, thus giving him a chance to get back on his feet and to start in where he left off, it would be a great help to the farmers. I repeat that I would like to see the bonus of one and a half cents a pound on cheese continued for five years.
I have made a statement in the house this afternoon as to the help the western farmers have received, and I think I should be prepared to back it up. I think I can do so, Mr. Speaker. I have gone over the main estimates for 1936-37 and the supplementary estimates, and I have checked up on what was paid out to agriculture last year. I find that to agriculture last year the government paid out $25,181,697.87, and of that large amount $17,247,449.38 went to the western provinces, the rest of the dominion receiving only $7,934,248.49. That is what I mean when I say that the western farmer has been getting everything from this government while the Ontario farmer has been getting nothing.
There is another interesting item here that I should like to present to the house, one dealing with the amounts spent on the different departments. I have mentioned what has been spent on agriculture, and I may say that that money has been well spent. In fact, I should like to see more spent on that industry, even though it goes to the western farmer. But there are other departments of

The Budget-Mr. Fleming
government upon which less should be spent. I refer particularly to the Department of National Defence. I eannot understand why we should spend money on this department because we have our representative at Geneva who makes certain decisions and then we wire him to withdraw them. The expenditures for this department amount to $18,695,857. I have in my constituency one of the finest rifle ranges in the Dominion of Canada, in fact one of the best in the world, the Connaught rifle ranges, and when I speak like this I am really speaking against my own interests because thousands of dollars are spent each year upon those ranges. But what do we find? We find old shots coming down from the west and up from the maritimes to shoot there for two or three weeks in the summer time. Money is spent, but I cannot see that it is doing the country any good. If we are really in favour of peace, I would suggest that we spend less money on national defence and more on agriculture or labour.
We are spending $26,476,000 on labour this year, and this amount should be increased by some of the expenditures now made on national defence. I do not want it thought for one minute that I am talking against pensions for the great war veterans, because I agree entirely with the payment of pensions to those who fought in the great war. In the little town of Carp, which has a population of only 700, in a township with a population of only 1,800, we have erected a memorial to the eighteen - who lost their lives in the great war.


Mr. SPEAKER:: I am sorry, but the hon. gentleman's time has expired.


Mr. H. R. FLEMING (Humboldt):: Mr. Speaker, I do not think the hon. gentleman who has just taken his seat (Mr. Hyndman) has been very fair to the farmers of western Canada. Surely the farmers of western Canada were not responsible for the grasshoppers; surely they could not help the rust or the drought, and many other disadvantages from which they suffered.
The budget, sir, presented as it has been to the house, with all proper dignity and due regard to its importance, offers an opportunity to every member of this parliament to register on behalf of the Canadian people his endorsation or otherwise of the soundness of its principles, which are calculated to lift the people of this country out of such a financial depression as has heretofore not been known in its history. It is one period when parliamentary discussion transcends the plans of party considerations and moves into the higher realm of national duty.
With this necessary preface to my discussion of the budget, I am glad to make this my first contribution to debate in the House of Commons. I should be lacking in my duty to my constituents did I not rise at this time and give expression to the sadness and sorrow which I know is theirs in the passing of His Gracious Majesty, the late King George the Fifth. The citizens of the constituency of Humboldt take second place to none in their unswerving loyalty to Canadian institutions. Racial differences have never disturbed the serenity of its public life. The diversity in the complexion of its representatives for the past thirty years is surely evidence of a breadth of view and a tolerance that could be emulated by other sections of this dominion. In the late Doctor Neeley, whose eloquence rang through this chamber on many a momentous question, Humboldt sent you a man thoroughly representative of the best in Canadian citizenship. When Union government was formed and the exacting problems of the war and reconstruction called for men with experience along these lines, Humboldt sent you the late Colonel Lang whose war record was of the highest; when peace was restored and domestic issues assumed the ascendant, and when a wave of progressivism or advanced liberalism swept over the prairies, we sent you C. Wallace Stewart, who made a splendid contribution to the problems of that day. In 1925 Humboldt sought out and obtained in Mr. Albert Frederick Totzke the man with the necessary business experience to cope sanely with the problems not only of the depression period but of the wildly speculative days that preceded it. It is therefore with diffidence and some apprehension that I approach the task which Humboldt expects of me, namely to carry on the torch laid down by my predecessors, and emulate, so far as in me lies, their high ideals of service to my constituency and my country.
In these new and yet strange surroundings I find one steadying and directing force around which seems to revolve all the activities of this house, and which has impressed me most profoundly. It is the authority which is vested in your office, Mr. Speaker, and which makes for order and decorum in our deliberations. That you were the choice of the house to assume this great responsibility is your guarantee that your authority will be respected, and in expressing my satisfaction that the execution of this authority has been placed in such able hands, I pledge you, on my own behalf, my fullest cooperation in your efforts to discharge your duties in a fair and impartial manner.
The Budget-Mr. Fleming

To those, Mr. Speaker, who sat in the last parliament and in the one preceding it, and who were returned to the present one, you have seen demonstrated in the last fifteen years the boon of democracy and the efficacy of democratic institutions. You have seen the policies which you advocated accepted, and whether you are a Liberal or a Conservative, you have seen them rejected in turn by your constituents, who in all matters that pertain to the administration of our common affairs are the court of final appeal. With that as a safety valve, the system of party government has long since been accepted as the best medium through which to conduct public affairs. The great majority, Mr. Speaker, of the electors of Humboldt constituency apparently decided that the administration of their affairs and of this dominion at the present time should be entrusted to the party of lower tariffs, and that the government should be led by the man who has the Liberal conception of Canadian nationality and who at the same time is prepared to place her international negotiations upon a higher plane than that of commercial bargaining. To recognize that we have such a man in the hon. Minister of Finance (Mr. Dunning) and to pay him the tribute that is his due, cannot be interpreted therefore as narrow partisanship. In his budget speech he says:
Canada cannot give everything to-day and bargain to-morrow, but Canada can, and this government does, give to-day to empire countries, such concessions as will, I am sure, be accepted in the spirit in which the British preference was conceived. In this spirit this government, since coming into office, has seen to it that unnecesary impediments to interempire trade have been removed, that vexatious restrictions have been lessened and that arbitrary regulations have been altered or abolished. It lias interested itself in the increase of interempire trade both by imports from the empire as well as exports to the empire; and under to-day's resolutions it proposes easier access to this country for certain empire commodities. The proposed reductions in the British preferential tariff are in no sense elements in a bargain. Concessions they are, both to Canadian consumers and to British producers, but concessions made in the firm belief that only from mutually advantageous exchange of commodities can come that common benefit in which should lie both the origin and the objective of intraempire trade arrangements. Canada knows full well that Great Britain, when the day of conference comes, will not be unmindful or forgetful of Canada's past record in the matter of preferential treatment in this market for British products-a record crystallized to-day in the fact that close upon seven hundred items in Canada's tariff schedules, practically half the items in the entire list, have against them the word "free" in the British preferential column.
It is said that one of the secrets of Napoleon's military success lay in his capacity

to choose competent generals, and the same has often been said of the late Sir Wilfrid Laurier, who, in forming his first government, surrounded himself with a "cabinet of all the talents." The force of this example would not of itself be sufficient to account for our leader's success. There must have lain behind it a native political astuteness; for, lookifng over the men who occupy the treasury benches in the house to-day and comparing them with any group of men who have preceded them in a like position, no one will deny that, in background, in citizenship and in achievement, they hold second place to none. Who could have brought more credit to Canadian statesmanship than the Minister of Justice (Mr. Lapointe) and Senator Dandurand at the world court? Who could have made a more substantial contribution to Canada's economic prosperity than did the Minister of Finance in his famous May day budget of six years ago, and than he did when he presented another May day budget this session; and who in their respective spheres could have any fairer record in public achievement or private accomplishments than the former premier of Saskatchewan, the present Minister of Agriculture (Mr. Gardiner)?
And what has been said of these men can be aptly applied to the others who hold portfolios in this administration. What the Prime Minister did in selecting his lieutenants in the government, he did with equal efficiency on two previous occasions. Whether he will accomplish all he has planned and all that he wishes for this land which he loves and serves so well, will not debar him from a place in history equal to that of any man who has filled this high post. The Prime Minister's is a leadership that is indigenous to the soil from which have sprung the cardinal principles of Liberalism. It is a leadership provocative of initiative in thought and action among his followers, a leadership which welcomes independent views on the many problems which are pressing for practical solution. It is a leadership which recognizes the political principle enunciated by Edmund Burke over a century ago, a leadership which would call out, from the more circumscribed affairs of constituency interest, the best in both thought and judgment that the representative is capable of giving in the broader field of national affairs. It is a leadership that goes further in encouraging us to study not only national problems, but international issues. It is a leadership that expects us to bring to our discussions and our deliberations the most advanced views on every question pertaining to the nation's welfare. The problems which prior to the great war were national

The Budget-Mr. Fleming
only in scope have now become international in their ramifications, and the world situation to-day, complicated and intensified as it is by European involvements of the past few months, calls for the greatest circumspection in legislation from within and in negotiations from without. In international negotiations thus far, the leader of the government has demonstrated that he is alive to the requirements of the times and will proceed in a manner that will enhance the standing of this country abroad and inspire confidence at home.
The Washington treaty was a consummate piece of work-a work of high diplomacy and masterly statesmanship. The depression, born of the economic disintegrations of the late war, has brought us a new problem-the problem of the individual. We have always had problems of state, problems which we felt were matters that could be adjusted by legislation, problems that were therefore impersonal in their application; but it was not until the intensive nationalism which has been developed by the war spirit rendered impotent the most generous impulses of the League of Nations that we came to realize that if a start in the direction of real reconstruction were to be made, we had to get back to fundamentals. We had to get down to the individual and the things which motivate him in his relations with his fellows. State control, without realizing it, had gone too far. The right of the individual to life, liberty and the pursuit of happiness in the highest sense was being more and more disregarded. Society was becoming mechanized to a point Where the freedom of the individual was being restricted and in some cases infringed upon.
In the new era of exaggerated state control, the initiative that went with individual enterprise is gradually disappearing, and with it the dignity that goes with personal responsibility. Men and women aTe to-day saying to all governments: "You have taken over the direction of most of the things which before we had in our own control, or you have done worse in allowing these things to get into the hands of selfish interests. Why should we be further concerned with the things which you call economic interests? You have created a situation by the infringement of our rights. It is your business, therefore, now to do for us what we could otherwise have done for ourselves." It is that state of mind which has given us this new problem. It is that attitude which is swelling the ranks of the unemployed, created in the first instance by the erroneous policy that restriction of trade would lower the cost of
living and increase the purchasing power of the dollar.
In advocating the restoration to the individual of these rights which are his, I am not advancing a new theory. It is philosophy that is as old as Christianity itself. Man, by his veiy nature, by the dignity which his God-given faculties impose, and the responsibilities which his station and purpose in life demand, must be given a dominating place in the scheme of things, and so I hold it is the duty of government to reorientate the relationship which now exists between man and his economic environment, and to establish upon an unassailable basis the sanctity of human rights. Just how that is to be done is the problem of this government and of this parliament, with honest men sent here to help solve the problem. I have no quarrel even if men differ in their ideas as to the treatment of our national ills and in their estimate of the-efficacy of proposed remedies. A solution will be evolved by calm and rational discussion, but. with propagandists and designing theorists I have no patience. Any doctrine that would set lawful authority at defiance is fundamentally wrong; and yet that doctrine has permeated the minds and inflamed the hearts of hundreds of our unemployed and set them trekking across the country from capital to capital in search of relief. The unrest which naturally results from long periods of enforced idleness is not in itself a matter seriously to disturb us, but the rancour which is fomented by an organized band of agitators, directed and financed from communistic centres such as Moscow, is in my judgment, a matter which should give us grave concern.
In the broad Canadian outlook and the optimism for the future which this budget manifests, I am in hearty accord. It is to be hoped, however, that the almost unanimous endorsement of such a sane and sensible policy will breach the void between the producer and the consumer, and will still forever the voice of the sectionalism the man who says that the harmonizing of these two interests defies solution, so long as we have a west, where agrarian interests dominate, and an east where the industrial position must be conserved. Next to the socialistic crank who would destroy our national integrity, the greatest enemy to national harmony is the sectionalist who would divide us on geographical grounds.
With a railway problem that has thrown the whole financial structure out of plumb, a marketing problem that has so far baffled our experts, a trade problem with wide international implications, and an employment problem that most vitally affects the well-

The Budget-Mr. Fleming
being and the happiness of our people, we have before us a task that calls for the greatest patience, the greatest skill and the greatest resourcefulness, a task to the accomplishment of which I feel certain the government is equal, provided the effort is a united one, wholehearted and determined. If I judge aright the temper of the Canadian people to-day, it will brook no delay in the handling of these matters. In this monumental task there is no place for political recrimination, no time even for criticisms of those who tried and failed. I do not think we should harbour any feelings of illwill towards hon. gentlemen opposite, or feelings of resentment because of their failure when in office to overcome our difficulties. I think the great issues should be approached in a spirit of cooperation, forgetful of any acrimony that may have been engendered in the heat of a political campaign. It is in no spirit of pessimism that I make these observations. They are suggested, perhaps, as much by self-interest as by public duty.
The appeal for good will in the solution of our domestic affairs I would extend to the wider one of international negotiations. Experience has proven that you cannot blast your way into the good will of others. Good will in international dealings, like good will in human relations, rests upon mutual confidence and respect. It is something which has to be cultivated and won by an approach obviously prompted by motives that are above suspicion. I am not impracticable, therefore, when I say that cultivation of good will is a step which should precede any efforts to engage in commercial bargaining. One envoy bearing messages of good will to the people of another nation will in my judgment accomplish more than a coterie of trade experts armed with statistics and obviously commissioned to drive the hardest bargain possible. Again let me quote from the budget speech, at page 2390:
As a gesture of good will and an earnest of intention to widen Canadian trade with the Irish Free State, reductions in duty, to be applicable under the British preferential tariff only, are proposed on certain products peculiarly identified with the Irish Free State and requested by that country, namely, stout, prune wine and Irish poplin.
I am not saying that in such dealings we should allow such things just to happen; I am merely indicating what I consider the most logical and diplomatic way to proceed in any efforts that may be made to extend our commercial relations with other nations, when a feeling of distrust already exists. The success already achieved under this policy is evidence,

I think, of its efficacy and of the wisdom of extending it to many other nations, offering opportunities for trade. There is much in the force of example, and I am confident that other nations seeing the advantage of this policy will adopt it also, and from that will follow a breaking of the commercial stalemate and a solution of that world problem, the legacy of the great war.
I might follow those who have preceded me in the field of figures, Mr. Speaker, and proceed to analyze the trend of business from comparative statistics, but on this, my first attempt to speak on the floor of this house, it seemed to me that I should attempt only to offer for your consideration a few saving principles consonant with Liberal philosophy. I leave the statistical task to those who may have a mathematical complex, and whose minds move more naturally in that orbit.
I intend, sir, to vote for the budget. Some say it does not go far enough; others say it goes too far. Some say it is dominated by the big interests; others say it is intended1 to please eastern Canada. But after careful study I think it is the best budget that could have been brought down. I have no hesitation in saying that the people of my constituency trust and always have trusted the Minister of Finance, and that trust has been justified in the reduction in the duty on agricultural implements from 25 per cent to 7-| per cent and the reduction in the intermediate tariff on gasoline from cents to one cent. I have every confidence that after such a fiscal policy has been in operation for a few years the old Tory "whisper of death" will disappear, and from the very furrows of this Canadian land the rural rustics will produce the murmur of life.
Let me close with the words of Lord Morley:
We must not judge human institutions by the white light that blazes in Utopia. Allowances must always be made for the frailty of mankind. Believing, as I do, in the capacity of democracy to rule, I shall record my vote and record it for the Liberal cause for one reason only-history and the present facts tell me that Liberalism is the one hopeful political cry in the world to-day, carrying with it a note which still rings true in the time of many delusions.


Mr. E. G. HANSELL (Macleod):: Mr. Speaker, I suppose it is in order for me to follow the other speakers in this budget debate and offer the congratulations of this group to the Minister of Finance (Mr. Dunning) on his budget speech, and consequently on his budget. However, we have a good deal to say with regard to the feeling of dissatisfaction that seems to ring in our minds and the disappointment that is within our hearts

The Budget-Mr. Hansell
as we read the budget more carefully and recognize its real intent. Before I conclude I desire to present to this house an amendment to the amendment, but before doing so I should like to refer to a certain portion of the budget speech which reveals that after all this is what is known as a so-called sound money budget, and I emphasize the words "so called." I was a little reluctant to refer to this paragraph until the hon. member for Kootenay East (Mr. Stevens) practically built his entire argument upon it; therefore I fancy it will stand repeating. The minister said:
I am not an alarmist. On the contrary, I am confident that common sense and sound economic policies can solve our immediate problems. Moreover I am convinced that this country can bear all the burdens which the war and the depression and past mistakes have saddled upon it, great as they have been. Nevertheless I believe that no country can go on indefinitely with heavily unbalanced budgets and continue to maintain either the confidence of investors or the basis upon which her economy can fuction healthily and vigourously. We have now reached the stage where delay should no longer be tolerated. We must make an immediate approach to a balanced budget and we must be able to show that complete equilibrium can be reached within a reasonable time.
One or two points in particular strike me forcibly in connection with this sound money policy as I find it embodied in this paragraph. The minister says:
... no country can go on indefinitely with heavily unbalanced budgets and continue to maintain either the confidence of investors or the basis upon which her economy can function healthily and vigourously.
The budget aims to maintain the confidence of investors. That may sound well and gefod to those who believe in the so called sound money policies. In this connection I wish to refer to another statement made during the budget speech, appearing at page 2365:
Moreover, if we continue this process of handing out funds without security and without control of any sort, we shall be in danger of undermining dominion credit-
I fancy the Minister of Finance is speaking of financial credit, and we make a distinction.
-which, in my opinion, must be protected at all costs.
The protection of financial credit; maintaining the confidence of investors-it seems that no matter what else we do we must safeguard ourselves against hurting the feelings of those money interests which are centred in, perhaps, shall I say Montreal; shall I say New York; shall I say London, or shall I even go to that centre of international
financial institutions, Basle, Switzerland? Must we continually assume that we are tied hand and foot to these interests? I wonder if we have not got to maintain the confidence and protect at all costs the interests of the great masses of Canadian people who in the last election put their confidence in the present Liberal administration. Yet there seems to be very little said concerning that in the budget. I do find in this paragraph:
I am confident that common sense and sound economic policies can solve our immediate problems.
Sometimes I wonder whether there is anything in the present so-called sound money policies that partakes of common sense. Let me point out one or two things that we find very prevalent to-day. There is a deficiency of purchasing power; is it common sense that we should have a deficiency of purchasing power? We have factories able to produce goods; we have our arable lands able to produce; our great transportation systems run clear across the continent, and we have plenty of coal and oil to run those transportation systems. We have highways almost clear across the continent, and great motor trucks and an abundance of gasoline and oil. Yet somehow it is impossible to transfer the goods from the factories and from the land and put them into the bands of our people. Why should it be impossible? Why is it thought incredible that it should be possible? The only reason it is not done is that there is a deficiency of purchasing power. Is that common sense?
Again, the upholders of the present so-called sound money policies have in some cases advocated the destruction of goods. Perhaps that has not been done to any very large extent in Canada-the hon. member for Red Deer (Mr. Poole) says it has been done in the Okanagan valley. Some years ago we recall that there was a reduction in wheat acreage, and we know that sound money people in other countries have advocated the destruction of goods. Is it common sense to destroy goods while millions of people -need them? Is it common sense to talk of higher prices-and we have heard a great deal about that in this, house during the past little while-when millions of our population have not the wherewithal to buy even at very low prices? Is it common sense to suppose that a nation can borrow itself out of debt? Is it common sense to treat money, which has no particular intrinsic value, as a commodity on a.par with other commodities? Not so many weeks ago the Minister of Finance declared that money is after all a medium of exchange. Money, we all recognize, has become more
The Budget-Mr. Hansell

