Mr. W. H. BENNETT:

That is equally

true in regard to the industry in my constituency.

Mr. CARRICK:

You will find the same

to be true in connection with the steel works in my constituency.

Mr. CARVELL:

I will admit that my

hon. friends are sincere in what they say but that does not change my opinion at all. You show me a protected industry in Canada, capitalized for $5,000,000 or $6,000,000, that has not $2,000,000 of water in it, and I will show you a white blackbird. However, from all the information we can get with regard to these things, there .seems to be one steel industry in Canada that is able to live and make money. They say that it has passed its last dividend, but x the Nova Scotia Steel and Iron Company has not passed its dividend. It is paying a six per cent dividend on its common stock.

Mr. BENNETT:

Is it not true that the smelter of the Nova Scotia Steel and Iron Company is shut down?

Mr. CARVEL.L: I think that is true to

some extent but that does not alter the fact that the Nova Scotia Steel Company has been able to do business and pay dividends

Mr. BENNETT:

Selling ore and coal.

Mr. CARVELL:

Not selling Canadian

ore, but selling Newfoundland ore. My hon. friends say that they want that to be changed, that they want to get these industries going. My contention is that these industries have been placed where they have no business to be placed.. We have a false system of economics built up industries all over Canada which cannot .succeed except by tariffs or bounties, something which is not native to the country, something, which was put up by promoters for the purpose of making money in building and not in operation. But we have one place where there is a real business proposition that has not had to close its doors. Although there have been one or two blast furnaces blown out at Sydney, all the rest are running and doing a good business. As my hon. friend from Red Deer (Mr. Clark) said, when the bounties were cut off they commenced to make nails. They commenced to manufacture the raw product. On account of the enormous production which we have had in the steel industry practically all the output of the steel industry has been in the form of rails, because that is the cheapest form in which steel can be turned out in Canada and in every other part of the world and because we have had an enormous railway development in Canada for the last ten years. On account of the railway development which has been going on in Canada these industries have been turning out steel rails at a price $3 or $4 more than the ordinary price in the rest of the world. But you .say that the Government have been putting up money for the building of these roads and therefore they might as well pay an extra price for the rails and with that particular branch of it I am not very much inclined to find fault. Now, unfortunately, railway construction has practically ceased. The rails are all bought and laid on the Grand Trunk Pacific, the rails are practically all laid on the Canadian Pacific railway in their double-tracking as well as on their main line and the rails are pretty well laid on the Canadian Northern. There is no further demand in large quantities for rails. The result is that the Canadian Steel Works have had to close down, not because they have not been able to mine their ore cheaply enough, not because they did not get their coal at the proper price, but because they have not the market. Can any hon. gentleman opposite tell me how a bounty on the production of iron ore will create a demand when the market does not exist? That is the whole question. My hon. friends do not realize that from an economic standpoint they are trying to butt their heads against a stone wall. If you have not the market, you cannot sell the goods. If you give a bonus, there is no doubt that you might start up an industry for a year or two, but in another year you will find yourself up against the wall again, because you will have your yards full of material and no market for it.

Mr. CARRICK:

Last year we imported

$141,000,000 worth of iron and steel products. Is that not market enough?

Mr. CARVELL:

I have not had time

enough to-night to go over the figures accurately, but I have done so generally. I have the trade returns for the first six months of the present fiscal year. Practically ninety per cent of these imports are manufactured articles, the very thing that I am discussing. I have not the time to go into it, but I fiud here that in six months we have imported only about $2,000,000 worth of pig iron. For the whole year that would be $4,000,000 worth of pig iron, a mere bagatelle as com-

pared with $141,000,000 worth of imports. 1 do not believe that we have imported $10,000,000 worth of the raw products in the whole year. Prom the figures that I have here, I find that we have imported: Bar iron and steel, $2,500,000; cast iron, practically $500,000; gasolene engines, $2,000,000; steam engines, $330,000; steel billets, $800,000; steel bridges, $600,000; pig iron, $2,000,000, and so on. The pig iron is the only raw product of all the articles that I have mentioned; the others are manufactured goods. In Sydney they are commencing to waken up; they see that they cannot sell their products to any great extent in the condition of raw material, and therefore they are commencing to manufacture; they have been making rods on a small scale; they are making them now on a larger scale. They are converting these rods into nails; they will go on and convert what they are now making their rails out of into rolled goods, angle bars, fabricated material, and they will develop their industry. When they do that, they will find a sale for their products, but is it fair that the people of this country should be compelled to pay millions of dollars annually in order to support industries in Ontario that are not native, that should not have been established, that were established for money making schemes, and that are not in operation? To show what can be done in the case of an industry which is native, 1 have a clipping here taken from this morning's Citizen which to my mind is an answer to the whole question. I find here that the Sydney concern have this week closed a trade by which they are selling 15,000 tons of pig iron delivered in Philadelphia. It is like taking coal to Newcastle, but they are doing it. The article is as follows:

Canada Pig Iron-Sydney, N.S., to benefit by American contract.

