QUESTIONS

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

Mr. DIEFENBAKER:: 1.	To what extent, if any, were moneys voted for Prairie Farm Rehabilitation Act purposes by parliament, during the 1939 session overexpended during the year 1939?
2.	Were any contracts for dug-outs and small dams let on the basis of payment therefor being deferred until the present session of parliament?
3.	Were any funds taken from the parliamentary vote for Prairie Farm Assistance Act and used for Prairie Farm Rehabilitation Act purposes?
4.	If so, what authority was there so to do?


Mr. GARDINER:: 1 and 2. Projects completed and approved for payment in 1939-40, some of which were previously authorized, exceeded the amount voted for 1939-40 as follows: Large projects, $58,381; dug-outs and small dams, $508,840.99. Total, $567,221.99.
In the case of dug-outs and small dams the authorizations for construction state that the financial assistance is to be subject to funds being available, or being made available, for this purpose when the project has been completed.
3.	No.
4.	Answered by No. 3.



GEORGES GONTHIER

Mr. McGREGOR:: 1.	What was the date of Georges Gonthier's appointment as auditor general?

Questions
2.	At what salary was he appointed?
3.	What was the salary of his predecessor?
4.	What was the date of Mr. Gonthier's retirement?
5.	What is the amount of his retiring allowance under the Superannuation Act?
6.	What is the total amount of his contributions under the Superannuation Act?
7.	Prior to Mr. Gonthier's appointment as auditor general, did he make application to the civil service commission in connection with a position in the customs or excise services?
8.	If so, what was the date of the aforesaid application ?
9.	What was the title of the position for which he applied, and the salary range?
10.	Was he successful in the competition for such position?
11.	Have any other retired employees, under the Superannuation Act, been voted additional amounts?
12.	If so, what are the names of such persons; what were their former positions, and what were the reasons for such additional votes?


Mr. CASGRAIN:: 1.	January 18, 1924.
2.	$15,000.
3.	$6,000.
4.	November 21, 1939.
5.	$4,750.
6.	$11,786.50.
7.	The records of the civil service commission do not indicate that any application had been received from Mr. Gonthier.
8.	9 and 10. Answered by No. 7.
11.	No.
12.	Answered by No. 11.



MUNITIONS AND SUPPLY-ROLLLING STOCK CONTRACTS


Mr. ROY:: 1.	What is the male population of Canada between the ages of 18 and 30, and between the ages of 30 and 60, according to the latest dominion statistical reports?
2.	What is the French Canadian male population in these two categories?


Mr. MacKINNON (Edmonton West):: 1.	Ages between 18 and 29, inclusive: 1,080,299 (census 1931). Ages between 30 and 59, inclusive: 1,862,984 (census 1931).
2.	Ages between 18 and 29, inclusive: 301,987 (census 1931). Ages between 30 and 59, inclusive: 413,635 (census 1931).


WAR HISTORIAN
Mr. ROY:: 1.	Has the government appointed any person to write the history of our participation in the present war, and, if so, who was appointed?
2.	Will the said appointee be assisted in his work by any others? If so, who are the assistants ?
3.	Will such history be published in the two official languages of the country, and have instructions been issued to that effect?
4.	If so, what instructions were given, and to whom?
5.	Is any of the staff charged with this work bilingual?


Mr. MACKENZIE KING:: 1. No.
2,,	3, 4 and 5. See answer to No. 1. QUESTIONS PASSED AS ORDERS FOR
T-* -rirpTTT) XTQ XL Hi X U 1UI iJ


NORTHERN SASKATCHEWAN FLYING TRAINING SCHOOL LIMITED
Mr. DIEFENBAKER:: 1.	Has the Northern Saskatchewan Flying Training School Limited, of Prince Albert, Saskatchewan, been given a contract by the government in connection with air training?
2.	If so, what are the terms respecting remuneration or payment to the said company?
3.	Who are the directors of the said company?


Mr. POWER:: Return tabled.


UNEMPLOYMENT RELIEF AND AGRICULTURAL DISTRESS-STATISTICS
Mr. ROY:: 1.	How much money did the dominion government pay to each of the various provinces for unemployment relief and agricultural distress in 1935, 1936, 1937, 1938, 1939, and 1940?
2.	How many unemployed were granted relief in each province in 1935, 1936, 1937, 1938, 1939, and 1940?


Mr. McLARTY:: Return tabled.
Tram,-Canada Air Lines


MOTIONS FOR PAPERS
Mr. NICHOLSON:: For a copy of all letters, telegrams and other documents in the possession of the department, regarding the request for leave of absence, resignation and reappointment of S. T. Shabbits, of Canora, Saskatchewan, during the year 1940.


UNEMPLOYMENT BELIEF-QUEBEC PROVINCE
Mr. ROY:: For a copy of all correspondence, letters, telegrams, memoranda and other documents exchanged from January 1, 1939, to date, between the dominion government and the provincial government of Quebec with respect to unemployment relief, the sharing of the cost and the amount contributed to the province by the federal treasury.


NATIONAL REGISTRATION
[Stage Direction]
On the orders of the day:
Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, I wish to ask a question of the Minister of National War Services (Mr. Gardiner). My attention has been drawn to the proposed questions to be asked during national registration next month. No provision has been made for a person desiring to declare himself as having conscientious objections to the bearing of arms, but who is prepared to offer himself for some other important service in our war effort. Will the minister consider including such a question?


James Garfield Gardiner: Mr. Speaker, this is a registration to find what the people of Canada can do. That is its objective, and it was not thought advisable to have on the questionnaire any question suggesting action with respect to exemptions from any service. When the results of the registration are being utilized for any purpose, consideration will be given to ways and means of meeting situations as they may arise.



TRANS-CANADA AIR LINES TRANSFER OF ADMINISTRATIVE SERVICES TO DEPARTMENT OF MUNITIONS AND SUPPLY

[Stage Direction]
On the orders of the day:
Hon. R. B. HANSON (Leader of the Opposition):: Yesterday the Prime Minister (Mr. Mackenzie King) tabled order in council P C. 3076 dated July 8, 1940. Having regard to the provisions of this order with respect to

the administration of civil aviation, meteorological and radio services, broadcasting, and Trans-Canada Air Lines having been taken away from the Department of Transport and vested in the Department of Munitions and Supply, will the Minister of Munitions and Supply (Mr. Howe) say that the administration of Trans-Canada Air Lines is to be divorced from the administration of the Canadian National Railways, and if not, how otherwise?


Hon. C. D. HOWE (Minister of Munitions and Supply):: Mr. Speaker, there is no disturbance of the departmental organization or of the organization of the Canadian National Railways. It so happens that the aviation branch of the Department of Transport has been made responsible for the construction of new airports in connection with the air training scheme, and inevitably is responsible for many services connected with the air training scheme, such as the weather service and the radio beam service. For that reason the Prime Minister (Mr. Mackenzie King) felt that in dividing the department it might be as well to place that part of the department in the war service group. The arrangement is that the Deputy Minister of Transport reports to myself on these particular matters without in any way interfering with his work as Deputy Minister of Transport reporting to the Minister of Public Works and Transport (Mr. Cardin).



PRIVILEGE


[Stage Direction]
On the orders of the day:
Mr. C. A. HENDERSON (Kindersley):: Mr. Speaker, I rise to a question of privilege. I have in my hand a copy of the Ottawa Citizen of the 16th instant containing a long editorial entitled "When Canada Speaks," referring largely to Canada speaking to the United States of America. It contains a paragraph which. I think, reflects very seriously on persons in my constituency of Kindersley, Saskatchewan. quite a number of whom came from the United States of America. I too was born in the United States-a matter over which I had no control; I was not consulted. These constituents, according to this paragraph, have not been voting right. I agree with that contention so far as 1935 is concerned, but I think they voted all right this last time. Shall I read the paragraph? I will just read a very small portion, Mr. Speaker.

Unemployment Insurance


Richard Burpee Hanson: The hon. member had better get down to the question of privilege.


Charles Albert Henderson: It states:
Canada has missed almost a year's opportunity to speak in the language of national action to inspire the United States. In the election period of wordy campaigning last March, the political parties were united in denying that Canada would introduce compulsory military service. A Liberal opponent of conscription, from the United States in the last war-of military age under the American draft law- successfully opposed a Canadian ex-soldier, the solitary candidate on the platform of national service. A C.C.F. pacifist also received more votes. The Canadian election performance conveyed no inspiring impression to Canada's neighbour.


Mr. SPEAKER:: Order. The hon. gentleman has risen to a question of privilege. Is there something to which he wishes to direct attention?


Charles Albert Henderson: I am a Liberal and a Canadian citizen. Although naturalized, I was naturalized before the war. I was not at that time a United States subject or subject to the United States draft. I have always been a loyal Canadian citizen, as are most of those in my constituency who have come from the United States, and I do not appreciate the reflection in this editorial that I came to Canada to avoid the United States draft law.



MR. ADAMSON-PUBLISHING IN THE PRESS OF MATERIAL BANNED BY ORDER OF CENSORSHIP

[Stage Direction]
On the orders of the day:
Mr. A. R. ADAMSON (York West):: Mr. Speaker, on a question of privilege: on July 12 I directed a question to the Secretary of State (Mr. Casgmin), and I was answered by the Prime Minister (Mr. Mackenzie King), with regard to press censorship. The Prime Minister stated that he would give me an answer on Monday. It is now Wednesday. Is he able to say when an answer will be given?


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I apologize to my hon
friend for not having carried out the undertaking. and I may also say that I was shortsighted when I said I would give the answer on Monday. One should not be so specific.
The question was one which related to the Department of Justice, and the Minister of Justice (Mr. Lapointe) was not in his seat at the time. I knew that my colleague had the matter in hand and I expected that he would be in a position to have the answer, either 95826-1071
given by himself personally or ready for me to give, but unfortunately the Minister of Justice has not been in the house since last week. I understand that the matter is receiving the attention of the Department of Justice, and as soon as I can get the answer from that department I will give it to my hon. friend.


Agar Rodney Adamson: Thank you.



MR. FAIR  MEETING OF BANKING AND COMMERCE COMMITTEE CALLED FOR THIS DAY

[Stage Direction]
On the orders of the day:
Mr. ROBERT FAIR (Battle River):: Mr. Speaker, on a question of privilege: in the Votes and Proceedings of Tuesday, July 16, a meeting of the banking and commerce * committee is scheduled at room 277 for 10.30 this morning. The hon. member for Bow River (Mr. Johnston) and I went to this meeting for the purpose of learning something, but to our disappointment it was only a Liberal caucus. We want to assure hon. members that we will not divulge any information obtained during our stay there-


Mr. REID:: We were discussing refugees.


Robert Fair: -and would ask that Liberal caucuses be called as such in the future.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: Yesterday my hon. friend the leader of the opposition (Mr. Hanson) suggested with respect to the unemployment insurance bill that it might be advisable after the second reading to have the bill referred to a special committee of the house. I stated at the time that I would confer with members of the government and indicate later the view of my colleagues and myself. May I say that on considering the matter it has seemed to us that a useful purpose would be served by having the bill referred to a select committee of the house. It may prevent a lengthy discussion in committee of the whole, seeing that the bill it-self is a long one and its provisions could be gone into carefully by p special committee. As there appears to be unanimity on the part of the house with respect to the principle of the measure, it might be understood that the bill will be brought up for second reading, say, to-morrow, and then referred to a special committee. If that course is agreeable to hon. members
Unemployment Insurance

it might also be understood that such lengthy discussion, if any, as is to take place on the measure might take place when the bill comes back from committee rather than on the second reading.


Richard Burpee Hanson: I have no objection to the course indicated by the Prime Minister (Mr. Mackenzie King), but I should like to point out to him that so far I have just seen the outside of this bill. It reached my office after lunch to-day, and I understand has not been distributed, or, I am told by the minister, even printed-


Norman Alexander McLarty: Oh, yes.


Richard Burpee Hanson: Well then, it has not been distributed. I should not like to see the bill pushed forward until hon. members have had at least a chance to read it. I know that it involves a great deal of study. So far as I am concerned I am pressed for all I am worth, and to give study to a bill of this kind requires time and deliberative attention. I hope there will be no rush to take any further steps until hon. members have had a chance to read the bill.