than a medium of exchange; it has itself become a commodity. Men buy money, men sell it, rent it, exchange it, just the same as they would a farm, a house or a cow. In this connection I refer to one or two statements from the budget speech which to my mind are striking. On page 2364 of Hansard I read this statement:
One price whose falling tendency is watched with considerable enthusiasm in many quarters is the cost of money; in other words, the rate of interest.
On the following page I read:
One factor retarding the full revival of confidence and the healthy functioning of the capital markets-
In another place:
... these provinces have not been able to borrow economically in the .public markets.
In another place:
I trust that the position which the government has taken in these matters and the action which it proposes to take will commend themselves generally to the good judgment of members of this house. The record of Canadian securities in the investment markets of the world has been a most enviable one.
You will notice in these quotations the phrases that I am calling attention to-"cost of money," "capital markets," "borrow in public markets," "investment markets of the world." I declare that it is not common sense to take money, which is supposed to be a medium of exchange, and recognize its function as that of a commodity on a level with that of other commodities. Is it common sense for one body of citizens to be taxed in order to keep from starving another body of citizens? Is it common sense to apply human genius to the task of taking the burden of labour from the backs of mankind and putting it upon the machine, and then to say to men that the only way they can get enough to eat is to work? That is not common sense, yet we find that very principle advanced over and over again in this house. Is it common sense to perpetuate a system which produces fear-fear for the future because of that insecurity which threatens almost everyone in the nation? I was speaking some time ago to a gentleman whose name I shall not mention, a very well known gentleman who at present is engaged in research work for one of our leading grain concerns. He also is a sound money man, not an exponent of social credit. But he said to me: "It is not all greed for more that characterizes the people of this country; it is rather the fear of going broke or of losing that which they already have." That is

characteristic of the life of individuals throughout the length and breadth of this country- fear lest they should not have provision for the future. Fear and insecurity are very real things. Is it common sense to perpetuate a system which produces fear and insecurity?
When we know that the purchasing power of the nation, which comes mainly from the processes of production-that is wages, profits, dividends and so forth-does not equal the price of the goods produced, is it common sense to say that we can buy those goods? Is it common sense to assume that it is impossible to provide a standard of living commensurate with the high productive capacity that characterizes this highly developed industrial civilization? Is it common sense to suppose that these nonsensical opinions which I have enumerated can be obliterated by the operation of what is usually known as the orthodox sound money policy which the Minister of Finance advocates and which is responsible for these evils? At least this much will be admitted, that these things have been in evidence during the reign of the so-called sound money policy. Right here I might digress for a moment and declare that a sound money system, in order to be sound, must work. A money system is not sound unless it can provide for every man, woman and child bearing the nation's name as high a standard of living as it is possible for our productive capacity to give them.
Quite often in the last few weeks we have heard that we on this side of the house, particularly perhaps in this corner, have not offered any great constructive criticism but have been more or less destructive. It seems to me that in the proper form and order of debate those occupying benches on the government side should speak on behalf of the affirmative, in every debate, while those on the opposite side should speak to what might be termed the negative; and I fancy I am correct in assuming that the purpose of the negative in any line of debate is to discover the flaws in that which the affirmative affirms. However, be that as it may, a perusal of Hansard within the last few days will disclose that we have suggested some very sound things that should be taken into consideration. Lest I be accused of not offering anything constructive I am going to offer at this time three fundamental principles which we believe should characterize a sound policy for the distribution of the abundance we are able to produce.
First, then, there should be the setting up of a national credit account; and right here

The Budget-Mr. Hansell
I wish to distinguish between financial credit and real credit. Financial credit is the ability to borrow money; real credit is the ability to deliver goods and services whenever and wherever required. There should be the setting up of a national credit account as the first step. The second principle is the principle of the just price-a just price that would give a just wage and a just profit and a just dividend to those who work and produce, a just price that would not exploit the consumer and yet would not depreciate the standard of living of producers. The third principle is the payment of a dividend to enable a nation of shoppers to buy their own goods. I am not going into a detailed discussion of these principles, but I maintain that this is absolutely possible.
It has been said that perhaps we in this corner are advocating something new. I do not wish to labour this point, but there are other countries that are trying something new and they seem to be solving some of their problems. However, in this connection I wish to read a brief excerpt from that great philosopher, poet and legalist, Goethe. He says:
If anyone advance anything new, which contradicts, perhaps threatens to overturn, the creed which we for years respected and have handed down to others, all passions are raised against him, and every effort is made to crush him. People resist with all their might: they act as if they had never heard nor could comprehend: they speak of the view with contempt as if it were not worth the trouble or even as much as an investigation or a regard; and thus a new truth may wait a long time before it can make its way.
I said that other nations were proposing something new, and other nations seem to be forging ahead. I wish to read from a little pamphlet by the Very Reverend Hewlet Johnson, a great mind-scientist, economist and thinker. "Why poverty in the midst of plenty"? is the title of this little pamphlet. I call the attention of the house to it simply because he refers to another country' which was not afraid to try new things-Japan. He says:
Japan enters the competitive field and leaves her rivals standing still. England outclassed. Germany outclassed. The United States outclassed. How in the world is it done? . . . Some say sweated labour is the secret, and advocate a drastic cut in wages. Japan's prosperity rests, they maintain, on the worker's misery. Let us examine the charge. I paid a visit to Japan two years ago and learned much. I went fiercely critical, quick to detect the social rottenness at home. Japan's proletariat, they told me, were underpaid, underfed, underhoused and overworked. I sought for the signs of it.
I found none. Such things may exist. They hide them very well away. I passed through
Kobe and Yokohama. On foot I examined Kioto and Tokio, penetrating the poorer quarters of those cities, and contrasted them with the wealthier suburbs of the same.
I saw, indeed, such sights as sadden English eyes in London or Manchester; but the contrast between wealth and poverty is less marked in Japan than in England, and the people who thronged the streets were not notably oppressed or overstrained; nor were the houses I scrutinized notable for squalor. . . . We can at least deny that Japanese pricecutting rates in any peculiar way on the worker's misery. We can deny that it rests on low wages at all. For wages, in any event can hardly account for so wide a difference in price when wage-costs form so small an item in total charges. I would ask those who run a modern rayon factory if their wage-costs amount to more than half of one per cent? Real wages, in short, are not phenomenally low in Japan, and certainly no wage adjustment could appreciably affect the disparity between Japan's price and ours. Japan's secret lies elsewhere. It lies in realms of money creation, and not in realm of factory manipulation, Japan employs her social credit, and therein alone lies the secret of her dominance. An assertion not, perhaps, so wild as it sounds. Apart from the fact that no other adequate explanations ever advance to the field, let alone hold it, there is the solid fact of Japan's keen interest for many years in the social credit movement; in that movement whereby a nation creates its own money against the backing of its own real goods, and puts no toll of interest upon it. The movement, which, by a proper national accountancy, estimates the real national appreciation of value, and on the strength of it grants a national discount, with a consequent price reduction.
This point is interesting:
Mr. Osaki, sometime Minister of Justice in Japan, represented Japan at the Disarmament Conference at Geneva in 1931. Starting on his mission in July, 1931, via America, he took with him a copy of "The Nationalisation of Credit," purposing to lecture on the subject in Europe and America.
Let me add to this.
Some years ago two Japanese gentlemen called at a London office and asked a friend of mine for information. They were economic investigators bound for Geneva to examine European economic systems. My friend presented them with copies of Major Douglas' Social Credit to read by the way.
After five days they returned. They had not been to Geneva. They had no reason to go there now. "All we sought we have found here," they said, pointing to the Douglas book.
If other nations such as Japan are trying something new, and succeeding comparatively well, why should it be thought incredible that something new might be suggested in this country that would bring us out of our economic bondage and slavery? I am not going to quote the finance minister's paragraph again because time will not permit, but I suggest that the minister all through his budget speech evidenced that he was in agreement with what is commonly known as the sound money policy. I believe I am
The Budget-Mr. Hansell

correct when I state that this country expected some very drastic monetary reform to cotme out of this present session. I fail to see it coming; at least, if I am to judge by the speech of the Minister of Finance on the budget, I fail to see it there. If the Minister of Finance had worded this paragraph a little differently and had made another budget commensurate with the different wording, I wonder how it would have sounded? I drafted a paragraph that I would like to have substituted for the one in the budget speech which I have quoted, and it reads something like this-of course this is my own wording, not that of the Minister of Finance. Suppose that paragraph had read this way:
"I am not an alarmist in the generally accepted usage of the term. Yet I wish to sound an alarm. I wish to say to this parliament assembled that unless we take immediate steps to take absolute control of currency, which must -be a medium of exchange only, and the control of our real credit, which is the nation's ability to deliver goods and services wherever and whenever required; if, I say, we do not take immediate steps to do this we will never be rescued from the quicksands of financial debt and death in which we are rapidly sinking. Moreover, I am convinced that by the application of sound common sense to the problem -of distribution of our very high productive capacity we will not betray the confidence which the people of Canada have been pleased to place in us. Let us stand together in our endeavour for a new economic order which will give to the eleven millions of people constituting this nation economic security, liberation from the grim monster of fear for the future, and bring to them that high standard of living and resulting happiness that we believe our wealth of production is able to give, and which they so much deserve, and which we believe can be done within a reasonable length of time."
If his whole speech had been commensurate with something like that, Mr. Speaker, I claim that the Minister of Finance would have gone down in history as one of the greatest emancipationists of our modern age of economic slavery.
I wish now to present an amendment to the amendment. I do so, Mr. Speaker, because we do not feel we can vote for the amendment as it now reads, owing to the fact that we do not believe in, and our policy is not that of, a socialistic state. I therefore move, seconded by the hon. member for Red Deer (Mr. Poole):
That all the words in the amendment following the word "country" be struck out, and the following substituted therefor:

"This house also regrets that no steps have been taken to provide
(1)	That every increase in the real wealth of the nation will be accompanied by an increase in the possible effective demand for the goods its citizens require;
(2)	That the distribution to individuals of claims to goods and services must be progressively less and less dependent on employment;
(3)	That the regulation of the issue and recall of money must automatically be adjusted to the requirements of the economic system. Financial policy must be made to serve industrial and national requirements, and thus remove all hindrances to the efficient production and distribution of goods and services so that all the people of this country may be enabled to enjoy the benefits to which their productive capacity entitles them."
I submit this amendment, Mr. Speaker, for the consideration of the house.


Mr. R. J. DEACHMAN (Huron North):: Mr. Speaker, I rise to make a few observations on the comments made by those in this house whom I may designate as the members of the dissenting minority. My remarks will be brief, partly because some of those comments answer themselves, and partly because a great many of the speeches contradict those which have been previously made.
I took particular interest in the speech which was made about a week ago by my hon. friend the leader of the social credit party, the member for Lethbridge (Mr. Blackmore). I confess that I rather like to hear him. There is a freshness and vivacity about his presentation, and I know that he actually believes what he is saying. The lance of his enthusiasm has not yet been dulled against the bleak intransigency of things, and I believe that when he sat down he felt that the house as a unit should rise and try to carry into effect the things he had suggested. My hon. friend is very keen on quotations. He made many in that speech, some of them were indeed excellent. I can agree myself with a great many, but there was one which, I take it, touched the crux of the whole question. It was an extract from an address by Stuart Chase, contained in these words:
Again it is agreed by all competent economists that purchasing power has not kept step with invention. Purchasing power is the final arbiter of all jobs under the prevailing financial system. Unless prices fall as fast as labour saving devices increase, the saved labourer must whistle for employment. With a static price level, he will have to keep on whistling. Prices have not been declining rapidly in recent years.
I want the house to note particularly one sentence in that paragraph as follows:
Unless prices fall as fast as labour saving devices increase, the saved labourer must whistle for employment.

The Budget-Mr. Deachman
Beyond question that statement is true; the enigma of our economic situation to-day is that prices do not fall with the advent of labour saving devices, and therefore men are thrown out of employment. While I commend my hon. friend for the very complete statement he has made in those few sentences, may I also be permitted to point out that unfortunately he does not agree with his own conclusion. The hon. member for Lethbridge does not want to adopt a policy which will bring about a decrease in price and thus provide increased purchasing power.
In his recent speech he argued in favour of the production of sugar from beets. Let me point out to the house that to-day sugar can be laid down in the port of Montreal on a free trade basis at $1.70 per hundred pounds. It cannot be produced profitably from beets in the Dominion of Canada at the present time for $3.70 per hundred pounds, and I doubt whether it can be produced profitably for $4 per hundred pounds. There are 8,000,000 hundredweights required. The hon. member for Lethbridge comes from a centre which produces beets and he is anxious to have sugar produced in Canada, yet if bis policy were put into effect the added cost of the production of sugar consumed by the Canadian people would amount to somewhere between $16,000,000 and $20,000,000 over and above what they would be asked to pay upon a free trade basis. Why is that? Because the cost of producing sugar from beets is very high, while the cost of producing sugar from cane is very low. The sun in the southern countries works for the production of sugar more efficiently than it does in the northern countries. We are asked to bonus the manufacture of sugar, to fight against the sun and to provide subsidies or bonuses against that power. I claim that in the long run the sun will win and bonuses will be beaten.
My hon. friend is ready to support such a measure, but what position does he take in connection with other measures? Where does he stand when the manufacturer of agricultural implements comes along and asks for a tariff of twenty-five per cent? Where does he stand when the textile manufacturer rushes to the Minister of Finance (Mr. Dunning) and asks for a higher tariff? Where does he stand when the iron and steel men ask for aid from the public? Where does he stand upon these issues which are vital to the prosperity of the country? There can be only one place for him, and that is on the side of the high protectionist manufacturer. He has backed measures which would increase the cost of the production of sugar; he is in favour of a measure of protection which would be equal
to sixty or seventy per cent of the value of the product.
My hon. friends on the social credit side of the house have gone so far as to return to their own constituents and suggest that this house had been paralyzed, that it had listened with rapt attention to the statements they had to make. I suggest that here is one thing which my hon. friends might answer, and I am quite sure that we would be very glad to hear from them. I should like to know if this is what they define as a "just price." Is this one of the things they would put into force with their social dividends? I wonder how they feel about these important questions?
My hon. friend suggested in his speech of a week ago that in the United States the total value of all production in 1934 was 60 billion dollars, but that the total paid out in that production was only 40 billion dollars. In some strange way 20 billion dollars' worth had disappeared. There was an explanation for 5 billion dollars' worth of this in the payment of life insurance, but there was no explanation for the disappearance of the 15 billion dollars' worth of purchasing power.
I have seen magicians stand upon a platform and pull rabbits out of a hat, hand theim to a. boy and have them disappear the next minute, but I have never seen a rabbit cause a man to disappear from a platform. Here we have a member of the House of Commons who has been able to accomplish the impossible. By a mere twist of the fingers, 16 billion dollars' worth of production disappears. I challenge my hon. friend and the members of the social credit party in this house to tell us where that 15 billion dollars' worth of production went.
They say that perhaps this production is lying on the shelves of the merchants, but I would never accuse capitalism of producing 15 billion dollare' worth of goods which it could not sell. Has it disappeared into the pockets of the bankers? I do not think our banking friends are so smooth as to get away with that much without losing their equilibrium. I do not believe that has happened, and I do not know where this amount has gone. My hon. friends say that it has disappeared, and I ask them to search for it and find out where it is.
I have here a book. I did not buy it; it was sent to me by a devotee of social credit, probably in the hope that I might be a brand saved from the burning. Let us assume that this book is worth one dollar. I submit that when the merchant sells this book for one dollar, every ipart of that dollar goes to someone engaged in the long chain of production,
The Budget-Mr. Deachman

from the time the tree stood in the forest right to the time the book passed over the counter. If anything disappeared, where did it go to? Production constitutes the basis of consumption. When the money was paid out for the production of that book there was constituted an equivalent volume df consumption through the money paid out in the cost of production. There is only one thing which could possibly arise, and I should be very glad indeed to hear my hon. friends deal with this matter. There is a possibility that in some part of the process some man might have got too much while others got too little. It is following largely the teaching of Major Douglas when I say that perhaps someone got too much-I	doubt very
much whether any of it disappeared.
I put it to the house in another way. Despite everything that has been said, the factors of production are still land, labour and capital. Part of the price of that book went back to the land owner, part of it went to labour and part to capital. But I search in vain for any part that has disappeared. The enigma of the social credit system is the disappearance of the value of production which they cannot trace and which they have made no attempt to trace.
I come now to another point, and perhaps I could not do better than to take the book to prove it. This book tells us that we ought to have social dividends. All right, we should like to have them. Here are the words:
The dividend which is declared over the equivalent period represents the division of the difference between actual consumption and actual production.
That is, my hon. friends, in the social credit section of the house, make the claim that production is vastly in excess of consumption; that there is therefore a large surplus, and that this surplus could be distributed. During 1928 and 1929 there probably was a fairly substantial surplus; it went into savings, into investment, into expansion of plant. But if you are going to get a dividend out of the surplus you must first take it from the people who have it, tax it into your government and then distribute it again as a dividend. But I want to point out that there is not always a surplus. I hazard this statement-I think it is capable of proof-that during the last few years consumption exceeded production. Our stocks of goods are disappearing; besides,depreciation is a part of consumption, and as everyone knows, during the past few years the physical plant throughout the dominion of Canada has been running down, because maintenance has not been provided. So, during the last few years total consumption exceeded produc-
tion. What follows from that? I think it is very simply and clearly stated if we put it in this way: In good years you might conceivably pay, let us call it for the moment the social credit dividend; let us assume that that was paid to the people of Canada; but what would 'happen in bad years? During the last few years the process would have been reversed and the Canadian people would have been obliged to pay a social credit dividend to the government. This would please my hon. friend the Minister of Finance; he would like it if he could get it. But this is the process. See where it would lead us. My hon. friends of the social credit party are very keen for a national bank. They are anxious, and have been anxious ever since they came into this house, to have a nationalized central bank. The object of the central bank, I take it, is to control the issue of credit. If we restricted it to some extent during periods of prosperity, in order to take the top off the boom, we would let it out in a period of depression so that we might level up economic curves and reduce the intensity of the boom and also the depth of depression. But my friends of the social credit group will pay their dividend in a period of boom or good years, and the people of Canada will have to pay it back in periods of depression. The result is that social credit will be operative in direct opposition to the ideas and conceptions of those who are agitating for a central bank.


Mr. POOLE:: May I ask my hon. friend a question?


Robert John Deachman: I would answer every question that is asked, and more, but my time is limited. One section of the program of the social credit party is working in a direction exactly opposite to the other. They propose to steer in reverse northeast by southwest without knowing the port of departure or the destination. Derelicts of that kind ought to be taken out of the open highways of the world.
There is one other point to which I wish to direct attention. They propose what has been called a cultural inheritance. That is, they say that we are the inheritors of all that has passed; all these things that we have are the product of the past, and therefore we ought to be able to pay a dividend cut of them. But I submit that we are getting our dividends right now. Take, for instance, the business of printing. Does any man imagine that in the days before the power printing press the standard of living among printers was as high as it is to-day? Could one have had three or four hundred years ago, though one possessed the wealth

The Budget-Mr. Deachman
of the world, a copy of the Citizen or the Journal on one's breakfast table? Could we have had an industry like those two publishing houses in the city of Ottawa three or four hundred years ago? No. We have now .the cultural inheritance that has come to us through the spread of the art of printing during the past century.