Philadelphia, March 9.-Part of the pig iron which R. D. Wood and Company will cast into pipe in their forty thousand ton Italian aqueduct contract will be brought from Canada. It also makes the first foreign-made iron of any amount to be contracted for or to he imported into the United States under the n*w tariff. This particular iron will come from Sydney, N.S. About 15,000 tons is understood to have been contracted for to he delivered at docks here for about $13.50 per ton. A first cargo of this Nova Scotia pig iron will be shipped promptly hut the hulk of it is to come next fall.

I think that is an answer to the proposition of my hon. friend from Thunder Bay and Rainy River. When you get down to rock-bottom economic business, when you establish a steel industry at a place where it can thrive, when you put it in a position

where it can compete with the rest of the world, it can live either with or without a bounty. My hon. friend says: Give us

markets; that is what we want. The very moment the United States market is thrown open, the Sydney industry has no difficulty in selling 15,000 tons of pig iron delivered at Philadelphia at $13.50 per ton. Take off the duty on rails and the Sydney people will be able to sell their rails to the United States. It is a well known fact that in tne last year the Sydney people have secured, in competition with the world, a contract for an enormous quantity of rails to be delivered in South Africa and to some extent in Australia, All that you have to do is to give us the markets and -we will make the article.

Mr. CARRICK:

Is the pig iron you refer to made out of Canadian ore?

Mr. CARVELL:

Certainly not. It is made out of Newfoundland ore. What do I, or what does anybody else care what it is made out of. It is made in Canada. All the work in connection with that ore is in Canada except the digging of the ore, which is a very small proportion of the cost of the work. My hon. friend knows that very well. It is true that Newfoundland ore is a high-class product; it runs from 55 to 70 per cent of iron, whereas the ore he wants to bonus is only 35 per cent iron. What is the use of taxing the farmers, the professional and the labouring men of Canada in order to keep an industry going which uses 35 per cent iron ore? It only shows the curse of protection wherever it gets a foothold in any civilized country. My hon. friend is perfectly sincere in wanting us to tax ourselves to keep an industry going which cannot go economically, but what is the use of doing it? Yon will only keep it going for a year or two, and then it will be up against the wall. In a year or two more protection, more bonus, more tariff will be wanted. It is the inevitable result. You never sin against the proper laws of economics but you pay the penalty. Just so long as you keep on pampering these unnatural industries, just so long shall we pay the penalty, and just so long shall we have to tax ourselves in order to keep them going. If there is one proposition to which I am opposed more than another-and the only reason why I wished to speak to-night was because of the proposition put forward by my hon. friend from Thunder Bay and Rainy River and my hon. friend from Parry Sound-it is that we

should withdraw the drawback from the manufacturers of farm machinery. In the interest of every farmer of Canada-and I represent a constituency composed of farmers, and I do not care whether I represent them or not-I think it would be a crime against those people to withdraw that drawback and compel them to pay more for farm machinery than they are doing now. They are paying enough when they are paying what those machines cost in the United States plus 17J per cent. That should 'be a sufficient tax on the Canadian people without compelling them to pay two or three dollars more a machine in order to keep going a few Ontario industries, which should never have been created and which probably will never be a success.

In conclusion I can only say: let the ordinary laws of commerce work out this question; let the industries in Canada which can exist, go on and do the business. My hon. friends do not ask any protection or bounty for the steel industries in the Maritime provinces, because they know that those steel industries import their ore from Newfoundland.

Mr. CARROLL:

It is going to hurt them.

Mr. CARVELL:

It is going to hurt

them? Oh, no, it is simply-I was going to say piggishness, but that might be offensive, -but it is the idea of Ontario that Ontario is the Dominion and that whatever is good for Ontario" must be taken by the rest of the Dominion whether it is good or not. If they are going to make a proposition to give a bonus on iron, why cannot they give it to everybody? Why give it only to the low grade ores of Ontario and not to the men who produce iron in the Maritime provinces? I should be as much opposed to a bounty to the Maritime provinces manufacturers as to a bounty for the Ontario manufacturers. It is wrong in Ontario, wrong in the Maritime provinces, wrong anywhere in Canada, because it is wrong in principle, wrong economically; and I do hope the Minister of Finance (Mr. White) who has been listening to this discussion, will take note of some of the points that have been made. I hope he will not be the man to add $2.50 to the cost of every binder the farmers of this country have to buy. I hope he will not be the man to increase the taxes of the people beyond what they can possibly stand, in order to keep going a few industries in Ontario which are not properly located, which ought probably never to have been started and which could never make

a success of it even if we gave them twice the bounty the hon. gentleman has been asking for.