William Lyon Mackenzie King: I am surprised to learn that the bill has not been distributed. I understand that it was printed some days ago. Certainly there is no desire on the part of the government to rush the measure in any way; we merely wish to meet the convenience of hon. members by avoiding unnecessary delay so far as the session is concerned.
I hope that there will be a chance for my hon. friends to read the bill between now and to-morrow, and that we may give the bill second reading to-morrow. If, however, when tomorrow comes my hon. friend should feel that he has not had an opportunity to peruse the bill sufficiently, we will arrange to have the second reading on Friday.


Richard Burpee Hanson: Very good.


William Lyon Mackenzie King: The sooner
the bill gets to the special committee, if it is to go to one, the sooner it will be disposed of in the end.


Norman Alexander McLarty: May I just explain that it was
understood that the bill was to be distributed this morning. Through some unfortunate occurrence copies were not available; but they will be available very shortly and will be distributed immediately to all hon. members.


Mr. CHURCH:: That means that for this
session it has been dropped by the government like a hot potato.



WAYS AND MEANS


[Stage Direction]
The house in committee of ways and means, Mr. Vien in the chair.
The CHAIRMAN:: Resolution 5, with
proposed new paragraph 3:
5.	That the said act be amended by adding thereto after section eighty-eight the following
section:
"88A. (1) In addition to any duty or tax that may be payable under this act, or any other statute, there shall be imposed, levied and collected a war exchange tax of ten per cent on the value for duty of all goods imported into Canada, payable by the importer or transferee who takes the goods out of bond for consumption at the time when the goods are imported or taken out of warehouse for consumption.
(2)	The tax imposed by this section shall not apply to any goods imported into Canada,-
(a)	which are entitled to entry under the British preferential tariff, or under trade agreements between Canada and other British countries;
(b)	which are entitled to entry under customs tariff items 360, 460, 690, 690a, 696a, 700, 700a, 701, 702, 703a, 704, 705, 705a, 706, 707, 708, 709; or to fish caught by fishermen in vessels registered in Canada or owned by any person domiciled in Canada and the products thereof carried from the fisheries in such vessels.
(3)	No person shall take advantage of the tax imposed by this section to increase the price of goods by an amount greater than is justified by any increase in cost properly arising from such tax or to maintain prices at levels higher than are so justified and, where the war-time prices and trade board reports to the governor in council that, in its opinion any person has so taken advantage, the governor in council may, upon the recommendation of the said board, for such period of time as he may determine, impose upon all or any of the goods produced, sold or dealt in by such person an excise tax at a rate not to exceed ten per cent of the selling price of such goods, remove or reduce customs duties applicable thereto, fix the prices thereof and take or authorize the said board to take such other measures under the war-time prices and trade board regulations as the said board may recommend; and, for the purpose of investigation and any recommendation by the said board and for the purpose of preventing any aforesaid advantage from being taken by any person, the said board shall have in respect of any aforesaid person and goods the powers conferred on it from time to time by the said regulations as if such goods were necessaries of life as therein defined, and the taking of any such advantage shall be deemed to be an offence against this act and the said regulations, and the penalties prescribed in said regulations shall extend and apply thereto."


Mr. PERLEY:: Yesterday afternoon and evening many western members protested against this ten per cent war exchange tax, pointing out its implications. I agree with them. This tax means an increase in the price of many articles used by farmers in their work either directly or indirectly. Gaso-

Special War Revenue Act
line, repair parts, implements and other items were mentioned yesterday. Agriculture has suffered in recent years to a greater extent, I believe, than any other industry. The depression has affected us in western Canada more than it has the people in any other part of the country. In various discussions *that have taken place in the house since the opening of the session on May 16, the western producer's situation has been fully placed before the house. The western farmer to-day is producing and selling his products below cost. I would ask what other industry in Canada is allowed to carry on under such conditions without something being done to remedy the situation. Industry generally, particularly in eastern Canada, is producing under a guarantee of costs, with a plus in some instances. I join in the protest made by the hon. member for Lake Centre (Mr, Diefenbaker), the hon. member for Rosthern (Mr. Tucker) and other western members who have spoken against this tax. They made a very strong case for an exemption of implements of production from the levy. Certain other imports might also be exempted.
The hon. member for Lake Centre discussed at some length the importations of fruits and vegetables, pork and other commodities. I am not going ,to burden the house with figures; a multiplicity of figures was given yesterday. I am not a calamity howler but I do submit that the circumstances of the western farmer should be emphasized. I am not going to do any calamity howling on behalf of the western farmer, however. The farmers of the west are ready to play their part to win this war and at any time they will discharge their duty patriotically, even if it hurts. At the same time, I suggest that this additional burden should not be imposed on the western producer at this time. Reference has been made to the surplus of wheat, and this may be a blessing in disguise in t'he long run. Two years hence it may prove to have been providential that we had a surplus.
As I say, the farmer is patriotic but he wants a fair chance. He wants a parity of prices. We have seen the prices of the products of industry rise to a point out of all proportion to the prices of the products the farmer has to sell. I might mention implements, for instance. I will not give any figures at this time with regard to prices, but yesterday the hon. member for Souris put on the record prices and other figures to show the developments in connection with implements since 1932. Under the Bennett government when there was an increase in the tariff generally, and on implements in particular, we voted for it on the distinct understanding that there had been an agreement that there would be no increase in price, and the member for Souris last night gave figures with regard to some of the principal implements of production, nine or ten, showing that from 1930 to 1935 there had been a decrease in prices. I admit it was not as much as we should like to have seen but it was in the right direction. In 1936, following the change of government, there was a lowering of the tariff from 25 per cent to 12^ per cent, and a further decrease in 1937-38 under the agreement. What was the result? We experienced an increase in price.
This war exchange tax will result in a further increase. Not only was there an increase in the prices of implements during the period to which I have referred but there was a very substantial increase in importations and this resulted in some ways to the detriment of the farmer. The Minister of Agriculture went to Saskatchewan in 1938 during the election campaign and said that for two years at Ottawa he had been trying to do something to reduce implement prices for the farmers. He pleaded with the electors to return the Liberal government in that province and promised that he would do something when he came back here. He came back and what happened? I well recall the speech he made in 1938 when he warned the implement manufacturers and importers what might happen if there was not a reduction in prices. They paid little attention to what he said, and since then we have seen increases in the prices charged. We have also seen a substantial increase in the prices of repair parts. In my opinion this tax will work to the great disadvantage of the farmers in regard to repair parts. We may expect to see increases in that direction if the tax goes through.
What consideration, I would ask, has the producer, the farmer, received in this budget? How often has he been named in the budget? If the hon. member for Regina City (Mr. McNiven) last night had looked through it he would have seen that the farmer or producer had received very little consideration The hon. member, however, did stress the assistance assured the farmer by the price of wheat being fixed recently, a graduated price; he claimed that was of some benefit to the producer. Reference was made yesterday to the one-cent increase per month in the price after the beginning of the crop year. Speaking on the budget last year I suggested to the government that they should consider a proposal to add one cent a bushel per month to the fixed price in order to encourage the farmer to hold his wheat on the farm. I believe that will have to come. I also suggested last year-and it was referred to yesterday-that we should have a domestic price
Special War Revenue Act

for wheat and flour in Canada. I believe that will have to come. Last year I suggested $1.20. Under the conditions that have come about since then, that may be a little high, but it certainly should be something over a dollar.
The question of storage charges has been discussed. I am not going into that this afternoon; I do not think this is the proper place. I trust, however, that within the next week or ten days we shall have an opportunity to discuss in general these questions pertaining to the marketing of wheat. The Minister of Agriculture knows well that there is a serious situation in parts of Saskatchewan. I noticed in yesterday's Leader-Post that the forms for application for the bonus have been distributed in that province, and the dead-line date was July 15. I have on many occasions this session asked the minister to make a statement with respect to the Prairie Farm Assistance Act. We have been assured that it is under consideration and that some amendments will be made.


James Garfield Gardiner: If the hon. member will permit me I should like to correct the statement just made. No such thing as a form goes out for application under the Prairie Farm Assistance Act. There is a letter that goes to all individuals in an area that may be affected, asking them to send in the acreage they may have, but it is not an application for bonus.


Ernest Edward Perley: The Leader-Post said that Mr. Mackie who was in charge of administering that act appeared before the municipal convention and referred to it, saying that these forms had been distributed, and no doubt he assured that convention that the act would be carried out this year in some form or another.


James Garfield Gardiner: If the report says that an application form for assistance under the act was sent out, it is not correct. That is not what they are.


Ernest Edward Perley: The report said that some three hundred thousand had been distributed.


James Garfield Gardiner: That would be about the number, but they are not application forms.


Ernest Edward Perley: The fact that Mr. Mackie had made the statement before the convention indicates that the farmers in some parts of the west are at a point where they will more or less have to depend on the bonus. All I wish to say is that we should have that legislation down very soon. If July 15 was the dead-line, any amendments to that act should have been introduced in this house a week before that.

I appeal to the minister to give consideration to the suggestions that have come, from this side of the house particularly, and the protests against this ten per cent war exchange tax as it applies to farm implements. In their present circumstances the farmers cannot carry that burden. I believe that sixty-eight per cent of the implements used in western Canada are imported or are the product of United States firms. The hon. member for Swift Current (Mr. Graham) will recall that when he was counsel before a committee of this house inquiring into the implement business, such figures were laid before the committee.


Mr. ILSLEY:: Has the hon. gentleman the value of the implements imported into western Canada?


Ernest Edward Perley: I have not the figure at hand, but I think it was quoted yesterday by the hon. member for Souris.


Mr. ROSS (Souris):: It was $20,000,000.


Ernest Edward Perley: I think the hon. member for Regina City also referred to it. I would stress this point, that over sixty-eight per cent of the farm implement business done in western Canada is done by United States firms, and that sixty-eight per cent of that Canadian business represents, I understand, only about four per cent of the total North American business of these United States firms. Therefore it is apparent that we are at their mercy. These goods will continue to be imported from the United States, and this tax will be a very heavy burden.
Speaking on the budget, I placed on Hansard a comparison of farm incomes, using 1926 as the base. It showed that, comparing 1939 with that year, there has been a decrease to forty-five per cent in farm income. What other industry in Canada has had such an experience? When we consider that position of western farmers we should give them every consideration possible.
I want to be consistent in my stand in this house. I have on former occasions, in 1930 and 1935, voted for an increase in the tariff. I did so when there was a guarantee that there would be no increase in prices of goods. I now appeal to the minister to give consideration to the suggestions that were made here yesterday, and the protests against this tax as it applies to farm implements. I therefore offer the following amendment to the amendment, moved by myself and seconded by the hon. member for Victoria-Carleton (Mr. Hatfield):
That resolution No. 5 he further amended by adding thereto the following:
"Provided always that such war exchange tax of ten per cent of value for duty of all goods

Special War Revenue Act
imported into Canada as proposed shall not apply to agricultural implements and parts thereof."


Thomas Vien: I think the amendment offered by the hon. gentleman is wrongly worded. We are considering resolution No. 5. The minister asked leave to amend that resolution by striking out subsection 3 thereof and substituting another subsection. That leave was granted. Therefore the resolution now before the committee is the amended resolution, and I suggest to the hon. member that instead of submitting an amendment to the amendment he should submit an amendment to the resolution as amended.
Mr. Perley moves, seconded by Mr. Hatfield:
That resolution No. 5 as amended be further amended by adding thereto the following:
"Provided always that such war exchange tax of ten per cent on the value for duty of all goods imported into Canada as proposed shall not apply to agricultural implements and parts thereof."
Perhaps I might make the correction.


Ernest Edward Perley: Very well. I leave that for the consideration of the committee. I hope it will have the support of all hon. members.