An hon. MEMBER:: Who is "we"?


Robert John Deachman: It is paid to us. That is true of all the great inventions which we have. We are enjoying the dividends now, and my social credit friends are asking that another dividend shall be paid on what we are getting and spending every day? What basis is there for such claim? It is sheer mist, pure will-o'-the-wisp and nothing else.
I have touched lightly upon one or two of the problems in relation to social credit. It would be interesting if we had in this house a free discussion of the question, because I think there is nothing quite so easy as to puncture some of these bubbles. Nevei

theless I am very glad that my friends of the social credit party are in this house, because after all they hold these views; one of the things which is our cultural inheritance is that we permit freedom of discussion, and the mere fact that we do not agree with the views of those who are opposed to us is no reason why they should not be represented in the House of Commons to the full extent that these views are held in the country.
Having touched upon the social credit program, let me turn to another phase of the discussion. I refer to the argument which was advanced by my hon. friend from Greenwood (Mr. Massey), the Adonis of House of Commons. He told us a few days ago about the agricultural implement industry, and he performed at least one service for which I am very grateful to him and for which I shall always hold him in regard. We have heard for over a generation that the great feature of protection was that it enabled us to enlarge our market and to adopt mass methods of production, and therefore we would be able to lower prices. But, speaking from his place in the house, the hon. member for Greenwood said this the other day.
In 1935 one company in the United States had a turn-over in that one year greater than the turn-over of all Canadian companies in nine years.
There we have a perfect illustration of mass production to the nth power. Were they able to produce any cheaper than we were in Canada? Not according to my hon. friend
the member for Greenwood, because in the next sentence or two he says:
The Saskatechewan prices are only 94-54 of the Montana prices. Taking prices at Sweet Grass. Montana, and Coutts, Alberta, the Canadian prices are 98-96 per cent of the Montana prices. Taking Pemibina, North Dakota, and Emerson, Manitoba, the Canadian prices are 99-73 of the American prices.
Apparently the nearer they get to the border the closer they get to the American price. Perhaps in the Peace River they are away below American prices. My hon. friend from Greenwood has smashed the time-honoured argument that mass production is the important factor, because he has told us that this little company with which he was formerly associated is able to compete against the great American companies which have a turn-over in one year nine times greater than all the companies of Canada. And what else do we know about the matter? That the Massey Harris company has a plant in the United States, and it is standing up against the giants on the other side; but when it comes to do business in the Dominion of Canada it wants protection. Those who speak for it tell us that the reason is not to increase their own profits. Oh, no, the sole thing they are worried about, when it comes to that, is the Canadian worker. I want to show how the Canadian worker is getting along with the tariff. My hon. friend pointed out that the men working in his factory were supposed to consume, per family, $400 worth of food in a year. In an average family of four that would be $100 each. I do not know exactly where they got the food, because that would make a total of $1,100,000,000 of food consumed. I assume that the hon. gentleman referred to Canadian food, and the net production of Canadian farms was less than $600,000,000, so we must have provided a tremendous market for food products in Canada. According to my hon. friend, however, that was the total consumption. But I looked up the wages paid by the Massey-Harris Company during the past few years, and I found that in 1934 their average wage amounted to S837. Follow me for a moment while I make this calculation. We have $400 for food, and let us assume that the family spent $360. or $30 a month, for rent, which would not be too much in a city like Toronto. That makes a total of $760, so after paying for food and rent-I am only quoting the authority of my hon. friend from Greenwood; I may be wrong-they had left only $77 out of which to pay for fuel, water, light, transportation, holidays, amusement, sickness, charity, and every four years a small contribution to the Conservative party, the party of the full dinner pail and

The Budget-Mr. Deachman
ample protection, with perhaps a little contribution for Mr. Sage.
But enough of that. This is the situation: The price of agricultural implements now is sixty-one per cent above the 1913 price. As far as I know, the spread between the 1913 level and the 1936 level is greater in agricultural implements than in any other commodity in Canada. I have before me an index of the Searle Grain Company, Limited, of Winnipeg, a very carefully worked out index, which takes as a basis the average for 1913-14, so the conclusions are a little different from my own. The 1913-14 average is given as 100, and in comparison the present day averages are as follows:
Groceries	 Ill
Clothing	 115
Household equipment	 145
Farm equipment, other than agricultural implements	 126
Farm machinery	 155
Taxes and miscellaneous items	 155
That gives an average index figure of 126. As I understand it, Mr. Speaker, the Liberal party is endeavouring to solve a definite problem, and we want the help of everyone in this house together with any suggestions they may see fit to make. In the past the agricultural implement industry has been prosperous when the Liberals have been in power, call it accident or call it what you will. It was prosperous when the Liberals left office in 1930, but to-day the agricultural implement industry in the Dominion of Canada is paralyzed. Why? There is only one answer: Because the purchasing power of the farmer in Canada has been destroyed-I come back to a suggestion emanating from my hon. friends of the social credit party-and when the purchasing power of the farmer is destroyed the agricultural implement industry perishes. So we have an investigation taking place today. That is not a persecution of the agricultural implement industry, for every true Liberal who sits here to-day would like to see that industry prosper as it did in the old days of the Liberal administration. But we say to the manufacturers of agricultural implements that if the present extreme tariff system, which we are now trying to lower, continues in Canada it can have only one effect. Capital and labour will be driven out of the production of agricultural implements and into the production of other things, and so the agricultural implement industry will be killed not -by the removal of protection but because this country has tolerated for too long a fiscal policy which has meant the ruin of agriculture, paralyzed trade, increased taxation and finally wiped out the industries which should 
provide the machinery used by the farmers in their business.
That is the situation. I am sorry my hon. friend from Greenwood is not in the house. If he were I would appeal to him, with the inherited knowledge that he must have of the past ninety years of this industry. -When was it prosperous. Only during periods of relatively low tariffs, and it can never be prosperous if the high tariff is pressed down upon the Canadian people until their purchasing power is destroyed and taxes are forced out of them as they have been by this process during the last few years.
Now I come to another utterance by one of the distinguished dissenters. I refer, of course, to my right hon. friend the leader of the opposition (Mr. Bennett). It is thirty-one years since I started to listen to the right hon. gentleman, and I have always considered it a pleasure to hear him speak. I am frank to say that I have written about him for almost the same length of time, and never in all that period have I said an unkind word about him personally. I have said many things about the views which he has expressed, however, and if my health holds out I hope to say a good many more if he does not change his views. My right hon. friend has many engaging qualities. I like the cosmic sweep of his mind. I like his great capacity for infinite detail, but above all I like that note of final and ultimate authority with which he says, "This and this is so. Believe it, or you will be destroyed." Only the other day he stated in this house that he had made a very careful examination in regard to the sales tax, and what was his conclusion? He concluded this, and nothing else: That if the sales tax was raised another two per cent it would mean the destruction of the capitalist system. Think of that situation, Mr. Speaker. Karl Marx and. all the great host of socialists, right down to Stalin, worked and Laboured to destroy capitalism, and now, just in a breath, according to my right hon. friend, it has been destroyed by a few brief words delivered by the Minister of Finance (Mr. Dunning).
Well, my right hon. friend should know something about the sales tax. He was present when it stood at one per cent, and within a few yearn he had raised it to six per cent. He would not go above that; he stopped there. That was the brink- of the precipice, but he was by no means so careful in regard to the tariff. Here are some of the items on which he raised the tariff. On blankets the tariff was raised from 20-45 per cent in 1930 to 44-82 per cent in 1934. I am including

The Budget-Mr. Deachman
in these figures, of course, the landing charges, sales tax and all the other things which operate to increase the price. Think of that, Mr. Speaker. Two years ago there was in Ontario a frost so keen that it killed every apple tree in the orchard of the old farm back home in Huron county, and at the same time the right hon. gentleman was raising the tariff on blankets until it was more than double the rate of previous years. On art silk the tariff was raised from 434 per cent to 86J per cent; on wool overcoats from 264 per cent to 52i per cent; on silk and wool hosiery from 26J per cent to 704 per cent. These are only samples, and remember these are tariffs and imposts levied upon goods entering this country from Great Britain. Yet my right hon. friend was filled with the idea that we might be ruined by* a paltry eight per cent sales tax. These are tariff heights indeed! Piling Pelion on Ossa, Everest on Aconcagua, and when he had reached these heights he gazed upward and wept because there were no further tariff heights to scale.
Then we have the dear old balance of trade. No, there is another one of which I would like to speak. There is the question of magazines. I want to quote the words of my right hon. friend on that, because they are very interesting, a wonderful sentence:
Is it just or fair that the Canadian people, as a whole, should be called upon to pay half the amount of the tax that is received from one who buys this paper outside Canada rather than in it?
That is a bit confused, I am not sure what that means. Here it is:
Is it just and right and fair that on a certain type of paper brought into the dominion for a certain specific purpose there should be a rebate of fifty per cent of the duty paid, and that we should ask the taxpayers of Canada to pay the balance? Is that right?
Now, when there is a reduction in duty the consumer does not pay it, he gets paid. That is what happens in this case; there was a reduction in the duty levied upon paper, and the Canadian consumer will get his dividend- I was going to say national dividend-out of the higher quality of the magazines produced.
What	is	the brief	history of this industry? Simply this, that some years ago the magazine publishers of this country wanted	a	tariff, but	later	Mr. Fielding,instead	of	putting a	tariff	on magazines,because	he	protested against	the idea of a
tariff against thought, gave a drawback on the duties levied upon paper. In 1931, after duties had been imposed upon magazines or upon the advertising content, the Publishers' Association of Canada and the Agricultural
Press Association of Canada wrote to the leader of the government of that day and said:
The money paid by Canadian publishers in higher costs of materials and equipment should be available to them for use in increasing the effectiveness and number of their editorial pages. Canadian readers compare Canadian periodicals with all others and it is only by the production of publications of superior quality Canadian publishers can win and hold the interest of the Canadian people. If our publishers are compelled to surrender their revenues for unwarranted costs of materials and equipment they are prevented from making their editorial pages as good as foreign competition demands.
What does that mean? The publishers wanted the opportunity to develop in Canada a kind and style of publication which in appearance and editorial content would be equal to the best American papers, and what they asked of the government of that day was that paper, ink, engravings, art work, machinery and supplies used in production should have the duties reduced to a lower basis. They said:
Given an even chance in cost of production Canadian publishers are able and willing to meet all competitors.


Mr. STEWART:: Might I ask the hon.
gentleman from what he is reading?


Robert John Deachman: I am reading from a
letter sent by the Magazine Publishers' Association of Canada and the Agricultural Press Association of Canada to the Right Hon. R. B. Bennett, Prime Minister and Minister of Finance, dated January 16, 1931, and I shall be very glad to let my hon. friend have the full text. It continues:
If, in the national interest, it is considered advisable to lessen the forces of foreign literature in Canada, a growing benefit, over a period of years, will accrue to Canadian publishers.
And then this underlined sentence:
But the solution of their pressing difficulties in the production of publications which will compare with all others lies in lower editorial and mechanical costs.
That is what they asked. They asked for what is given to other manufacturers, a chance to reduce the cost of their product so that they could compete fairly with American publications. They did not from that date until this ask for a duty upon magazines. Now that the Minister of Finance has done something for the magazine industry I predict that it will go forward with increasing prosperity just as it did in the days of Mr. Fielding. I have under my hand an item which shows what they did accomplish in that time. When the drawback came into effect eight leading maga-
The Budget-Mr. Deachman

zines were using 1,912 tons of paper per annum. At the time the drawback was cancelled in 1930 these publications required 5,283 tons per annum, an increase of 3,371 tons, indicating greater progress in eighteen months than had1 taken place in the previous ten years. I predict greater progress in the magazine publishing business in Canada in the next two years than has taken place in the last five under high protection.
Now a word about this ever-recurring question of the balance of trade. My right hon. friend the leader of the opposition, speaking in regard to it the other day, stated that too much emphasis had been given to it in the past. To-day I attack this general fallacy of the balance of trade on the ground that as far as Canada is concerned an increase in tariff is not conducive to a favourable balance of trade. Personally I care little whether the balance of trade is favourable or unfavourable. There have been times when we have been prosperous with an unfavourable balance; there are other nations which have been prosperous for generations with an unfavourable balance; also the reverse has been true. But I say that a high tariff policy is not conducive to a favourable balance of trade, and I prove it from Canadian history. Between 1878 and 1896 there were only five years in which there was a favourable trade balance; that is the time when protection was in flower and was guided by the master hand of Sir John A. Macdonald. During all the years of Canadian history, leaving out the war years and the immediate post-war years, the high favourable balances have been in times of low tariff and the unfavourable balances in times of high tariff. And may I point out-I am sorry that the leader of the opposition is not in his place, for I know he would agree- that in the years 1912,	1913, 1914, the
adverse trade balance of Canada was larger in proportion to total trade than ever before, especially the balance with the United States, and what was happening then? My right hon. friend was in the house and he had not one word to say because at that time the Tory flag flew at the masthead and all was right with the world.
Now what is the problem before us? ? It is simply this: Are we to go forward under low tariffs, giving a chance for expansion and development, or go back to stagnation under high tariffs? I have no hesitancy as to which course we are going to follow. If you examine the history of all the depressions of the past what do you find? The nations moved out of these depressions when tariffs were lowered and trade expanded, or when there came into

the situation some new factor which produced exactly the same result as an expansion of trade. In England one of the greatest world depressions followed the Napoleonic wars. Great Britain was not clear of that until 1846, the time of the repeal of the corn laws, but in the next ten years British trade made more progress than from the days of the invasion by Caesar until then. Why? Not only because of free trade but because about that time there came the industrial expansion which meant the development of England. Take the United States following the civil war; what happened? They passed through a depression; then came the opening of the west and the expansion by that means of the free trade area, and the United States moved forward into a great period of expansion because of the same basic cause; the free trade area of the country was expanded. Coming to our own country in 1896 what had we? Sir Wilfrid Laurier expanded trade by the adoption of the British preference; Sir Clifford Sifton helped in opening up the west and thus expanding the free trade area in Canada, and we entered upon a great period of development. That is the history-every time the world has moved out of depression it has been because trade has expanded and greater freedom has come to the people.
But what do we hear to-day? Prom various corners of this house, from all over the dominion we have other suggestions; let us try this; let us try that; let us have a little more currency; let us have a social dividend- whatever that means-let us have a just price; let us have some of the things which Premier Aberhart is promising to the people of Alberta anything except the thing which would make use free. Always and forever the human race seeks distant Pharpars and Abanas and will not take the remedy that lies at home. Under the government we have to-day we look forward to a movement in the right direction. We have made a start and are going forward. It is forward with Liberalism, freedom and progress, or backward to stagnation with the opposing forces.


Mrs. MARTHA LOUISE BLACK (Yukon):: Mr. Speaker, it has been my privilege to listen to the budgets brought down from the time of the Right Hon. Mr. Fielding. I heard him bring his budgets down; he was followed by the Hon. Mr. Robb, the Hon. Mr. Dunning, the Right Hon. R. B. Bennett, the Hon. Mr. Rhodes and again Mr. Dunning. I have yet to hear one budget that has carried with it the unanimous support and approval of all parties; in very commonplace language, "someone's ox had always to be gored."

The Budget-Mrs. Black (Yukon)
During the early part of this session we had the treaty between Canada and the United States. I did not want to vote against that treaty because I knew it was going to be of help to the Yukon. In the Yukon we import everything we use-our clothes, our food, our machinery. But in thinking the matter over, I felt conscientiously that I had to vote against that treaty because it affected the whole of Canada, and to explain my reason for voting against the treaty I must go back to the reciprocity agreement of 1911. During that campaign, when my husband was working very hard for the election of the hon. gentleman to my left (Mr. Stevens), I received from my father in the United States a letter written to him by an uncle of mine who at that time was president of one of the largest manufacturing concerns in that country. In that letter this uncle said, "There is an election campaign going on in Canada. It is for a reciprocity treaty, and we have stopped our building in Montreal. We are not, going ahead in Toronto. If the treaty goes through, all our manufacturing will be done in the United States." Naturally, therefore, I felt that this treaty would hurt the factories, the manufacturers of Canada, and that is the reason I voted against it. As I have said, the Yukon imports everything, and it exports what the world needs-gold, silver and a small quantity of other metals. I was pleased as a Yukoner when the treaty went through; as a Canadian I am still wondering.
During this session I have listened to speakers on all sides with reference to the railway question. First one speaker brings forward everything he can possibly think of against the Canadian National Railways. The Canadian National is the heaviest drain on the national resources, and the speaker will inveigh against carrying it on. A part of the press inveighs against the expenditures of the Canadian National system. On the other hand, speakers rise in the house and inveigh against the Canadian Pacific Railway, and a part of the press does the same. The Canadian Pacific is the heaviest taxpayer in Canada to-day. I have no brief for either railway, but at the same time it seems to me that as sensible men and women we should stop this continual sniping, first against one road and then against the other. As sensible people, as we value this country, as we value the future not only of ourselves but of our children and of our grandchildren, we should think of business first and of political sniping afterwards. I for one am sick of it.
I sometimes wonder how many people in this house or in the country would recognize 12739-172
the name of Onderdonk, one of the greatest railway builders Canada lias ever known. In the early nineties I knew that man as inti mately as any family friend; he was very much at home in my father's house in Chicago. I heard him tell tales of romance, hard work and the investment of capital in the building of the Canadian Pacific railway in the west, how those men blasted their way through the fearful mountain ranges. Others will say: But the government gave the Canadian Pacific a kingdom. Well, maybe the government of that day did give something to the Canadian Pacific Railway. But who wanted that kingdom at that time? When the United States bought Alaska, why did not Canada, why did not Great Britain buy it at the time for the paltry sum of $7,200,000? Because no one wanted it; and afterwards we say that we have done this and done that. Let us have some sense.
The Minister of Finance, to bring down a budget that would please everybody, would have to be a magician, a hypnotist and a prestidigitator all in one. I have never yet heard of that man in any country in the world. The sales tax will hit the Yukon quite a bit but I am hoping the treaty will offset that. The Yukon, as I said in very few words a short time ago, suffers some injustices from the federal government. Consider those civil servants who for years paid into the superannuation fund on both salary and living allowance. Some on retiring received from the fund the amounts which they had paid in. Suddenly the government, seemingly for no reason whatever, changed the order; retiring civil servants were told that they would be paid only on their salaries. The money paid into the fund on living allowance was refunded or an order was made that it should be. This was a most unjust, and, to me, an absolutely dishonest ruling. It is just as though one of you gentlemen had paid for life insurance amounting to $5,000 or $10,000. You paid your premiums year in and year out and you died. Your wife and family went to the insurance company to collect the insurance and were told by the officials, "Yes, true; we are sorry. Your husband did pay the premiums but we have decided that we can hardly afford to pay you the $5,000 or $10,000, so we will give you half." I have been told that the government should never have made this promise. I am not disputing that, but the government did make the promise. When a man retires, too old to take out other insurance, too old perhaps to work, why should he then be cheated in connection with what he has paid in?
As regards the Yukon-and I may say it is about all I know in this world-one heavy

2696	COMMONS
The Budget-Mrs. Black (Yukon)
charge that is made against us is on account of the telegraph line through northern British Columbia. I would suggest that the hon. member for Skeena (Mr. Hanson) try to get the government to put part of that charge on his constituency because it certainly is not fair that the Yukon should be charged with an amount of money which is spent in British Columbia.
Our government in the Yukon consists of a commissioner and council of three members, elected one from the Whitehorse district, one from the Dawson district and one from the Mayo district. I do not believe that in any place in Canada to-day is a more honest effort made by any government in power to spend every dollar to the greatest advantage. Our crying need is always roads, and yet more roads. This year the government in power has seen fit to be more generous to the Yukon, and the mining industry, which is the backbone of our life there, will benefit by that generosity.
In the early days of the Yukon mining was carried on largely by individuals, but in a few years that was changed. Huge grants of land were given to political favourites. One mining recorder walked from Daw'son to The Porks at night and reported to the government at Ottawa that the tract of land over which he had walked in a few hours was not fit for individual mining, and these huge concessions were given to pampered favourites. The Klondike concession, forty miles of the Klondike river from rim to rim, the richest country in the Yukon, was originally given outright. The concession has changed hands from time to time until finally it is now owned by the Yukon Consolidated Gold Corporation Limited. That company has put up hundreds of thousands, nay millions of dollars, but owing to dishonest, corrupt or incompetent managers, it has always been in the red. It has changed its managership within the last year. During the recent campaign, in every small public meeting I held, I did not hesitate to say that the bunk houses furnished by this company for its men were not fit habitations for a well-bred dog. I am told that this company is now putting up, notwithstanding its failures in the past, another two million dollars this year. It is putting this money into new dredges; it is adding to its hydraulic machinery; it is digging new ditches, and there are also to be new camps for its men. I had letters recently saying that some of these bunk houses, the new ones, are well built, with large rooms, but as yet no accommodation for bathing, showers or anything of that sort has been provided for the men. This is not quite fair.