Mr. W. M. GERMAN (Welland):

I do

not propose to add much to this discussion, but as we have in the county of Welland a blast furnace of considerable dimensions and of no little importance, I should like to express my views on this very important question. I had not the honour and pleasure of hearing the hon. member for Rainy River (Mr. Carrick) in the remarks he made before dinner, but I understand that they were in support of the idea of the Government giving a bonus to the iron industry. I wish to be put on record as being in general not in favour of bounties; but I do think that something should be done, notwithstanding my hon. friend from Carleton (Mr. Carvell) in regard to the industries of Ontario, to increase and benefit, if possible, the iron industry not only in the province of Ontario, but of the Dominion at large. Because it is one of the great industries of this country, and we have enormous mineral resources awaiting development. Whether this encouragement should be in the form of a bounty or otherwise I do not at this time pretend to say. The Minister of Finance is the responsible gentleman in the management of the financial affairs of this country, and when his proposition is submitted to Parliament, I shall be prepared to discuss it with due care and with the best intelligence I can bring to bear upon it. But I wish to call the hon. gentleman's attention to one thing-and this is what I really rose to my feet for. Under section 288 of the Customs Act it is provided:

The Governor in Council may, under regulations made for that purpose, allow, on the exportation of goods which have been imported into Canada, and on which a duty of customs has been paid, a drawback equal to the duty so paid with such deduction therefrom as is provided in such regulation.

The meaning of that is that if a concern manufacturing iron imports into Canada a thousand tons of iron and makes it up into manufactured goods and exports those goods, the concern can get a rebate on the whole of the iron exported. But if it makes up that iron with four thousand tons of Canadian iron, they get a rebate on only one-fifth of the material used. Now, I submit to the Minister of Finance that he does not need an Act of Parliament to do this. Subsection 2 of this section provides:

In cases mentioned in such regulations, and subject to such provisions as are therein made,

)

such drawback, or a specific sum in lieu thereof, may be allowed on duty-paid goods manufactured or wrought in Canada into goods exported therefrom.

Now, the Minister of Finance is a lawyer and knows the Act. And I will venture to say that his commisioner of customs will advise him that in his opinion it does not need an Act of Parliament to do what is proposed. And I respectfully suggest to the Minister of Finance that regulations should be passed. But if he thinks they could not be passed by Order in Council, then let him bring in a Bill to assist the iron industry in Canada and I will be pleased to support it, and I believe it will come as near to aiding the iron industry as this suggestion of the hon. member for Rainy River.

Hon. W. T. WHITE (Minister of Finance) :

This discussion has more than a passing resemblance to a debate on the Budget, and consequently I shall not participate in it to any great length. I am very much obliged to my hon. friend from Rainy River (Mr. Carrick) for bringing the matter to the attention of the House, if for no other reason than for the very able and illuminating discussion it has brought forth. The matters which have been drawn to my attention by my hon. friend from Welland (Mr. German), and some other hon. gentlemen on this side of the House, together with those which have been brought forward among hon. gentlemen opposite will, of course, receive my best attention. If we do not reach a wise conclusion upon matters of the tariff, it will certainly not be because we have been denied the advantage of variety of opinion.

My hon. friend from Rainy River has referred to the depressed condition of the iron and steel industry, which he described truly, I think, as secondary only in importance to the great basic industry of agriculture. And before I pass from that remark of his, I should like to call attention to a statement made in the course of his speech by my hon. friend from Red Deer, in which he stated that agriculture is the primary industry and that every other is based upon it, and cannot flourish unless agriculture flourishes. In substance, I think that is what he said. And then he proceeded to describe the condition of prosperity as to its industries which Great Britain had attained under a free trade policy. Without commenting upon that, I desire to draw the hon. gentleman's attention to a report ' On the Emigration from the Rural Districts of England and Wales,' published

under the authority of the Board of Agriculture and Fisheries in 1913. I will read for the hon. gentleman's information a brief paragraph from that publication:

Agriculture in this country is not an expanding industry capable of absorbing the full natural increase of population. On the contrary, the area of farmed land steadily declines. Since 1901, about 388,000 acres have been withdrawn from agriculture altogether, and about 1,060,000 acres have been withdrawn from arable cultivation. The levelling up of the general intelligence and education of farmers has led them to greater resourcefulness in the economy of labour and greater willingness to use labour-saving machinery and appliances. It might also be expected that the better education of the farm labourer would have made him individually more competent, but it may be doubted whether this factor counts for much in reducing the number of labourers employed.