Mr. GRAHAM:: Mr. Chairman, ever since I listened to the former Minister of Finance introduce this budget I have been much concerned over this feature of it; and ever since then the western Liberals sitting on this side of the house have been giving a great deal of attention to this exchange tax of ten per cent imposed upon imports other than from empire countries. It is no secret, I think, that we made representations to the former Minister of Finance, and after the present minister took over the portfolio we had an opportunity to make the same representations to him. I am happy to recall that in making his budget speech the former minister made it quite clear that the government fully realized that this was a departure from the traditional policy advocated and to a certain extent implemented by Liberal governments that have held office in Canada in the past. He definitely stressed the point that the necessity for this measure arose because of the war situation and indicated that the government fully intended to repeal the tax just as soon as the necessity for it was removed. I am also happy to believe that the present Minister of Finance takes exactly the same view.
As I have said, this tax has been justified by the government on the ground that it is necessary in connection with our war effort. They suggest that it will produce some 165,000,000 in revenue. I do not propose to deal with that feature, because I do not
believe the government would have introduced this tax at all if the primary purpose had been the raising of revenue. I have not asked them, but I think they would agree that there are many other ways of raising this amount of money without imposing such an unheard of tax in the manner in which it has been imposed. It is true that $65,000,000 is a considerable sum of money to us as individuals and to the Canadian people collectively; yet when it is recalled that the budget deals with some $1,250,000,000, I am sure the committee will agree that in comparison $65,000,000 seems small and therefore, from our point of view, could have been raised much more beneficially either by increased direct taxation or by being included in the amount to be raised by borrowing. Therefore I do not intend to emphasize the revenue producing purpose of this tax, because I do not believe the government, in asking the committee to adopt this resolution, had that in mind at all. Undoubtedly the primary reason for the introduction of this tax was the desire to conserve foreign exchange.


Richard Burpee Hanson: And to raise revenue; the minister said so.


Roy Theodore Graham: For my purpose I am
assuming that the primary purpose was to conserve foreign exchange. We all know that Canada is faced with a most unusual situation. Because of the necessities of our war effort we are compelled to make very large purchases of war equipment in the United States, and that is also the situation so far as the mother country is concerned. In addition, some avenues of trade between this country and the United Kingdom have been closed because of the exigencies of war. So, as I followed the argument advanced by the minister, the purpose of this tax is to conserve United States exchange and also to increase the British preference in the Canadian market. That is to say, we wish to place ourselves in the position of having United States funds with which to make necessary war purchases in that country, and in addition, we recognize the fact that because of her situation at the present time the mother country is entitled to in increased preference in the Canadian market is against non-empire countries.
With the essential of these objectives I do not think anyone in this committee would disagree. I believe, however, that the method of carrying them out, as exemplified by this tax, is not the correct and proper method to achieve these purposes, worthwhile, as they may be. Although I am very much opposed to the application of this tax I voted
Special War Revenue Act

for the budget, and perhaps it would be proper to place myself on record as to why I did so. If there is one thing in connection with our war effort that we need above everything else it is unity behind leadership. I am fully aware to-day, as I have been ever since war broke out, that if we intend to make our contribution to the war effort most effective, we must choose leaders of capacity and, when we have chosen them, give them that measure of confidence which will permit them to carry on the effort we expect of them with the greatest degree of efficiency and the least possible interference. I think everyone will agree that we cannot possibly hope to win this war on the street corner, in the coffee-shop or even in the lobby of this House of Commons. So it seems to me that in passing final judgment on any measure introduced in this house every member must ask himself how his attitude towards that measure in the long run will affect the general instrument we have created to carry on our war effort.
To-day my submission will be in the way of criticism of this tax, but I want it distinctly understood that this does not weaken in any way my personal belief as a Canadian, rather than as a Liberal member of this House of Commons, that the men in key positions in connection with our war effort are, in my opinion, completely satisfactory. I would not want them to be embarrassed or interfered with in carrying out the severe and almost overwhelming duties which have been imposed upon them as a result of our taking part in this war. In spite of that feeling on my part, however, I believe I should express my opinion if I consider that the government have been ill advised or have pursued a wrong policy, of course always bearing in mind that salutary statement by Cromwell, "I might be wrong". I therefore think it is proper for me to point out why, with regard to this particular exchange tax of 10 per cent, I believe the government has pursued the wrong way of achieving the objectives it wishes to achieve, that is to say the conservation of our foreign exchange and the giving of assistance to the motherland, in the position in which she finds herself to-day.
I have listened with keen interest and attention to observations from hon. members opposite, and I must say I have been surprised at some of the arguments advanced by them for and against this particular tax. I find myself, in principle of course, allied completely with the hon. member for Ros-thern (Mr. Tucker), who so ably presented to hon. members the plight of agriculture. He presented it as it seemed to him, from the

point of view of Saskatchewan. But I do not believe any western Liberal member with whom I have been acquainted has ever thought that any national policy in Canada can be advocated or supported from only a Saskatchewan point of view. I feel sure the hon. member for Rosthern had no such idea in mind when he made his observations.
We from the west realize fully that a national policy must be considered in the light of the manner in which it affects the whole of Canada, not any particular part of it. With respect to this particular tax I would point out that one might just as easily champion the cause of the farmers in Ontario, the farmers in the maritime provinces, the fishermen in any of the provinces in eastern Canada, or in British Columbia, and might champion just as easily the cause of the consumer in any one of the provinces of Canada as he could the cause of the farmer or the consumer in Saskatchewan. This is a national problem, and one must of course approach it from that viewpoint; otherwise his observations ought not be given any great consideration by the Minister of Finance. I join with the hon. member (Mr. Perley) who has just spoken and with other hon. members from western Canada who have expressed the belief that the western Canadian farmer is just as desirous of bearing a fair share of the war load as is any other citizen in Canada. The farmers of the west claim no monopoly on patriotism; but on the other hand they claim, as they have pointed out on many occasions, a position of reasonable equality in respect of the imposition of costs brought about by the war.
There are, of course, many circumstances in our Canadian confederation which make it almost impossible under any conditions to make equal the position of one individual as compared with that of another in any portion of Canada. But in my view it should be the aim of the government, so far as it is able, to divide the load as equally as possible among the different portions of the countiy which must bear it.
I listened with particular interest 'to the remarks of the hon. member for Lake Centre (Mr. Diefenbaker), who comes from my own province of Saskatchewan. Much as I admire and respect the hon. member, it occurred to me that he became confused when he attempted to reconcile his position in respect of this tax with his desire to support the protective idea, one which has been so long advocated by the Conservative party.


Mr. HOMUTH:: No difficulty about that.


Roy Theodore Graham: I listened to the hon. member for Peel (Mr. Graydon) and much

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earlier, of course, to the hon. member for Danforth (Mr. Harris). May I point out to him, when he suggests that one must go down to the museum to find a free trader, that despite the war emergency and the necessities of the government, there are on this side of the house many hon. members who continue to support the fine and practical theories connected with the policy of free trade.
I listened yesterday to the Minister of Labour (Mr. McLarty), who quoted with approval Sir William Beveridge, and I would point out that in connection with the matter now before the committee I could quote the same authority with, I believe, the same approval. I doubt very much if one could find an economist of high repute who would support any policy other than that of the greatest possible freedom in our international trade.
As a matter of fact, in our own lifetime we have had the good fortune to see tried out two different theories in respect of trade. In 1930 we had the so-called "Canada First" programme. The Right Hon. R. B. Bennett made it quite clear to the country that, if returned to power, he was going to make experiments in the matter of tariffs. Let us say this of the right hon. gentleman, that he left no doubt in our minds that if he were returned to power he would carry out that experiment. Mr. Bennett did that very thing; he imposed the highest tariffs, and in this regard made an all-time high. For five years we as Canadian citizens had an opportunity of watching in actual practice the application of the theory of high protection.
As the hon. member for Rosthern pointed out, while there may be individual Conservatives who still support the theory of protection, yet away down deep in their hearts they must realize that from the point of view of the citizens of Canada that experiment was a hopeless failure, and was condemned in the election of 1935.
Never in my lifetime have I seen such a definite mandate given to any government to lower tariffs as was given to the Liberal government When it was returned to office in 1935. So much so is that true that I doubt if even the most courageous member on the Conservative benches to-day would dream of rising in his place and supporting under the name of "Canada First" the policy advocated by the Conservative party from 1930 to 1935.
For a moment or two I should like to deal with one aspect of this question. When Mr. Bennett put the "Canada First" policy into force he was successful in accompanying it with a promise from large manufacturers of
certain commodities to the effect that they would not use tariff increases unfairly to raise *the level of prices in Canada. I have had some experience in this matter, and when I speak I am speaking from my own knowledge of facts ascertained in inquiries before the tariff board, before parliamentary committees of this house and in legislatures.
I refer particularly to gasoline, and more especially to the suggestion by Conservative members that the promise elicited from those companies was carried out during that high tariff period. Let me outline briefly the history of what happened in connection with gasoline. Mr. Bennett obtained from practically all the large oil companies in Canada a promise similar to that obtained from most of the farm implement companies. I recall that Mr. Fowler of Saskatchewan, who was interested in the Consumers Cooperative Refinery, wrote to Mr. Bennett calling to his attention the fact that in Mr. Fowler's opinion the companies were not keeping that promise. Mr. Bennett replied that he had made certain inquiries and as a result of those inquiries was forced to disagree with Mr. Fowler's conclusion. Thereupon Mr. Fowler pressed the matter, setting certain facts before Mr. Bennett, and the latter graciously undertook to take the time and trouble to examine more carefully into the situation, and promised to communicate in greater detail at some later time. In his reply Mr. Bennett said he had caused due inquiry to be made and was quite satisfied that the companies had kept their promise, and that Mr. Fowler was wrong in his submission.
It will be recalled that some time later the Bennett government directed the tariff board to make inquiries respecting gasoline. The inquiry was costly not only to Canada but to all concerned. I believe the investigation began in the spring of 1935, sittings being held in Regina, Calgary and Vancouver, and two sittings were held here in Ottawa. If I recall correctly, the whole inquiry lasted at least a year and a half, and on its termination a report was made which is familiar to all hon. members. The tariff board, a wholly independent body set up !by the Bennett government, found that, either consciously or unconsciously, the companies had not keipt their promise, and recommended that the duty on gasoline be reduced from two and a half cents to one cent a gallon.
I know that Mr. Bennett was quite sincere in sending that letter to Mr. Fowler, and the executives of the companies may have been quite sincere in believing they had kept the promise which they had given to the government of that day. But hon. members will
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notice what a tremendous task was imposed not only upon the government but upon the people most vitally interested, the consumers of gasoline, of trying to prove, as finally they successfully did, that the promise was in fact broken; and thereafter they secured the relief which they so much desired. The consumers as a matter of fact would not have been able at their own expense to carry on that inquiry, but the province of Saskatchewan assisted them by bearing the expense of having their arguments properly presented and pressed home.
I turn now to the farm implements inquiry. I have heard suggestions from the other side that the farm implement companies kept the promise they gave to Mr. Bennett. Again I draw attention to the fact that the executives of these companies, perhaps not maliciously, perhaps unconsciously, did not adhere to the promise they gave. There was a costly inquiry into the matter, although in the end it proved a profitable inquiry for this country because of the changes that were made in the application of the regulations of the Department of National Revenue. But on that question alone, as hon. members know, a committee of this house sat in 1936, and again in 1937, and spent a great deal of time studying farm implement prices in this country. Here is a very strange thing in connection with the promise which was made to Mr. Bennett. The International Harvester company, the leading company in the farm implement industry in Canada, was never asked to give and never gave that promise to Mr. Bennett. I mention that to illustrate the futility of any government, Liberal or Conservative, attempting to depend upon promises given by private interests, be they manufacturers, lawyers or farmers, that they will not take advantage of a certain type of legislation to increase prices.
The committee went carefully into the prices of farm implements, and we discovered that whereas after 1930 the trend of prices of farm implements in the United States was downward because of the depression and the resultant desire of the companies to market their products, the trend in Canada remained constant. In my opinion and in the opinion of the committee the companies were not keeping the promise which had been given to Mr. Bennett, and which was relied upon by him. The real truth of the matter is that the trend of prices in the United States would have continued downward had it not been that Mr. Roosevelt in 1932 introduced his policy avowedly based on the assumption that it would be wise to increase wages and commodity prices in that country.


Richard Burpee Hanson: In what
year?


Roy Theodore Graham: In 1932.


Richard Burpee Hanson: He was
not elected in 1932.


Roy Theodore Graham: I am saying that he was elected. The increase in prices in United States started in 1933, as was pointed out, I think, by the hon. member for Souris.


James Arthur Ross: I did not make that
statement.


Roy Theodore Graham: Somebody did, when giving the range of price increases in United States, starting in 1933.


James Arthur Ross: In 1936.