Then, too, our work in that country is practically all seasonal; when the men sign on they sign on for eight hours, ten hours, or even twelve hours a day, and when these men sign on for the summer work for ten or twelve hours a day they must sign a paper saying that they will work for twenty-five cents an hour for any extra hours. That is not just. Someone may say: But why do they sign on then; why do that work? Well, I would say to you men here: If you had a wife and family or if you had no other way of living than by taking that work you would certainly take it if you were honest and decent and preferred to work rather than be on relief. The men work so hard during the summer of five, six or seven, and in very rare cases eight months, that they become almost automatons. They are worn out; they are weary; they are dragged, and they have little at the end of those eight months to show for the work they have done. One may say that they need not sign on, but they must sign on if they would do anything.
Then, again it is said that living up there is so much cheaper. Well, living is cheaper than it was in the early days when we had to pay $1 a pound for sugar and S3 a pound for butter, and everything else accordingly. Now, while living is cheaper, bread still costs twenty-five cents a loaf. In the summer when the fresh fruit comes in, watermelons are $3 apiece; honeydews or muekmelons-and we seldom get a muskmelon-are from SI .50 to $250. Chickens the year round run from $2.25 to $3.50 each, depending upon the size of the bird and the time of year. During the summer in the north we pay S18 a cord for wood, $10 a month for water for the house and garden, and $10 a month for our telephone.
So it does not seem to me that any reasonably minded man should hesitate if we could pass a minimum wage law in that north country providing for, say $4.50 a day for an eight hour day, with board, and for the extra hours accordingly. The past government tried to put through $1.25 for the regular hours. We have an eight hour law in the Yukon, but the government official who drafted that law' is also an official and director of this mining company. I must say that the hon. Minister of Labour (Mr. Rogers) gave me an interview the other day and said that he would carefully consider this matter of the eight hour law in the north. At the present time the price of gold is twice what it was when the company first commenced work and had to

The Budget-Mr. Elliott (Kindersley)
work under much more difficult circumstances than now.
We in the north are anxious to do what we can. I do not think we complain. We want to do the best we can not only for the north but for Canada as a whole. I think in my thirty-eight years of living in that north country I could count on the fingers of one hand the men who preferred loafing to working-yes, and then I would have several fingers left.
Under no circumstances do I wish to be unfair or to put an unnecessary handicap on industry. I want to be fair to the men who elected me. They were the labouring men of the Yukon. I want to be just as fair to the company which did everything in its power to prevent my election, because I understand perfectly well that no matter where we are, labour needs capital and capital needs loyal labour, and if capital and labour are always ready to spring at each other's throats the rest of us are hurt and the world is hurt.
The Yukon is pleased to learn that the topographical and mining surveys are to be continued this coming summer. I would only like to be allowed to suggest to the hon. Minister of the Interior (Mr. Crerar) that his deputy consider putting on these mining surveys some of our own boys in that north country.
I was elected as Yukon's representative by the combined vote of stand-pat Conservatives, friends of thirty odd years standing, and as well by the support of a number of genuine Liberals who were certainly not well treated by the representatives of their party in British Columbia and the Yukon. The Yukon is an enormous territory with great potentialities, and I would like to feel that the two ministers in the government who are most interested in that territory, the hon. Minister of Labour and the hon. Minister of the Interior, would visit us. They would receive the warmest kind of welcome. A few years ago it would have taken them weeks, nay months to make the trip, but with present day flying conditions they could make the trip from Ottawa to Dawson and return, going by way of the Hudson bay if they so desired, in less than two weeks. They would see things at first hand and could understand better than ever our needs and necessities. While not always agreeing with the policies of the government, as I said before, I do wish to thank the ministers for what they have done this session to help the Yukon. Again I extend an invitation to the members of the government to visit us and to know at first hand what we need.
Mr. O'. B. ELLIOTT (Kindersley):	Mr. Speaker, I welcome the criticism of the hon. member for Huron North (Mr. Deachman), because I believe that any policy which cannot stand the criticism of this House of Commons is not worth advocating. I expect the minister will hear more in reply to the criticisms the hon. member has made. I wish to associate myself with hon. members who have extended congratulations to the Minister of Finance (Mr. Dunning) upon the very impressive manner in which he presented his budget speech. I am sure that all those within hearing distance must have been impressed with the sincerity with which he delivered his speech. However, things were different when one was away from the influence of his great personality. Upon rereading his speech we then saw that there were some things lacking in the fulfilment of our desires. It takes a considerable amount of, I might say intestinal fortitude for a new member to attempt to criticize an important document of this kind, and in speaking this afternoon I speak more in the spirit of suggestion than in that of criticism.
Practically every thoughtful person must have given considerable study to the various systems by which we hope to realize our desires in obtaining a solution of the present difficulties in our economic system. Reviewing some of the assertions made by different ministers with regard to cooperation between th federal government and the various provincial governments, I found a piece of legislation passed by the Saskatchewan legislature. Bill No. 120, an act to amend the Local Improvement Districts Relief Act, is somewhat in fine with the principles that have been advocated. Section 2 reads as follows:
The minister may make advances by way of loan to settlers resident in local improvement districts or in rural municipalities for the purchase of food, clothing and building material, for medical and hospital care and treatment, for the purchase of work stock, milch cows, brood sows, poultry, feed, fodder' petroleum products, seed, machinery, implements, repairs to implements and parts and binder twine, for the payment of freight on settlers' effects, homestead entry fees, timber or hay permit fees and for improvements on crown lands and other lands, for the purpose of breaking land, the surveying of drainage of land for settlement purposes, and the moving and reestablishment on land of persons on relief or about to become public charges.
The only difficulty in connection with this bill is to be found in section 1, which reads as follows:
Subsection 1 of section 5 of the Local Improvement Districts Relief Act, as amended by section 4 of chapter 38 of the statutes of 1934-35, is further amended by striking out
2898	COMMONS
The Budget-Mr. Elliott (Kindersley)
the words "at the rate of four and one-half" in the sixth line and substituting "at a rate not exceeding six."
Subsection 2 of section 2 reads:
Every loan made under subsection 1 shall be a charge upon all the property, real and personal, of the person to whom it is made and shall be repaid at such time or times and in such manner as the minister may by regulation provide.
It seems to me that our financial system is always trying to saddle our people with the maximum load of interest they can bear instead of making a minimum rate, which is the most desirable. In Saskatchewan the rural population is 79-7 per cent of the whole and the welfare of the whole province is vitally dependent upon the success of the farmers. During the last five years the equilibrium of the province has been upset because of financial conditions which have compelled many farmers to seek avenues of revenue besides the farm. Many of them have gone to the towns to open up business ventures of various kinds. Most horn, members are familiar with the law of diminishing returns. A town with a given population can support only a given number of business places. Many of these farmers have opened up stores, trucking concerns, garages and other places of business, and the result has been disastrous to many of the old established places. Many of these old firms had extended credit to farmers during the difficult days of crop failures and they were forced to compete with new ventures which were opened up debt free and carried on mostly on a cash basis. The result was that many of the older firms eventually went into bankruptcy.
It seems to me that Canada is making exactly the same error in connection with our transportation system. We built thousands of miles of railway lines and then we proceeded to construct highways practically parallel to the railway lines to serve a population which was not increasing at the same ratio as we increased our transportation facilities. The trucking business is not sufficiently well controlled, as far as financing is concerned, and it is not compelled to abide by any fixed charges.
At six o'clock the house took recess.
After Recess
*The house resumed at eight o'clock.


Mr. ELLIOTT (Kindersley):: When the house rose at six o'clock I was saying that the trucking business is not sufficiently well controlled to compel the operators to abide 
by any fixed charges. I know of many cases during the last few years where small truckers have gone into that business to provide themselves with some means of sustenance. They found the rates charged by going to the railway station and obtaining the classification and rates on freight between given points, and then, in order to obtain business, they transported their goods at a smaller charge. In addition to this we are also providing assistance to all manner of shipping, both foreign and local, through a free canal system. When hon. members consider that the Canadian National Railways spent during 1935 about $24,000,000 on their right of way, they will agree that it is hardly consistent with good business to provide free means of transportation for other systems. We have in Canada 509-4 miles of canals, giving us 1,846 miles of waterways open to navigation. Since the commencement of the building of canals, Canada has spent $336,564,618, on which revenues of $30,851,699 have been received, $14,000,000 of this being between 1868 and 1910, in which latter year canal tolls were cancelled. The estimates this year show that we are about to spend many more millions on harbours and canals.
Records shows that in 1934, 22,217 Canadian and 2,044 United States vessels, with a registered total of 17,736,818 tons, used our canals. Freight carried was as follows: Canadian, 10,813,922 tons, or 59-8 per cent; United States, 7,255,330 tons, or 40-2 per cent: passengers handled were 69.990. The 1935 returns show a total of 25,694 vessels, with a tonnage of 18,204,468 tons, or an increase of 135,216 tons. If hon. members will compare this with the revenue freight handled by the railways, it will be observed that on the Canadian National Railways the revenue tonnage was 38,807,718 tons, and on the Canadian Pacific railway, 26,094,183 tons, or a total of 64,910,901 tons, so that the canal handled almost 30 per cent of the total revenue tonnage. In addition to this, people in their criticism fail to make note of the thousands of tons of freight, both carload and less than carload, that have been handled free during the last few years of depression, and I might say that the people in my constituency who have received quite a large part of this relief appreciate the services of the railways.
I wish to place on record comparisons of the traffic between the ports to indicate the service given by our canal system: Between Canadian ports, upstream, 4,063,850 tons; down, 6,119,551 tons; Canadian to United States ports, 1,895,272 tons up, and 197,614 tons down; between United States ports, up, 398,815 tons; down, 551,523 tons; United States to Canadian ports, up, 162,102 tons;

The Budget-Mr. Elliott (Kindersley)
down, 4,680,625 tons. During the season of navigation 140 cargoes, or 211,169 tons of freight, passed up the St. Lawrence canal from Europe and north American Atlantic ports. This included 22,704 tons of anthracite coal, all for Toronto, from England-and this, it may be observed, was in competition with our Canadian coal-56,058 tons of wood pulp, almost entirely for United States ports, from Norway, Sweden, Germany, Est'honia, and the maritime provinces; 61,372 tons of pulp wood for Thorold and Oswego area and other United States ports, all but one cargo being from the maritime provinces. A great deal of this freight was handled by Norwegian tramps in competition with our own vessels. In 1935 wood pulp carried on the St. Lawrence amounted to 380,876 tons, and pulp wood, to 619,907 tons, and a large amount of hard and soft coal was transported as well. During the present year, from April 24 to May 8, 148 Canadian, two American, and seven foreign boats, principally Norwegian, were engaged in handling wood pulp, china clay and merchandise.
I note also that, according to the Montreal Star of May 7, three more Norwegian tramps have cleared their ports with sulphite pulp billed to Montreal. On May 5 the Montreal Star states:
More tramps have been chartered to go to the head of the lakes and take grain from there to Europe. Lake ship owners are anything but pleased, for they say they have plenty of ships available. One lake ship man bitterly complained yesterday that wages were about one-third on the Norwegian tramps what they were on Canadian ships. Canada has plenty of lake ships, but cannot compete against the Norwegian tramps on toll free canals, he complained.
Among those going up to take Canadian grain at the head of the lakes are Audun, Koinet, Lab, Rondo, Bette, Bonde, Ornefjell, and Asgerd.
The Norwegian tramp, Margit R., which passed up the canal for the lakes, was the first ship to go by this year with her boilers on deck. She had a load of coal from Swansea to Toronto.
In the Star of May 6 I find the following
criticism:
An equally menacing form of competition to Canadian railways is to be found in subsidized waterways. Operators on these, who at one time were primarily occupied in moving bulk products, are increasingly encroaching on package and other freight. It is hoped that the government will give active consideration to plans for making inland waterways selfsupporting. The development of the methods of transportation which compete with rail services has been very largely the result of large public expenditures made without any real consideration of the economic consequences. The railways are naturally interested in corrective measures, but it should not be
forgotten that the interest of the taxpayers in the sound financial policies of public authorities is even more pressing....
All railways on this continent are being subjected to increasing competition from highway transport. It cannot be doubted that the motor vehicle has a permanent place in our economy, but it is equally true that the railroad has not been supplanted as the most important element in the transport field. It would appear that the proper function of the motor vehicle is to serve as a supplement to, rather than a substitute for, railroads. _
Highway transportation of freight, in its present form, has suffered from acute internal competition and cannot be regarded generally as a proven economic enterprise.
Canadian railways have also lost a considerable amount of traffic through the Panama canal. Of 2,201,180 tons of Canadian traffic originating on the west coast, 498,708 tons were destined to Canada's east coast; of 196,204 tons originating on Canada's east coast 189,227 tons were destined to Canada's west coast. The report of the governor of the Panama canal zone for the year ended June 30. 1934, reveals that 5,553 vessels, with 28,566,595 canal net tonnage, passed through the canal, and the tolls collected amounted to $24,063,789. It seems to me that toll charges Dn a similar ratio on the Canadian canals would provide a return of possibly $18,000,000 or $20,000,000.
There is no doubt that the solution of our railway problem is increased business, and I believe also that there should be a department of transport possibly along the lines set out in the resolution which is No. 28 on the order paper, and which states:
That it is expedient to provide for a department of transport to comprise the present Department of Railways and Canals-
The greatest deterrent to the business of Canada, of course, is not only the heavy taxation in the municipalities, cities and towns, but also the indirect taxation. As far as our housing scheme is concerned, it is impossible for the great majority of our people to build houses with money at five per cent and taxes at their present rate. If we take into consideration the income tax returns for 1934 we shall readily see the impossibility of a large number of Canadians ever owning their own homes. The income tax returns show that in Canada in 1934, 390 persons received $100,000 or more; 1,853 persons received between $25,000 and $100,000 ; 28,896 persons received from $5,000 to $25,000 ; 246,057 received between $1,000 and $5,000, and 3,765,971 had incomes of $1,000 or less.
We should take a lesson from the past; the enormous interest and tax burden that we have attempted to meet could be explained by the national policy introduced by Sir John A.
2700	COMMONS
The Budget-Mr. Elliott (Kindersley)
Macdonald in 1873. In its essentials that policy was based upon a protective tariff and sound money. It has been demonstrated that it was based also upon the mistaken idea that the individual Canadian must spend a lifetime working for the system built up under the national policy, and must be content to accept in return whatever may be left after all other demands have been met. It may be said that it is one thing to make this broad statement and another thing to prove it, but this is the experience of the last fifty-six years: In 1936 the population of Canada only slightly exceeds the population of 1879. In the interval Canada has absorbed some 3,000,000 people from Europe, who have displaced or replaced young Canadians who have moved to the United States, where the Canadian population is said to exceed 15,000,000. In the fifty-six years to which I have referred the existing public utilities and fixed assets of Canada, including the railways, have been put into place on such terms and conditions that Canada owes more than the entire cost of construction, and more than the replacement value. The weakness of our present system is that it maintains poverty as a necessary and recognized institution, and seeks to carry a religion of faith and idealism on the backs of the people who are oppressed by material necessities and human ills.
This is only another way of saying that the system has always insisted upon maintaining poverty in the midst of plenty, dividing the people into rich and poor, enforcing the rights of property by power of law, and restricting human rights to every extent necessary to keep money sound. An individual cannot eat ethics, and in all sincerity I say that there should be credited and devoted to the factor of restoration in Canada a fully adequate share of the credit and money of the nation. There must be a restoration, by immediate remedial action, of an adequate Canadian standard of living. Nothing less and nothing else will satisfy the electors of Canada. This country can be made the richest nation, per individual of population, in the world; the assets exist but are locked up most securely.