In fact, complaints are general that labourers still in their craft are less numerous than formerly. From the employers' point of view, any shapening of intelligence due to literary education does not compensate for lack of technical training.

I refer to this merely to show to my hon. friend that it does not necessarily follow that the development of agriculture depends upon an application of the theory of free trade, even as it exists in England to-day.

It appears that there is somewhat of a depression in the steel industry in Canada. I think it is quite possible to draw altogether improper conclusions from that fact. In Canada, and indeed throughout the world, during the past year there has been a more severe and long-continued financial stringency than has existed within the memory of any hon. gentleman within the sound of my voice to-night. It was absolutely inevitable that that financial stringency should be followed by a great trade-slackening throughout the world; otherwise the condition would never be relieved. It was inevitable that the flow of money from the great international centres should be checked and that, in consequence of the curtailment of credit involved and the dimin-ishment of capital available for business enterprise, there should be a slowing down of trade and commerce in all the countries of the world. The slackening that has been experienced is not peculiar to Canada; it is manifest in the United States, where it is estimated that over a million men are out of employment. In the city of Pittsburg not long ago the furnaces were shut down, and it was estimated that over 100,000 men were walking the streets. The condition referred to by the hon. member for Thunder Bay is not, as I' have said, in any way

peculiar to the Dominion of Canada; in fact, I am convinced that Canada has come through this crisis better than most countries which have experienced the financial stringency of which I speak.

The hon. member for Carleton (Mr. Car-vell) has referred to a slackening in railway construction. To a certain degree, that was inevitable by reason of the facts to which I have drawn the attention of the House, namely, the shortage of money in the great money centre, London. In addition to that', as the hon. gentleman pointed out, the three transcontinental lines have been almost wholly completed, and consequently there is not at the present time as great a demand for sfeel rails as there has been. But in connection with these assertions of the hon. member for Carleton, I should like to point out that it is by no means to be concluded that the demand for steel rails in Canada is going to cease. Railroads are never absolutely completed; they are always building, and they always will be building. We cannot, therefore, look forward to a condition in the near future in which railway building in Canada will have ceased; there will be a continuous demand for rails and for the other supplies required by railway companies. But the point I am making is that the slackening which is affecting the steel industry, and, indeed, all other industries in Canada, is precisely what we might expect, having regard to the financial conditions that have prevailed during the last year and a half. It has been called to my attention that the Dominion Iron and Steel Company has passed its dividend. That is not the first time it has done so. If I recollect rightly,

10 p.m. this company for many years did not pay dividends upon its preferred stock. The common stock of this company at one time stood as high as 80, and afterwards dropped as low as 10.

Mr. CARVELL:

It was nearly all watered.

Mr. WHITE:

My hon. friend says so,

but I do not think it was all watered. However, that is not in issue. I am the first to admit the importance of the steel industry; no industry has had more careful attention on my part during the last two years than this, because I realize that it is a basic industry. The falling off in the building trade is also to be ascribed to the stringent money conditions which have prevailed throughout Canada. That phenomenon was manifest in 1908, and, I think, in 1904; in other words, it is simply economic history repeating itself. I am not 97

answering in any antagonistic fashion the arguments brought forward by the hon. member for Thunder Bay, but I am seeking to explain, on economic grounds, the conditions that prevail at the present time in respect of this great basic industry.

With regard to the steel and iron imports, to which attention has been called, amounting, I think, to $140,000,000, it must be borne in mind that Canada is a borrowing country. We have borrowed $250,000,000 or $300,000,000 per annum in the London market for a number of years. That money is not brought into the country in the form of gold. Any hon. gentleman can readily ascertain for himself, if he looks up the gold imports, how much does come in as gold. I do not say that all the $140,000,000 of our imports in iron and steel represent money borrowed abroad, but a considerable portion of it undoubtedly does, because international balances are generally settled not in gold, but in commodities. We import a certain amount of goods from Great Britain. We import a certain amount of goods from the United States. It may be that Great Britain is sending us in the form of goods some of the money that we borrow, or it may be that Great Britain is paying us through the indebtedness of the United States to Great Britain, the United States paying that indebtedness by sending her goods to Canada. So that, considering the amount of our importations in this line, I think we should not be unduly anxious, because if the money did not come in that form it would come in the form of gold. Suppose we are borrowing $250,000,000 or $300,000,000 a year, and our importations are very small. Let us assume we were manufacturing all these goods that we now import; if the time should come when we would not be able to borrow $250,000,000 or $300,000,000 on account of money conditions, then we would indeed have a condition of inflation in Canada. I do not say for one moment that the steel industry does not deserve at all times the attention of the Government, and that attention I have tried, and will continue, I hope, to give it. But I do say that, from the fact that so many hundred million dollars' worth of commodities come into Canada, you cannot argue that the tariff is necessarily wrong; you have to take all the facts into *consideration. I would be disposed, therefore, to agree with what has been said by an bon. gentleman in the House, that a very considerable portion, at all events, of these commodities necessarily come in in