Roy Theodore Graham: In the United States prices did start to go up in 1933, but that price rise was based on the assumption that costs of production in the United States had gone up, and steel and other commodities entering into the manufacture of farm implements also showed a rising price trend; but neither in wages nor in material costs did that rise occur in Canada until the January, 1936, increase.
The committee found that so far as Canadian industry was concerned there was no justification for the price increase in January, 1936, although one could easily show from the price information we obtained from the United States that there was at least a measure of justification for the increase in the United States. The hon. member for Rosthem said that the committee had some difficulty in passing judgment on the increases that occurred in 1936. I do not think any member of the committee had any difficulty in arriving at the conclusion that the increases were not justified by the cost items entering into the production of farm implements in Canada.
I have heard many statements made in this house and on the public platform that the policy adopted by this government of lowering the duty on farm implements from 25 to 12| per cent, and then later to 7i per cent, did not have the effect of decreasing the price of farm implements but rather had the effect of increasing prices in this country. If the suggestion is that the lowering of the tariff had the result of increasing farm implement prices, I would say that those members who make that suggestion cannot have read the report of the committee of this house which took such a great deal of time and trouble to establish the facts in connection with the farm implement industry. The truth is, as disclosed by the report of the committee, that right in the middle of the inquiry there was a reduction in the tariff from 12J per cent to 71 per cent because of the treaty with the United States, and immediately the committee were notified by the International Harvester

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company of a price reduction equivalent to the reduction in duty, expressed in dollars, on all implements imported from the United States and affected by the reduction in duty. The Massey-Harris company did likewise, and the John Deere company to a certain extent, but not on all implements. But the real failure of the industry to respond with price reductions equivalent to the reduction in duty was due to those companies which do not manufacture in Canada but manufacture practically their whole line of implements in the United States. I have in mind the John Deere company. While it manufactures a small line of implements in Welland, Ontario, the great bulk of its goods which are sold in Canada are manufactured in the United States. The John Deere company was in a position to disregard the reduction in duty, disregard the saving which that company made in the cost of marketing its products in Canada, and other Canadian companies saw no necessity for making reductions corresponding with the reduction in duty.
The situation was this. It was not that duties play no part in the price structure of any commodity but that there had grown up in the farm implement industry and in a number of other industries-I have no desire to pick on the farm implement industry-a tendency to disregard the tariff on any given commodity if there is a measure of control that permits an agreement, tacit or otherwise, to disregard the saving to the company and to insist that the consumer continue to pay the same price.


Richard Burpee Hanson: Is the hon. member suggesting that the farm machinery people are in a combine or trust?


Roy Theodore Graham: I am suggesting this. Somebody referred to the Saskatchewan inquiry. I was counsel in that inquiry, which was held in 1938 or 1939. and it is true, as some member pointed out, that the committee of the Saskatchewan legislature reported to the dominion government that the position and the facts ascertained by the committee seemed to indicate that there was sufficient evidence to establish an infraction of the Combines Investigation Act. I say quite frankly to hon. members that there was not sufficient evidence to bring that fact home to any court in this land or any tribunal that might be set up. The committee of this house and the Saskatchewan committee could not possibly accept the fact that the price increases which were made in January, 1936, on a great number of farm implements could have been made without an agreement of some kind, when the companies engaged in the industry
increased at the same time the price of each individual implement to the same extent. I think it requires a strong imagination to accept that this was done without some measure of agreement. But the leader of the opposition raises the very point that I wish to raise against the amendment introduced by the minister, which gives more power to the price control board to control prices. The hon. member will note, with me, the immense difficulty of substantiating before a judicial tribunal of any kind things of the nature of which I have been speaking. You must go further than merely setting up circumstances which arouse strong suspicion. You must actually bring home sufficient evidence to prove the point you suggest, that either the company is a combine or that the company is not justified in the price increase.


Richard Burpee Hanson: May I suggest that that is going a little further; under the statute what one is required to do is to present a prima facie case.


Roy Theodore Graham: Even then I doubt very much that anything effective can be done, because the executive officers of all the implement companies swore that there was no written agreement and no verbal agreement; and they are men of high character. Yet the circumstances would lead one to assume that by some method the companies had all arrived in January, 1936, at a decision to increase the price of hundreds of implements.


Mr. DOUGLAS (Weyburn):: And since,
also.


Roy Theodore Graham: And since, also.
I referred to gasoline. After the tariff board had recommended the reduction and the government had implemented that recommendation by reducing the tariff from 2i cents to one cent, the Canadian companies did not give effect to it, and I am informed on very good authority that the reduction which occurred throughout Canada was brought about only by the late able chairman of the tariff board, Mr. Justice Sedgewick, going to New York to interview the Texaco company, a company which brought in all its products from the United States, and insisting that, since that company was actually saving the reduction in duty, it should lead the way in giving the reduction to the consumer in Canada. So one can see the position which any government or any agency is up against in getting the corporate associations of this country to give effect to reductions in the tariff.
I want to point this out to those who would suggest that a reduction in the tariff on farm
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implements simply gives the companies an opportunity to raise prices. If the remaining tariff of 7i per cent were abolished, one would soon find strong lobbies or representatives of the farm implement industry in Ottawa attempting to persuade this parliament that that was unfair and improper. The farm implement industry would like nothing better than that not only Conservatives but everyone who speaks on this matter would accept the theory they adopt, that a reduction in tariff would mean an added cost of the implements of production.


Karl Kenneth Homuth: It has worked out that way.


Roy Theodore Graham: If the hon. member will read the farm implement prices committee's report, he will find that it gives the true reasons why that increase has occurred.


Richard Burpee Hanson: That is the hon. member's interpretation of the true reasons.


Roy Theodore Graham: I am accepting the committee's report.


Richard Burpee Hanson: Oh, well, the hon. member wrote the committee's report, did he not?


Roy Theodore Graham: No, the committee wrote it.


Richard Burpee Hanson: What did the hon. member do for his $30 per diem?


Roy Theodore Graham: Allow me to offer this personal opinion. Long examination of the farm implement industry leads me to believe that, unless we are prepared arbitrarily to fix the prices of farm implements, thereby dealing with but one of a thousand problems in this country, and one which of course could not be treated singly, the Saskatchewan committee came to the only reasonable solution of the farm implement problem when they recommended that cooperative organizations take up the handling of farm implements so as to introduce into the industry an element of true and permanent competition. The cooperatives which suggested that course made it clear to the Saskatchewan committee that one cannot confer cooperatives on any people, just as you cannot confer democracy upon a people. I do not believe that this parliament can do much to assist, other than to set up legislation which would encourage the growth of true and wisely formed cooperatives, and which would allow those cooperatives to search the world for sources of supply of these farm implements. I believe that some day, in order to supply a much needed element of 
true competition, this parliament will approve legislation which will give effect to the thought I have expressed.
To come back to the resolution, I want to submit this to the government. I suggested before that I have enough sense to know that I may be wrong. But I am hopeful that they will adopt the same mental attitude and consider if there is not merit in the suggestions of my hon. friends who have spoken in like vein to myself. My own viewpoint in tackling this question of foreign exchange is that this is not a large enough policy to achieve their objective. It seems to me that there are other measures which are preferable to contracting our trade, increasing the cost of production, and so lowering our capacity to finance the war effort which we must make. We must bear in mind that conservation of exchange is only a means to an end; it is to make us more fitted to bear the load of taxation which we must carry in order to meet the war expenditures that must be made. So I suggest to the minister, as I have suggested before in private conversation, that the government might wisely explore the possibility of making reciprocal arrangements with the United States to stabilize exchange in the matter of trade and commerce. I suggest this in view of the relationship of the United States to Canada as part of this American continent, and in view of the declared policy of the present administration of that country to encourage a large reciprocal trade area to replace in some degree the loss to all the American nations of the greater part of their European trade. If the government could go further and include Great Britain in that exchange agreement, we should do a great service not only to Canada but to the mother country.
If that avenue is not open, I suggest that much the wiser measure to have taken would have been to have raised sufficient money in the New York market, at reasonable rates of interest and upon terms of payment, so far as the exchange rate is concerned, which would be fair to Canada.
It seems to me that in either of those two constructive ways this government could have solved the problem they are facing without imposing upon the consumer class of this country the burden which is imposed by this tax.
I agree with the other speakers as to the condition in which agriculture finds itself, not only in Saskatchewan but in the whole of Canada, but I do not propose to elaborate upon the subject. Our war efforts in this country of necessity quicken the wheels of our manufacturing industries. We not only encourage but expect almost every industry

Special War Revenue Act
to be working, if not night and day, certainly to the limit of its capacity. We are leaving to industry a certain measure of excess war profits. We are leaving to them of course a certain measure of their normal profits. So of necessity, because of the millions which we are pouring out of the public treasury, we are assisting one part of our economic life to be busy and so to lower cost of units of production. On the other hand, by the very nature of war expenditure, the need of increased direct taxation, the need of the imposition of such taxes as these, we are going to increase certain costs of production. Therefore we are going to increase the cost of living and make it more difficult rather than easier for our primary producers to pay the taxes expected of them.
I appeal to the government to take the widest possible view of this question. Looking into the future we know quite well that even when we are victorious the British empire is going to emerge from the war in a naturally depleted financial condition; but it is our duty, favourably placed as we are on this North American continent, to make every measure of contribution we can to the success of the empire, and even though we do not care for a moment to contemplate such a thing as defeat, I suggest that Canada should take steps to be in a healthy economic condition should the necessity arise so that we may be able to give some measure of leadership as well as of assistance to the empire as a whole after the war is over.
We Liberal members from western Canada may not be able to persuade the government to accept the views put forward on this question, and of course we realize quite well that it is their duty to decide the financial policy of the country as part and parcel of the *whole national policy of Canada. In the last analysis that responsibility must be theirs. If, however, the government cannot see their way clear to adopt the suggestions we have made, then I say that we should like to get a slice if we cannot obtain a loaf, and if we cannot get even a slice then let them give us at least a crumb. So I join with the others in the hope that the government will find it possible not to restrict the nonapplication of the tax to mere farm machinery, because I do not think that will be broad enough to be of real assistance, but that all implements which enter into production should be given the exemption, whether those implements are used on the farm or in the factory; for, after all, if we have to tool up our factories, the factories should be permitted to equip themselves at the lowest possible cost. From the national point of
view, therefore, I trust that the government will exempt from this tax all implements which enter into the productive capacity of the country.


Thomas Vien: Before the debate proceeds, I would advise the committee that I have considered the amendment proposed by the hon. member for Qu'Appelle (Mr. Perley), which reads as follows:
Provided always that such war exchange tax of 10 per cent on the value for duty of all goods imported into Canada as proposed shall not apply to agricultural implements and parts thereof.
The effect of the amendment is that all agricultural implements and parts thereof shall be exempt from the proposed tax. The government have submitted budget resolutions and have determined the amount of revenue required for public services. I read in May, page 544, as quoted in Beauchesne at page 164:
Though it is the function of the committee of ways and means to impose rather than to repeal taxes, examples of the repeal of taxation effected in this committee are to be found upon the journals. Proposals for the variation or modification of taxation can therefore be made in the committee; but these proposals must be grafted upon the financial scheme submitted by the government, and must not affect the balance of ways and means voted for the service of the year. Amendments, therefore, can be proposed to substitute another tax, of equivalent amount, for that proposed by the government, as, for instance, a proposal to substitute probate and legacy duty on real property as an alternative for an inhabited house duty, the necessity of new taxation, to that extent, being already declared on behalf of the crown.
I would read also the decision of this house given on March 2, 1936, as reported in the journals of 1936, volume 74, page 90:
Mr. Thompson, seconded by Mr. MaeNicol, moved,-
That, in the opinion of this house, all rural telephone companies should be exempt from federal income tax.
Mr. Speaker ruled the said proposed motion out of order for the reason that it is not framed in such abstract or general terms that it can be entertained by the house. The proposal made therein is for a special reduction in the public revenue. The item to be struck out is mentioned, namely, the income tax levied on rural telephone companies. Such a proposal can only be entertained in committee of ways and means and, as May says, page 544:
"These proposals must be grafted upon the financial scheme submitted by the government, and it must not affect the balance of ways and means voted for the service of the year."
Therefore I must rule the amendment out of order as affecting the balance of the ways and means proposed by the government in its budget resolutions.
There is another question which I do not consider it necessary to determine, that is,
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whether a private member, not a minister of the crown, could move an amendment of this sort. It is not necessary to determine that now, inasmuch as the point just dealt with disposes of the matter at present before us. I therefore declare the amendment out of order.