Mr. T. C. DOUGLAS (Weybum):: Mr. Speaker, I had not intended taking part in this debate, but in view of the fact that I seconded the amendment moved by the hon. member for Vancouver East (Mr. Maclnnis), I feel that I ought to make a few observations with regard to the salient points of the budget.
May I begin, like others who have preceded me, by complimenting the Minister of Finance (Mr. Dunning) upon the comprehensive manner in which he presented his budget, and 
on the earnest and sincere way in which he approached this great problem.
First of all I should like to mention some of the features in this budget that seem commendable to me, coming as I do from an agricultural constituency in western Canada. The reduction in the intermediate tariff rate on gasoline and distillate, if it is reflected in a reduced price to the consumer, will be of great benefit to western farmers, particularly in those areas where they are largely machine farmers. There gasoline and distillates enter into the production of their crops. Covering large areas, as they do, this is part of their cost of transportation, and a large part of their income is used up in buying gasoline and distillate. Therefore, Mr. Speaker, if this reduction in the tariff rate is reflected in a reduced price, as we hope it will be, we feel that the Minister of Finance is to be congratulated upon having taken this step.
We believe also that the $100 worth of goods which may be brought into this country by tourists is a commendable feature. I do not feel that I want to take advantage of this provision; I have always felt that one ought to spend his money where he earned it, but while I would not want to take full advantage of this offer the fact remains that because of the times in which we live thousands of people are compelled to make their dollar go as far as possible. There has been a concerted demand, particularly from along the boundary, that the privilege now enjoyed by residents of the United States should be extended to Canadian tourists, and I feel that in taking tihis step the Minister of Finance has done something which will be in the best interests of our people.
I think, too, that the increase in the corporation tax to fifteen per cent is a move in the right direction. In the United States for some time past they have had a corporation tax of sixteen per cent, so a fifteen per cent tax is not at all out of proportion. It is only right that those who have made large profits out of the society in which they live, and have been able to make them only because of the existence of the society, should pay a fair share towards the maintenance of that society.
But most of all is the minister to be congratulated upon the lowering of the tariff on farm implements. The hon. member for York South (Mr. Lawson) said the other evening that while we of agricultural constituencies might be glad, he. thinking of the workers, was not at all happy about this. I would point out that never to my knowledge has a protected industry been an industry which has looked after the workers. In fact it is

The Budget-Mr. Douglas
commonly said that protected industries have been the most sweated industries and those in which wages are lowest. We, too, are interested in the workers, but I hardly think that the worker will be helped very much by high tariffs on farm implements. But if lowering the tariff on farm implements means a lower price to the farmer, this will be of great material benefit. I say "if"; it has not always been the case. I have in my hand a report of the Searle Grain Company dated Thursday, March 19, 1936, in which they list ten farm implements. I am going
to read the prices in	1913,	1935	and 1936,and the increase in	price	from	1913 to 1936:	%Increase1913	1935	1936	1913-1936Drag harrow. . .	$ 14	$ 16	$ 17	18Steel tray barrow.	5	6	6	26Wagon and box. .	101	143	156	55Walking plough. .	23	28	28	22Seed drill	144	237	248	72Hay rake	36	57	59	66Eight foot binder.	194	262	280	44Mower	60	94	102	71Disc harrow. . . .	46	71	73	59Gang plough. . . .	90	135	135	50 [DOT]
This reveals the fact, that to-day one would have to spend three bushels of wheat to buy the same amount of farm machinery that in 1913 could have been purchased for one bushel of wheat. It shows .that tihe cost of farm implements had increased out of all proportion to that of the other commodities the farmer has to buy either to produce or to live. But the most significant fact is that out of the ten items I have listed seven have increased in price since last year. We heard a great deal during the general election that if only we could get a lower tariff on farm implements the cost to the farmer would come down; yet the fact is that of the ten listed seven are higher this year than last. Therefore in the west we are apprehensive. We are hoping, and I think the Minister of Finance is hoping, that this decrease of five per cent in the tariff on farm implements will mean a decrease in price. If it does he is to be congratulated. I am not going to say any more about this because a committee has been set up to investigate the matter and I do not wish to anticipate its findings, but if this reduction in tariff is not followed by a reduction iD price there will be great disappointment among the agricultural producers of western Canada.
I am very glad to be able to congratulate the Minister of Finance upon these things: the lowered rate on gasoline, the increased corporation tax, the permission to bring back $100 of goods free of duty, the lower tariff on farm implements. Sometimes hon. gentlemen opposite have taken the attitude that we in this group delight to find fault. That is not true; we are only too glad to congratulate any minister upon a fine piece of work. When we criticize, as I must now proceed to do, it is not because we love the Minister of Finance less but because we love Canada more.
I shall confine my remarks particularly to the first part of the amendment moved by the hon. member for Vancouver East (Mr. Maclnnis):
This house regrets that the proposals submitted by the Minister of Finance on May 1 are entirely inadequate to meet the acute and serious situation prevailing in Canada.
I was interested to find that those words are exactly the amendment which was moved last year by an hon. gentleman who is now of the government party. I felt that conditions had ohanged so little since last year, that this amendment was still very much in order. There are in the budget two things particularly which do not commend themselves to me: first, the inequality in the raising of the national revenue, and, second, the inequality in the expenditure of it.
As to the inequality in the raising of the national revenue, one would naturally have expected that since the country is facing a large deficit there would have been a substantial increase in the income tax in the higher brackets. But such was not the case. Lest some might think that, perhaps, there are no higher brackets of any consequence, I have in my hand figures of the incomes assessed for income war tax in Canada, in 1934. Reading at page 5, I find the following figures:
Number of Incomes $5,000 and Up
1931
1933
41,455
43.150
39,305
31.134
23,344
Number of Incomes Over $25,000
1930..
1931..
1932..
1933..
1934..
2,293
2.430
2,358
1,602
1,237
Incomes of $50,000 and Over
1930		
1931		
1932		
1933		
1934		
601
390
A close scrutiny of these figures reveals the fact that about forty per cent of the population are receiving about seventy-five per cent of the national income, leaving about twenty-five per cent of the national income
The Budget-Mr. Douglas

to be divided among the other sixty per cent of the people. This means that those who are receiving large incomes have, in relation to what they receive, very little taken from their average purchasing power by the tax. Two things, it seems to me, ought to be done. First, the names of these people and the amounts on which they pay income tax should be published. We ought not to wonder that suspicion is rampant. We cannot wonder that people misunderstand, when the governments hesitates to print the names and amounts received by these individuals. The other thing is that without hurting these people very seriously, we could grade steeply the income tax, not only in steps of $5,000, but every $1,000, so that each $1,000 might pay proportionately higher than the preceding $1,000. One would have expected this to be done, but it was not. The Minister of Finance spoke quite longingly about Great Britain; yet we know that to-day Great Britain has very steeply graded her income tax, with the result that in some of the highest brackets as much as fourteen shillings in the pound is taken. But no such step has been taken in this budget.
Then we suggested that a levy might be taken on wealth.


Mr. DUNNING:: Before my hon. friend leaves the income tax, would he permit a question? In making comparisons with Great Britain, has my hon. friend added to the federal income tax in Canada the provincial income taxes now prevailing? There is in Great Britain only one income tax whereas in Canada there are two and sometimes three.


Thomas Clement (Tommy) Douglas: No. I have not added the provincial income tax; but the fact remains that the provincial income tax, like the federal, does not emphasize the higher brackets. It is the people in the lower brackets, and not those in the higher brackets who pay the major part of the national revenue.
The second thing we suggested was a levy on wealth and undivided profits. The hon. member for Kootenay East (Mr. Stevens) said that he could not support our proposal because it was a move in the direction of socialism, and yet he proceeded to suggest a reduction in interest rates on bonds, which really would have the same effect but would not distribute the burden as equally. To cut interest on bonds indiscriminately-and we are in agreement with a reduction in interest rates-would strike not only at the large financier but at those people who are dependent for their livelihood upon small groups of shares, life insurance policies, annuities and so on. But by levying a tax on wealth you 
would take from those who have and who can best afford to contribute revenue towards the support of the country. Let me take an example. On page 52 of the price spreads report I find that the Imperial Tobacco Company and subsidiaries showed, from 1929 to 1933, undivided profits amounting to $11,886,573. On page 115 I find that the Macdonald Tobacco Company at the end of 1933 had undivided profits amounting to $594,432, despite the fact that the president had taken out $260,000 annually since 1930. These are two instances. Surely they are not isolated; surely there are in Canada other accumulations of similar undivided profits. Surely, therefore, these are places to which we ought to go in all fairness to gather some of the revenue by which to finance the dominion. It was suggested this afternoon that this is a socialist measure; yet it was tried in Germany by the government there, not socialist, on two different occasions to meet financial crises. I would not vouch for the authenticity of this, but it has been estimated that by a levy on wealth in . Canada, spread over a period of five years, it would be possible to get somewhere in the neighbourhood of $2,000,000,000. I suggest that that is worthy of serious consideration.
We suggest further that some revenue might be raised by inheritance taxes. In Great Britain to-day when men are leaving behind them large fortunes to their next of kin the state feels that in view of the fact that they made those fortunes within the country and by the aid of all the people in the country, the people of that country have a right to some share of those fortunes. This would be a good place to work out what the hon. member for Huron North (Mr. Deachman) suggested. He spoke of our cultural heritage; he said that we have this and we have that. I could not help wondering whom he meant by "we"; a good many people are not included in that "we," for a good many people have not much of an inheritance. It is true that there are books and all the other fine contributions to our cultural heritage, but they are not procurable by thousands of people, and these things might be made available to these people through the collection of inheritance taxes on fortunes passed on from generation to generation. In Great Britain to-day by the time a fortune has passed through the exchequer, one-third has been taken for government revenue. But this government did not see fit to raise money in any one of these ways; rather, it chose to raise money largely by increasing the sales tax from six to eight per cent.

The Budget-Mr. Douglas


Charles Avery Dunning: Does my hon. friend or his party advocate adding a federal inheritance tax to the already existing succession duties? It would help a great deal to have that clarified.


Thomas Clement (Tommy) Douglas: Most decidedly, and also equalizing them throughout the provinces so that no man might move from one province to another where the rates were lower. There can be no more pernicious form of taxation than the sales tax. I will not go into the details of it, but there are three facts to be pointed out in connection with it. In the first place, it takes from the consuming power of the great mass of consumers; the average man, in other words, will have two per cent less to buy goods with; there wall be two per cent less for the storekeeper, and two per cent less going into circulation. I remember seeing last year large bill-boards showing a man tied up with ropes, and there was this inscription, "Let him free; vote Liberal." Yet here we are tying up internal trade in the most effective way possible by taking two percent more from the pockets of the people. But there is something else. Like the sugar tax, the sales tax affects largely those who have the biggest families and who have to buy the basic necessities of life. When people have to buy sugar for five or six or seven children they pay five or six times as much under the tax, whereas people who do not spend their money on basic commodities pay less. We all remember one of the axioms in the economic text-books, called Jevin's Criteria, where it is pointed out that the smaller the income the larger the proportion that goes for basic necessities, whereas, in the case of larger incomes, more goes in investments, education and in other directions. Consequently the major part of the sales tax will have to be borne by people who can least afford to pay it. The old couple with their $20 a month old age pension, buying a few groceries-


Charles Avery Dunning: No.


Thomas Clement (Tommy) Douglas: It will work back indirectly to them.


Charles Avery Dunning: Has the hon. member
studied the list of exemptions?


Thomas Clement (Tommy) Douglas: Yes. The fact is that it will work back to them. We need not imagine that the storekeeper will pay.


Charles Avery Dunning: How can it work back-on an article on which it is not payable?


Thomas Clement (Tommy) Douglas: I am quite well aware of that, but the minister is stepping aside from the point. Industry uses machinery and it will cost industry more to produce certain articles; consequently the tax will be passed back in the price charged to the consumer. Whether we realize it or not, the consumer will pay indirectly. He will pay in the long run, and it is those who have to buy these commodities who will have to pas' the large share of the sales tax. It seems to me that this budget will give us confidence, if possible, at the cost of human security. As one reads the budget one feels that the minister or the government evidently believes that "for whosoever hath, to him shall be given; and whosoever hath not, from him shall be taken even that which he seemeth to have."
May I say a word now about the amendment to the amendment moved this afternoon. We in this group feel that we can agree with the amendment to the amendment inasmuch as it is couched in general terms, indicating very generally the desire to have consumption brought into line with production. But we cannot vote for this subamendment because it is moved in substitution for the amendment we now have, and to vote for it would be automatically to support the sales tax which we have condemned in our own amendment. We feel that perhaps the most pernicious thing in the entire budget is the levying of the sales tax, which has been increased by 33J per cent, and that to vote for this subamendment, agreeing with it as we do in general terms, would be to vote in favour of the sales tax, to which we are opposed whether it be levied by a provincial or federal government.
I should like now to turn attention to the inequalities in expending the national revenue. The main item of expenditure in the budget is the interest on the national debt of $3,432,000,000, an interest charge of $134,550,000, or 36 per cent of the budget. When we add to that the share of the Canadian National Railway deficit which the government pays, $47,000,000, that accounts for another 12 per cent of the budget, and with the loans which will be made to provincial governments to help clear up debts it will be seen that nearly fifty cents on every dollar of this budget is going to pay interest charges in one form or another. Now I would ask the government a question, the same question they have been asking us ever since this session started: V/here is the money coming from? Almost $200,000,000 goes to pay in-
The Budget-Mr. Douglas

terest charges in one form or another. That is to say, 62 per cent of the entire budget goes to pay fixed charges. Where are you going to get the money?


Charles Avery Dunning: Will my hon. friend permit a question?


Thomas Clement (Tommy) Douglas: Certainly.


Charles Avery Dunning: My hon. friend, or his
colleagues at all events, has made the suggestion that some of the money should come from a levy on large accumulations of capital. I would appreciate it, looking as I always am for constructive suggestions, to have that defined in simple terms because my hon. friend in discussing it to-night spoke merely of large accumulations of liquid capital. Just what is meant-large accumulations of capital of all kinds, or merely large accumulations of liquid capital?


Thomas Clement (Tommy) Douglas: The term used-I hope,
Mr. Speaker, you will take note of the time occupied by interruptions-


Charles Avery Dunning: My hon.. friend asked
a question.


Thomas Clement (Tommy) Douglas: That is all right. I am simply asking the Speaker to remember the time at my disposal. We said that there should be a levy on wealth, not on capital.


Charles Avery Dunning: No, on large accumulations of capital


Thomas Clement (Tommy) Douglas: The statement I made
-and Hansard will bear me out-was a levy on wealth.


Charles Avery Dunning: I am reading from your
amendment.


Thomas Clement (Tommy) Douglas: All right. After all,
capital is merely wealth used to produce more wealth, so it is merely quibbling over terms. Surely the minister will not deny that capital is wealth used to produce more wealth. We would place a levy on wealth. It might be liquid wealth, or merely frozen assets, and it could be paid over a period of time either in cash or in the form of securities.
Let me return to my question:	Where is
the money coming from? That is the question the minister asks us every time we propose anything. Here is $200,000,000 required to pay interest charges. Where are you going to get the money? Of course, we know where. The money will come from the revenues of the country. In other words, this is a fixed charge; it is something that must be paid. But the other 38 per cent

of the budget is not composed of fixed items. In other words, social services are not to be recognized as uncontrollable items of expenditure in the budget; only these interest charges are to be so regarded.
Let us consider our sense of values for a moment. The interest that we have to pay on our funded lebt accounts for 36 per cent of the total budget. Unemployment relief last year took $49,469,000 in round figures, or 13 per cent of the total; the Canadian National Railway deficit, $47,400,000, or 12 per cent of the total; the amount paid on wheat and oats, $6,770,000, or 1-5 per cent of the total; the amount paid out by the farm loan board, $7,933,000, or 1-6 per cent of the total; old age pensions, 4-5 per cent of the total; public works, $80,000,000, or 20 per cent of the total. In other words, if we add the amounts for unemployment relief, Canadian National Railway deficit, wheat and oats, we are still paying less for all that than we pay in interest charges on our funded debt.


Charles Avery Dunning: Why not include all
pensions while you are at it?


Thomas Clement (Tommy) Douglas: Just a moment. On May 1 the minister spoke for two and a half hours, and I do not remember that I interrupted him.


Charles Avery Dunning: I am sorry.


Thomas Clement (Tommy) Douglas: I have only forty minutes, and it is passing very quickly.
Turning to our expenditure, we find in the estimates, in round figures, $13,377,000 for national defence; $4,130,000 for the air force; and in the supplementary estimates $5,317,000 for national defence, making a grand total, in round figures, of $22,825,000, or an increase over 1935-36 of $1,284,000. That is what we are spending on military estimates and national defence. We are spending on our legation at Geneva $614,890, a decrease of $10,502 from last year. In other words, Mr. Speaker, we are spending over forty times as much for war preparations as we are in the interests of peace.
We do not expect the minister to find the money growing on gooseberry bushes. We know he has a limited amount of money to spend, and there are a great many demands upon him, but we submit that pensions for the blind, an extension of the old age pension, some type of health policy, and legislation to take care of those who are crippled and incapacitated, are all items which ought to have a place in the list of expenditures. When it comes to finding money for these things the reply is: We have not the money. But when it comes to finding the money for interest charges-that is a fixed charge.

The Budget-Mr. Douglas
What is the government's policy as revealed by the budget? I think I am right in saying it is three things: Extension of external trade, a balanced budget, and protecting the credit of Canada. The Minister of Finance said that our external trade had increased by ten per cent, but at the same time he said, as reported on page 2363 of Hansard:
One of the most disappointing features of the business improvement so far is that the numbers of those on relief do not decline at the same pace as business activity recovers.
I think the government will come very slowly to the position to which we have come, that even with return of normal business activity we shall not have a return of prosperity, and a return to the former volume of trade and business activity will not mean the wiping out of unemployment or the solving of our economic difficulties.
The second feature which the minister stresses is a balanced budget. That can mean only one thing. There can be no cutting down on the fixed charges representing 62 per cent of the budget, and so it means that any cutting down must be on the other 38 per cent, unless we are prepared to tax these bondholders or cut the interest or principal of their bonds. Then a balanced budget must mean the cutting down of relief, pensions or some other type of social services. I wish to submit that wherever that has been attempted it has been a failure. It has meant higher taxes, fewer social services and a lower standard of living for the great masses of the people.
The other suggestion is that we shall protect the credit of Canada. What we mean when we talk about protecting credit is that we shall prevent any type of inflation which would hurt the creditor and help the debtor. Deflation has always been in the best interests of the creditor; inflation has always hurt the creditor. The Minister of Finance shakes his head, and yet is it not true that the creditor who has invested his money when money was cheap, and then experiences a period of deflation such as we have had in the last five years, finds that the return he gets from his money is a return in a dollar which will buy two or three times as much as the dollar he invested? Consequently a period of deflation is a paradise for him, but it is very different for the debtor who must pay back. Therefore, when we talk about protecting credit we really mean we intend to prevent anything which might upset the present state of deflation. In this corner of the house we are not inflationists, but neither are we deflationists. We have advocated managed currency, namely that currency and credit should be issued in proportion to goods.
In Germany there was a state of true inflation; she issued money which was valueless. Why? Because that money had nothing behind it. She did not produce goods in proportion to her money, so her money was worthless. In Canada we have done the opposite. We produce goods in abundance, but we have not produced sufficient money in proportion to purchase those goods, and the result is that we have deflation. Money without goods back of it is bad, but goods without money to purchase them is just as bad. It can be only by the issue of currency and credit in proportion to the goods issued that we can hope to establish a managed currency which will give the people purchasing power to consume the goods which they themselves have created.
A few days ago the Minister of Labour (Mr. Rogers) said that he did not mind going forward, but he wanted to know where we were going. He believed in progress, but he said that he wanted ordered progress. I look over the budget, and I wonder whether the government knows where it is going. Is there any ordered progress? I look through public works expenditures placed here and there in a haphazard fashion, and I see no concerted financial policy.
It is true that during the election campaign hon. members such as the hon. member for Vancouver-Burrard (Mr. McGeer), the hon. member for Rosthern (Mr. Tucker) and the Minister of National Defence (Mr. Mackenzie) did enunciate some type of financial policy which might have been of value, but to date we have heard very little about it in the budget debate. As a matter of fact we have heard nothing constructive, and nothing to suggest that the government knows where it is going. Instead of that the tone of the budget and the demand of the minister on May 1 was: Back to May 1, 1930.
I submit that this is no time to go back. We can hardly expect a policy which brought us into this mess to pull us out of it. If a program could not prevent the greatest economic crisis in history, then it cannot hope to pull us out of it. Surely no hon. member thinks we can get out of the mire by tugging at our own shoelaces. This is not the time to tread beaten paths; it is time for the government to blaze new trails. The slogan of the government ought not to be: "Back to 1930"; it ought to be: "Forward, to greet the new day."
The Budget-Mr. Green


Mr. H. C. GREEN (Vancouver South):: Mr. Speaker, listening to the budget speech delivered by the Minister of Finance (Mr. Dunning), and reviewing it with its various statements and tables as reported in Hansard one could not help being impressed with the seriousness of the problems facing Canada; neither could one fail to realize the burden being borne by the Minister of Finance, and for this reason, and also because he bears his burden with a smile, I cannot find it in my heart to deal harshly with his budget. I must say, however, that in many respects I dislike it; time alone will tell whether or not he has been wise, and in due course he will have to answer to the people of Canada for any mistakes. Meanwhile I wish to offer one or two suggestions in regard to the budget, and to place squarely before the house the question of aviation in Canada.
Dealing, first, with the budget, I would earnestly suggest that the minister reconsider the provision whereby goods valued at not more than $100 may be brought into the country free of duty by Canadian residents, after an absence of not less than forty-eight hours. Surely a provision such as that should apply only to travellers or tourists, and not to shoppers. If it is properly restricted there is some justification for the provision, although as all hon. members are aware, it will seriously affect the revenues of the dominion. I suggest, however, that the provision in its present form is simply an invitation to Canadian people living near the border to shop in the United States. As such it will seriously affect Canadian retail business and will set up one more magnet to draw our people to the south, instead of having them transact their business east and west in our own country.
Let me give as an illustration the situation in the city of Vancouver. The people on relief and those who are not fortunate enough to own a car, will have to buy their goods at home and probably at higher prices; they will have to pay a sales tax on most of the goods they need, which, by this budget, is increased from six per cent to eight per cent; in other words the poor people will get no help from the provision. On the other hand the man fortunate enough to own a car could quite justifiably get into his car in Vancouver on Friday night, after his day's business is concluded, drive to Bellingham or Seattle and return Sunday night, bringing with him, under this provision in the budget, groceries valued at $100; or if he chose he could bring back S100 worth of clothing; he could even go there and buy furniture on a time payment plan; for example, he could buy a vacuum cleaner valued at, say $90, making an initial

payment of $9 or $10 and agreeing to pay the balance under a hire-purchase agreement; and he can bring those goods back to Canada free of duty and free of sales tax. Surely the minister does not intend to have the provision go that far. If he does not, then I would suggest that the length of absence from Canada be extended beyond a period of forty-eight hours; that the exemption be cut from three times a year to twice a year; that a traveller be required to produce receipts showing that he has paid for the goods he is bringing back. Finally, I suggest that the exemption should be limited to purchases incidental to the trip, a provision which, I believe, appears in the United States tariff.
May 1 further suggest that the exemption be reduced from $100 to $35 or $50. It is so hard for us to remember that we have a population only one-twelfth that of the United States and to remember that most of our people are settled only 100 or 200 miles away from the border, which is not the case with the people of the United States. I do not think it is reasonable for us to expect to have everything the people in the United States can have, and to do everything that they can do. I suggest that if their exemption is to be $100 ours would be more than ample if it stood at $35 or $50.
I have this further suggestion in regard to the budget: I would ask that the minister reconsider the terms of the exemption from sales tax in connection with crushed stone or crushed gravel. At the present time the exemption reads as follows:
Crushed stone or crushed gravel to be used exclusively in the building or maintenance of provincial, county or township roads.
That leaves out cities and municipalities.