connection with the borrowings of Canada. I believe, differing in this respect from the 'hon. member for Red Deer, in a policy of reasonable protection for this country. I think a mistake is made by economists in saying that free tiade is right at all times and for all countries, and I think, too, that protectionists are wrong in saying tha,t protection is right at all times for all countries. I think the question of what tariff suits a country is a question of expediency and common sense, having regard to the requirements of that country; and I say that Canada, as a matter of fact thrives under a reasonably protective policy and has done so ever since 1878. It is perfectly apparent to any student of economics and of tariff history in Canada, that the protective policy of 1878, fathered by Sir John A. Macdonald, was an absolutely inevitable policy for this country. This country could not have got on at that time without it. The hon. member for Red Deer (Mr. Clark) was not in this country at that time. I am satisfied that if he had had the experience of the 70's he would have modified to a large degree the views he expresses so freely with regard to free trade and its manifest advantages to this and other countries. The farmers of Canada at that time had absolutely no market. They were shut out, after the termination of the Reciprocity Treaty with the United States, from the markets of the south; and any of us who lived in that period-most of us were boys at the time-realized the conditions then existing, when the farmers of Canada had no markets for their products and it was absolutely necessary to build up the industries of Canada in order to establish large cities to give employment to our workingmen and to provide a new market for the farmers of Canada. Therefore the National Policy was truly called the National Policy because, as a matter of fact, it was for the advantage of the workmen and the manufacturers and the farmer and certainly not the least of all for the farmer.

It is true that a number of furnaces in Canada at the present time are out of blast. Our attention has been called to the fact that the Canada Iron Corporation has ceased operations. I think I could demonstrate to the House, if the occasion arose that it was not the tariff that put the Canada Iron Corporation out of business; there were other factors that entered in, but it is not necessary to discuss them now. As to the Ati-kokan Company I suppose that one factor entering into its suspension of operations was the character of the ores which it had to treat. But the hon. member from Port

Arthur would be able to speak more authoritatively with regard to that. The hon. member for Red Deer has spoken of our borrowings and he read an article from the Daily Telegraph commenting on our borrowings and asking as to our impending liabilities. So far as our borrowings are concerned, I would say to the hon. member for Red Deer, although he did not appear to me very critical with regard to them, . that all the borrowings of this Government .this year have been brought about in assisting in connection with enterprises inaugurated by the late Government. The first year this Government took office we reduced the national debt by $136,000. That was upon the estimates of our predecessors, and I take no credit for that. The next year, when we had abnormal revenues, instead of spending them all we reduced the debt of Canada by $25,000,000; and it was a very wise thing to do under the circumstances, because the $25,000,000 was available to take care of the three per cent bonds of the Grand Trunk Pacific railway, the care of which we inherited from our friends opposite. That was one of the babies we found on the doorstep. We have taken them all in and taken good care of them and we hope to raise them to be healthy infants, if possible. But I do not think we should he blamed by hon. gentlemen opposite for doing so. We have been borrowing in connection with subsidies granted to the Canadian Northern railway.

Mr. CARVELL:

How much are you reducing the debt this year?

Mr. WHITE:

I will give you that in a moment. My hon. friend must not be impatient. That was also a situation that we found confronting us, a line promoted from Montreal to Port Arthur with a guarantee of $35,000,000. I need not again call attention to the stringent conditions that prevailed last year and the importance of not having railway construction interrupted. 1 say that our borrowings have been not to meet either current or capital expenditures this year, but to meet the abnormal and unusual situation which we found confronting us in connection with the railway situation of Canada. My hon. friend asks about the debt to-day.

Mr. CARVELL:

I ask how much you

reduced it this year.

Mr. WHITE:

We have not reduced it at all this year, the net debt will be increased this year for the reason I have

march 10,1914

given. But I will say to my hon. friend that the net debt of Canada will be less on the 31st of March than it was when this Government took office, and it will be less because last year, when we had an abnormal revenue we did not expend it all, we had a surplus of $25,000,000.