Richard Burpee Hanson: I suppose your ruling, Mr. Chairman, is not debatable, and I do not rise to discuss it, but may I suggest with all respect that the more courteous course would be to call the attention of hon. members to the reaction in your own mind and to allow at least some discussion on the point of order.
Dealing with the last point to which you have referred, and which you say it is not necessary to rule upon at this time, I have always understood that it was in order for a private member to move to reduce taxation provided we were at the proper stage of the proceedings.


James Lorimer Ilsley: In supply.


Richard Burpee Hanson: In supply. "At the proper stage of the proceedings" covers everything.


Thomas Vien: I would point out to the leader of the opposition that it has been so decided when the house is on the bill, and the committee of the whole have already reported the resolution, provided that the balance of the budget resolutions is not affected.


Richard Burpee Hanson: I have always known that it was not in order at any stage of the proceedings for a private member to move to increase the burden of taxation. That is axiomatic. I did think, however, that this resolution was in order, if I may be permitted to say so. In the words of paragraph 552 of Beauchesne, it is a proposal for the variation or modification of taxation, and can therefore be made in the committee. And it is a proposal which may be grafted upon the financial scheme submitted by the government, although it must not affect the balance of ways and means voted for the service of the year. It is on that, I suppose, that the chairman is hanging his hat.


Thomas Vien: I would say, rather, basing my ruling.


Richard Burpee Hanson: I stand corrected. I find myself in great difficulty sometimes in maintaining the dignity of the position when I am so used to the vernacular of the street. With this apology I proceed.
I do not understand the rule to preclude the moving of similar amendments at a
[The Chairman.]
later stage with respect to the bill. There was something said that might indicate that we would never be able to move a resolution or an amendment of this kind. From that I must respectfully dissent.


Thomas Vien: As I pointed out, I have given no ruling which would affect the power of a private member to suggest a reduction of taxation. I do not believe it necessary. My ruling, which can be appealed from to the house, is based on the point that it affects the balance of the budget that the government have laid before the house as being required for the public service during the year. In my opinion there is no doubt that exempting a series of articles from the application of a tax must necessarily affect the balance of the revenue.


Alexander Malcolm Nicholson: I should like to make a few remarks in support of hon. members who have presented the point of view of western agriculture. We do not claim for a moment that we alone in this parliament are concerned about the welfare of agriculture in Canada. But we are concerned about the farmers of Canada making their fullest and best contribution during this critical time. It has been clearly pointed out by all hon. members who have spoken that the farmers at this time are in no position to carry an additional burden. I called up a representative of one of the implement companies in this city yesterday to find out how the farmers in this part of Ontario are going to be affected by this proposed tax. It must be borne in mind that farmers in this part of Canada use much smaller machinery than is used in the west. But I was told that a farmer who purchases a small rubber-tired tractor will pay $80 to $90 additional as a result of this proposed tax. One who buys a small six-foot combine with a power take-off would pay approximately $50 more. If he bought a combine with auxiliary motor he would pay $64 more. On an 8-foot combine the additional cost would be $60.78. The implement company manager intimated that the additional cost would be about seven per cent on the present retail price.
I have received a letter from one of my constituents in which he states the amount of wheat he had to sell to pay for a 35-horsepower diesel tractor which he required for his farming operations. He paid for this tractor $3,500 cash. Adding seven per cent for this tax means an additional $245. When one considers that the farmers in Canada have been producing for less than cost over a con-

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siderable period of time it is obviously most unfair to ask them to assume a further burden of this kind.
Hon. members have pointed out that there is no fair relationship between the prices farmers pay for their machinery and the prices paid to farmers for the commodities they sell. I have in my hand a report of the special committee set up by the Saskatchewan legislature a couple of years ago to look into this agricultural implement business. The hon. member who has just taken his seat was the counsel acting for this commission. 1 commend to hon. members a careful study of this report. It gives a break-down of the amount the farmer pays for a binder. In 1936 the farmer buying a binder at Regina paid $281 for the machine. The cost of the machine is divided as follows:
Raw material	 $ 71 06
Labour	 22 62
Freight from factory to selling point	 26 06
?119 74
Difference between above items and selling price, $161.26.
I am aware that there are other costs in connection with the handling and distribution of farm implements, but I submit that a spread of $161.26 is altogether too great, and to place an additional load on the backs of the hard-pressed farmers is very unfair.


Karl Kenneth Homuth: Did the report give a
complete break-down?


Alexander Malcolm Nicholson: Yes.


Karl Kenneth Homuth: Would the hon. member give the rest of it?


Alexander Malcolm Nicholson: I shall be pleased to do so?
Overhead or burden	
$33	93Experimental work	
2	55Commission	
45	50
Some hon. members apparently were under the impression some years ago that if we had in office a low tariff government it would bring great relief to the farmers. This committee carried out studies in that connection. Evidence was given that in 1935 an 8-foot binder sold in Regina at $263. The next year we had in office a low tariff Liberal government, but the price in that year was $281. The next year, still with a Liberal government, the price was $295, and the next year it was $324.75. The price has remained at about that figure ever since.
I should like to refer to a speech made in this house by the Minister of Agriculture on April 29, 1938, as reported on page 2429 of
Hansard:
The industry has paid no attention to the complaints of farmers and the warnings of the committee. If they persist in this course action should be taken which they would fully understand and appreciate. Agriculture, which is the greatest primary industry in Canada, refuses to be bled any longer by half a dozen manufacturing plants which give as their only real reason the fact that they are employing 4,159 men.
The evidence which has been placed before the committee by other hon. members from western Canada should make it abundantly clear that the farmers at this time cannot stand the additional burden that this proposed tax would place upon them. I ask the minister to observe and keep in mind that representatives of four different groups on this side of the house have united in asking him to consider the advisability of permitting agricultural implements to be admitted into Canada free from additional taxes. This is most important if we are to have the greatest production of foodstuffs at this time. Other hon. members have pointed out repeatedly that the success of the cause which is so important to us all is depending and will depend to a greater extent on the increased production of foodstuffs. I urge the minister to give most careful consideration to the proposal to admit agricultural implements, and parts therefor, free from any additional burdens.


Mr. HANSELL:: I wish to express my
appreciation of what has been said by those who have spoken on behalf of western agriculture. I agree with the hon. member who preceded me, that the farmers of the west simply cannot stand any further burden. I said yesterday, speaking on another matter, that it did seem to me the primary producer gets the worst end of the deal all the time. What I am about to say may not directly touch this department, but I wish to point out to the minister that this year the farmers may find themselves under a still further burden. We understand that there may be a tremendous carry-over of wheat. According to reports it would seem reasonable to suppose that it will be difficult to find storage for all our grain. It has been brought to my attention by one of the newspapers in my constituency that while this need will become apparent this fall the farmers are unable to proceed with the construction of granaries for the storage of their grain. Something must be done, and it appears to me that the farmer will have an additional burden to carry. He simply cannot stand it; that is all there is to it.
I should like to read a brief paragraph from a lengthy article which appeared in the High River Times, discussing the matter of the
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storage of grain and giving an analysis of the additional burden that will be placed upon the farmers of the west:
An estimate of the approximate initial cost of building granaries to store the crop, is about five cents a bushel, plus labour building. These buildings would be good for five or ten years, thus spreading the actual cost over the years one-half cent per bushel. But they would have to be paid for as built, and five cents a bushel is too heavy a charge to impose on the individual farmer at prices which are likely to prevail.
For example a granary twelve by fourteen and eight feet studding would take about 1,900 feet of lumber and 2,000 shingles. It would have 1,200 bushel capacity and the cost of materials including nails would be around $60.75. On a granary of 1,450 bushel capacity would cost around $74. These figures are approximate, subject also to the changing prices of lumber, and are used merely to show the tremendous outlay involved in building farm granaries of a durable nature to store the probable prairie crop.
The question asked in this article is who is to finance this investment. Perhaps that is where the Department of Finance might come in. The farmers cannot do it; the lumber companies cannot do it, yet if dame rumour is correct that additional storage space will have to be provided in order to store the grain this year, and if the farmers must build the granaries, this will be an additional burden for them to carry. The hon. member who preceded me pointed out the extra burden in connection with machinery, and it seems to me that it is simply burden after burden as far as the western farmer is concerned.
The amendment has been ruled out of order, but the minister has had an opportunity to feel the pulse of this committee, and I think he realizes that the general opinion seems to be that this additional burden should not be imposed upon the farmers at this time. We urge him to reconsider this provision. It may be out of order for a private member to move such an amendment, but certainly it would not be out of order for the Minister of Finance himself to deal with the matter. I am sure he can do so, and I do not think such a change would affect the budget a very great deal. In the light of what has been said by all who have spoken we urge the minister to give this matter further attention.


Mr. WOOD:: Since the amendment has been ruled out of order, Mr. Chairman, I need not place on record a good deal I had intended to say. After listening to this discussion, however, one might feel that all the farming in Canada was done in the three western provinces; and representing a constituency which in the main is rural, though of course it is partly industrialized, I felt there should be some expression of opinion

on behalf of the Ontario farmer. We quite admit that there is a preponderance of agriculture in the three prairie provinces, yet in terms of value the good old province of Ontario each year since confederation has produced almost as much as the three prairie provinces together. Therefore I think there should be some consideration given the Ontario farmer, because after all I am sure that his difficulties are very similar to those of the western farmer.
Hon. members from the west seem to have a sort of pick on the agricultural implement industry. It seems to me, however, that if these implements should be exempt from this tax, the fertilizer used by Ontario farmers, for example, should be exempt also. Last week I made an appeal to the minister in this connection, and I rather feel that my argument was sound, at least as sound as the arguments of the Conservatives. Of course they generally want protection on the things they have to sell and free trade in the things they want to buy. Perhaps I might be accused of taking that view in appealing for the removal of this tax on pure-bred live stock coming from the United States. I need not repeat that appeal now, because it is already on record, but I feel that instead of a ten per cent tax being placed on tractors for an indefinite period of time we might have a complete embargo against the importation of tractors. That would not hurt the western farmer, though it probably would curtail the production of wheat. The fact of the matter is that about a hundred million bushels of wheat is grown on land that should grow feed and grain for horses. Such an embargo would stimulate the production of horses, and instead of buying gasoline the farmers would raise their own fuel. I have a firm belief in the long-term policy I recommended to the minister last Thursday night, when I asked for exemptions on the importations of pure-bred sires from the United States. Undoubtedly the farmer in Canada has a little keener eye than has the average farmer in the United States with respect to judging superior live stock. I believe that may be accepted as a generally known fact.
Because of our superiority in this respect we have been in a position to export large numbers of dairy cows. Those exported animals have been superior to those offered in the United States markets-at least I believe that must be so, or they would not want them. It seems to me that if an embargo were placed on the importation of tractors, if they were kept out of Canada completely and we had to go back to the breeding of colts and horses and to the

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growing of the feed for them, we would be creating a market in Canada for our own products, and at the same time we would take about a hundred million bushels off a glutted wheat market.
Much as I dislike tariffs, I am supporting the measure in general. I believe the minister ought not definitely to make up his mind that if he exempts one commodity he must exempt others, believing that he might be setting up a precedent or that he might bring about a flood of appeals in connection with other interests. We must face things as they are. I am a realist, not a theorist. I believe that one ought to lend one's support to a measure not because it may involve high tariff or low tariff, but because it is in the national interest. I was happy to receive support from the hon. member for Peel (Mr. Graydon), who sits across the way, and who has a charming personality indeed.


Mr. GRAYDON:: That is mutual.


Mr. MARTIN:: On with the business of the house.


George Ernest Wood: I was deeply interested in his observations the other day. I am led to the belief that if we came down to actual reality the hon. member and I have far more in common than might appear at first, and that there may be only few subjects in respect to which our opinions are divided.


Mr. McIVOR:: You are both progressive.