Charles Avery Dunning: Will my hon. friend permit me to state that cities and municipalities are already exempted with respect to crushed stone, etcetera, which they use themselves? This is an additional exemption.


Howard Charles Green: Take the city of Vancouver; perhaps they purchase some of their crushed gravel and crushed stone, but I believe that in most cases they have the work done by contract. If they are going to have work done by a contractor they must pay that sales tax, and I do not see why there should not be an exemption for cities and municipalities. After all, in my province of British Columbia there exist no county organizations and no township organizations, which means that the exemption will apply only to provincial roads, whereas a great deal of the province is under municipal government; I suggest that in all fairness the municipalities and the cities

The Budget-Mr. Green
should get the benefit of the exemption. When the history of the last five years comes to be written it will be found that the municipal governments have borne more than their share of the burdens; they are bearing more than their share at the present time, and I do not think it is fair that they should be discriminated against in this w-ay.


Charles Avery Dunning: Of course they are not, in fact.


Howard Charles Green: Now I have a word of praise for the minister. I am pleased to see that he is trying to do away with uncertainty in mining taxation. The same principle of doing away with the uncertainty of government interference could well be applied to other industries of Canada, such as the farm implement industry, but as I do not represent an agricultural constituency I have nothing more to say as to that. However, as far as mining is concerned, no one can question that that industry has played a cheering part in the dark days through which this nation has just passed. The prospector, the miner, the engineer, the promoter, the financier, and all others engaged in mining have done much to raise the morale and the spirit of the Canadian people. I think we should accord them our admiration and our praise, and anything within reason that will assist them should meet with our approval. The industry has been greatly aided by aviation. Many of these mines would never have been developed but for aviation, and I suggest to the government that the time has now come when Canada should adopt a bold and aggressive air policy.
Let me tell the house in a few words the present position of civil aviation in Canada. I intend to treat the question in a nonpartisan spirit; it is a new problem and one which, in my opinion, should be dealt with in a non-partisan way. I wish that it were possible to discuss more of our difficulties in that way; we would get much further ahead.
First of all, let me give the house the bright side of this picture; that is, flying in northern Canada. I think it may fairly be said that flying has made possible Canada's great strides in gold mining and has advanced by decades the development of the northern section of our country. This is well set out in an article by Mr. J. A. Wilson, our own controller of civil aviation, to be found in the February issue of the Engineering Journal, from which I quote the following extract found at page 68:
The surveyor, geologist, and prospector were not slow to follow the example of the forester
and use aircraft as a better means of transportation and observation throughout the unsettled areas of Canada.
The result of this policy has been that to-day there exist generally throughout northern Canada efficient commercial air services which have been self-sustaining, have required no subsidy, and which give access to the remotest districts of the country. More has been learned of northern Canada during the past ten years than in the preceding three hundred. The forester, surveyor, geologist, prospector, mining engineer; the clergy, the doctors, the nurses, the police; in fact, all w-hose activities lie in northern Canada find their task greatly lightened, their range of action multiplied many times and their efficiency increased by the use of aircraft. Journeys which a few years ago meant weeks or months, and sometimes even years of toil and hardship, are now performed in ease and comfort in a few hours. The expansion of Canada's mining industry has greatly helped to tide Canada over the dark days of the depression and this development has been immensely assisted and hastened by aviation. Many of our most promising new mining fields owe their discovery and their opportunity of present development entirely to aircraft.
The figures of passengers, freight and mail carried by air in Canada during the last few years show the remarkable progress which has	been	made.	I	give the	approximate
figures: Passengers carried in 1933, 85,000; 1934, 105,000; 1935, 177,000-practically all in northern Canada. Freight carried, 1933,
4.205.000	pounds; 1934, 14,440,000 pounds; 1935,
26.439.000	pounds. It has almost doubled in the last year. Mail carried, 1933, 539,000 pounds; 1934, 625,000 pounds; 1935, 1,126,000 pounds.
Details of the air mail carried are given on	page	2146	of	Hansard.	The Postmaster General (Mr. Elliott, Middlesex) said, as reported on page 2140, that this mail was carried actually at a profit to the post office. All this development has been brought about by private enterprise, without subsidy of any kind from the government other than payment for	mail,	which,	as	I have remarked, wascarried at a profit to the post office. In addition to opening	up	northern	Canada, civil
aviation has been the means of training airmen who are without superior anywhere in the world. For instance, we have Hollick-Kenyon and Lymburner, two famous Canadian airmen whose exploits have not been properly recognized by this nation, two airmen who have done wonderful things in the last few months in the antarctic.. These men were trained through flying in northern Canada. I suggest that this is sound national develop-' ment for Canada. Our future is in the north. I believe that our destiny is to become a great northern nation, not a vest pocket edition of the United States of America.
The Budget-Mr. Green

I turn from the more pleasant side of the picture to aviation in the more thickly settled parts of Canada. What do we find? Quite a lot of flying has been done on fishery patrol on the coast of British Columbia. There are five mail routes, and five only, in the settled part of Canada, each one, with the exception of the route from Moncton to Charlottetown, being from Canada to the United States in order to get the mail down to the transAmerican airways. These five routes are to the south from Montreal, Winnipeg, Vancouver, and Victoria, and the one from Moncton to Charlottetown. So far as the trans-Canada airway is concerned, I understand it is hoped to complete the airway from Winnipeg to Vancouver in the summer of 1937.


Mr. MACKENZIE (Vancouver):: During the year 1936.


Howard Charles Green: So much the better. And from Winnipeg to Halifax in 1938-[DOT]


Ian Alistair Mackenzie: That is correct.


Howard Charles Green: -with feeders to the principal cities off the main route. When that is done we shall have an air mail service across Canada by which letters will go from Montreal to Vancouver in from eighteen to twenty hours, whereas it now takes four days, and from Montreal to Halifax in five more hours. Apparently this development has been brought about in this way: Municipalities along the main air route have constructed what are known as airports; these are the main ports of call. The government has adopted the policy of supplying all the aids to air navigation. If I am wrong in any of these statements the Minister of National Defence (Mr. Mackenzie) will correct me. I understand that these aids consist of intermediate aerodromes located every thirty miles or so, many of which are still to be constructed; airway lighting, comprising beacons; meteorological services; and radio services, consisting of radio beam stations; and in addition general research work by the technical departments of the government, leaving flying to private companies. In other words the government does not intend to carry on any of the actual flying.
Let us just realize what that means. Private companies will have to carry on this flying. They will have to acquire planes and train personnel for night flying, which is not carried on in Canada at the present time. They will have to train them also for very fast flying; I understand that the mail planes will have to fly about fifty miles an hour faster than our Canadian planes fly at present. All this means

that the company or companies concerned must know well in advance the definite plans of the government, because it will take some time to prepare to give the service.
Then I come to the position of aviation in Canada in relation to world aviation. All other nations have far more extensive air services. Canada is the only nation not subsidizing civil aviation extensively. For example, in Great Britain the Imperial Airways is heavily subsidized by the British government, and as a result that government is able to say that certain mileage must be flown and certain routes must be kept open. The trans-Canada airway is one of the few important air routes in the world that have not yet been opened up. The only other two are the transatlantic and transpacific routes, and the former is to be completed shortly. I understand that test flights for the transatlantic air route will be made during this summer. The route over Canada is the shortest air route between Great Britain and the orient being three thousand miles shorter than the shortest route possible over United States territory. Let me repeat that: the air route from Great Britain to the orient over Canada is three thousand miles shorter than over United States territory. Yet here we are in the middle of the empire, the leading dominion, and we like to think, and I believe, the most progressive dominion, almost in the position of preventing the completion of an empire wide air service.
There is the picture, Mr. Speaker. I urge the government to adopt a bold air policy at once. Let them announce their plans; let them rush the trans-Canada airway to completion; let them establish a trans-Canada air mail service, and do everything possible to aid aviation. I am convinced that it is a workable policy, and that it would be comparatively inexpensive. The hon. member for Gloucester (Mr. Veniot), who was formerly Postmaster General of Canada, dealing with the air mail service, said, as reported at page 2141 of Hansard, that he thought it could now be operated at a profit. In any case the cost of establishing this air service would be very, very small. The government have a great majority and there is no reason why they could not go ahead with a progressive scheme such as this. Incidentally I believe that if they did so they would have the support of the official opposition.
Such a course-the initiation and development of an active air policy-appeals to me particularly for two reasons. In the first place I am sure it will help to draw the provinces together. Coming from British Columbia I

The Budget-Mr. Poole
am always worried about the provinces of Canada drifting apart, and I am sure hon. members from the maritimes have felt the same way. Any policy within reason that will help draw the provinces together will have my support. I think at all times we in this national parliament should do everything possible to bring the provinces of our nation closer together. After all, during the depression the provinces have been hard hit and there have been many rumblings, many questions asked as to whether or not confederation was worth while. I think we must remember that it is our duty here in parliament to do everything possible to hold the provinces together.
I am also interested because I do not think anything will do more to strengthen the morale and raise the spirit of our people than to make Canada a leader in aviation. After all, the morale and spirit of our people are worth a great deal, far more, I think, than many realize. Look at our background in aviation. In the war we had a far higher percentage of pilots in the air force than any other part of the empire. We had outstanding leaders in the air during the war, men such as Colonel Bishop, Colonel Barker, Colonel Collishaw and Major Don MacLaren, the last two from my own province of British Columbia. Men like these were known all over the empire as famous war aces, and there were dozens of other famous Canadian airmen. That is the background of Canada in aviation, and we also have the deeds that have been done by our fliers in the north. There is no reason why we should not go ahead and lead the world in aviation. We have a people of courage and initiative, and I suggest that this Canadian parliament should give the people of this nation bold and aggressive leadership on this question.


Eric Joseph Poole: Mr. Speaker, as seconder of the amendment to the amendment, it gives me a great deal of pleasure to say a few words in connection with the budget on this occasion. First of all I want to thank the hon. member for Huron-Perth (Mr. Golding) for the kind remarks that he made the other day concerning this little group, when he appealed to the Liberal party at least to listen to those representing a new line of thought, or at least a line of thought foreign to this house. I thank the hon. member for his kind consideration, but we in this corner have noticed the lack of interest shown in anything coming from Alberta. It is unfortunate that such should be the case, in days such as these when we are faced with new conditions. I do not believe that any government in any country of the world to-day can afford to sit down and simply try to
uphold the old status quo.	We must be
always on the look-out for new ideas to alleviate the distress that is with us.
I have read the budget; I have followed the debate keenly, but I have not noticed anything startling in what has been proposed. We in this corner have been patient, thinking that as time went on some new policy would be outlined, some hope would be given the Canadian people, but in everything that has been suggested the cause of all our economic ills has been left untouched. The minister made quite a lengthy address on May 1, which I enjoyed as I believe every member of the house did. In the first part of that address the minister spoke of trade, and he made some startling statements. He said- and I believe this has been the opinion of the Liberal party-that our hope for internal prosperity lies in the expansion of our external trade. There has been also an old theory tarried on through the years, inherited from mediaeval days, that the way to measure internal prosperity is by your favourable trade balance. Yet the surprising thing is that when we look into our Canada Year Book we find that in 1932, which was recognized as the depth of the depression, we had a favourable balance of trade. Of course it may be said in answer that the volume of trade was less. That is true. But again the minister said that these conditions prevail because of the policy of economic nationalism in every nation of the world, and that we have no control over the policy of other nations. With that I agree. But those conditions are not being faced by the government, because if they recognized that nothing can be done externally to improve the lot of the Canadian people they would see that their attention must be focussed on internal problems.
An hon. member on the other side some days ago told us that the machine was not displacing labour; that the machine provided more work. How that statement can be accepted by anyone is surprising in view of the fact that we have a million Canadians unemployed. We find that in. 1919 the leader of the Liberal party, Sir Wilfrid Laurier, recognized this fact more than do the government to-day. In his last address on January 14, 1919, he direw attention to the changed industrial conditions, and spoke of the necessity of cooperation between capital and labour and of the displacement of men from industry. But the Liberal party that promised so much to the people has not recognized this in 1936. There is, however, one thing that we can agree on-I suppose we have to be thankful for small mercies- and that is the reduction of the debt burden
The Budget-Mr. Poole

through conversion and refunding. The only criticism we have to offer on that is that it is not broad enough, does not take in enough territory. I have been interested in observing the inconsistencies of government members. We may not be able to get our views over in this house, but at least we have an opportunity to listen to other hon. members, and we take advantage of it. I notice that in the policy Laid down by the government so far as the unemployment problem is concerned the Minister of Labour (Mr. Rogers) provides for subsidies to industry. Then I turn to a statement by the Minister of Finance in his budget address, in which he tells us that if we speed up industry the inevitable result will be overproduction and breaking the market. I wonder whether the Minister of Labour and the Minister of Finance (Mr. Dunning) should not get together on this question and really decide upon the policy, because the inconsistency is glaring.
Referring to the criticism levelled by the hon. member for Huron North (Mr. Deach-man) at us this afternoon in which he spoke of social credit theories, and I believe was endeavouring to prove us inconsistent, I know my leader would like to defend himself on this and I suppose the opportunity will present itself some day. The hon. member referred to the inconsistency of our leader when he spoke of protection or subsidies to the sugar beet industry. I would point out that the conditions prevailing in that industry are different from the conditions which prevail in many industries in this country. It is a matter of national protection to subsidize an industry that produces a consumable necessity which we must have during a time of war. I believe that was the whole purpose in advocating that. If war were to break out in Europe we would be dependent upon importations of sugar, although we can manufacture it here, because we cannot compete with sugar producers from outside.
I quote again the article that was read in the house by my leader some days ago, because the hon. member for Huron North has got a little mixed up. He told us that production in the United States was $60,000,000,000 and that the total amount of purchasing power was only $45,000,000,000, and he wanted to know where the difference went. Part goes back into savings, as this article describes, but part of it, the difference between $50,000,000,000 and $60,000,000,000, was never in existence. That is one thing which this group have endeavoured time and time

again to make clear, that under the present system you cannot place in the hands of the people through the medium of wages, salaries and dividends sufficient purchasing power to purchase the total price values. Then, he says, these people suggest paying a dividend even in prosperous times, and he wanted to know what we would do when the depression came. I wonder what my hon. friend means by depression. A depression infers that we are short of something, but surely there is not a member of this house who would suggest that we are short of goods. They were never so plentiful, and if we were short of goods surely we have available productive power in Canada to produce more. There is no depression to-day. There is poverty, however, and nothing suggested in this budget will alleviate that condition. Tariffs might help some, but the minister says that we have no control over economic nationalism ; that we cannot compel the nations to accept those things which they do not desire. If we could have brought prosperity to Canada by removing the barriers of economic nationalism, surely that could have been accomplished at one of those numerous international conferences which have taken place during the last five years.
When you take the tariff out of the Liberal platform you have nothing left; it is the peg upon which they hang their whole policy. When that falls, Liberalism falls. They must recognize that the purpose of an economic system is first and foremost to increase the standard of living for the citizens, not of China, but of Canada, and the only purpose of an export market is to exchange our products which we do not need at home, because we have such abundance of them, for those which are not common to the production of this country. In this year 1936 we are starting along exactly the same lines that have been followed down through the years, raising the same old ghosts. We have an unemployment problem. This is what Mr. R. J. Scrutton said in Prosperity, April, 1935, quoting the same article which was criticized this afternoon. This, I think, puts the situation plainly:
It is useless trying to find work for the unemployed until the present financial system has been changed. Productive work merely increases the glut of goods and adds to our problems. Non-productive work such as road making will certainly provide wages, but those wages must be taken by taxation from those engaged on productive work. This is a method of sharing out the nation's poverty; and in no way shares out the machine made abundance.