George Ernest Wood: While I am on my feet may I deal particularly with the observations respecting myself made last night by the hon. member for Battle River (Mr. Fair). While he did not specifically mention my name, he did refer to certain observations I had made, and I am fully aware that when he spoke he had me in mind. The hon. member said that in a contribution I had made to the debates I had at one time said that the farmers were extravagant. I should like now to correct any misunderstanding in that regard. I do not believe what I said was meant in the sense indicated by the hon. member. The only way in which the Ontario farmer shows any extravagance is the energetic manner in which he goes about producing the fruits of his labours. I think it may be said that there are few who put more effort and energy into their work than he does.
No; I have never said what the hon. member suggested. Yet I do agree there are many farmers who to a certain extent are the victims of their own folly. It seems to me that when we consider the reason for the imposition of the 10 per cent duty on agricultural implements now being discussed by the committee, we must agree it is only a bagatelle. The duty is imposed to bring in revenue with which to conduct our war effort.
If I may be permitted to make a personal reference, over the last week-end I went home, and while there purchased a new Massey-Harris binder. It so happens that the firm manufacturing the binder is located in the constituency I represent, and naturally, since it was manufactured right in the city of Brantford, I bought that make. I traded in a binder which, purchased originally for S175, had been used on my farm for thirty years. Yet, when I purchased the new binder, not only did I trade in the old one but I paid $265 in cash, or the equivalent of 440 bushels of wheat. It would appear, therefore, that so far as exchange of service is concerned the farmer is not in a happy position, and it may be that the hon. member for Battle River had that point in mind when he attributed to me a statement respecting the extravagance of farmers.
After all, it must be remembered that the old binder cut the crops on 200 acres of land for thirty years. Placing the cost price at $175, the depreciation on the binder distributed over its life stands at only $5.81 per year. With these figures in mind I am inclined to the view that there are many farmers who neglect their implements, who probably leave them out in the weather a month or so after the harvest, and that possibly from their own neglect they are paying a great deal more than this 10 per cent.
I do not like tariffs any more than do the farmers from western Canada, but we must look at the matter from the point of view of the national interest. I believe the minister is sincere in his efforts to get revenue, and in my view we would do well to pay for our war effort when the flow of money is at the highest point and when the velocity is greatest. We ought to collect at this time as much as possible, and not leave heavy debts for the post-war period.
I urge again that the minister might do well to place a twenty-five per cent rate on tractors and to reduce the ten per cent rate on pure-bred live stock entering Canada. By so doing he would have shaped a two-edged sword: he would be discouraging the use of tractors and relieving an over-glutted wheat market, while at the same time he would be creating a market for the products of our farms. Not only would we save exchange which might be lost in the purchase of tractors, but we would save through greatly decreased purchases of gasoline brought in from the United States.
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Even if I do not get my own way, I shall support the measure. It has been my philosophy in life that if one does not always get his own way, he would do well to subscribe to what is being done in the hope that in the final distribution he may get something in return.


Mr. CASTLEDEN:: Mr. Chairman, I
hesitate to participate in a debate which has been marked by so much oratory and legal, shall we say, wisdom. It has been interesting to listen to hon. members from all parts of the house speak on behalf of the primary producer, and try to tell the administration that something is seriously wrong when conditions in any part of our dominion are permitted to get into the unfortunate state in which western agriculture now finds itself.
I was wondering how long we would have to listen to hon. members from both sides of the house before someone mentioned the old topic of tariffs. I was bom in Saskatchewan, and since I have been old enough to go to political meetings I have listened to tariff discussions and heard people talk about tariffs. The high tariff people told us how their policy was going to save agriculture and the western farmer, and the low tariff people told us how their policy was going to save the country. Both the older parties have had opportunities to try out their policies, with the result that western agriculture has gone down to a point which is an absolute disgrace.


Paul Joseph James Martin: The drought may have had something to do with it.


George Hugh Castleden: I agree; it has had a great deal to do with it. But there have been other injustices which have done more to ruin the west. Here are some figures showing in bushels of average-grade wheat the average price a farmer would have had to pay for a
binder:	
	Bushels of
	wheat
1916		
1922		
1937		
Hon. members from all parts of the house have been saying that this is a burden which western agriculture cannot stand. I point out to the administration that it is dealing with a sick man, and no person can convince me that the government does not know it. The information which this government have respecting conditions in the west is sufficient to make them realize that the imposition of this tax will mean ruin and the end of the road for a lot of people. We have spent a billion dollars for relief, and we can go on spending more because these people who have 
worked so hard on the land are going to lose everything they have. I tell this government once again that this thing cannot go on. If its policy is deliberate the government deserves the worst condemnation we can bring to it.
Conditions in eastern Canada are different. I have noticed this about eastern farms. Their economy is different. They are able to take advantage of greater diversification. We see farms all around us in this province abundant with crops of hay, large herds of milk cattle, and a variety of strawberries and other fruits. They can finish cattle and take advantage of the market for finished beef and pork. They can make money the year round out of the products they produce. But western Canada has no such diversification. She depends largely upon wheat.
The thing that has bothered me most, Mr. Chairman, since I have been here, is the conduct of members on the government side who talk reform. Some of them seem to be just as far to the left as we are. They want reforms in health, finance, and social legislation, all along the line. They talk of having seen a vision of the house upon the hill. They seem to have the courage of their convictions to the extent of standing up and stating them. But when it comes to a vote, where do they stand? I notice that some of them even duck the voting.
I want to pay tribute to the youngest member of the house for his speech last night. I was particularly pleased that he was not rudely interrupted by the hon. member for Skeena (Mr. Hanson).
Turning to the amendment now before us, I cannot see how it is going to save anything. What a source of great satisfaction it must be to the western farmer to read it! It is about as much good to him as it would be to tell a man who is dying from galloping consumption that when the dentist comes for his false teeth after he has died he will not be allowed to make any undue profit out of selling them again. When the minister replied to the hon. member for Lake Centre (Mr. Diefenbaker) I saw that about the last hope of the western farmer was gone. It meant nothing less than this, that the western farmer was to be sacrificed on the altar of our trade agreement with the United States.
It is not alone in the realm of agricultural machinery with its increased prices that the farmer will suffer through this budget item. Those who import wool or woollen clothing or cotton or cotton clothing will pass on the increased costs of production caused by this tax in increased costs to the consumer, and

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the people of western Canada will have to pay more for their clothing, more for socks and shoes and stockings for their children. You cannot get any more money out of western Canada. There is no possible source of increased revenue for the farmer. You cannot get blood out of a stone. He has nothing more you can take. This tax will only mean that his standard of living must go still further down, and more children in the west will have to stay home from school this winter because of lack of clothes to cover their backs and shoes to cover their feet and materials with which to repair their worn-out clothing. This increased cost of living, on top of the increased cost of production, means the end of the road for many people. Most of our farmers in western Canada see no hope of any possible increase in their revenue and, as I have said, this tax is bound to force down their standard of living. I have no objection to a ten per cent increase that is passed on to people who are going to enjoy a higher income because of increased activity in the industrial areas. Many homes in industrial Canada will enjoy an increased income, and naturally they will be in a better position to pay their share of this taxation.
I should like hon. members to consider the case of a friend of mine. In 1916 he bought half a section of land. To pay for it he took a farm mortgage of $8,000. The first four years of his farming were fruitful, and in that period he paid $4,000 off his $8,000 mortgage. Then bad years struck him, but through the good and bad years he struggled along. He has receipts from the trust company showing that he has paid $10,500 on his mortgage. The trust company notified him in 1938 that, after having paid $10,500 on his $8,000 mortgage, he still owes $7,200. The $10,500 had reduced his capital debt by $800. We figured it out the other day and found that he expects to celebrate the two hundred and fiftieth anniversary of his wedding by burning the mortgage 1 Fortunately the trust company is not going to foreclose on him this summer.
It has already been pointed out that ninety per cent of our farms in Saskatchewan are mortgaged. This is not the result of mere laziness, nor is it because our farmers, as some people suggest, waste their money and go off to California every winter; nor are they improvident. The fact is that when the farmer is unable to make any payment on his mortgage or indebtedness because of drought- and this is a point I want to make clear- capital still continues to take its toll. The reward of capital is far too great. It is neither right nor just that the farmer who has lost everything he attempted to produce in rust or drought years should be further penalized by having interest charged upon his mortgage until the load of debt becomes insurmountable. In view of what has happened in the west I warn the minister and the government that western Canada cannot stand this extra burden. This increased cost of living will break its back. In increasing numbers our farmers will be forced into bankruptcy and on relief.
A return was tabled in the legislature at Regina showing that almost 3,000 farm foreclosures had been made in the four-year period ending February 1, 1938. If this legislation goes through, as apparently it will, the farmers must be given some protection, otherwise they are going to lose everything they have. The War Measures Act is now practically the constitution of Canada, and I cannot see how our farmers can be saved unless this government take advantage of the War Measures Act to stop foreclosures against our farmers at least for the duration of the war. If that is done you will find them willing and ready to produce everything they can and to do their utmost. Carefully considered legislation should long ago have replaced the "pass-the-buck" policies which are exemplified by this clause. As I said before, you are dealing with a sick man. He is the victim of neglect. He has been fooled by organized pirates of finance who apparently are more interested in getting his legacy, what he may leave, than they are in curing him.
I hope that the government will take some of these facts into consideration before this measure is finally passed.


Gordon Graydon: I rise somewhat reluctantly to take up the time of the committee this afternoon. During the progress of the debate last evening I was called out of the chamber for a short time, and during my absence the hon. member for Regina City discussed a number of pertinent subjects relating to some of the industries in which I, as the representative of my constituency, am naturally interested. I wish first to thank him for his kindly and reassuring remarks with reference to me personally, and, now that the hon. member for Brant has taken his seat after making a splendid contribution to the debate, I might couple his name with that of the hon. member for Regina City.
During the debate last evening the hon. member for Regina City referred to a speech which I made in 1939 in connection with the tariff on fruits and vegetables. That subject is not new to hon. members. Alluding to the tariff applicable to imports of these products into Canada, he took exception to the rates in force under the Bennett adminis-
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tration, on the ground that they were much too high. On page 1686 of Hansard he refers to my speech as follows:
For example, he refers to carrots costing $1.25 a crate which were subject to a dumping duty of $2.73.
And he gives various other details to support his argument. But after all, as the hon. member for Brant has said, all of the privation and suffering in agriculture is not confined to western Canada. In saying that I am not minimizing nor have I ever minimized what western Canada has undergone during the last number of yeare, but I ask for the toleration of hon. members, whether they come from western Canada or anywhere else; I ask them to realize that in almost every part of this dominion there are problems calling for solution which are peculiar to the farmers of those particular localities.
So far as the fruit and vegetable industry is concerned, it is true that for a certain limited period of the year there are tariffs designed partly to stop importations into Canada. But I do not wish hon. members to assume that the industry on whose behalf I have spoken many times in this chamber is asking for anything which will deprive other sections of the country of their just dues and deserts. The fruit and vegetable industry seeks protection only at certain times of the year, not all through the year, as might be indicated by some general references to the matter. All it asks is that it shall enjoy the home market for the time that it is able to supply that market in great abundance. I admit that during certain periods the duty may seem high, but it actually is not too high. I defy any hon. member or, indeed, anybody in Canada to say that it has had the effect of raising the price of fruits and vegetables to the consumer. The fact that the domestic market is flooded in these periods by the products of our own orchards and market gardens prevents any such situation from occurring. So, when the fruit and vegetable men of the dominion ask for a high tariff applicable in a certain specific period, they are not doing so at the expense of the consumer or of any other class in the dominion.
May I answer in a kindly way the hon. member for Regina City. If he is not convinced of the soundness of my arguments with regard to the effect of the lowering of the tariff, perhaps the results as regards importations would satisfy him, because what we prophesied would happen as a consequence of the lowering of the tariff has unfortunately occurred. Since this tariff tinkering took place in 1935-and I use that word advisedly-


Mr. MacNICOL:: It is a good word.


Mr. GRANT:: 1930.


Gordon Graydon: -this is what has occurred. I have obtained my figures from another source, but I regard them as no less reliable than those of my hon. friend. When the tariff tinkering took place in 1935, many hon. members rose in defence of the fruit and vegetable industry and predicted that there would be a great increase in importations of fruits and vegetables from the United States. From 1935 until the new agreement came into effect on January 1, 1939, importations of vegetables increased nearly fifty per cent beyond what they were in preceding comparable periods. In 1939, when the new agreement went into effect, we found ourselves oppressed with a still heavier burden. Those of us who raised our voices against what we considered to be an unjust lowering of the tariff were accused of taking a pessimistic view of the situation. But I would point out to the hon. member for Regina City that if he will look at the results as regards importations of fresh fruits and vegetables, he will see that all the statements and the prophecies made in this respect at that time from this side of the house have unfortunately come true.
After all, this is a great country and agriculture has many branches. I ask only that all hon. members shall be tolerant and understanding as regards the problems of our industry. We are not asking and never have asked for a tariff or one which will prejudice the consumer. We have asked only for a tariff high enough to keep out United States imports when their exclusion will give our people a chance to market their products. To-day one of the results of the present policy is staring us in the face. When the Minister of Agriculture brings down his estimates he will ask for more money to advertise and to try to sell the great quantities of fruits and vegetables which we have produced, and cannot consume, largely because we have left the back-door open for United States stuff to come in.


John Ritchie MacNicol: And the front door too.


Gordon Graydon: I make that statement in all fairness and without undue criticism of the government, merely pointing out to the Minister of Finance that the ten per cent increase in the tariff is as near to being useless to the fruit and vegetable men as any kind of tariff could be. We are not interested in a tariff of ten per cent through the year. True, it may be of some help in a small way, but if we are going to have a market in Canada for our products we must have more than ten per cent increase in certain parts of the year. We must have a tariff sufficiently high to make it impossible for United States products

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of a class or kind produced in Canada to enter our markets and displace the products of our own fruit and vegetable growers. I very much regret the necessity of depriving some of our western members, particularly the hon. member for Regina City, of some of their best campaign arguments, such as they used in the last election. I do not think it is quite fair to a great branch of the farming community, who are doing their best under trying circumstances to make ends meet, to single out that particular industry. It has not been harmful to Canadian consumers. On the contrary, it has given the people some of the best products that appears on their tables. For that reason and others that I shall not mention I ask for the tolerance of members to the arguments that are put forward in favour of one of the greatly depressed branches of the farming industry in Canada.


Mr. DOUGLAS (Weybum):: I do not intend to traverse many aspects of the question that has been discussed by other speakers this afternoon. I wish to take but a few minutes to put on the record one or two facts with reference to the effect of this resolution. In the first place, the resolution removes the last tattered shred from the Liberal party's pretence to be the free trade party of Canada. Let us make no mistake about it. This tax is a tariff. The minister, as reported at page 1611 of Hansard, said:
I am inclined to think that in some cases
the ten per cent tax, or the ten per cent increase in the tariff where the goods are dutiable, is not going to cause actual ioss.

We are following the regular practice; the matter of ethics or of principles is not involved. The matter of raising the duty ten per cent, or imposing a ten per cent duty on duty-free goods, and calling it a war exchange tax, is a matter of practice.
We should recognize first of all that, no matter by what name you call it, this tax is a ten per cent increase in the general level of the tariff. The second point is that, according to the Liberal doctrine as we have heard it expounded in Canada for a good many years, you cannot raise the tariff without having two effects upon your economy: first, an increase in the cost of articles coming into the country, and, second, usually an increase in the price of articles produced in the country by virtue of the protection enjoyed. The whole argument of the hon. member for Swift Current to-day was to prove that, in spite of appearances, the reduction in tariffs did reduce the cost of articles to the consumer. If that be true, then the effect of this ten per cent tariff must be, inevitably, an increase in the cost of articles imported, and a probable
consequence of that will be an increase in the cost of articles produced in this country by industries enjoying the ten per cent protection. I merely wish to put these two statements alongside the record of the Liberal party for the last eight or ten years with reference to the whole question of the price of farm implements, and I can do so in just a few sentences.
In western Canada, from 1930 to 1935, we listened to scores of Liberal speakers pointing out to agricultural audiences that the reason why the farmer was so hard up was that he paid so much for his farm machinery, which reflected itself in the cost of production, and that the reason why his farm machinery cost so much was that the Bennett government had imposed a 25 per cent tariff on farm implements. The Liberals said, "You put us in and we will bring the tariff down, and the farmers will be able to produce for less and so compete in the markets of the world." This government was elected on October 14, 1935, and one of its first acts was to lower the tariff on farm implements from 25 per cent to 12i per cent, and later to 7-i per cent. But, strange to say, every time they lowered the tariff downward, the price of farm implements went upward. The hon. member for Swift Current points out that the price went up not because the tariff went down. If that is true, the other must be true also, that the price went up in spite of the tariff going down.
On March 2, 1936, the government referred the matter to the committee on agriculture, and that committee reported back to the house on February 1, 1937, a year later, suggesting the setting up of a select committee to study the price of farm implements. That committee reported on April 6, 1937, and submitted some thirty recommendations. I shall not weary the committee with them; I will merely point out five. They pointed out that farm implement prices from 1891 to 1936 were consistently too high and recommendation 30 read:
Over the period from 1891 to 1936 retail prices of farm implements have been maintained at too high a level, as shown by the financial returns to the companies engaged in the industry during that period.
Another finding of the committee, No. 2, was that the increase in January, 1936, was not justified. Recommendation 29 read:
The increases announced by the companies in January 1936 were not justified by the increase in manufacturing or distribution costs, or by the financial results of the companies.
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The third recommendation was that the committee was convinced that the cost of distribution was too high. Recommendation 33 reads:
The committee is of the opinion that the cost of distribution of farm implements is unnecessarily high and constitutes an important factor in the price to the consumers.
The fourth important recommendation was one in which the committee stated that the cost of farm machinery bought on time was so excessive as to constitute usury, and they urged that immediate steps be taken to reduce credit charges.
The fifth recommendation was that unless the companies themselves took action, the government should encourage the cooperative distribution and servicing of farm implements.
That report was tabled in this house on April 8, 1937, and it lay on the table for over a year. On April 29, 1938, we finally discussed the report. In the interim, in spite of these statements, in spite of these conclusions, the price of farm implements went up again, making a total increase of 11 per cent. When the report was before this house on April 29, 1938, I moved an amendment suggesting that since the implement companies had not seen fit to comply with any suggestions of the committee, the government should take steps to set up cooperatives and assist farmers to buy machines cooperatively. That amendment was turned down. But I remember that the Minister of Agriculture made an impassioned and fiery speech that night. I can see him now, standing in his place, one hand clutching a glass of water and the other clutching the implement companies by the throat, threatening that unless they did something immediately to reduce the prices of farm machinery, dire consequences would follow. Not only have they failed to reduce prices but they have again increased them. But there have been no dire consequences.
In Saskatchewan a provincial committee was set up to study the same question, and the results were similar to those obtained by the committee set up by this house. The facts are beyond dispute: we have had tariff reduction and at the same time increases in price, due to the fact that is becoming increasingly evident that we are faced m this country with a great monopoly, not only national but international in scope, which has been able, notwithstanding the tariff, to control prices on both sides of the boundary. If this ten per cent tariff increase is going to have any effect at all, it can only have the effect of raising again the price of farm implements. And the Liberal party, which has stood for free trade, or at least very low tariff, is now faced

with one of two alternatives: they must either say that lowering or raising the tariff makes little or no difference to prices, or they are now proposing to raise the tariff which can but have the effect of increasing the cost of implements of production.
Personally I am not yet satisfied that any argument has been advanced to show that the purpose for which this tax is to be levied could not be attained in some other way.


An hon. MEMBER:: What other way?


James Lester Douglas: I am coming
to that. Two reasons have been suggested for this tax: one, revenue; the other, conservation of exchange. As to revenue, it has already been pointed out that there are other fields from which revenue could be derived.


James Lorimer Ilsley: What, for instance? I should like to have it.


Thomas Clement (Tommy) Douglas: A luxury tax.


James Lorimer Ilsley: It has been thoroughly
explored.


James Lester Douglas: Succession
duties.


James Lorimer Ilsley: That is provincial.


James Lester Douglas: Not exclusively. There is nothing to prevent the federal government from entering that field.


Richard Burpee Hanson: It should
be all federal.


James Lorimer Ilsley: Should be, but it is not.


Thomas Clement (Tommy) Douglas: It should be
and could be, and if the minister wants to make this tax a luxury tax, it could apply to articles that are not necessary from the point of view of either the consumer or the producer.


James Lorimer Ilsley: That was thoroughly explored. The possible returns from it are very low.


James Lester Douglas: If this tax is to raise 865,000,000 as has been suggested, it can raise it from only one source, namely the consumer, the person who buys goods, by increasing his costs and consequently decreasing his purchasing power.
The second object is said to be conservation of exchange. I am not convinced that the same purpose could not be attained by rationing exchange, through import boards to which importers would be required to apply for permission to purchase exchange in order to import goods. That is done to some extent now, under the foreign exchange control board, and could be extended.

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James Lorimer Ilsley: Surely that would raise
prices, would it not?


Thomas Clement (Tommy) Douglas: No; what it would do would be absolutely to stop the bringing into this country of anything which the government considered not absolutely necessary. And in war time we should be prepared to do that.


James Lorimer Ilsley: And throw the market to
the domestic producer.


Thomas Clement (Tommy) Douglas: In order to keep out things like motor boats or things a man could do without, and so conserve exchange. This tax is a tax on people who have to buy implements of production.


James Lorimer Ilsley: We may have to do the other also.


Thomas Clement (Tommy) Douglas: I would be in favour of that. But we could do this first, and attain what purports to be the objective of this resolution, without bringing about any of the harmful effects that this ten per cent increase in the tariff will have.
I rose for the purpose of putting before the committee these facts regarding what is happening to farm implements: the tariff has gone down, prices continuing to rise. I cannot associate myself with the pious wishes of the hon. member for Regina City who feels that the war-time prices and trade board may do something about the matter. The hon. member for Swift Current placed before the committee this afternoon some facts which proved to his satisfaction that from 1930 to 1935 the agreement made by the implement companies and the oil companies had not been kept. I have no more faith that any agreement will be kept now. The effect of this tariff increase will almost inevitably be another increase in the price of farm implements, which are already too high. I appeal to the hon. members who have voiced their objection to this ten per cent tariff particularly as it applies to implements of production, to oppose the passage of this resolution. One hon. member said that this is a time for national unity behind leadership. That is true, provided one knows where the leadership is leading him. We were told yesterday in the midnight broadcast that in the British House of Commons members of a national government, where they have a preponderant majority, and where the opposition are represented in the cabinet, turned down a bill and absolutely refused to pass it in the form in which it was presented because they considered it detrimental to the people, and the minister said it would be amended. That is
democracy; that is retaining our parliamentary rights; that is what we are here for and what the people of Canada expect of parliament. They expect hon. members not merely to indulge in vociferous fireworks but to say to the minister and to the government that this resolution in its present form is not acceptable and we propose to vote against it. If we can we certainly shall ask for a vote on this resolution, in order to show where hon. members stand.