The Budget-Mr. Poole
And that is all that we have accomplished in this budget. What do you do when you borrow $75,000,000? You place a chattel mortgage on the future of the country; that is all you do. You do not solve the problem. We have spent $600,000,000 in the last five years and the problem is just as great as it ever was, plus this fact, that while our trade has increased unemployment remains the same. That is important in view of the statements which have been made in the house to the effect that machinery is not displacing man power. When you displace men you displace wages, and we claim that the wage system has broken down; it will no longer distribute goods. It was all right in the days when we had markets on which to throw our surplus production or could invest money in other nations for capital expansion. But those days are gone. The Minister of Finance told us that we have no control over the policy of economic nationalism which has been adopted by other countries. I agree. That being true, are we going to solve the problem or restore prosperity by indulging in a public works program ? When you tax you deflate; when you tax you reduce the standard of living of the people. What happened in the United States two or three years ago? They poured out money. W hat followed ? A man getting $15 or $20 a week found that his money would not buy as much as it did before. Prices began to increase when new money was poured in. I want to continue quoting from this article because it is valuable. It is something well worth putting on Hansard; if many members will not listen to the social credit party in the house they may in spare moments look at Hansard:
T There is only one way out of the difficulty, it we intend to keep the machines then we must devise a method of giving people the u ages of the machines which do their work. Incomes must be based on wealth produced and not on human labour performed. In order to do this our financial system must be based on the capacity of a nation to produce goods and services instead of a gold or sterling standard which bears no relation to our real wealth. Then, if we produce goods priced at $10,000 we can create and provide the people with $10,000 to spend. The balance sheets of all industrial and business concerns, containing a special item giving average profit on turnover, would provide the government with the necessary information. By this means the total prices of consumable goods produced during the preceding six months would 'be made available, together with the total purchasing power issued in the form of wages, salaries, and industrial dividends. The total of prices would be found to be far higher than available purchasing power and would provide a figure representing the goods unsold and now glutting our markets. (According to the 12739-173
National Bureau of Economic Research, American industry paid out $45,548,000,000 in the form of wages, salaries, dividends, bonuses, pensions, compensation, etc. The value of consumable goods produced for the same year was $60,366,000,000. When savings and investments were deducted from these incomes only forty billion was available as purchasing power to buy goods valued at sixty billion.) We propose that these surplus goods form the basis of new money which shall be created by the government and issued free to the people so that the goods shall be bought. At present only production is financed. This takes place when the banks create and lend money to industry.
Under social credit the government would finance consumption by the method outlined. It would not borrow money but would follow the practice of the banks, creating money on the basis of something which is already in existence and which, I may add, is a sounder money system than the one under which we live to-day. The only basis for many of the bank creations is hot air. I think it is becoming evident throughout the world to-day that the system under which we live has served its purpose. Capitalism was adapted to general expansion, and while that expansion was possible capitalism could provide men with a livelihood through the agency of wages. But when you arrive at the point where you can no longer export goods, then the system is ready for the scrap-heap. Unfortunately we have inherited many conceptions that are not- true. We have led men to believe that the only purpose of an economic system is to provide work. Hon. members will persistently tell us that we shall get out of the mess which we are in to-day. Surely that is absurd when you look at the increasing national debt-and it is bound to increase. In the budget debate some criticism has been levelled at the late administration because of an increase of a billion dollars during their regime. Surely that is not the fault of the late government; if it is, then the Liberal party might well be accused of the same thing, because the national debt of Canada has always increased. It increased from 1921 to 1936, not merely from 1930 to 1936, and the time is coming not only nationally but in every municipality when fixed charges will constitute the largest item. The amount available for what I consider uncontrollable expenditures, that is for public services, for relief, for indigent people, for the incapacitated, for pensions and so on, is becoming less, while the ability of governments to tax will diminish as time goes on, because the debt structure is top heavy.
The hon. member for Huron North this afternoon told us that we have our cultural



BEYI8ED EDITION COMMONS

[Stage Direction]
The Budget-Mr. Poole
heritage. Maybe the hon. member has, but there are thousands who have not yet had it. I have in mind the ex-sendee men of Canada, the unemployed of this dominion. I wonder whether they have got their cultural inheritance. I do not think so; I do not think they have been considered very well. I recognize, of course, that as fixed charges increase the ability to give them any kind of inheritance which would be beneficial to them will decrease. On the other hand, I believe the only heritage the old line parties will ever leave to the dominion, if they do not change the monetary system, will be one of debt and mortgages. When we borrow $75,000,000, when we launch into public works schemes, for the purpose of giving bread and butter, we are looking for something to drop from the sky to help us out of the mess we are in "o that we may remain politically secure, and twenty years hence it will be just another mortgage, another one of these fixed charges.
What I want the government to tell this group in this sectioq. of the house is this: In view of the fact that we have had a favourable balance of trade during the depression years, in other words, sold more than we purchased; in view of the fact that we have goods here, and in view of the fact that all the evidence which is required exists, showing that there is a downward trend in the standard of living and an increase in our national and all other debts, I wonder whether they could tell us, when they talk of putting men to work under the conditions that prevail, how they expect to do this and at the same time to reduce the national debt. There have been two Liberal members who have the idea, the hon. member for Rosthern (Mr. Tucker) and the hon. member for Vaneouver-Burrard (Mr. McGeer). They are the monetary reformers. They know that the axis upon which this economic system turns is money. They know that the monopoly which controls it controls this government. It controls the ability of this government to collect taxes.
Mr. FINN:: No.


Eric Joseph Poole: It does. I will go further if
you wish, and prove it. During the deflationary period what does a bank do? It takes that which is just as necessary as the blood to the body; it takes purchasing power by restricting loans to industry, and by calling in loans already out, driving prices down and reducing property values. That is why the western farmer is in the mess he is in to-day. During the inflationary period what does a bank do? It gives to production something. It gives to agriculture financial credit based upon something. What? Some-

thing that belonged to the depositors? That is nonsense. It was something that belonged to the agricultural industry. The banker may give it with pen and ink, basing it upon the ability of the farmer to produce, the land and the machineiy of production he has, and the desire on the part of people associated with him for the goods of production.


Robert Emmett Finn: May I ask the hon. gentleman a question?


Eric Joseph Poole: Quite welcome.


Robert Emmett Finn: Does the government of
Canada or does this parliament of Canada, of which my hon. friend is a member, control or undertake to control the loans made by the banks to individuals or to corporations?


Eric Joseph Poole: No, it does not.


Robert Emmett Finn: Then why is the government
to blame for this present condition?


Eric Joseph Poole: My hon. friend has just
mentioned the point I have been trying so hard to get over.


Robert Emmett Finn: I am glad I helped the hon.
member.


Eric Joseph Poole: The government does not
control these things, and the very fact that the government does not control them places the banks in a position where they control the government because as the banks deflate they take from the people the means to pay taxes, do they not?	.


Robert Emmett Finn: Absolutely no.


Eric Joseph Poole: They take from the government the power to extract taxation. You cannot get away from it. Then what do the government proceed to do? To borrow, increasing national, provincial and municipal debt-. Then what do the government do? They suggest- a public works program to cure all these ills, and they hope we may be able to expand our volume of trade and sell some wheat to the Chinese.


Robert Emmett Finn: That is not fair.


Eric Joseph Poole: I quite agree with my friend that it is not fair, for I believe that we should feed our people at home first.


Robert Emmett Finn: I meant the hon. member's
statement.


Eric Joseph Poole: We should realize that the
duty of this government is not so much to balance the budget, not so much to find work because work is not an end in itself. I repeat this because to me it is very im-

The Budget-Mr. Poole
portant; it is one of these ideas we have inherited, and you will hear it expressed ten times a day. You meet a man who is bard up on the street and he wants a hand-out. The first ithing he says is, "I wish I had a job." I|t is not a job he wants, it is what a job in the old days got for him. It is goods and services he wants. That is what the people want. We have these things now in abundance. What are you going to do? Do you suggest pouring more money into production, to glut the markets with more goods? Or do you propose to monetize the goods already in existence? If you would do that, then immediately the unemployment problem is solved because industry moves when the people have effective demand, purchasing power. But when you take that effective demand, purchasing power, from the people the industrial machine slows down, and no matter how large a volume of goods you1 have piled up they are not available to the people because they have not effective demand. I am speaking now, of course, of money, and this is true not only of this but of every country.
There is another angle which is very interesting if it is pursued. If you are looking for markets, there is one thing that will stimulate international trade. That is when you go to the markets of the world and bargain better, when you go and say, "I am not going to sell my wheat. It is my national purchasing power. I have come to buy." What would happen if you did that to-day and if you could ship out everything you had? You would have to say to these people, "We cannot buy your goods. We cannot take your imports into our country because our people have not the purchasing power to buy them."
I hope, Mr. Speaker, that some day in this Canadian parliament we shall have an opportunity to present the views of social credit.


Charles Avery Dunning: Why not now?


Eric Joseph Poole: I should not like to attempt it in forty minutes. The Liberal party does not express its policy in two hours and fifty minutes. We are not afraid of any criticism that may be levelled against social credit. We are not afraid even when members leave the house. We challenge the government to solve the problem without monetary reform. We know they cannot do it. Even if you control fifty-one per cent of the capital stock of the Bank of Canada, that is not monetary reform, any more than it was monetary reform that we had in this country between 1939 and 1935 when we changed the size of the dollar bill but got no more of them. The kind of monetary reform we want is a change 12739-1733
in policy. I do not care who owns the bank, I am not interested in who owns the bank or the factory. I want the producers to get a fair price for what they produce, and that can be done by placing effective demand, purchasing power, in the hands of the people. I am interested in the policy of the bank in seeing that it distributes sufficient purchasing power, wages, salaries, dividends, which will go from the bank into production and in addition, that the government place in the hands of the people a national dividend, and there is no member who will say that the people are not entitled to it. In this scientific age the machine has displaced man. What are you going to do? Throw him on the scrap-heap? Put him on relief for the rest of his life and jeopardize our whole national future? No, sir, not if we are here administering in the interest of Canada to-morrow as well as to-day. We will do something different from that. We will have the courage to remove from our economic life these bankers, this monopoly, and we will change the policy and make it conducive to a higher standard of living. That is the job which :his government has to do, that, and nothing else. The first job it should have done before bringing down a budget and before doing anything else was to provide itself with the means to do these things. Then, I say, your unemployment problem is solved, because the moment you place purchasing power in the hands of the people goods will move, industry will revive and there will be a demand for labour. Until that time comes we shall never have prosperity.
In conclusion I -should like to say a few words about the budget itself


Robert Emmett Finn: May I ask the hon. member a question?


Eric Joseph Poole: I am only too willing to answer.


Robert Emmett Finn: Do you believe in confiscation?


Eric Joseph Poole: No; I am very much opposed to it, even the banks confiscating.


Robert Emmett Finn: Then I should like to ask this question: Under the policy of the present government in Alberta, namely that of giving S25 to eveiy woman and man, according to population, how much money would be required?


Eric Joseph Poole: I believe it is around


Robert Emmett Finn: That is pretty good.


An hon. MEMBER:: A month or a year?


Eric Joseph Poole: A month, for the year. Hon. members opposite concentrate their attention
The Budget-Mr. Poole

upon money, but we claim that we have $10,000,000 worth of goods which are not moving; that is the important point. Have we those goods in Canada? If we have not why have we unemployed? That is the question which hon. gentlemen opposite cannot answer.


An hon. MEMBER:: Explain it.


Eric Joseph Poole: I would not try to explain it in five or six minutes. If an opportunity is given, this group will explain it; I promise you that.


Robert Emmett Finn: You said " group "?


Eric Joseph Poole: Yes, this group, here, will explain it. Any time a full dress debate on the question is desired, we are ready to go to the mat, any one of us.
In conclusion, I wish to say that I always thought the difference between the two old parties was the height of the tariff wall, but I find on this occasion that the difference is $62,000,000, namely, the difference between the budgets of this year and last year. That, however, is not the interesting point. We find that last year the Conservative party then in power was more Liberal than the Liberal party in power to-day, and we find that the Liberal party has gone Conservative. I wish to say again that there has been some criticism about blank cheque legislation; I am in favour of the blank cheque, because, after all, whether we like it or not, I have a little different slant on it from some people. The fact is that an emergency did exist, and exists to-day; it has not diminished. The provision was made with the knowledge that the condition was critical and that to-morrow or a month hence there might be more unemployed. Provision was made for them. Whether we agree with the amount that was given is not the important question; we must remember that provision was made. That is the point. This government does not say that. They make appropriations and live within them. They restrict their own activities and restrict their opportunity to do anything for the people of Canada. Therefore I am in favour of the blank cheque, because I believe the most uncontrollable expenditures are those which have to do with human welfare. If any persons are going to go short, then those people who can afford to lose ought to be the ones. The first consideration should be the poorest people, namely the unemployed, the ex-service men, the incapacitated, and the old. When they are served it is time to talk about fixed charges for bankers and on bonds. The people I have mentioned are a sacred obligation.
The budget debate has almost reached a conclusion, but many other things could be said. Now we are waiting with a great deal

of interest. The people of Canada are watching intently for your financial policy, and if you do not come through, then they will displace you for exactly the same reason that they displaced the last government.


Robert Emmett Finn: Who will come in?


Eric Joseph Poole: And while we are on that question may I say there has been plenty of ego expressed by the Liberal party.


Robert Emmett Finn: I do not believe in it.


Eric Joseph Poole: The first day I was in the chamber the leader of the government speaking to the leader of the opposition said, "The people have turned you down, and shown you where you get off at." He forgets that they turned him out in 1930. In a few more . years, probably less than four, the Liberal government will go.


Robert Emmett Finn: And they will come in again.


Eric Joseph Poole: It is not parties that are defeated. Governments are turned out when the people realize that the principles propounded are not sound and that the effect is poverty. I say to-day that the Liberal party will suffer a worse defeat than did the Conservative party.


Robert Emmett Finn: Is that a prophecy?


Eric Joseph Poole: The Liberal party have been saying all along, "We have licked you; the people have rejected you." I want the Liberal party to remember that there is only one province in Canada, namely in Alberta, where there were social credit candidates to vote for, and what was the result?


Robert Emmett Finn: That will be the last time.


Eric Joseph Poole: No.


An hon. MEMBER:: What happened in Saskatchewan?


Eric Joseph Poole: 
Robert Emmett Finn: Is that so?


Eric Joseph Poole: Do not be afraid of the
banker. When he comes to dictate to you, for the first time you should tell him that you are the government. If the people require money or means to move goods and to increase prosperity, see that you provide the scientific machinery to provide it, and remove any obstacles which may be in your way.


Mr. W. K. ESLING (Kootenay West):: Mr. Speaker, I am sure the Minister of Finance (Mr. Dunning) must feel gratified at the generous commendation he has received for his splendid presentation of the budget, and his perfect diction. Naturally the public will feel the effect of the eight per cent sales tax. They will hold the government responsible,' and it will reply, "Well, it is as a result of having returned us with such a huge majority."
Naturally the Minister of Finance would like to withstand the numerous demands from his following, but it would be impossible for him to do so. While hon. members might like to be modest, their constituents will want this, that and the other thing, and the demands would be almost too insistent for the minister to refuse. I know he feels sorry for himself in having to sit through this long discussion, but that is one of the penalties he must pay for the honour and privilege of presenting a national budget.
I will not attempt to enter into this discussion beyond referring to one phase of the country's condition, that of unemployment. In that connection, will the government not consider some means of enlarging the present housing act, for the reason that there is no avenue of endeavour which goes so far, in its various ways of relieving unemployment, as that of construction? The housing act as it stands is confined to the construction of new homes. It was thought, perhaps, that it would contribute largely towards the building of the many homes which are required throughout the country. But the conditions which surround the arrangement with the government are such that the act is absolutely useless outside the large cities. Some twenty-two companies have entered into the agreement with the government, but, if we take the whole province of British Columbia aside from the cities of Vancouver and Victoria, absolutely no loans are being made towards the construction of homes. Not even in Vancouver itself is there a loan company, an insurance company, or a trust company which will enter into this arrangement with the government to lend sixty per cent for the construction of homes. In the interior, where we are very fortunate in having an industry which
makes homes necessary, there is not a single company from Vancouver to the Alberta border which will lend a dollar in furtherance of this arrangement with the government for housing construction. My suggestion is that the government might see their way clear to go at this matter on a larger scale, in cooperation with the municipalities. When I say, "in cooperation with the municipalities," I mean four or five municipalities with five thousand to ten thousand1 population; let them form one cooperative concern in order to reduce the administration costs. If the government would realize how small the present housing act is in comparison with some other activities it would not hesitate to go a little further into the matter.
In our own little city of Trail, with a population of ten thousand people, we have an industry which has actually loaned to its employees one-tenth of all the money that the government of Canada intends to advance to the people of the whole dominion. The Consolidated Mining and Smelting Company has lent approximately one million dollars to its employees, and constructed and repaired for them more than one thousand houses. It charges only five per cent, and makes things so easy that an employee, if he has a permanent position, can build for himself not only a house within the municipality but a summer home up the lake. Then take the city of Nelson. Nelson has about eight thousand people, who have sufficient confidence in its stability and its future to spend during the last six months 1250,000 on a civic centre, one of the finest evidences of municipal enterprise, for a city of its size, that can be found in the dominion. So I ask the government if it will not consider some way of acting jointly with the municipalities. I do not expect the government to lend a municipality of five thousand people a lot of money, because it incurs the expense of supervision; that is the reason these loan and trust and insurance companies will not give assistance in these small centres; it is not because they lack confidence in them, but because the cost of administration, supervision of construction, preparation of plans, and so on, is greater than the interest return of five per cent will warrant.
During the discussion which has occupied this house for so long, references have been made to the part that industry might play in relieving present conditions, conditions which have continued for five long years. Although some improvement has taken place, the government has to look forward to the coming five years, and while there is strong hope, yet there is absolutely no certainty of any
The Budget-Mr. Esling

brighter future. We have to care for, not only the number of unemployed resulting from this depression, but the problem presented by the young men and young women who are reaching that age where they expect to enter the fields of labour. I took the trouble to call up the bureau of statistics, and I find that in the past five years the young people who have reached that age when they become a factor in the field of labour number 300,000. I mention that to show the government that even though conditions should continue as they are-and they are even now none too good-in another five years there will be 300,000 more looking for employment, and certainly that situation must be provided for in some practical way other than that of public relief.
If there is one proposal which, in my opinion, would benefit our young people and future generations of Canadians, it is a plan whereby young men will have an opportunity to learn a trade. It is all very well for them to take up various courses of study and to extend their education, but there is nothing in the life of a young man or any man that fits him more effectively to meet the contingencies of the times than the advantage of a trade, a basis for his living. Fifty years ago it was the habit of parents to say, as soon as their son was old enough: What trade shall the boy learn? And if there was *one benefit above another in putting a boy to a trade, and making provision for his future, it was the element of compulsion in the arrangement as between the boy and his employer. I happen to be one of those fortunates who as a boy was bound out to a master, as it was termed in those days, for bed and board. I was bound to a printer. While I did not like it very much, and might have preferred to be a lawyer or a doctor,
I became a printer, and I am very thankful for it, thankful because I was compelled to stay with it, and so laid a foundation for the future. If this government could go so far in welfare work as to provide means for the young men of this country to face the future with some degree of certainty, it could not engage in a much better work.
Here again I want to take the house back to my own city of Trail, because I like to show the people of this dominion that in an industrial way Trail sets an example not only to the government but to all phases of industry in Canada. In that city we have an industry which employs five thousand men, and not another industry in this dominion has the same keen sense of the human relationship between employer and employee that exists there. They recognize the great benefits

which result from giving the boys a start by way of a trade. The sons of employees are taken into that plant. They may go into the carpenter shop, the paint shop, the foundry, the electrical department, the pattern making shop or any other branch of the works. There they are put to work on the basis of twenty-five per cent of a journeyman's wage, and every six months they are advanced until they receive the full wage of a master artisan. Then, if the department for which they have fitted themselves is not ready to receive them, they are simply sent to what we call the clearing house,. the labour gang, where they work until there is an opening in their particular department, where they are given preference.
I should like to go a little further in emphasizing the part that industry might play in this period of depression. Recently it was my privilege to have a conversation with perhaps the foremost construction engineer and the foremost mining man on this continent. In their general conversation they referred to the fact that Doctor S. G. Blaylock, vice-president and general manager of the Consolidated Mining and Smelting Company, had gone further and accomplished a greater work than perhaps any other man on this North American continent. That work was purely and simply the creation of a cooperative spirit among the five thousand employees who carry on the work of the largest metallurgical plant, not only in the Dominion of Canada but in the world. Doctor Blaylock was so far-sighted as to realize that the time had come when there must be a uniform interest as between the employer and the employee. He wanted the employees to understand the ideas of the management, and they formed a cooperative so that the management might get the benefit of the ideas of the men, and to show hon. members that this is a plant which might well be copied by other plants in the matter of industrial relations, may I say this: Do you know that the Trail smelter, this huge metallurgical plant, paid 4J per cent of the total freight revenue of the Canadian Pacific Railway in 1935? Do you know that it paid 1-9 per cent of the total freight revenue of both Canadian railways during that same year? So it will be seen that this is something of an institution.
There is one point I want to stress, because it applies not only to mining institutions but to all industrial plants in this country. If they could create a relationship under which the employee would feel not that he was only getting so much per hour but that he had an interest in the work, this would be a great step forward. This is only an indication of what must come in Canada if we are to