Mr. STIRLING:: There is a phase of this resolution that interests me very much, but not for reasons which have hitherto been dealt with in the discussion. The minister proposes this ten per cent tax for two reasons; one is to conserve exchange, the other quite obviously is to get revenue. How the two are to be made compatible one with the other, I do not understand. But speaking as a representative of people particularly interested in the production of fruits and vegetables, I want to return to the startling figures which the hon. member for Lake Centre placed on Hansard a day or two ago. He drew attention to the fact that with regard to the conservation of exchange this measure had been of no effect whatever, as indicated by the carloads of fruits and vegetables which had been imported during the first week this tax was in effect. He referred to one market in Canada, the greatest, Montreal, and in addition there are three other important markets to which such commodities come. The hon. member for Regina City took him to task, pointing out that it was improper to use the figures of importations during the first week because the cars which came to Montreal during that week must have been ordered long before June 26 and consequently could not have had the ten per cent tax imposed. That statement merely reveals that the hon. member for Regina City is not fully acquainted with the customs of trade. It will take only a few moments to explain that point and I wish to do so because it leads to another.
Broadly speaking, Chicago is the receiving point for the whole of the middle west. Cars of fruits and vegetables from California and other producing states roll to Chicago largely on consignment. The Montreal wholesaler does not buy at the shipping point. He buys from Chicago; he may buy when cars have left Chicago on consignment to Montreal; he may even buy on the tracks in Montreal. On June 25 this ten per cent tax became well known in the distributing centre of Chicago, so that any cars which came to Montreal after June 26 certainly came in under this tax. This shows that the ten per cent tax did
Special War Revenue Act

not operate for the purpose of conserving exchange.
But supposing there was any validity in the argument of the hon. member for Regina City, that validity is entirely destroyed when one considers the figures for the week after that, when undoubtedly the ten per cent tax was in operation. During the week from July 2 to July 8, thirty-five carloads of cantaloupes rolled into the Montreal market which, as I say, is only one market in Canada. In that week fourteen cars of cherries were received. The British Columbia crop is just about cleared up, but the Ontario crop of admirable cherries is running strong. Twenty-six carloads of peaches came to Montreal. Within three weeks Ontario peaches will be at their flood; at any rate commercial production will be commenced, but we have twenty-six carloads of peaches bought by consumers in that one market. Thirty carloads of plums came to Montreal during that week, in addition to the twenty-eight carloads which came during the previous week mentioned by the hon. member for Lake Centre, and 111 carloads of tomatoes, with shipments coming already from various points in Canada.
I am entirely in agreement with a measure having as its object the conservation of exchange. It appears to me most unreasonable that in one market, Montreal, during the week commencing June 26, some 856,000 worth of plums should be sold, with another 861,000 worth entering the same market the following week. In various parts of Canada we produce plums of better flavour than those imported; we are most anxious to use the Canadian market for the distribution of our plums, yet consumers in Montreal have an opportunity of buying and consuming between $110,000 and $120,000 worth of plums in a fortnight.
This is a matter which principally concerns three groups of people: the producers, the trade and the consumers. The producer is anxious to have at his disposal the Canadian market during the period of his production. It may be asked what view the trade takes on a tax, a method, an endeavour, to conserve Canadian dollars. If the minister were to go into the matter with the wholesalers of the shipping port of Montreal for instance, there he would find men earning their living in that branch of industry who are just as patriotic and just as desirous of helping Canada in her war effort as we are. I think he would have this story told to him: "The custom of the trade has been for these cars to roll into our market. That is the way in which the people who sell to us deal with us. It is necessary for us to do what we can with

those cars which are sent on consignment. Among our members here is a wholesaler who stocks himself with a certain range of commodities; here is another, and another." The wholesaler says, "If I am to retain my business I must stock up the various commodities which are at our disposal. I must endeavour to sell them. It is the custom of the trade." But he also says, "If Canada is at war and the government is endeavouring to conserve Canadian dollars and not allow them to go out of Canada for luxuries, why is not this stopped? We cannot stop it."
I appeal to the minister to consider those other methods to which his predecessor referred in the budget speech, when he said:
... it may, from time to time, in respect of certain classes of civilian imports, take other methods of a non-fiscal character for the purpose of meeting this vital need as circumstances seem to require.
The remark interjected by the minister a few moments ago induces me to appeal to him to give further consideration to this question. I am not asking for further tariff assistance. That is not necessary. I am persuaded that some other method can be adopted which will enable the minister to arrive at the goal at which his predecessor aimed. Before the budget was brought down, representatives of the fruit and vegetable industry had an opportunity of meeting the minister and discussing with him their problem, namely, that they want the Canadian market at their disposal when their produce is ready. In the course of the amiable discussion which took place on that occasion this matter of the ten per cent duty was raised, and the minister was told by the industry that in their opinion it would be absolutely unsuccessful in achieving its purpose. Other methods were discussed. However, the budget came down and it contains this provision. Now we have presented evidence to the minister showing that in the two weeks immediately after the imposition of this tax we had in one market in Canada a glut of this useless stuff, which had the effect of making it more difficult for Canadian producers to sell their products. I ask the minister to give his best attention to the finding of some other method which will accomplish the end he has in view.


Richard Burpee Hanson: I desire to make a few observations, and I promise the minister I will not delay the matter beyond six o'clock. First of all, let me ask him why it is that the bills based on the Income War Tax Act and the Excess Profits Tax Act resolutions, all of which I believe were passed last week, have not yet been introduced. In my opinion those bills should have been

Special War Revenue Act
introduced and read the first time at the conclusion of the discussion on the resolutions, when we concurred in them. I hope there will be no further delay, because so far as I am concerned I just cannot burden myself with a multiplicity of these measures at once. It is not fair to the private members, and certainly it is not fair to me, that we should have these measures dumped on us era gros. I trust the minister will bear that in mind.
To some of those who have been talking this afternoon about Liberal doctrine, its practice and its performance, I would say that they must not be surprised at anything that may happen. The profession of Liberal doctrine when that party is in opposition, and its application when that party comes into power, are two different things, especially when the doctrine of expediency makes it necessary, upon taking office, to discard Liberal doctrine. If hon. members do not believe me I would suggest that they go back and read what Mr. Fielding said as long ago as 1922 or 1923, right in this House of Commons.
I believe the minister said in another place this morning that this resolution has to go through in the form in which it has been introduced, plus such amendments as he-and he alone-may introduce on the floor of the house. Whatever I have to say is based on the theory that the government is adamant in refusing to make any changes with respect to policy, as embraqed by this resolution.


James Lorimer Ilsley: To what "other place" is the hon. member referring?


Richard Burpee Hanson: I understand that is what was laid down in caucus this morning. I was not there, but I understand that happened. We can just let that pass, and not waste any time upon it, if the minister wishes to have the resolution passed.


James Lorimer Ilsley: My hon. friend should not make those statements, because I can neither affirm nor deny them.


Mr. MACKENZIE (Vancouver Centre):: That did not happen.


Richard Burpee Hanson: I was not there, and I am not in a position to contradict.
I am making that observation, but I shall change it to this, that from the attitude the minister has disclosed in the house we are to understand that the resolutions as proposed by the government are to go through as they are, save and except with respect to such amendments as he may propose. I think there cannot be great exception to that statement.


James Lorimer Ilsley: That is in accordance with the facts.


Richard Burpee Hanson: I regret that, because there are reasons why that rigidity of purpose, if I may use that expression, should not be adhered to.


James Lorimer Ilsley: There has been no rigidity. I have complied with the wishes of the committee in at least two respects.


Richard Burpee Hanson: Has the minister?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: I do not
so understand it. The minister did not comply with the plea of the hon. member for Qu'Appelle.


James Lorimer Ilsley: No.


Richard Burpee Hanson: It was ruled out of order to-day, after a hurried call to the chiefs of the clan. It was an amendment designed to lift the burden on agriculture, and especially that on western agriculture.


James Lorimer Ilsley: Was it in order?


Richard Burpee Hanson: I think it was. But it was ruled out of order on motion of the chair. And if the chair had not ruled it out of order I suggest the minister, or some of his colleagues, or some of his followers would have risen in their places and ruled it out of order.


James Lorimer Ilsley: The argument that it was in order was pitiable.


Richard Burpee Hanson: I did not get a chance to argue the matter, and I resent the use of the term "pitiable".


James Lorimer Ilsley: Perfectly proper.


Richard Burpee Hanson: I resent the use of the term "pitiable", and if the minister wishes to get this resolution through to-night he will have to withdraw that term.


James Lorimer Ilsley: I will not withdraw that term.


An hon. MEMBER:: Threat.


Richard Burpee Hanson: That is all right; it may be a threat; but from this seat I have treated the minister with the utmost respect, consideration and courtesy, and I say the word "pitiable'' is not courteous and is not in keeping with the attitude I have adopted toward the ministry. I will admit the argument was weak; I did not get a chance to make any argument, and I do not blame the chairman. But I did observe in a mild way that I thought, before making his ruling, he might have asked for some dis-

Special War Revenue Act

mission. However he did not do that. I did not pursue the matter, because I know there will be another opportunity.
The government has taken the attitude that this resolution must go through in the form presented by the minister, with such amendments as he himself may suggest. It was, however, for the purpose of discussing the amendment to resolution No. 5 that I rose to make some observations. In subsection 3 of resolution 5 this provision is made:
Where the war-time prices and trade board reports to the governor in council that any producer or producers of goods have taken advantage of the tax imposed by this section to increase the price of such goods by an amount greater than is justified by any increases properly arising from such tax in the cost _ of materials or parts entering into the production of such goods or to maintain prices _ of such goods at levels greater than are so justified, the governor in council may-
Do thus and so. In the proposed amendment the minister goes a good deal farther. I wonder if he realizes that we have here an amendment of, I believe, twenty-five lines, in which there is only one sentence. I have had a good deal of difficulty in understanding just what it means, although I have tried to analyse it. Instead of starting in on the assumption that the war-time prices board will make a report there is the prohibition that:
No person shall take advantage of the tax imposed by this section to increase the price of goods by an amount greater than is_ justified by any increase in cost properly arising from such tax, or to maintain prices at levels higher than are so justified-
And so on.
In that paragraph we find a prohibition and the statement of a position which does not in principle differ from the original proposal. Then the amendment goes on to say:
-and, where the war-time prices and trade board reports to the governor in council that, in its opinion, any person has so taken advantage, the governor in council may, upon the recommendation of the said board, for such period of time as he may determine-
Do certain things of a drastic character. Included is the imposition of an excise tax, as was suggested in the original resolution. In the Customs Tariff there is one weapon which will be just as effective as this elaborate machinery which the minister is about to set up. All he has to do is to take off this imposition, and the thing will end then and there. That is what Mr. Bennett did in 1930 in connection with the Hamilton glass company, and everybody knows how effective that was.
I might have elaborated and analyzed it further, but one word more and I am done. Let there be no mistake about it. This measure will not be effective in keeping out

United States production. It never was so designed because, after all, the former Minister of Finance said that one of the reasons for it was to protect the exchange position. When by a tax of ten per cent imposed on United States imports you hope to realize $65,000,000 in revenue, as the former minister of finance stated at page 1021 of Hansard, you are not going to help the exchange position very much. What you are doing is raising more money for war effort, and if this is one of the methods the minister chooses to adopt for that purpose I am content. I think that we can well impose a tax on United States importations, but if he wanted to help the exchange position I should think that he would have adopted another course altogether, a course which he himself indicated and which the minister (Mr. Ilsley) has incidentally referred to as being necessary perhaps to adopt later. If the first and primary object of this legislation was to help the exchange position, then I suggest that the minister has got the cart before the horse. He should first have put on his restrictions against all luxury importations. He should have done that first, and not second. As a matter of fact the whole thing is designed to help the revenues, and the people of Canada are going to pay it.
Amendment (Mr. Gibson) agreed to.
Resolution as amended agreed to.


Richard Burpee Hanson: What about the bill?


James Lorimer Ilsley: With regard to the bills,
I am in a position to introduce the Income AVar Tax Act amendment bill if the committee will first put through a resolution of which I sent a copy to the hon. gentleman the other night. I have not yet had an opportunity of moving it.


Richard Burpee Hanson: The minister will have to explain it to the house. My colleague (Mr. Stirling) suggests that it might lead to some discussion, and perhaps we had better leave it until to-morrow.


James Lorimer Ilsley: I think so. With regard to the excess profits tax, I have still an amendment to discuss to-night with the officials, so that perhaps we had better report progress.


Richard Burpee Hanson: I quite
agree.


The ACTING CHAIRMAN (Mr. Macdonald, Brantford City):: It is the intention of the committee, I understand, that I report the whole resolution regarding the Special War Revenue Act? Carried.


Richard Burpee Hanson: _ If the amendment to the new subsection 3 is not on

Duties of L. W. Brockington
Hansard I suggest that it should be. Many members have asked me about it. They do not know anything about its provisions.


James Lorimer Ilsley: I gave an advance copy to my hon. friend.
The text of the resolution with the proposed amendment will be found at page 1692 of Hansard.


Richard Burpee Hanson: Has resolution 5 been carried as amended?


James Lorimer Ilsley: Yes. Resolution 5 is an
amendment to the Special War Revenue Act, but I was speaking a moment ago of a resolution relating to an amendment to the Income War Tax Act. The Income War Tax Act resolutions were all passed by the house, and I shall have to go back to them and move the resolution to which I have referred. I am prepared to do what is necessary to have it appear on Hansard; perhaps I should get my colleague to move it.


Ian Alistair Mackenzie: I move:
That it is expedient to amend the Income War Tax Act and to provide that if any tax, licence or other impost, otherwise deductible under the said act is imposed or increased after June 24, 1940, by or under the authority of a provincial statute, the amount of any such tax, licence or impost imposed and the amount of the increase of any such tax, licence or other impost shall not be allowed as a deduction from the income of any taxpayer except to the extent permitted by the Minister of National Revenue.
Motion stands.
Progress reported.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
Thursday, July 18, 1940

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