The Budget-Mr. Esling
provide jobs for all who need them, not only now but during the next five or ten years. The one solution is the system now in operation at that plant; I refer to the five day week. That must come or work cannot be supplied for those who need it. The men there realized that fact. They had every opportunity in the world to maintain a full six day week, but rather than see some members of the community go without jobs they were quite willing to carry on with a five day week. What did they do when the depression began? The management called the men together; they picked out the married men and put them on three-quarter time and put the single men on half time. Then, as things picked up, they brought the single men up to three-quarter time, and finally the men were called again. The management said, "You boys can take your choice. Do you want to go back on six days a week and thus deprive some people of jobs, or would you care to carry on the five day week"? Unanimously the men chose the five day week. As a result they now have time for relaxation. If they are shift men they work fifteen days and lay off five days, while ordinary day labourers work five days a week. Seventy-five per cent of the men own their own homes, and when they have their five days off they fix up their gardens, mend their fences and generally improve their homes.
This whole plant is run on a cooperative basis. There are perhaps fifteen or twenty departments, and the men in those departments never air their grievances to anyone but their own delegates. Each department elects two delegates, who meet with the management-partly on the company's time- twice a month. Any man with a grievance as to working conditions, wages, safety or anything else takes that grievance not to the management but to his own representative. The delegates from the various departments discuss the grievance; if it is well founded it is remedied and if it is not it is simply sent back. I should like to point out some of the benefits which have resulted from that spirit of cooperation which pervades that plant. In the first place every man enjoys free insurance in the amount of $1,500. If he chooses to add to that it is at his own expense, but the $1,500 of insurance is provided at the expense of the company.
At the company's expense likewise a pension is provided for all old employees, a minimum of $240 a year, but determined on the basis of the earnings for the previous ten years. Then they have a benevolent association which includes practically one hundred per cent of the employees. The members pay $1 per month and they receive benefits in
case of illness or accident at the rate of $1.50 a day for periods up to six months. The hospitalization is unequalled anywhere in Canada. It is not a case of a lot of doctors saying: We are going to charge this or that, but the men fix the rates; the workmen's cooperative committee calls the doctors, twelve in number, in a clinic and makes their own arrangements for medical attention and hospitalization, not only for themselves but for every member of their families. They have the very best attention in the most modern hospital that could be constructed. There are also all sorts of athletic and social facilities.
What more does this company do? The company says to its employees, We are not paying you so much an hour or a day, but we want your cooperation, your confidence, your interest in your work; and the men give it, they feel it is an honour to be an employee of that company. When a man has been there three years he is given outright a share of stock in the company; that share to-day is quoted at about $250, but it does not make any difference if it were quoted at $500; he gets it without cost. They have this elaborate housing scheme, under which they have advanced almost a million dollars to the employees, repayable in monthly payments. When Christmas comes there is not another institution in Canada that treats its employees better. Hon. members will forgive me for elaborating upon this, but I feel proud of coming from a community in which there is such an industry maintaining such fine human relationships between employer and employee. They say to the employees: In the first place we are going to give you a basic wage. When 1 left there the basic wage happened to be about S3.35 a day. That basic wage is fixed by the company, but there is a general discussion with the committee and the basic wage is largely determined by the Government's cost of living yardstick. If the cost of living goes up the basic wage goes up; if the cost of living goes down the basic wage goes down. To that basic wage is added/ first a bonus for efficiency, which is interest in the company's welfare. It is also based upon the price of metals; when the price of metals goes up the bonus goes up, and when the price of metals goes below a certain line the bonus ceases. When I left, the bonus in addition to that basic wage of about $3.35, was ninety cents a day. That wage is for common labour. The men in different departments of course have different scales, but that is the basis for common labour.
Every employee feels an interest in the company's welfare. A man goes to his work
The Budget-Mr. Esling

In the morning not with a feeling of insecurity, like many employees throughout the country in these days of depression, not knowing whether he is going to have his job or whether he will be told when he reaches the shop that they do not want him. Not so at Trail. There a man cannot be discharged on account of some feeling on the part of his boss, who may have a dislike or a grievance against him. No man can be fired offhand, unless it be for some offence that could not be countenanced by anyone. If, for instance, a man does not get along in the carpenter shop what does he do? He goes to the employment manager. The employment manager asks him: What department do you think you could get along better in? The man says: Perhaps I could get along in the paint shop. So he is given a transfer to the paint shop. He is there for six months and perhaps he does not get along in the paint shop. So he goes back to the employment office. The employment manager says: You have had one transfer, you may have another, but if you cannot get along in the third place it is all off. But that man feels a sense of security in his job that few others have.
When Christmas came along what did they do? Every married man in the plant who had been in their employ before January 1 of that year was given $25 eash, and single men $12.50 in cash. Men who had been employed only six months were given a smaller sum, but everyone received something; a single man who had been in their employ for even three weeks was given a couple of dollars or an order on any store in which he chose to spend it. And every man received a turkey.
I tell this in order to show the house and the industrialists of Canada that it is possible to create a spirit of human relationship in industry not merely hiring men at so much an hour or a day. That company does not want men who are just working for so much an hour; they want them to feel that they are carrying on their work day by day with an interest in the business.
Now I appeal to the graciousness and generosity of the Minister of Finance. I have said all the nice things I can possibly say to him and about him, so through the Minister of National Defence (Mr. Mackenzie) I want to call the attention of the Minister of Finance to the fact that we have an airport in the city of Trail, one which probably surpasses any airport between Regina and the coast, I mean any which has been built without any assistance or support from the government. We did our

own work, cleared the field; we have a field now almost equal to that of the Salmo airport which the government constructed at a cost of $67,000. We would like the government to find means of assisting municipally owned airports in places where the municipalities do a little more than their share. To-day our landing field is about 400 feet wide and 2,000 feet long; we would like to widen it to 600 feet and make it
3,000	feet long, which would make it the same as the government airport at Salmo. We ask .that assistance. But we do not ask it outright; we ask it only after we have put in a beacon light and boundary lights at our own expense, so that it will be perhaps the most modern airport between Winnipeg and the Pacific coast, because you can land there on the water as well as on the land.
I trust that some hon. members will find it possible during the summer vacation to visit this plant at Trail and inform themselves of the extent of the interest which this company shows in its employees. It leaves nothing undone for their comfort, welfare and social betterment. It has a memorial hall which provides every possible facility; there are few halls in Canada which surpass the accommodation and perfection of appointments of that hall. The company has financed an artificial ice rink. There is nothing for the welfare and interest of its employees to which the company does not contribute.
I simply wish to express the hope, in closing, that some of the industrialists of this Dominion will follow the example set by Doctor Blaylock, which as I have stated is generally considered to be one of the greatest industrial accomplishments on this North American continent. It is not as if it began only yesterday; for seventeen years it has been working perfectly, so much so that every man in the employ of that company feels that he is honoured by being on its pay-roll.
Mr. H. E. BRUNELiLE (Champlain): Mr. Speaker, I have heard it said by many English speaking members of this house that the French language is musical, and in consequence of that very kind compliment, which I have taken seriously, I will, in the course of the few minutes which will follow, use that most harmonious language. I am sure this will be a relief to the patient Minister of Finance (Mr. Dunning).
(Translation). I would not take up a single minute of the valuable time of the house to speak on the budget were it not for the

The Budget-Mr. Brunelle
criticisms levelled by leading politicians, not only in this chamber but in the province of Quebec and particularly in my own constituency, against a certain item of the budget presented by the hon. Minister of Finance (Mr. Dunning). Before proceeding, I deem it my duty to congratulate the hon. minister, who presented such an admirable statement of the financial situation of the country.
As it is my intention to submit a claim on behalf of the French Canadian element in Canada, I shall address the house in my mother tongue, and in doing so, I offer no apology, for indeed it is a matter of regret that, owing to circumstances, we are so frequently called upon to use the English language.
As I was saying, in a circular published in a number of newspapers in the province of Quebec, a certain politician criticized the increase of the sales tax from 6 to 8 per cent. The taxpayers are well aware that in 1930, the sales tax had been reduced by the Liberal party to 1 per cent and that between 1930 and 1935, the same tax was raised to 6 per cent, which represents an increase of 5 per cent. At that time no circulars were printed to criticize the increase, nor was there a single voice raised in protest on the floor of the house. Other times, other ways!
Why is it necessary for the government to impose new taxes, and what are the facts? From 1930 to 1935, under the Conservative administration, our national debt increased by
8867.000.	000, which, at the rate of 3 per cent, represents an interest charge of $26,010,000.
Secondly, the country has to pay, in interest alone on our total debt, 8134,550,000 a year.
Thirdly, for the last year of the Conservative administration, the deficit amounted to
8162.191.000.
It is obvious that new sources of revenue were required to meet the obligations of the late regime. The sales tax reaches every one, and to a larger extent is paid by those whose purchases are greater; the wealthy will therefore pay more than the middle classes. So far as the unemployed receiving under direct relief are concerned, they will hardly be affected since practically all their requirements are purchased by the public authorities.
On the other hand, out of the 8134,000,000 payable annually, the larger portion must go towards the payment of the war debt which, to use the words of the Minister of Finance himself, "is still the principal factor of our budgetary situation." We all know which party was responsible for the war debt and those who belong to that party
should not find fault with the present government's earnest effort to pay off the enormous debt incurred by the Conservative party.
Once order is restored to the business of the country and our enormous debt has been reduced, the Liberal party will undoubtedly reduce the sales tax, just as they did in the past, and just as they succeeded in decreasing the national debt by $275,000,000 during their last administration. To achieve such a result, the present government will adhere to their usual policy of moderation and careful thought.
Should not, for instance, automobile owners rejoice at the reduction of the rate of duty on gasoline? Should not the farmers also welcome the 27 per cent reduction in the customs duty on farming implements?
I note with great pleasure that the budget presented by the hon. Minister of Finance is a fair one that distributes the burden of the national debt among all classes of society evenly, according to their ability to pay. In fact, legislation should not tend to penalize any class of the community, but aim to make for uhion amongst all classes, in the national interest.
In the few minutes to follow I should like, Mr. Speaker, to .make a plea for union from a threefold viewpoint. I realize that agriculture is the basis of our wealth and the key to our national prosperity. In that connection, may I quote the statement once made by Hon. Honone Mercier, a former prime minister of the province of Quebec:
We are an agricultural country and upon the prosperity of agriculture depends our national progress. To seek to build our future on anything else but agriculture is to have recourse to artificial means that will prove just as useless as to attempt to stem the tide.
If it is possible for the government to subsidize a certain class of the community, for example by paying part of the cost of unemployment insurance, I believe they are also bound to pay part of the interest on farm loans and to provide loans for the farmers at a rate of 3 per cent. On the other hand, the procedure in connection with the obtaining of loans should be made more expeditious, less costly and more applicable to the laws and conditions existing in the province of Quebec. If farmers in a certain section of the country are to be granted subsidies or bonuses to stimulate the production of their chief commodity, would it not be equally fair that the farmers in eastern Canada also be paid a bonus on their production of butter and cheese?
The farmers of eastern Canada have their own problems as well as those of western
The Budget-Mr. Brunelle

Canada. Let all be assisted or none. I consider that we should help every one and come to the assistance of all the provinces.
The sums recently appropriated for the western wheat growers was voted in order to redeem the pledges of the late government. Otherwise, I would have protested unless the eastern farmers had been assured of equal treatment. The farmers of the various provinces are not efficiently organized; their forces are divided. In every province there is a lack of practical unity in each province and a still greater lack of it among the farmers of the various provinces. All the farmers' unions in the country should be organized into a federation, so as to enable so important a class of the community to submit their claims more efficiently and expeditiously and to assert their rights. I therefore look forward to such a federation of Canadian farmers from the Atlantic to the Pacific. In order to achieve that result, the earnest cooperation of each province is required; only through good will can perfect understanding exist among all the citizens of the country. It is also necessary to dissipate all causes of envy, friction, misapprehension and prejudice.
As a second point of union, I shall now refer to a delicate subject. It is necessary that harmony should reign between the two great races composing this country. Personally, I have no fault to find with the element constituting the majority of the citizens of Canada. For nearly twenty years I have lived in Saskatchewan, among our Englishspeaking fellow citizens, and I have no cause to complain of them. On the contrary, they are endowed with business ability and a sense of discretion which we should seek to emulate. I must say, however, that a certain discontent seems to exist in the province of Quebec regarding the number of positions held by French-speaking Canadians in the federal service. I desire to quote a few figures on the subject. In 1932-and the situation has become much worse since-out of 40,638 civil servants, they numbered only 8,142, or 20-02 per cent, while on the basis of the Frenchspeaking population of the country they should have had nearly 33 per cent of the number of federal civil servants, or 13,546. On the basis of salaries paid, the situation of the French-speaking civil servants is still worse. Out of a total of more than 66 million dollars, their salaries amounted only to $12,559,432, while based on the figures of the Frenchspeaking population of the country they should be entitled to about 33 per cent of the total payroll, which is $22,325,347.
I do not wish my Temarks to be misunderstood. I am simply stating facts. The time

has not come yet to indulge in bitter protests, to show rancour and still less to resort to threats. I merely say that if a province must share the burden, pay its quota of taxation and contribute its share of sacrifice, it should receive its share of compensation. Let us render justice to whom justice is due. Let us not act in such a manner as to give any section of the population cause to feel itself unfairly treated or persecuted, for the discontent that will inevitably follow will react to the prejudice of all, and we are all here to stay and to live together.
At the celebration recently held in Orillia to honour the memory of Champlain, Dr. Cody, principal of Toronto university, proposed the toast to Quebec. Having paid tribute to a few great figures in our history, such as Champlain, La Salle, Laval and Montcalm, he added:
These men have and still have descendants. Is it necessary to mention de Salaberry, Papineau, Cartier, Lafontaine and Laurier? The history of the past and of the present should help us better to understand each other. Our attitude towards one another should not be only one of tolerance, but of brotherhood and cooperation.
I congratulate and thank the Minister of Finance for having, for the first time, caused the budget statement to be translated into French and for having made possible its publication, in the French as well as in the English press, on the day of its delivery in the house.
As we all have at heart the future of our country, I wish to offer a third suggestion in connection with unity. The problem arising from unemployment, direct relief and the national debt is stupendous. It places our future in jeopardy. There is no reason why a young country like Canada should be unable to solve this problem. Should not the party leaders write on a single policy in the matter of unemployment? If extreme measures are necessary, we should take them. Could not the party leaders, meeting as a committee, decide upon a program to be carried, and then urge their respective parties to support such a uniform policy, not only in parliament but also at election time? The idea might appear impracticable to some, but I believe that every one should aspire to that ideal, for, as Lafontaine says in one of his well-known fables:
L'histoire nous apprend qu'en de tels accidents,
On fait de pareils devouements.
I am not advocating a union or coalition government, but simply an understanding between parties, a union of Canadians for the settlement of the unemployment problem. I find the following in Le Droit, of the 9th instant: "All parties in France unite to save

The Budget-Mr. Needham
the franc." Then, could not our own parties here also unite in an effort to protect our future?
The leader of the Conservative party (Mr. Bennett) is an able and public-spirited citizen and the right honourable the Prime Minister (Mr. Mackenzie King) is a sincere man, in whose veins flows the blood of a true patriot. In my opinion, one or the other of them should take steps to reach an understanding on unemployment. No doubt, the leaders of the other parties would join them in an effort to solve that all-important problem. The question of unemployment is such a distressing one that it hardly seems reasonable that a party should seek to sap the people's confidence in the government's endeavours to settle it. Bold and presumptuous as my suggestion may appear, I offer as excuse my frankness and sincerity. I am sure, Sir, that the illustrious Canadians who have passed away, Conservatives as well as Liberals, Macdonald, Cartier, Mackenzie and Laurier, would thrill with admiration at such a fine gesture made by their successors to preserve Canada from the dangers and consequences of unemployment and direct relief, two evils that can only spell disaster for Canada's younger generation.
In conclusion, I may say that the policy of this government is one which tends to end the present disastrous depression, and I trust that all parties having at heart the welfare of the country will give it their eager and sincere support.


Mr. JOSEPH NEEDHAM (The Battle-fords) :: Mr. Speaker, it seems as if almost everything that could be said on the budget has already been said, but there are one or two points I should like to put forward.
Quite naturally I felt quite a thrill of pride in hearing the Minister of Finance (Mr. Dunning) present his budget on the first of May last, as he is one of my own countrymen who came out to this country just a year or two ahead of me and settled almost in the same district, and I have watched his progress from the time he went to the first convention in Prince Albert right down to the present.
The main subject I wish to discuss is the financial situation of the dominion, the enormous debt that has accumulated, $3,800,000,000, as presented in the budget of the Minister of Finance, and also the minister's statement that in making his budget this year he expects a deficit of not less than 8100,000,000. To me those figures look very serious indeed. The national debt has been growing ever since confederation, at which time there was very little debt. Looking through the Canada
I ear Book I could count on the fingers of one hand the years since confederation when any reduction has been made in the national debt. That is a serious situation because we have passed through many years of prosperity as well as through some years of adversity, but the years have been one long, almost unbroken, succession of an accumulation of debt from confederation down to the present. No one government or party is responsible for that. There has been a succession of Liberal and Conservative governments in charge of the affairs of this country ever since confederation, except during the time of the Union government. One or other of the two old parties has always been in power; I understand that prior to the last election their periods of governing were just about equal, and so I say that no one government can be blamed more than another for the debt situation. In fact I suggest that there is very little difference when one analyzes the situation in its entirety.
The two old parties can be likened to a railway. The train runs along a certain track and reaches a certain destination. You may change the engineer periodically, but so long as the train goes along the same track it will arrive at the same destination. I think that is typical of the two old parties, and the results of their management are the present situation. After the election I received a letter from a friend of mine in Manitoba, and referring to the two old parties he said; "The Conservatives have been true to false principles and the Liberals have been false to true principles." That was his sizing up of the two old parties, and I think his comment is worthy of study in the situation in which we find ourselves at the present time. The wonder is that we continue with the same old system. The system that has produced the results we see at the present time surely is not a system that can bring about a change for the better. No corporation or company would pursue a similar line under similar circumstances, and yet we are doing it in government. I ask myself, do they not know a better system? I cannot satisfy myself that they do not know. When the leader of the opposition (Mr. Bennett) was Prime Minister he gave some radio addresses in which he indicated that he understood the situation and the remedies. I believe that had he implemented those radio pledges in the last session of the last parliament he would have been swept back to power with as great a majority as the Liberal party now holds.


Richard Bedford Bennett: But he did.
The Budget-Mr. Needham


Joseph Needham: That was not the feeling where I lived.


Richard Bedford Bennett: But he did.


Joseph Needham: I shall have to analyze
that Statement, -because I am satisfied that he did not. Had he done so he would have
been swept back to office. I have not the least doubt that the present government understand the situation and the remedy just as well as do hon. members in this or any other part of the chamber. It seems to me it is just a matter of courage and the power to break with some force which is now holding them. That is the only solution to iwbich I can come. I want to analyze the situation in a -reasonable and fair way, because we think we have a solution; the Cooperative Commonwealth Federation think they have a solution; the Conservatives think they have a solution, and surely the government has something different from what has been going on since confederation. Mr. Speaker, I would ask you to call it eleven o'clock.
On motion of Mr. Needham the debate was adjourned.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Tuesday, May 12, 1936